ETNO Report: €300bn still missing for networks

European telecom operators have released a new report on how the sector can contribute to digital transformation and economic recovery. The “Connectivity and Beyond: How Telcos Can Accelerate a Digital Future For All” report from industry group ETNO (European Telecoms Network Operator’s association) and consulting firm BCG comes ahead of a summit of EU leaders to discuss industrial and digital policy, among other topics. The European network operators expressed the need for significant investments to realize the economic benefits of digital infrastructure.

The report sees the potential to create 2.4 million new jobs in the next four years through investment in digital transformation. This will require the telecom operators to invest EUR 300 billion in networks, along with additional action to stimulate demand and improve digital skills.

In order to achieve the opportunity, Europe must dramatically ramp up its network investment capacity to achieve gigabit speeds across territories and ensure full digital inclusion. BCG estimates €150bn is still needed to achieve a full-5G scenario in Europe, while an additional €150bn is required to finish upgrading fixed infrastructure to gigabit speeds.

However, increased investment is also much needed on the demand side, with 83% of EU SMEs still not using advanced cloud and 60% of 9 year-olds currently educated in schools that are not digitally equipped. BCG estimates that upgrading the digital infrastructure of all European schools would require €14bn/year, which corresponds to 1.8% of the Next Generation EU fund. Similarly, digitalizing all European SMEs would require €26bn/year, or 3.5% of the Next Generation EU fund.

BCG analysis finds that 5G alone can generate an annual increase of EUR 113 billion in GDP and 2.4 million new jobs in Europe by 2025. A widespread uptake of digital solutions can also help reduce carbon emissions, by up to 15 percent, the report said. This is based on rolling out smart city services and digital transformation in the transport sector.

The report highlighted the significant investment needed to realize these gains, saying Europe will need to ramp up network spending quickly to achieve its goals. BCG estimates it will cost EUR 150 billion to bring 5G to all of Europe and another EUR 150 billion to upgrade fixed infrastructure to gigabit speeds. More can be done also to stimulate demand, such as supporting digital transformation among small businesses and bringing internet infrastructure and digital skills training to schools, the report said.

The EU members agreed last year that 20 percent of the EUR 750 billion economic recovery fund should go to digital investment. ETNO members are hoping part of this funding can go towards supporting investment in the next generation of telecom networks.

The report details a series of “urgent” policy actions to support these aims, including increasing the attractiveness of investment in roll-out, allowing for more industry collaboration and scale in the sector, stimulating demand and digital transformation across industrial sectors, prioritizing leadership in European digital services and investment in digital skills.