Europe’s Digital Targets at Risk Without Regulatory Action, Warns Vodafone

Vodafone Urges Regulatory Reboot to Safeguard Europe’s Digital Future

(IN BRIEF) Vodafone has warned that Europe’s digital future is at risk without a reboot of regulations. The company is calling for decisive action from the European Commission to address challenges in the telecommunications sector and ensure that Europe’s digital targets for 2030 are met. Vodafone highlights the need for an upgraded connectivity infrastructure to meet the growing demand for digital services like 5G, augmented reality, and artificial intelligence. The company also emphasizes the importance of strengthening the EU Single Market, in-market consolidation, efficient spectrum management, and funding for network upgrades. Vodafone suggests that companies generating the most data traffic should make a proportionate contribution to the costs of the networks that carry it. They also call for a harmonized approach to spectrum management and stress the significance of scale in supporting investments. Vodafone believes that a fundamental reboot of EU policy is necessary to protect and ensure Europe’s digital future.

(PRESS RELEASE) BERKSHIRE, 19-May-2023 — /EuropaWire/ — Vodafone (LON: VOD), a British multinational leader in technology communications, emphasizes the urgent need for an upgraded connectivity infrastructure in Europe to meet the growing demand for advanced digital services, such as 5G, augmented reality, virtual reality, artificial intelligence, and metaverses. The company is responding to the European Commission’s consultation on the future of the connectivity sector and calls for a fresh approach to address broader challenges, including strengthening the EU Single Market, in-market consolidation, efficient spectrum management, and funding for network upgrades. These measures are essential to bridge Europe’s investment gap and accelerate the digital transition in the EU.

Vodafone is urging the European Commission to take decisive action in order to overcome the challenges faced by the telecommunications sector and ensure the achievement of Europe’s digital targets for 2030.

According to Joakim Reiter, Chief External and Corporate Affairs Officer at Vodafone, the EU is at a critical point, having already fallen behind on 5G deployment, and the Digital Decade targets seem increasingly unattainable. He emphasizes that the EU needs to demonstrate seriousness and determination in delivering the necessary changes to protect and secure Europe’s digital future.

Vodafone recognizes that Europe requires high-quality, modern, and secure connectivity to enable consumers to access the latest digital services and businesses to benefit from emerging technologies. Achieving this upgraded connectivity necessitates significant and sustained investment in 5G and fiber networks. Europe requires an estimated €174 billion to meet its digital targets. However, the connectivity and communications value chain is undergoing a transformation driven by technology, market changes, and new market players. Without a new policy approach, there is a risk of Europe and European companies falling behind in this dynamic landscape.

Vodafone proposes that the companies generating the highest data traffic, excluding public broadcasters, should contribute proportionately to the costs of the networks carrying their traffic. Vodafone’s network has experienced significant growth in traffic, with a 360% increase between 2019 and 2022 alone. Nearly half of this traffic originates from just four major digital content providers. Vodafone anticipates an annual growth rate of 21-30% in peak traffic. As a result, nearly 20% of Vodafone’s network upgrade expenditure in 2022 can be attributed directly to managing the growth driven by these content providers. The evolution of services like virtual worlds further exacerbates this issue, as it requires costly low-latency networks. Focusing investments solely on managing data traffic demand from these providers makes it challenging to invest in other areas, such as bridging rural coverage gaps or supporting the digitalization of public services like education and healthcare. Vodafone asserts that a fair and sustainable solution would involve introducing a regulatory framework that facilitates direct payments from the largest traffic generators to the telcos providing network-based services.

Vodafone also highlights the challenges posed by the excessive fragmentation of the EU Single Market, including gaps in rules and inconsistent application of common rules. These issues undermine the necessary scale required to support investments in EU connectivity infrastructure. In this regard, Vodafone argues that in-market consolidation is necessary to achieve the scale needed to strengthen the sector against financial headwinds and intense competition. The positive effects of in-country scale on investment incentives, efficiencies, consumer welfare, and funding for achieving the Digital Decade goals would be substantial. Vodafone believes that the European telecom sector does not currently benefit from the EU Single Market and, as such, cross-border consolidation lacks a compelling argument. Therefore, scale should primarily be achieved at the EU Member State level. Vodafone suggests that the European Commission adapt its approach to reviewing in-country consolidation in line with market, technology, and competition developments, as well as consider longer timelines to assess potential efficiencies and benefits on investment and competition.

Regarding spectrum management, Vodafone emphasizes the need for genuinely harmonized EU rules. The current inconsistent approach to spectrum allocation across Member States contributes to Europe’s investment gap in digital infrastructure. Vodafone calls for a new fully harmonized approach that ensures efficient auction formats and longer-term spectrum allocations. This approach would encourage sustainable and long-term investments in mobile networks throughout the EU.

To address these challenges, a fresh approach is required, focusing on strengthening the EU Single Market, supporting in-market consolidation, driving efficient spectrum management, and determining funding mechanisms for network upgrades. This comprehensive strategy aims to close Europe’s investment gap and accelerate the EU’s digital transition.

Media contacts:

GroupMedia@vodafone.com

SOURCE: Vodafone Group