Frustration was omnipresent in Barcelona. At the Mobile World Congress, the world’s largest mobile communications and telecoms trade fair, you could meet many pessimists this year. Managers, consultants and other executives from Europe saw their industry in decline. There is therefore a threat of declassification in low motion.
The reason: the continent’s large telecommunications companies have to invest billions in their infrastructure every year in order to keep their customers’ growing thirst for data under control. In view of strict regulation, however, they can only hope for comparatively small gains.
Some of the problems at Deutsche Telekom, Telefónica and Vodafone are of their own making. In many places, management has overlooked trends and has been unable to develop digital products that can keep up with those of the American tech industry.
Structurally, the pessimists have a point
It is significant that the market capitalization of all major European players has fallen significantly over the past five years. The only exception: Deutsche Telekom, whose business focus is now in the United States.
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The double financial burden on the industry from 5G and fiber optic expansion is huge. The necessary investments devour billions. At the same time, the strict requirements of the European Union (EU) ensure a kind of glass ceiling for many prices. Some specifications, such as ensuring broad, stable fiber optic and mobile phone coverage, make sense. On this point, the German federal government was too soft in the past and allowed itself to be persuaded to make lazy compromises by the network operators. But the high effort must also be worthwhile. In the medium term, many customers would probably prefer to pay a few euros more per month if they could work and make calls reliably on the train. In return, national and EU regulators should allow more leeway here.
The reluctance with which Vodafone CEO Nick Read acts with his German subsidiary is a strategic mistake. But it is also a product of the relative indifference with which many European politicians view the telecommunications industry. The industry is right when, as in a recent open letter from the most important CEOs, it demands more backing from the EU in the competition with the American tech giants. It is a key industry whose strength Europe cannot do without.
More: Lack of fiber optics and problems with 5G expansion: Why Vodafone is falling behind in Germany