GSMA Report Reveals European Mobile Industry At A Crossroads
Despite having the world's highest unique subscriber penetration rate at 79 percent, Europe is the only region that saw revenues decline -- from EUR162 billion in 2010 to EUR151 billion in 2012 -- and is now falling behind in the deployment of next-generation mobile technologies and the services they make possible.
A report by the mobile industry trade group, the GSMA said that in 2012, the mobile ecosystem generated approximately 2.1 percent of GDP for the European Union (EU) -- including contributions to public funding of EUR53 billion -- and directly supported 394,000 jobs in the region.
"Europe was long viewed as a pioneer in mobile, but, as this report illustrates, is now lagging behind other regions in the deployment of mobile broadband, particularly in 4G/LTE," said Anne Bouverot, Director General, GSMA. "Despite this, the mobile industry can play a key role in the European recovery, but this will require policy that encourages investment in mobile broadband connectivity, enables innovation and helps build consumer confidence in mobile services,"
Europe Trails in Adoption of Next-Generation Mobile Technologies
The report issued today finds that Europe has fallen behind many other parts of the world in the deployment of LTE technology. At the end of 2012, LTE accounted for just 0.3 percent of total devices in Europe, compared to 11 percent in the USA and 28 percent in South Korea. This reinforces research issued by the GSMA and Navigant Economics earlier this year, which showed that growth in investment in the U.S. is translating into faster data connections, with U.S. speeds now 75 percent faster than the EU average, with the gap expected to grow.
The report also outlines a number of key areas where appropriate EU policy and regulation can help regain lost technology leadership by encouraging investment, reducing barriers to consolidation, enabling innovation and building consumer confidence.
Encouraging Investment Through Spectrum Harmonisation
A more coordinated pan-European approach to spectrum release and harmonisation can help underpin further investments in broadband connectivity. The EU has indicated that a total of 1200MHz of spectrum should be allocated by 2015 to meet the expected growth in data traffic, but only an average of 600MHz has already been released and there are delays in allocating the Digital Dividend spectrum in the 800MHz band. If these issues are addressed, it is estimated that up to EUR119 billion of incremental GDP could be generated over the period to 2020, producing EUR23 billion of additional tax revenues and creating up to 156,000 new jobs across the region.
Reducing Barriers to Market Consolidation
With Europe home to more than 100 mobile operators as well as nearly 530 MVNOs, consolidation has become a growing industry issue as operators face inconsistent spectrum policy, ongoing competitive pressures and increasing revenue declines and margin erosion.
Enabling Innovation in Content and Services
Mobile operators are working to continually expand their portfolios with new products and services that go beyond traditional core voice, SMS and data propositions. The report finds that in order for operators to continue developing new services, they must be free to create business and pricing models that are better aligned with the services that consumers desire and are willing to pay for. A regulatory framework that enables this will be a key driver for innovation.
With mobile now firmly entrenched in consumers' everyday lives, the industry must continue to proactively address issues such as fraud, spam and privacy concerns. Consumers seek meaningful information and consistent rules that apply for functionally equivalent services. Regulators should not apply prescriptive rules to the information provided to consumers, but rather focus on ensuring transparency across the entire Internet value chain.
"Clearly, the focus needs to be on stimulating investment to achieve long-term economic growth," continued Bouverot. "The move to a Connected Life, where nearly everything and everyone are connected, presents an important opportunity for Europe to regain its leadership position. Collectively, we must create an environment that will attract and nurture investment in mobile. The single telecoms market initiative presents an important opportunity to enable this and we must get it right."