GSMA urges major regulatory reform to spur new investment and innovation, including the assignment of new spectrum and the removal of hurdles to market consolidation
Europe now lags far behind the US in the deployment of next generation mobile technologies and the advanced services made possible through mobile, according to a new report from the GSMA.
As recently as five years ago, the European mobile market was performing as well as, or even better than, the US. However, since then the situation has dramatically reversed.
On average, US consumers spend more each month than their EU counterparts and use mobile services much more intensely, consuming five times more voice minutes and nearly twice as much data.
The report, titled 'Mobile Wireless Performance in the EU and US' and developed in collaboration with Navigant Economics, explores the many factors that have contributed to Europe's lost mobile leadership and offers policy recommendations designed to re-establish the EU as a centre for mobile investment and innovation.
The US has opened up a large lead in deployment of next generation technologies; by the end of 2013, nearly 20% of US connections will be on LTE networks, compared to fewer than two per cent in the EU.
'Europe was the birthplace of mobile, with a wide range of companies pioneering the innovation that now benefits more than 3.2 billion men and women around the world,' said Anne Bouverot, director general, GSMA. 'However, this report confirms the very sobering reality that Europe has lost its edge in mobile and is significantly underperforming other advanced economies, including the US. While there are many factors that have contributed to Europe's current position, it is clear that enlightened policy reforms could bring improvement, creating substantial benefits for EU consumers and driving economic growth.'
Also, average mobile data connection speeds in the US are now 75% faster than those in Europe and by 2017 will be more than twice as fast.
Additionally the report shows that mobile investment in the US has outpaced that in Europe, with capital expenditure in the US growing by 70% since 2007 while declining in the EU and the gap continues to widen.
Commented Jeffrey Eisenach, managing director at Navigant Economics: 'While there are several factors leading to this divergent performance, it can be partially attributed to the relatively inefficient structure of mobile markets in Europe. EU regulatory policies have resulted in a fragmented market structure that prevents operators from capturing beneficial economies of scale and scope and inhibits the growth of the mobile ecosystem.'
Fundamental regulatory reforms are needed to restore growth in the European mobile industry, stated the GSMA. In particular, a focus on facilitating investment and innovation, rather than on the direct management of prices, is needed. The GSMA offers the following recommendations to create a new, progressive regulatory environment that matches the current economic reality:
Prioritise Spectrum Allocation and Harmonisation – The European Commission's immediate priority should be to address the slow progress being made on the release of the first Digital Dividend, where the majority of Member States have missed the allocation deadline. In the coming years, Europe faces a significant spectrum shortfall that must be addressed now. It is critical that the European Commission ensures the allocation of the 700MHz band for future mobile broadband services and, importantly, that it is released in line with internationally harmonised band plans.
Enable Efficient Consolidation – The Commission should reduce impediments to the efficient consolidation of mobile markets by streamlining merger reviews and taking a more cautious approach to the imposition of remedies. Discrimination in favour of new entrants should be discontinued and market forces should be allowed to determine the optimum number of players.
Drive the European Single Market for Mobile – The European single market for mobile could act as a key enabler for growth. The GSMA believes the European Commission must launch a major regulation exercise to establish a light-touch, simplified approach to pan-European regulation. This would entail a complete review of the way regulation is implemented at a national level and would identify areas that could be more effectively coordinated at a European level, such as consumer protection. Incentives to kick-start broadband investment should be introduced immediately, including the elimination of planning and network sharing restrictions and the provision of subsidies for rural coverage.
Attract Investment and Innovation to Europe – The European Commission should immediately create a bold plan that will position Europe as a centre for mobile innovation and investment, refocusing its policies on fostering innovation and leveraging the unique potential of the single market. The Commission should create a series of pan-European, visionary, mobile-enabled public/private partnership initiatives aimed at stimulating growth, building social inclusion and promoting investment in new technology and services.
'We believe that undertaking these major policy reforms is essential in re-establishing the leadership of Europe in mobile, driving new growth and investment in our industry and, more importantly, generating important socio-economic benefits for citizens across the EU,' added Bouverot.