There’s a new battlefield on the European technological arena . . . that has increasingly unfolded as one to watch closely throughout the year. It has certainly inflamed due to the recent European Commission reforms of telecom rules known as the European Electronic Communications Code (EECC). The European states and the Commission have recently reached an agreement on the development of a future 5G network which has practically been cemented in stone and will undoubtedly garner more interest from European countries as the year steamrolls ahead. In this case, it is an intra-European battle for control with the victor appearing in a distant 5G-war with China and Huawei. Until such a day, how noteworthy is this agreement?
The agreement entails a scenario in which operators will benefit from 15-to-20-year licenses to encourage massive investment, which is a key milestone for the development of 5G in the European space. The decision, however, was not made overnight. For months, EU members and the EC battled dauntlessly over the necessary duration of licenses to be granted to operators. To encourage investors to build quality networks, the Commission pleaded to give them maximum visibility with 25-year licenses. However, most of the European states initially wanted to stick to 5 or 10 years maximum to better control more frequent auctions. The agreement reached is a “balanced decision” welcomed by both parties as states will grant licenses of 20 or 15 years with a 5-year extension mechanism. Furthermore, a significant clause in the extension is that it must be automatic, unless qualitative criteria defined from the outset are not achieved. The Commission will play arbitrator in case of disputes.
Today, the duration of licenses for 4G networks is variable in Europe, from 10 years in some states to 25 in others – an average of approximately 17 years. Other reasons of satisfaction for operators, long worried about this issue are the new conditions for setting “reserve prices”, the starting point for auctions, which will reduce regulatory costs and heaviness of administrative tasks related to network deployment.
The geopolitical implications of this agreement are particularly interesting. Reluctant states like Germany have ended up playing the “game of agreement“, while smaller players simply see any stake in the directive as favourable to its long-term interests. Europe is trying not to repeat the mistakes made during the dawn of 4G when it was too late to match the demand due to the lack of continental cooperation, contrary to the United States that acted swiftly during the rift. This time, Europe hopes for things to be done differently as China looms with its own prospective 5G forces spearheaded by Huawei.
The other breakthrough of this directive lays the foundation for better coordination between states regarding the spectrum of frequency bands. Admittedly, an agreement had been reached last year to coordinate the use of the high-quality 700 MHz frequency band as soon as possible but the Commission warned that it wouldn’t be enough to allow the rapid and successful development of new cross-border services such as connected cars, smart cities or remote health care, as key sectors in the economy of Europe. An agreement was reached to coordinate, by the end of 2020, the use of two other spectrum bands (3.6 and 26), with characteristics appropriate to the needs of 5G.
Next-generation 5G services pledge to bring, not only quicker communication, but also connected vehicles and “internet-connected industrial sensors” over the upcoming decade. Whatever the Commission decides to do in the future; the European 5G players will be watching with a hawkish eye as any developments could add or remove players from the battlefield. 5G implementation is evident and it will diffuse into a tech-epidemic sooner rather than later.