The Lost Decade of Mobile Internet in Europe

The Lost Decade of Mobile Internet in Europe

I. The “foci” of Europe’s network collapse, more than half of households do not cover high-speed broadband

“Only play single-player games, not network games.” “Network use low peak cache movies, peak period will not be afraid of Netflix, YouTube card dead.” This is the experience of Spanish-Chinese Shen Kai in using the Internet during the epidemic.

In 2019, the broadband coverage in the 27 EU member states reached 86%, and the 4G network covers almost the entire population.

The Lost Decade of Mobile Internet in Europe

Broadband coverage in selected European countries in 2020

However, such a level of network development still does not support the isolation needs of 447 million people at home.

The “cause” of the two, one because of the lack of high-speed broadband coverage, the second because of the uneven development of network infrastructure construction in the EU countries.

The EU 2020 broadband report shows that in 2019, the coverage of high-speed broadband in EU countries is 44%, and only 26% of households using 100Mbps and above.

In contrast, China’s broadband penetration rate of 100 Mbps and above was 85.4% at the end of 2019. From this point of view alone, the gap is quite clear.

Within the EU, the level of network development is uneven. In terms of fiber broadband (including FTTH fiber to the home and FTTB fiber to the building) coverage, Sweden, Spain, and Latvia ranked among the top three EU countries at the third quarter of 2019.

The Lost Decade of Mobile Internet in Europe

Sweden (SE), Spain (ES) and Latvia (LV) ranked in the top three in the EU fiber broadband FTTH/B ranking, source: EU Broadband 2020 report

In terms of the overall strength of network development, the Nordic countries such as Denmark, Sweden and Finland are leading within the EU.

The Lost Decade of Mobile Internet in Europe

Instead, the old powerhouses are lagging behind in network construction, with the average rate in Germany, France and Italy only around 30 Mbps.

In Germany, high-speed broadband coverage is only 30% by 2019, and 6.8 million people in France do not have access to the Internet, accounting for about 10% of the total population.

France’s immediate goal is to achieve 100 percent coverage of 30Mbps Internet speed broadband by 2022, in contrast to Denmark, which has achieved 100Mbps download speeds for all homes and businesses in 2020.

In addition to the country-to-country, the rural-urban gap within the EU is also large, in the rural areas of EU member states, only 59% of households can use 30Mbps and above broadband.

Second, the EU’s “digital ambition” to achieve full gigabit coverage in the next decade

In March this year, the EU put forward the “Vision, Goals and Pathways for a Successful Digital Transformation in Europe by 2030”, concretizing the goals of “EU 2030” around four basic points.

The first goal is that by 2030, at least 80% of adults should have basic digital skills, 20 million ICT specialists should be employed in the EU, and more women should be employed in such jobs.

In terms of digital transformation of enterprises, by 2030, three-quarters of enterprises should use cloud computing services, big data and artificial intelligence, more than 90% of SMEs should reach at least a basic level of digital intensity, and the number of unicorns should double.

In terms of digitization of public services, by 2030, all key public services are online, including access to electronic medical records for all EU citizens and electronic ID cards for 80% of EU citizens.

Finally, returning to the network infrastructure, by 2030, all EU households should have gigabit coverage and urban areas with more than 10,000 people should have 5G coverage.

In fact, EU countries are far more enthusiastic about high-speed broadband development than 5G, with only 17 of the 27 countries allocated 5G spectrum by 2020.

European communications market industry observers believe that the EU governments have a very vague position on the issue of Huawei, but because Huawei has advantages in product performance, price and other aspects, so European telecommunications operators generally hold a wait-and-see attitude on 5G.

Relatively speaking, cheaper, faster public acceptance of high-speed broadband has become the “meat and potatoes”.

The epidemic has caused a surge in demand for high-speed broadband in European countries, and the market space is huge. a study at the end of 2020 said that the number of high-speed fiber broadband in Europe is expected to double in the next six years.

Third, the old city transformation into a “burden”, 1 billion to transform 10M costly

“Usually on YouTube also card, after the collapse of not much feeling.” Last year, the day after the release of the UK home isolation policy, the network crashed, when studying in the UK, He Si (a pseudonym) is still using 10M broadband, the same residents living in the old apartments in the central city to live a “slow life”.

Similar to the United Kingdom, the old EU countries Germany, France and Italy are also densely populated, Gartner is mainly responsible for the research vice president of communications services Liu Yi that copper to optical trenching and burying the high cost of labor, the long approval process, which is the main reason for the transformation cycle in Germany, France and Italy than the Nordic countries.

Compared with China, the EU’s older countries have “historical baggage”, copper (VDSL), cable (cable) and other different technical paths to evolve, will cost more transformation costs and time.

Huawei employee Yi Shang (a pseudonym), who has been building networks in Europe for many years, still clearly remembers that in 2018, Belgium Telecom released a fiber-optic transformation plan for a decade, with an annual investment of 1 billion euros. Knowing that Belgium’s population is just over 10 million, the investment costs and cycle time for fiber optic transformation in Germany, France and Italy are relatively larger.

Huawei’s President-in-Office, Hu Hou Kun, cited a set of figures from the European Union: 500 billion Euros are needed for Internet connectivity by 2025, but there is currently a funding gap of 155 billion Euros. The question then becomes, “How do we encourage private companies to invest in broadband networks over the long term?”

Government support is the most effective driver. The Nordic countries network development is the best example, starting in 2018, the Danish government spent 100 million DKK per year to support households and companies with weak broadband coverage.

IV. Why is there no Internet in Europe? The EU’s lost decade

The EU’s ambition is evident in its digital strategy for the “next decade”, with 75% of enterprises going to the cloud, doubling unicorns, accounting for 20% of global production capacity in 2nm advanced process chips, and launching Europe’s first quantum computer within five years.

However, weak links in the network infrastructure and innovation genes have already slowed the EU down. According to the UN Digital Economy Report 2019, China and the United States own 90% of the market value of the world’s 70 largest digital platforms, while Europe accounts for only 4%. Known as the “fourth industrial revolution” of artificial intelligence, 85% of global patents from the United States and China.

Liu Yi analyzed three reasons.

First, strict data protection legislation, high digital taxes, etc. are slowing down the development of the Internet in the EU to some extent.

(b) The small market, language and culture inconsistencies in EU countries make it difficult for Internet companies to develop on a large scale.

Third, the proportion of programmers in Europe is not lower than that in China and the United States, but the general public has poor digital skills, for example, they are still accustomed to queuing up at banks to withdraw money, but not to use mobile payment.

As we all know, the EU is a market that attaches great importance to rules, and its General Data Protection Regulation (GDPR) issued is known as the strictest privacy data legislation in history, thus becoming a model for global personal data protection legislation.

In addition, France, Italy, the Czech Republic, Spain and other EU countries have announced digital taxes on large Internet companies.

The digital tax is the result of resistance from other EU countries to “tax havens” such as Ireland, and in the view of countries that support the digital tax, providing tax havens is tantamount to quenching their thirst. But the digital tax will eventually be passed on to consumers.

Many also attribute the lack of Internet in Europe to small markets, no demographic dividend, mixed cultures and no uniform language. And the EU is also in a relative backwater when it comes to the digital skills of its population.

Relevant data show that in 2019, at least 35% of the EU workforce (24 to 64 years old), some 75+ million people, do not have basic digital skills. So during the epidemic, the EU population was not comfortable with telecommuting compared to China and the United States.

For a long time, the EU countries have been “in bed together” in an inexplicable way.

Germany is the initiator of Industry 4.0, but other countries in the EU are not as enthusiastic as China and the United States in following up Industry 4.0, and only France and Italy have made friends with German Industry 4.0.

However, the transformation of industrial Internet is an important part to promote digitalization. According to “A New Picture of the Global Digital Economy (2020)” released by the China Academy of Information and Communication Technology, Germany’s digital economy is 63.4% of GDP, ranking first in the world, mainly thanks to the Industry 4.0 strategy, which has increased the digitization of its industry to 90.3%. China and the United States, on the other hand, have significantly higher digital economy penetration in the service sector than in other industries.

In contrast, the rest of the EU has seen a slowdown in digital economy growth, with Spain, Finland, Norway, Greece and Sweden growing by less than 1% in 2019. During the same period, China’s growth rate was as high as 15.6%.

The gap continues to widen in the wake of the epidemic.

How can digitization be a coincidental goal for China, the U.S. and Europe? The epidemic has accelerated the pace of digitization, but essentially, digitization brings economic accounts that are cost effective.

The New Picture of the Global Digital Economy (2020) released by the China Academy of Information and Communication Technology mentions that the size of the digital economy in the 47 countries measured in terms of value added expanded from $30.1 trillion in 2018 to $31.8 trillion in 2019, an increase of $1.6 trillion, while in 2020 to 2023, the investment in digital transformation of enterprises will reach $7.4 trillion, with an annual $2.5 trillion dollars of investment for a $30+ trillion market, and who will miss it?

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