Most of us would agree that we like our internet connections to be fast and reliable. It would also be great if our coffee machines, toasters and refrigerators could “talk” to each other and “coordinate” breakfast. Such improvements to our everyday technology – not to mention healthcare, education and transportation – will only be made possible with regular and efficient access to 5th-Generation Wireless Systems (5G). It’s a worry then that Europe is already falling behind in the race to build and invest in 5G wireless networks.

Sticking Points

One of the basic conditions for developing 5G networks is gaining access to a range of radio frequencies and then building an infrastructure capable of quickly sending and receiving high density data. Without access states, corporations and individuals will be unable to harness the full potential of recent breakthrough technologies and solutions. These include the Internet of Things (IoT), an interconnected communication capability that could one day make our fully coordinated breakfast dreams a reality. 5G could also benefit Artificial Intelligence (AI) systems that are already bringing new levels of efficiency and decision-making to manufacturing, education, diagnostics and more.

At first glance, Europe appears ideally poised to benefit from and contribute to most breakthrough technologies. The European Commission (EC) is committing funds to the research and development of new technologies (see post-2020 EU budget) and has just rolled out a strategy that emphasises a common European vision for the development of AI. It’s a very different story for 5G, where reaching an agreement on how, when and where to build infrastructure has been too slow, especially when compared to the United States and Asia.

One of the main sticking points has been accessing the all-important radio frequencies, which are considered as national resources by governments. It is common practice for states to regularly auction the use of its radio spectra for set periods of time. But while the United States and most Asian countries act as sovereign decision-making powers in these matters the EU must negotiate with all member states to enact a Europe-wide 5G infrastructure.

Efforts to develop 5G capabilities at the local level are already underway. Over the past month Germany has deployed its first antennas capable of supporting the new standard of communication in real-world conditions. However, the deployment of 5G is still at the testing stage and spotty across the EU. 5G will only become commercially available throughout Europe if all member states free up a specific radio spectrum for infrastructural development.

Bones of Contention

This doesn’t necessarily mean that accessing frequencies will become any cheaper. According to estimates, developing Europe’s 5G infrastructure could cost anywhere between €500 and 660 billion. These are figures that are beyond the reach of many European countries and EU resources. Rather, investment will have to come from a mix of private and public sector organisations. However, the private sector might shy away from investing if it senses that returns will be affected by weak or diminished access to radio spectra and other logistical issues.

It’s certainly not in the public sector’s interest to discourage private sector investment. Auctions for radio spectra are often important sources of revenue. In France, for example, a base price of  €416 million was set in 2015 for 2×5MHz blocks in specific frequencies. Moreover, while EU governments agree that harmonisation of the radio spectrum is necessary, standardising the length of a licence remains a bone of contention. Put simply, shorter radio spectrum licences lead to more auctions and a guaranteed national income. Little wonder that the EU is opposed to an EC proposal for auctions every 10 years.

That said, the costs will be high if EU states become too embroiled in arguments over this admittedly short-sighted principle. As things currently stand, the US and Asian governments are vying to create the best conditions for 5G internet and investments into the technologies of the future. South Korea already previewed its 5G capabilities to the world during this year’s Winter Olympics. For its part, Washington is preparing to auction two spectrum bands for a 5G infrastructure by November this year. Both developments effectively lay the foundations for new technology giants to emerge and flourish in key global regions with well-developed infrastructure. European companies might struggle to compete with their better- connected counterparts.

Reasons to be Cheerful?

Just over a week ago, the European Parliament, the EC and the member states concluded a marathon set of negotiations concerning the European Electronic Communications Code. All sides reached a compromise on 20-year licences for radio spectra and a common spectrum band that should make a 5G internet widely available by 2020. This agreement is good news for Europe and represents a first step towards gaining the capability to implement new technological solutions in the not-too-distant future.

Bringing these negotiations to a conclusion also represents a success for Bulgaria’s Presidency of the Council of the EU. Sofia identified a revised European Electronic Communications Code as one of the main objectives of its 6-month term. Further disagreement over telecom rules would not only blight the tenure of Mariya Gabriel, Bulgaria’s EU Commissioner for Digital Economy and Society or take away from the Presidency achievements, but also further complicate Europe’s efforts to develop much-needed 5G capacities. There’s still a lot of work to be done, with completion of the Digital Single Market among the top 7 priorities of the Junker Commission.

It seems that Europe will not be left in the technological dark ages without access to infrastructure necessary for change and growth. Taken at face value, an updated Code should lead to increased investment and have a multiplier effect across European business networks. This can only be good news for Europe’s economy. However, when compared to other parts of the world, the pace at which the new Code was agreed upon suggests that Europe will remain behind the main players for the foreseeable future. The new technology giants that are growing around 5G will continue to operate where conditions are most favourable for their business interests. And for now, that is the United States and Asia.