BARCELONA — When it comes to 5G, your smartphone is fooling you. Many Europeans today might see a 5G icon when unlocking their phone, but are most likely still riding on a lower-grade connection of boosted 4G. Europe is lagging behind China and the United States on rolling out top-level mobile internet known as 5G standalone (SA), so much so that some research suggests only 2 percent of Europeans are connecting to it. The lack of full-fledged 5G threatens to stall European innovation, keeping the bloc’s industry stuck in the slow lane while other parts of the world speed ahead. Industry officials warn the lag is aggravating Europe’s competitive decline and the bloc’s ability to attract investment. “At the start of the 5G cycle, vendors and operators put up huge promises about how it is going to enable robotic surgeries, autonomous cars, all this different stuff,” but none of that can be delivered until standalone architecture is in place, said Luke Kehoe, an industry analyst at connectivity intelligence firm Ookla. European companies are missing out on faster speeds and game-changing capabilities that were supposed to take the industry to the next level — making factories smarter and more automated. Ultra-connected, robot-packed plants are still a work in progress, partly because operators haven’t fully upgraded networks, especially right down to the core parts, to the full 5G standard. Trade association Connect Europe estimated that only 40 percent of the European population was covered by 5G standalone by the end of last year, behind North America (91 percent) and Asia-Pacific (45 percent). But Ookla, which is behind the online tool Speedtest, crunched the data and found that fewer than 2 percent of Europeans are actually connecting to it today. “We did see very, very clearly that Europe is markedly behind,” Kehoe said. SIGNAL FOR INVESTMENTS IS WEAK 5G non-standalone (NSA) — which Europeans mostly have today — is like putting a turbo engine in an old car. It boosts the speed but still relies on the previous 4G infrastructure. 5G standalone, on the other hand, is like building a new high-speed train system from scratch. It requires time and money to optimize and upgrade the full network. If anything, the sluggish roll-out “is an indication that we do not have the investment environment to compete,” according to John Giusti, the chief regulatory officer for GSMA, the global association of mobile operators. The bloc’s biggest telcos have warned for years that the regulatory landscape, market fragmentation and restrictive merger policy in Europe have been squeezing profits and stretching their wallets thin. “We don’t have the return on capital coming in to the sector to further invest and strengthen our networks. That is the core issue,” Giusti claimed. Meanwhile, China — with more than twice as many robots in its factories as the EU — has made 5G standalone a policy priority, Kehoe said. The country has a “huge base of enterprises that are using 5G SA in a manufacturing context for very, very low latency,” the critical time that data takes to travel to a server and back. “That’s where I think Europe would miss out now.” India is also thriving, driven by its largest operator Reliance Jio, which leapfrogged the non-standalone phase and rolled out standalone infrastructure from day one. But all hope is not lost for the old continent, as Ookla’s Kehoe underscored. “Fiber is particularly important in terms of competitiveness and, on that matter, Europe is doing very, very well.” CHICKEN AND EGG It’s not just about the money, or lack thereof, going into next-gen infrastructure. “What you see in Europe is actually very rational investors’ behavior,” said Robert Mourik, chair of the BEREC group of European telecom regulators. It’s a classic “chicken-and-egg” problem, he argued. “We are not investing too far ahead of the demand” — noting the industry’s timid appetite for something new — while also recognizing that struggling operators need to focus on clear revenue opportunities. Connect Europe reported nine new commercial launches of 5G SA networks last year. It acknowledged that slow adoption “is largely due to operator concerns that the return on investment is unclear, the technology is immature and the migration from 5G to 5G SA is disruptive.” For manufacturers selling the 5G kits, Europe needs to step on the gas. “I think the risk is we fall even further behind on both the existing industries but also missing out” on the ones “we don’t see yet,” said Jenny Lindqvist, Ericsson’s head of market for Europe. Europe needs to play catch-up, she emphasised. “We have other markets outside of Europe where the infrastructure is there and we start seeing the new use cases.”

The European Commission’s competitiveness adviser Mario Draghi wants the bloc to slash telecom regulation and relax merger rules — but its national governments just aren’t buying it. Capitals are pushing back on key recommendations made by Draghi — the former Italian prime minister who authored a flagship report underpinning the new European Commission’s plans for growth and global competition — according to a document to be signed off by digital ministers on Friday and obtained by POLITICO. Draghi recommended that regulators ease off to allow European telecom providers to size up and deliver the investments to upgrade the bloc’s networks, as it faces fierce competition in a global race with the United States and China to innovate and control key technologies. The call took up cries for help from bigger operators who’ve been warned off buying their rivals. It also echoed many ideas previously floated by the European Commission. But it is now running into a reality check from national governments. “There is a lack of analytical material to back some of the conclusions that are made in the white paper and the Draghi report,” one EU diplomat said ahead of the meeting of ministers this week, citing consolidation in the telecom industry, usually understood as allowing operators to merge with national rivals. Countries are skeptical that reducing the number of telecom players will unlock more money for Europe’s infrastructure. They also fear it could lead to higher prices for consumers, an issue raised by competition experts such as former EU competition czar Margrethe Vestager. Some of Draghi’s premises are “questionable,” according to Tonko Obuljen, Croatia’s chief telecom regulator and chair of the EU’s group of national telecom regulators, BEREC. “Many European countries are actually doing better than the U.S.,” he said, citing quality of services and affordability. “We would plead for analyzing before jumping to some conclusions. And of course, for proving the facts on which the proposals are based,” he added. Some capitals are also worried their own national champions might be the target of a takeover by a bigger European rival. “Operators of all sizes should have business opportunities in the single market and be able to benefit from and contribute to effective competition,” the document reads. BACK OFF, MARIO Draghi didn’t exactly win over governments with a call for member countries to cede some ground on spectrum, which is the bandwidth of airwaves over which mobile data travels. Dubbed a “cash cow,” licenses for operators to use the airwaves are sold by governments for billions of euros. Draghi’s report called for harmonizing licensing rules and timelines, giving a bigger watchdog role to the EU executive. Mario Draghi recommended that regulators ease off to allow European telecom providers to size up and deliver the investments to upgrade the bloc’s networks. | Sean Gallup/Getty Images That idea, too, got the cold shoulder from capitals. “Spectrum harmonization is not the favorite topic of member countries,” said Katalin Molnár, the ambassador for Hungary, who currently chairs talks between EU governments. The national capitals in their document insisted that managing radio frequencies is “a key public policy tool,” stressing “the sustained significance of Member States’ national competencies in that regard.” In short: Governments are telling Draghi and the Commission to butt out. They also push back against the idea of cross-border telecom providers operating under their home-country rules — the “country of origin” principle — over worries this would clash with their national prerogatives, again, and open the door to “forum shopping” to let them choose the most favorable national regime. With a future Digital Networks Act looming as a potential plan to boost 5G and fiber rollout, the Commission will need to present rock-solid evidence to win over EU governments. “Any future legislative proposal requires a solid impact assessment” and be based “on evidence,” the member governments warned.