Summary Bullets:
• The good news: European operators and vendors are planning 5G in at least one city per EU country by 2020 and appear to be in lockstep in taking a pan-European, cross-border approach to deploying 5G.
• The bad news: Their Manifesto identified a host of regulatory issues and potential roadblocks to deployment. Ultimately, net neutrality concerns could hamper 5G investment.
An impressive roster of European operators (plus Nokia and Ericsson) issued the 5G Manifesto on July 7. The document reflects progress on the EU’s “5G Action Plan” designed to solidify Europe’s leadership in deploying 5G as standards harden in 2020. That in itself is significant, as the North American operators were the clear leaders in LTE deployment, and early pre-5G trial announcements largely focused on APAC, especially Korea. However, the manifesto also came with a laundry list of challenges and “asks” from the EU in order to avoid stifling 5G growth.
First the good news:
• Strong Regional 5G Support: The 15 operators supporting 5G deployment include all of the big hitters, notably Vodafone, Deutsche Telekom, Telefonica and BT. Collectively the group plans to deploy at least one “smart city” leveraging 5G technology by 2020 in 28 countries. That’s a markedly different approach than European operators took in LTE deployment, which occurred at significantly different rates depending on operator and country.
• Clarified Focus on the Most Important Verticals: European operators are focusing on specific use cases with the best chance of showcasing the ROI around investing in 5G. The verticals initially targeted include connected car, eHealth, transport/logistics, public safety, and utility/smart grid. The use cases being envisioned aren’t exactly groundbreaking – many of them are already seeing LTE or even 2G/3G deployment – but do reflect a degree of coherence among European operators.
• Upcoming Opportunities to Showcase 5G: Early 5G trial announcements have centered around Asian venues such as the South Korean Olympics in 2018. To re-inject Europe into this discussion, operators and vendors have identified several major Euro events happening in the same timeframe that can serve as 5G trial opportunities; specifically, the Glasgow-Berlin European Soccer Championships in 2018 and the European Soccer Championship 2020. While not exactly at the “cachet” level as the FIFA World Cup or the Olympics, both events should provide an important opportunity to position Europe as a 5G hotbed.
So clearly the European operators are intent on prioritizing 5G – that’s good for the entire 5G ecosystem of handset, silicon, and network equipment vendors, not to mention European wireless customers. Unfortunately, the bulk of the document focused on what the industry needs to achieve its full 5G potential. And the list of “asks” was lengthy:
• Bandwidth, Please: As always, bandwidth to keep pace with endlessly increasing usage patterns looms large. For Euro operators, this means harmonized licensing of 700MHz, 3.4-3.8GHz, as well as >24GHz bands for backhaul. The lack of clarity (and harmonization) on if/when spectrum might be made available, how it might be doled out, and how quickly existing bands can be repurposed for 5G, needs to be clarified. (Note – the FCC provided a good example of the kind of initiatives European operators are looking for, providing new rules July 14 that open up nearly 11 GHz of high-frequency spectrum for wireless broadband, including 3.85 GHz of licensed spectrum and 7 GHz of unlicensed spectrum.)
• Show Me the Money: In order to help make the vertical use cases work, Euro operators are looking for the EU to directly fund individual use cases ranging from €0.5 billion -$€1.0 billion. In addition, the Manifesto calls for a 5G venture fund to take equity stakes of more than €1 billion in European start-ups developing 5G technologies and applications. In theory, sovereign investment should embolden private equity investors to follow suit.
• Regulatory Certainty: 5G Manifesto proponents, not surprisingly, want to be regulated as lightly as possible. In some areas, such as harmonized rules regarding establishing rights-of-way for the installation of passive facilities; supportive municipal site rental charges; and removing taxation of sites and antennas; the Manifesto is clearly well-aimed. In others (see next section) the manifesto walked into the middle of a maelstrom.
• No Net Neutrality: The 5G Manifesto calls for an environment in which “all players in the digital value chain should operate on a level playing field” and warned that current net neutrality guidelines stifle investment. Then the threat: “Investments are therefore likely to be delayed unless regulators take a positive stance on innovation and stick to it.” Though the language was obscured in Alan Greenspan-esque cloudiness, the message is very clear – the lofty pan-European 2020 5G deployment plans may not materialize if operators aren’t able to sell differentiated service offerings with performance characteristics dictated by the specific use case.
In total, the 5G Manifesto provides some optimism; however, the challenges facing operators in eyeing widescale 5G deployment in Europe are significant. The bad news is that many of these challenges are unlikely to be resolved immediately, or perhaps at all: Requested investment from EU or its constituent countries may or may not materialize; spectrum may take longer to become available than operators hope; and more favorable rental and tax treatment may not be coming at all. But none of these are likely to be deal breakers. However, net neutrality raises a major obstacle to the ability of operators to offer network slices, which by definition enable different levels of service to be offered to different customers, and in turn directly challenges the notion of equal Internet treatment for all. And 5G-enabled network slicing is a key factor driving the ROI case for mobile operators. That means that, for all the promise that the 5G Manifesto holds for an aggressive pan-European 5G deployment, it is very much an open question whether operators are truly committed to the 28-city deployment plan unless the vexing net neutrality issue is resolved in their favor.