Six Telecom Myths the European Commission Can’t Afford to Believe
Main takeaways
- While the European Commission prepares to reopen Europe’s telecoms regulatory framework with the Digital Networks Act, it should not fall into telcos’ false claims
- Data traffic is not growing exponentially, and AI will not ‘overload’ telco networks
- The EU is actually well on track to meet its 2030 digital targets
For many decades, the world of fixed and mobile communications was one of relative certainty: with substantial data growth, demand for ever-higher internet speeds, and technological advances to meet these. But this started changing nearly 10 years ago, and as I set out in my book ‘The End of Telecoms History’, those old certainties no longer apply.
Especially now, in the context of the European Commission’s call for evidence on the upcoming Digital Networks Act (DNA), it’s important to clear up some telecom myths clouding the debate. While the goals of simplifying telecom regulation and creating a telecoms single market are worthwhile, the Commission should proceed carefully – focusing only on real issues and avoiding unnecessary regulation of systems that already work well.
Here are six stubborn views that are now myths, which unfortunately still tend to distort discussions in Brussels and beyond.
1. Data traffic is not growing exponentially
Exponential growth means that not only something is growing, but the rate of growth also keeps increasing. That’s definitely no longer the case for telcos. In reality, both mobile and fixed data growth are only slowing – as shown by ample evidence. Mobile growth has fallen from a global average of 70% per year in 2013 to 15% annually in 2024 – and it is likely to completely plateau around 2027. Fixed growth is on a similar trajectory. Not only is data usage no longer growing exponentially, it will soon not be growing at all – as we all reach saturation in the usage of our mobile phones and connected devices.
2. AI will not lead to a big increase in access network traffic
While the evidence of the end of data growth is incontrovertible, some telco lobbyists keep talking up hope for new growth sources. Artificial intelligence (AI) is just the latest of these. Sure, AI does lead to growth in data sent between data centres, but this is on dedicated high-capacity backhaul networks. For end users, AI-related data usage is in fact minimal. A few prompts to ChatGPT, followed by a text-based response or perhaps an image – nothing special at all in terms of internet traffic. We see no ‘AI uplift’ in traffic at present on fixed and mobile networks, and are unlikely to see any in the future.
3. Telecoms and cloud businesses are not merging
For some reason, the Commission has been led to believe that telecom operators and the cloud sector are increasingly intertwined. It notes that “convergence of European electronic communications networks and cloud services to an EU “Telco Edge Cloud” […] could become a major enabler.” But the same could be said for electricity providers – they need internet access and telco operators need electricity – and there is no discussion of mergers there. In practice, networks and cloud computing are completely different businesses.
Indeed, recent press reports found that those cloud providers who did offer a telecoms service are scaling it back. Telcos might eye the cloud business with interest, but many have already tried to enter that market and most have failed. These businesses are separating, rather than merging.
4. Europe does not have poor mobile networks
Policymakers fixate on simple metrics, such as download speed and 5G availability, as the stories that ‘speed is everything’ is an easy one to believe. Until 2015 download speeds were insufficient. That has changed, and consumer surveys show that speed (and hence 5G availability) is actually of very little concern to consumers today. It is cost, ubiquity, and reliability that matter. On those, Europe has some of the lowest costs in the world, and its operators dominate the global tables of reliability.
If EU policymakers really do wish to intervene, it should be to enhance ubiquity – subsidising coverage in areas without connectivity, perhaps in combination with satellite direct-to-device services. If I had to pick a continent that has the ‘optimal’ mobile networks, it would be Europe.
5. Telcos are not prevented from innovating by regulation
It is true that telcos – mobile and fixed operators – do not innovate much. While they often had significant R&D departments some 20-30 years ago, these have been cut back hard. And while many have tried to implement new services over the years, these have nearly all failed. But this has not occurred due to regulation or lack of scale.
Telcos simply do not innovate because they are not well placed to do so. Just like your water company or electricity provider, they are in the utility business, where cutting costs is the most important factor. It is on the cost side that they can innovate with increased automation, new channels to market, new customer propositions, and more. Consolidation isn’t the problem either. In large national markets, like the US and China, most operators still do not have big R&D budgets, nor are there any signs of innovation. The role of telcos is reliable, low-cost, and ubiquitous connectivity.
6. More traffic is not expensive for telcos
As noted above, increases in traffic are falling and may soon come to an end altogether. Today’s increases of 10-15% annually on fixed and mobile networks can be readily accommodated within current network capacity. Adding traffic to fixed networks is nearly cost-free since most broadband connections are dedicated to a building and very lightly utilised – a 1Gbit/s fibre-to-the-home connection will be utilised less than 0.2% in most homes! Mobile networks generally have spare capacity, after 5G spectrum is brought into use, with the number of congested sites being small. This is evident from the falling sales of the major network equipment suppliers, as operators need to order less equipment to handle increased traffic.
