The importance of the Telco sector in the deployment of a Digital Europe

Building Europe's digital infrastructure of tomorrow

As a global technology race unfolds, Europe is deploying the regulatory framework and investments needed to foster innovation and technological leadership in areas such as online platforms, artificial intelligence, data, cloud, quantum technologies and virtual worlds. In today's rapidly changing economic context, a state-of-the-art telecommunications infrastructure is a key pillar for growth, innovation and job creation.

For this technological revolution to succeed, says EC Internal Market Commissioner Thierry Breton, it must be ensured that European networks are up to the task in terms of transmission speed, storage capacity, computing power and interoperability. To this end, it will seek to promote a Digital Networks Act that will serve to redefine the DNA of Europe's telecommunications sector.

Exploratory consultation on the future of the electronic communications sector and its infrastructure

From 23 February to 19 May 2023, the European Commission conducted an exploratory consultation on the future of the electronic communications sector and its infrastructure. The aim was to gather views from different stakeholders, in particular on the technological and market changes affecting the sector, as well as the types of infrastructure and investments that Europe is expected to need to lead the digital transformation in the coming years. The consultation was divided into four areas: (i) technological and market developments, (ii) fairness for consumers, (iii) barriers to the single market and (iv) fair contribution of all digital actors.

The Commission received close to 500 responses to the consultation from different interest groups such as companies (including network providers as well as large traffic generators), business associations, citizens, non-governmental organisations, academic institutions, consumer organisations and trade unions, as well as comments from public authorities. Most of the responses came from the EU, although there were also participants from other invited countries such as the United States and the United Kingdom.

From the exploratory consultation on the future of the electronic communications sector and its infrastructure, the following conclusions can be drawn:

• The need for innovation and efficient investment in technologies such as network virtualisation, artificial intelligence, open networks and perimeter cloud (in that order of importance), recognising that these will have a substantial impact on the sector in the coming years by driving cost reductions. Network virtualisation is expected to be the technology with the greatest impact by enabling greater flexibility and improved network efficiency, offering a great opportunity to develop new business models. In terms of investment, most respondents expect that a significant part of their annual revenues in the coming years (up to 50% of revenues) will have to be spent on investments in connectivity infrastructure and replacement of devices from providers considered high risk. Public funding is seen as crucial, but questions remain as to whether it will be enough and how to attract more private investment.
• The second conclusion, relating to consumer equity, is that the majority of respondents indicate that overall broadband access prices will decrease in the coming years, although there is more discrepancy when considering high transmission speeds. There is also no consensus among respondents on the effectiveness/efficiency of the Universal Service Obligation rules to protect consumers with special needs, and there is also disagreement on whether it should continue to be financed by the public budget or by network providers.
• It also points to the importance of harnessing the single market to drive investment and innovation, cooperating on key technology developments, and standardising technologies and platform building, so as to support the deployment of initiatives based on federated, interoperable and open source models. The majority of responses indicate that streamlining and simplifying regulation by harmonising best practices at EUlevel would serve to reduce administrative burdens, supply chain and/or regulatory costs, thereby increasing efficiency and speed of infrastructure deployment.
• The fourth conclusion focuses on the need to protect EU networks. In an interconnected world with growing geopolitical tensions, security is critical. Despite advances in the security of 5G networks, gaps remain in the protection of network infrastructure. A more coordinated European approach, especially with regard to further integration of radio spectrum, and with a better aligned auction model and licensing conditions between regions, could improve coverage in border areas and strengthen the EU against harmful external interference.
• Finally, as regards the contribution of digital players to network roll-out, several telco providers anticipate a negative outlook for the next 5 years, driven by the continued fall in unit prices (in terms of EUR/Mbps), which offset the potential revenues from increased data traffic and, therefore, to the detriment of the investments needed to support such traffic. More than half of the respondents answered in the affirmative on the question of whether large digital players should contribute in a fair and proportionate way to the costs of public goods, services and infrastructure, and on the potential introduction of a mandatory mechanism for direct payments from content application providers.

The role of communications networks in the development of data spaces

The data spaces are ecosystems from which to realise the voluntary sharing of data among their participants, based on the creation of an environment of sovereignty, trust and cybersecurity. In contrast to traditional monolithic models, data spaces are virtual, federated environmentsand are therefore established through integrated governance, organisational, regulatory and technical mechanisms.

Data spaces ensure that a large amount of data and algorithms are available for use in the economy and society, while the companies, organisations and individuals that generate these resources retain control over them. As such, these data sets and algorithms will aspire to maintain their residence in the computer systems of their respective owners, connecting with others on an ad hoc basis according to precise needs, which is why data spaces require a renewed infrastructure of communication networks. Based on 5G (or even 6G) technology, data transmission with lower latency and higher capacity is enabled, and also drives the development of edge computing solutions (edge computing), which allow added flexibility for the emerging European Data Economy.

Likewise, operators, through initiatives such as Open Gateway, will also be able to transform their telecommunication networks into value-added platforms, making their capabilities more flexible and available through standardised APIs, with which to develop new applications and digital solutions of greater complexity and scope. Such developments may encourage the participation, collaboration and interoperability of the different actors in the data spaces, with telecommunications operators also playing an important role as facilitators, not only in the development of use cases, but also in the implementation and operation of these use cases.