In the current climate of skyrocketing inflation and the cost-of-living crisis, European telecoms companies are under serious pressure to generate profit.
As executives face rising costs and falling profits, governments and companies are making bold statements around the rollout of 5G and the technological advancements this will bring. In recent months, there has been talk of using 5G in stadiums to allow sports fans to have more interactive experiences and the EU has now changed regulations to allow 5G to be used on flights.
However, for these advancements to make a real difference, 5G must be available on a much wider scale. The need for better connectivity is also being driven by a growing appetite for social media; users are spending an average of 147 minutes a day on apps such as TikTok, Twitter and Instagram. In 2022, it was reported that over 50% of all global internet usage was dedicated to just six Silicon Valley companies.
These conditions have brought a decade-long debate around infrastructure funding to a head. European telecom companies are currently looking to major Silicon Valley tech companies for funding for 5G network infrastructure. As Big Tech firms are expected to receive the greatest commercial benefit from improved connectivity across the board, telcos argue that they should make a ‘fair’ financial contribution.
If a collaboration between telcos and tech giants were to happen, it would fundamentally alter the industry dynamic and provide much-needed capital to upgrade network infrastructure in line with government targets and consumer demand. These market shifts could bring lucrative opportunities for younger, less established telecoms providers looking to expand into a greater number of markets.
However, this collaboration would come at the expense of service providers’ autonomy. Partnerships would also inevitably lead to discussions on leadership, profitability and accountability. In almost every way, Big Tech firms are fundamentally different with their global reach and innovation to European telecoms companies, which are often country-specific and more traditionally run.
To bring about the maximum investment from Big Tech firms, national telecoms providers should begin by collaborating with one another to create a bigger platform with a louder voice. If Silicon Valley invested in European service providers, they would gain the hyper-local remit of these brands while maintaining their global dominance. This would potentially foster trust in Big Tech firms and lead to improved services for consumers.
However, Silicon Valley partnerships would also require service providers to run all decisions past their stakeholders and other partners. Even though Big Tech partnerships would likely complicate the approach of European telcos, in the longer term, business potential and returns would be worthwhile.
Going forward, the issues between the two sides won’t be resolved immediately and will probably need to involve a trial-and-error approach to find a solution that works for everyone, both in the short and long term. The beginning of these partnerships will likely appear this year but are unlikely to be fully settled until the end of 2025. Although the partnerships will not be straightforward, with regulations to ensure market security, there could be an opportunity for shared success in the coming months and years.
In addition, if service providers manage to acquire the levels of capital they are aiming for, these companies will have significantly greater funds to provide better services and maintenance in the future.
As it stands, European telecoms providers claim they spend €50 billion on the maintenance and rollout of new services. With data requirements growing exponentially as the world becomes more digitalised, 5G offers the next stage in connectivity to improve user experience.
Beyond the consumer impact, this would also lead to greater business innovation, more accessible public services, and better social connectivity. These changes would lead to greater public welfare overall. No matter how 5G is funded, the next steps are crucial in our digital society.
European telecom companies are currently looking to major Silicon Valley tech companies for funding for 5G network infrastructure
If Silicon Valley invested in European service providers, they would gain the hyper-local remit of these brands while maintaining their global dominance