In a new report about the future of European competitiveness, former Italian Prime Minister Mario Draghi spouts the usual nonsense, uses the word ‘fragmentation’ a lot and effectively calls for mergers. Sigh.
Denmark, according to the rationale of Europe’s moany telecom bigwigs, should be a backwater for mobile connectivity. It is a tiny country, home to fewer than 6 million people, and yet it hosts four mobile network operators, making it far too competitive for the average telco boss. Assets can be shared within Denmark, but not easily with networks in other European countries. The same “core” network, for example, could not serve customers of the same telco group across national borders, one telco executive recently complained. Denmark should, by rights, be a subscale casualty of Europe’s fragmentation, a telecom dystopia of Nokia phone users and aging antennas.
Yet it beats the supposedly high-flying US, often held up in Europe as a paragon of 5G, on various measures scored by Opensignal, an independent monitor. Telia, the fastest network in Denmark, clocked 5G download speeds of 421.9 Mbit/s in February, while TDC, the slowest, managed a zippy 204.7 Mbit/s. That was close to the speediest American operator, T-Mobile US, with 226.7 Mbit/s in July. AT&T, the worst performer, crawled along at 142.1 Mbit/s. With 5G availability scores ranging from 9.1% to 17.1%, all four Danish operators trailed T-Mobile US, with its impressive 67.9%. But they all beat Verizon’s score of 7.7%, and only Telenor, the laggard, was behind AT&T’s 11.8%.
This is not the something-rotten-in-the-state-of-Denmark story one might expect after reading “The future of European competitiveness,” a doom-and-gloom take on Europe’s predicament written by Mario Draghi, a former Italian prime minister, at the behest of Ursula Von der Leyen, the European Commission’s president. Europe is behind targets for 5G deployment and invests markedly less per capita in networks than operators do in the US, it grumbles. With 34 “mobile network operator groups,” compared with a handful in the US, the EU is blighted by “fragmentation,” a favorite word of Draghi’s that turns up 16 times. “Fragmented” is used another 14.
Twaddle and more twaddle
The example of Denmark somewhat undermines the telecom part of the Draghi report, which advocates closer integration and a full capital markets union as remedies for Europe’s various industrial problems. Returns on investment might be worse in Europe than they are in the US, but this is not the same as saying that Europe has missed 5G and fiber targets and needs to plug a €200 billion ($US220.5 billion) investment gap. Fiber penetration is much higher in some EU countries than it is across most of the US. The connectivity experience varies dramatically between European nations. A single formula to explain the region’s ills looks inappropriate, albeit convenient.
The European perception that US telecom is in great shape looks misguided, too. For one thing, T-Mobile US, the most successful operator in recent years, is majority-owned by Deutsche Telekom, Europe’s biggest telco, and largely responsible for the 70% increase in the German company’s share price over the last five years. By contrast, AT&T’s share price is down 25% over the same period, and Verizon’s has dropped 29%. Burdened by debts, they have slashed tens of thousands of jobs to protect margins. After strategic blunders in content, their combined annual revenues have dropped 15%, or $45.3 billion, in the last five years.
What’s more, Draghi’s cursory telecom analysis seems to ignore cost-of-living factors. Yes, the US invests more per head in capex, but the chart included in the report shows that Europe outspends China, seen by Ericsson, one of Europe’s main kit vendors, as a 5G leader. Perhaps this is because “fragmentation makes the fixed costs of investing in networks relatively more onerous for EU operators than for continent-scale companies in the US or China,” as the report says. But Draghi surely can’t have it both ways?
يمكن الاطلاع على المقال الأصلي على: