Growing European mobile data traffic drives pressure on network investment

Fuelled by 4G migration in central and eastern Europe and increasing improvements in 5G coverage and capacity, and as demand for high-quality gaming, extended reality and video content grows, mobile data traffic in Europe is projected to almost triple over the next five years, according to research by the GSMA.

And the annual European mobile economy report from the trade association global mobile industry also warned that with 5G subscribers particularly interested in adding high-bandwidth services and content to their mobile contracts, these demands will in turn require continued investment in Europe’s mobile networks by operators, who are already expected to spend more than €198bn on upgrading their networks by 2030.

Overall, the GSMA found the mobile ecosystem added €910bn of value to the European economy in 2022, with mobile technologies and services generating 4.3% of GDP across Europe. It contributed €110bn in taxes in 2022, with employment taxes and social security generating €50bn, followed by services, VAT, sales taxes and excise duties at €40bn.

The entire ecosystem accounted for 2.2 million jobs, directly or indirectly, in 2022, while mobile-based productivity was said to have contributed €670bn to the European economy as operators’ own contribution generated €110bn.

The report expects the sector’s economic contribution to reach €1tn by 2030, driven mostly by continued expansion of the ecosystem, and vertical segments benefitting from the improvements in productivity and efficiency delivered by the take-up of mobile services.

The report also reveals that 5G will become Europe’s dominant mobile technology in the next three years, driven by uptake in Germany and the UK. By 2030, 5G is expected to reach 87% of all users. As it develops, the GSMA expects the technology to benefit a range of business sectors as European economies incorporate 5G use cases into their activities.

By 2030, 53% of 5G’s business benefits will originate in the services sectors, while almost 30% will come from manufacturing, driven by applications such as smart factories, smart cities and smart grids. To this end, the report notes that 5G will help drive European GDP growth, accounting for €153bn of economic benefits by the next decade, and representing some 15% of the overall economic impact of the mobile sector. Many of these benefits will materialise over the next five years.

GSMA calculated that there are over 900 million active connections in Europe, made via smartphones and feature phones. It predicts ownership of such devices will reach 91% by 2030, enabled by greater affordability across the device domain.

Yet the report warns that the continued growth of 5G is at the same time tempered by concerns about the impact of policies holding back investment in next-generation network technologies in Europe, threatening the bloc’s digital leadership globally, as well as its Digital Decade goals. It notes that European adoption of 5G standalone continues to trail behind other regions: at the end of 2022, only 5% of live 5G networks in Europe were 5G SA, compared with 25% in Asia Pacific, a reflection of the challenging operating environment operators in Europe continue to face amid market fragmentation and low returns.

Other key findings contained in the report included satellite connectivity “flourishing” as mobile operators and satellite companies seek to address coverage gaps through connectivity to Low Earth Orbit constellations. In addition, it found generative AI was being actively explored by operators for activities such as code development, network management and customer care.

“Europe has a strong history of leadership in mobile and digital technologies, but strong, sustained investment in networks is now needed to regain that leadership in the face of global competition,” said Daniel Pataki, vice-president for policy and regulation, and head of Europe at the GSMA.

“We’re encouraged to see European policymakers now facing up to that reality and examining the potential for meaningful policy change on areas such as consolidation, spectrum harmonisation and the creation of fairer investment models for infrastructure, as we go into 2024. Our report shows that action is needed now to give European citizens and businesses the digital infrastructure they need for the future.”