EU seeks foreign support on 5G from Mobile World Congress 2015 as the “digital gold rush” begins

EU Commissioner Günther Oettinger, responsible for Digital Economy & Society, at the rostrum of the EU Press Conference at Mobile World Congress 2015. Mr Oettinger is welcoming this session where CTOs from the world’s biggest telecom operators (sitting) took part in the EU 5G debate. The photo was taken live from the CC4 Media Village of Mobile World Congress 2015 in Barcelona on 3 March and constitutes intellectual property of the European Sting (© European Sting).

“The digital economy is simply becoming the economy. And the future network infrastructure, 5G, will become the infrastructure”. These words came from Günther Oettinger, the European Union Commissioner for Digital Economy and Society, and they were spelled in Barcelona, during Mobile World Congress, 2015 last week. Those words stood for Mr. Oettinger’s introduction for the EU’s “grand vision” for 5G, which already represents the biggest challenge in the digital economy world. Last June the Commission signed a deal with South Korea to work together towards a global definition of 5G and to cooperate in 5G research. The time for new, huge agreements might have come, as revealed by Commissioner Oettinger.

EU calls China

“It is our intention to sign similar agreements with other key regions of the world, notably Japan, China, and the US,” said Oettinger last Tuesday. This happens as the EU is basically seeking to help its companies catch up in the race to develop next generation technologies. And to fill the existing gaps. “With 5G, Europe has a great opportunity to reinvent its telecom industrial landscape”, Commissioner Oettinger underlined with enthusiasm, although what is more important for the EU now is to not repeat the mistakes of the past.

The Commission is likely to start formal discussions on 5G with China soon, which is home to the world’s second-biggest maker of mobile network equipment, Huawei and ZTE being ranked fifth. “We are closely working with our customers to get to 5G”, Huawei’s chief executive Ken Hu said, as reported by Reuters. “It is the only way to fully meet the demand of machine to machine technology”, he added. Reuters also reports Japan’s NTT DoCoMo is already at work with Nokia and Ericsson to develop networks running at high frequencies for use in the 5G wireless era.

Internet 1,000 times faster

Now 5G looks indeed as the next big revolution in the digital world and beyond. The question deservers a few considerations though, especially on what the impact for European consumers and citizens would be like. The 5G promises almost “live”, zero-delay internet experience, connection speeds and downloads up to 1,000 times faster than current ones, broader network coverage and the possibility of connecting billions of electronic objects to support “the Internet of things”, as described by Commissioner Oettinger in Barcelona. But the question then is whether there really a big demand for that at the moment.

Astronomic Investments

Tech specialists at the Boston Consulting Group estimated in a report that mobile companies would have to spend 3.5+ trillion euros on research and investments by 2020 to develop 5G. In Asia, South Korea alone has invested almost € 1.8 billion aiming to commercialise 5G technology by 2020, according to the GSMA (source: AAP Australian Associated Press Pty Limited). Now in order to have some kind of return on investment, companies will need to be convinced that demand for 5G will be strong. That – let’s be honest – is still not completely clear, given customers’ not really warm response to 4G. Also, the time left to make decision is limited, as the 5G standardisation in the EU is expected to begin already in 2016, and the actors involved know very well that they have to move fast to take the best spots on the stage.

Incomplete 4G phase

Moreover, it is quite common view among experts and tech-savvy reporters that much work remains to be done on 4G still, whose rollout across Europe has been very slow and definitely not meeting expectations. Chief executive of France’s Orange, for instance, said in Barcelona “We need to prepare for 5G but let’s not jump too fast”. The Economist reports that Cisco estimates that only 2% of European devices are connected to 4G, and that shows how the “migration process” to 4G is still far from completion.

A matter of Spectrum

There might be also a few technical issues to be discussed along the way. Setting the right steps to have sensible results by 2020, being the Tokyo Olympics the expected point for the first commercial deployments of 5G, could be not so easy indeed. Commissioner Oettinger mentioned from Barcelona what for instance is one of the main knots to be discussed: the identification of 5G spectrum bands, “There can be no successful 5G deployment in Europe without enhanced coordination of spectrum assignments between member states”, he said. “We must build together a European approach in the international spectrum debates with other global actors,” he continued, also remarking that the responsibility for spectrum should fall under the auspices of ministers of digital affairs, rather than within treasury departments.

The biggest challenge

5G is seen by EU as the chance to turn the page and be back to leadership in innovation, after almost two decades of decline. Europe was once the leader in innovation during the second-generation GSM technology phase for mobile phone networks, before collapsing behind the United States or, more recently, China. If you are reading this article from an iPhone, although 15 years ago a Nokia 3310 was your best friend, this could be another clue that something went wrong in the EU.

The Gold Rush

This would definitely justify the EU’s “rush” in announcing upcoming big deals with large tech firms, which are clearly more than happy to participate in this future revolution and are currently elbowing their way ahead of the competition. That is something that makes and will make the EU’s policy makers (and bureaucrats) quite happy, as the heaviest part of investments will likely have to come from the private sector.

Large telecom firms will subsequently play a pivotal role in shaping and designing the market, a market where it will be themselves to sell products to the EU first, and the to the EU citizens. It’s more than clear why the 5G European expedition is incredibly important for telecom first, but it also should be carefully monitored by EU regulators, to prevent that an uneven telecom market would make 5G become a revolution only accessible by a few.