Vodafone shares Draghi’s view: Europe must respond quickly to boost its productivity and growth. State-of-the-art connectivity can power this transition, digitalizing European manufacturing, supply chains and small and medium-sized enterprises (SMEs). We believe the moment has come for a new approach to deliver the economic transformation required. Europe needs a Connectivity Union.
Vodafone shares Draghi’s view: Europe must respond quickly to boost its productivity and growth.
Poor connectivity is holding back our economy. For every 100,000 EU citizens, there are around 100 5G mobile base stations. In China, there are 245 and South Korea has nearly 600.[i] 5G mid-band coverage – ideal for bringing fast, low-latency connectivity to urban areas – is around 30 percent in Europe. In North America, it’s at 85 percent. China sits at 95 percent.[ii] Similar gaps arise in mobile subscription rates for 5G – if people can’t rely on a signal, they won’t sign up.
Businesses can’t develop 5G-powered products, services and applications if 5G isn’t available. There is a very real risk that poor connectivity in Europe becomes a bottleneck for industrial innovation – for factories trying to leverage the latest developments in artificial intelligence, for example – while companies in better-connected regions surge ahead.
In Foshan, China, where 5G standalone is publicly available, thousands of manufacturing businesses are using the connectivity to improve their operations. As a result of 5G-enabled digital transformation, SMEs have reported labor productivity increases of 40 to 60 percent, manufacturing costs lowering by 25 to 35 percent, and equipment energy consumption reducing by 15 to 20 percent.[iii] While similar business cases do exist in Europe, they are often limited to larger organizations with the resources to invest in private 5G networks. Europe’s SMEs – 99 percent of all businesses and employers of around 90 million people – are missing out.
As Draghi argues, piecemeal regulation has put the brakes on progress. Some responsibilities sit with the European Commission, others with the member states and regulatory authorities. Few rules are aligned across the EU27, creating bureaucratic barriers and discouraging investment.
There is a very real risk that poor connectivity in Europe becomes a bottleneck for industrial innovation – for factories trying to leverage the latest developments in artificial intelligence, for example – while companies in better-connected regions surge ahead.
For the other fundamental building blocks of a modern European economy – capital markets, energy and banking – policymakers have demonstrated ambition and acknowledged the need for cohesive union-wide goals. These regulatory ‘unions’ give a central direction to each, unlocking the power of the single market and providing better economic, social and security outcomes. Connectivity warrants the same attention.