Europe’s governments and regulators were hammered by their own telcos and Washington representatives for being anti-competitive as innovation struggled to be heard above the noise
Don’t mention the war. Executives at the telecom’s industry’s annual jamboree
Mobile World Congress mostly avoided direct mention of the
geo-political split between Europe and the U.S but pressure to bulk up the EU’s
capability in mobile internet connectivity and AI smarts was keenly felt.
Although the stakes are now raised, European telco leaders claimed member states had slipped behind the US and Asia in building out high speed broadband networks with knock-on consequences for local economies. The blame is placed squarely on the EU’s fragmented market, oppressive (compared to the U.S) regulatory climate and having to shoulder the cost of trafficking OTT video on network infrastructure it continues to pay for with little reward in return.
“Twenty-five years ago the European telco industry was the greatest champion of technology change leading standards that sharply changed our way of communication,” lamented Telefonica president and CEO Marc Murtra in a keynote. “We are now in a new era where titanic tech companies are driving change.”
He laid out the charge sheet. “These giants work as dominant players in monopoly markets. They are able to invest huge amounts of capital to develop and dive deep into disruptive technology. All these companies are based in the USA and in China.”
Murtra went on to call out the “excessive regulation, fragmentation and insufficient industry returns” that have weighed European telcos down.
“We are falling behind. This has not happened in the USA, the Middle East or Asia.” He urged a relaxing of regulation so that large European telcos could consolidate in order to build scale.
“If this does not happen the EU’s position in the world will dwindle and we will not have the capacity to decide its future autonomously,” he warned.
While less strident, Mats Granryd, who speaks on behalf of mobile industry trade body (and MWC show organiser) GSMA, said, “Research shows that our industry funds 85% of the infrastructure that drives mobile internet connectivity. Our networks are the foundation of digital economies but our revenue is not growing accordingly. It is not sustainable. Something has to change. Either we stop investing in mobile capex or revenue must increase.”
According to GSMA figures there are more than 2 billion 5G devices connected worldwide “the fastest take up of any generation of mobile” and over 300 5G networks yet only 60% of them have implemented 5G Advanced. If the rest were to roll that out it would enable enterprises to add a further $4.7 trillion to the global economy by 2030, Granryd said.
“I know it is easier said than done. Getting ROI is the challenge.”
European telcos challenge regulators
Complaints about the unfair amount of investment that telcos have made for what they consider to be the backbone of all future economic growth are not new but there was an air of exasperation in the pleading for change.
“We have an extremely low growth industry of just 2% on average yet the demand on us in terms of buying more spectrum, taxes and levies is huge,” claimed Sunil Bharti Mittal, Founder & Chairman of Indian telco provider Bharti Enterprises that operates in Africa, Asia and Europe. “We shoulder the burden of building out infrastructure, subsea cables and data centres yet the return on capital is 4% on average. We might as well bank the money and go play some golf!”
He wanted governments to lower taxes and offer more affordable spectrum licences.
“You lavish praises
on this industry yet for some reason it is heavily taxed,” he said.
Mittal also blamed European regulators for its “restrictive” competition laws and shared stats showing that most countries in Africa had two dominant mobile operators while China and the U.S. have three a piece.
“Europe does not need to have 4-5 operators in each country or 100+ across EU member states. It restricts the potential for scale and investment making it pointless building large infrastructure today,” Mittal said. “This industry cannot have multiple players. How many duplicate towers and other infrastructure do we need? Yes, competition is an article of faith but we need to allow for more consolidation.”
Executives lined up to beat the same drum. “When we had the first mobility wave we created a lot of value for the industry but not much for ourselves,” opined Usman Javaid, Chief Products and Marketing Officer for Orange. “We missed the opportunity with the cloud wave too. Let’s not miss the opportunities for AI. We need to have an eye on the new revenue.”
Single market for EU telcos
Vodafone CEO Margherita Della Valle said, “In the global race to 5G it is fair to say Europe is not winning.” In fact, Europe is not just falling behind the U.S or China, she said, “We are falling behind an increasing number of small- and middle-income countries.”
Deutsche Telekom CEO Timotheus Hoettges at least acknowledged that it sounded like groundhog day. “We are repeating the same story,” he said. “There is no reason every market has to operate with three or four operators, we should build a European single market.”
With this he was repeating the EU’s own proposal published in September that encouraged the EU to adopt harmonised rules regarding spectrum allocation, cybersecurity and consolidation at the EU rather than member state level.
Author Mario Draghi had also bought into play the idea of fair contribution – charging content and application providers to use the networks that carry their data.
“If we cannot increase consumer prices, if we cannot charge the OTT, players we have to get efficiencies out of the scale we created,” said Hoettges.
AI to the rescue
Moaning aside, what leading telcos had in common was a hope that they can AI their way out of the problem.
A recent GSMA survey found more than half of global operators are allocating between 10% to 25% of their digital budgets towards AI, covering everything from data systems and LLMs to customer service and network ops. The biggest impact of AI at this stage will be in automating operations, both within customer service including marketing and sales and in the network.
“AI-driven personalisation will deliver tailored content, services, and advertising with unparalleled precision,” said Dario Betti, CEO of trade body Mobile Ecosystem Forum. He warned that heightened scrutiny over data privacy and intellectual property will follow. “As AI becomes increasingly integrated, ethical considerations and the need for transparency in algorithms will remain pressing challenges.”
Consumers can look forward to deeper more intelligent interaction with AI-driven agents, like Alexa but on steroids.
“It is hard to understate the importance that this is the year of agents,” declared Calum Chace, co-founder of Conscium which is researching artificial consciousness. “Everyone concerned about AI safety is saying let’s not develop AI agents because once out in the world we cannot control them. But it’s too late. The horse is half way out of the stable.”
Wearables like Meta smart glasses which rely on 5G and 6G mobile networks will merge physical and digital closer together. “The world will be a lot more digital at the same time as it will feel more human,” forecast Mikael Rylander, Tech Leader at Nokia. “AI will remember you. It will know what makes you happy and what you need. We will see a lot of new services which are much more tailored to our personalities.”
He added that rollout of such AI capabilities will require consumer trust. “Suddenly you will have a companion with you that sees what you do, what your family and friends do so you need to trust the company that has that data.”
With 6G capabilities set to be released in 2028 we are moving into a future where AI is intrinsic to network infrastructure. Unlike in 5G, where AI and ML are applied in specific use cases, AI will be fundamental to the 6G network. In other words, there will be a shift from AI as a performance enhancement to AI as a key technology component: from AI-assisted to AI-native,” said Andreas Roessler of Rohde & Schwarz making one of the show’s surprisingly few interventions around 6G.
Europe’s telcos may be feeling the pressure but there was a similar theme at Telstra, the giant Australian based network, whose CEO Vicki Brady, claimed that value from investments in 3G and 4G “went to others because the telco industry didn’t change its commercial models.”
She said, “This time we are thinking about our network as a commercial product and challenging ourselves to think differently about how we price it and how we go to market.”
She was optimistic that this approach, using AI, would be different. “The last time we faced an inflection point like this was in 2000 when the mobile internet first appeared. The next revolution in connectivity is here now so we’ve got to make a step change. There is no version of the future that does not rely on technology and it all needs to be connected.”
EU regulators under pressure from the U.S
But there is a rift here too opening between Big Tech in the U.S and the European market. With the EU’s AI Act and the European Commission’s Digital Services Act (DSA) now in force the chair of the Federal Communications Commission which governs communications policy in the U.S was in Barcelona to read the riot act.
“For U.S technology companies that do business here, the censorship that is potentially coming down the pipe from the DSA is something that is incompatible with both our free speech tradition in America and the commitments that these technology companies have made through diversity of opinions,” said Brendan Carr, a Trump administration appointee.
Responding to the notion that the AI regulation hinders innovation Don McGuire, SVP/CMO, Qualcomm was unequivocal. “The idea that the advanced AI industry would have no regulation is frankly crazy even if that appears to be the view of the current US administration. Aviation, pharmaceuticals, finance all have power to harm consumers and are regulated. Advanced AI is very powerful and can harm people so it has to be regulated.”
He continued, “The idea that a bunch of people in Silicon Valley are creating enormous powerful systems which rules our lives and we all just carry on and watch regardless is also for the birds.
“The EU has adopted the right risk-based approach. That is, there are certain types of AI that won’t harm anybody [so regulators shouldn’t interfere], there’s a middle level where AI developers have to show due diligence before release, and the highest level which are the AI’s we don’t necessarily want.”
On this list he put public facial recognition systems. “I don’t think we should ban all facial recognition but you have to start somewhere. It is lamentable that Europe is leading the world in regulation but is not part of the industry actually developing AI. AI should not be a duopoly between the US and China.”
Openly acknowledging the elephant in the conference, Gregory Allen, Director at the Washington-based thinktank Center for Strategic and International
Studies said, “For better and
for worse Donald Trump is a
wake-up call on the reality of European freeriding. Trump likens himself as the ultimate deal
maker but there's no deal [Trump’s] going to make with Europe where Europe
agrees that Europe is the enemy. That's just not going to work for them.
Europe cannot be the enemy in a future
in which the United States and Europe cooperate effectively. Somehow, we have
to come back from that brink.”
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