Last year, Ericsson issued a blunt warning to Europe. Without faster progress, it risked falling behind Asia and North America on 5G rollout and the launch of new services that need 5G connectivity.
The Swedish equipment vendor says these fears have now been realized. According to data that Ericsson has shared exclusively with Light Reading, Europe this year finds itself at a worrying disadvantage to market leaders on the availability and performance of the new-generation mobile technology.
"It is not a [question of] risk today. Europe is lagging behind and at the heart of this is the deployment strategy associated with 5G midband," says Christian Leon, who leads Ericsson's networks and managed services units for Europe and Latin America.
Despite a wave of 5G launches in the last two years, Europe's failure to invest in technologies compatible with midband spectrum – usually in or around the 3.5GHz frequency range – means less than 10% of people in the European Union and UK are today covered by a 5G midband network, according to Ericsson's latest estimates.
Midband status, percentage of covered population in April 2021
That compares with 5G midband coverage of more than 90% in South Korea and 46% in Switzerland, one of Europe's few high-flyers, reckons Ericsson. It also means the region is badly trailing countries including Australia, China and the US on midband availability.
Ericsson's thesis is that European operators have tended to rely heavily on dynamic spectrum sharing (DSS) – which has allowed them to use existing and lower-band frequencies for both 4G and 5G services – without introducing midband technology. The consequence of that has been much poorer connectivity than consumers enjoy elsewhere.
Data that Ericsson has partially sourced from Ookla, which monitors network performance internationally, shows that 5G users in the UK, Germany, Spain, France and Italy can expect median 5G downlink speeds of not more than 150 Mbit/s. Connection speeds are twice as fast in China and more than 400 Mbit/s in South Korea, according to the data.
Performance advantage associated with midband leaders
Source: Ericsson analysis on Speedtest Intelligence data from Ookla, February 1 to May 15, 2021
While lowband signals travel over long distances and are good for indoor coverage, higher ranges come with more spectrum and support faster connections.
"Europe has done pretty well at licensing midband and operators have stood up networks, but in nearly all cases they have not done a broad midband coverage deployment," says Gabriel Brown, a principal analyst with Heavy Reading (a sister company to Light Reading).
One problem is that Europe's operators do not have the same density of sites as their peers in China and South Korea, concedes Leon. China today has about 1.9 million 4G sites, of which 776,000 have been upgraded to 5G, while South Korea has 290,000 4G sites and 166,250 that can support 5G services.
Those figures indicate South Korea has about 57 sites for every 10,000 people, while China has nearly 14. The equivalent figure for Germany would be 8.7, Deloitte calculated in a 2018 report, and France's 4G footprint of about 47,000 sites equates to a comparable ratio of just seven.
Putting Europe on the same footing as South Korea would require a huge investment that operators could not justify unless sales grew rapidly. So far, the rollout of 5G technology has not led to a substantial increase in revenues in any part of the world.
"I don't see a big push to densify networks in Europe and what operators are hoping is that technology will solve it for them with massive MIMO," says Heavy Reading's Brown. "What we will see is strategic investment in certain areas and hotspots. They will incrementally densify."
In December, Michael Trabbia, the chief technology officer of France's Orange, told Light Reading that he hoped to avoid much 5G "densification" through the use of "more efficient technology." Orange is basing its 5G strategy largely on deployment in the 3.4GHz to 3.8GHz bands of massive MIMO, an advanced antenna system, and it has made limited use of DSS outside Poland, Light Reading has learned.
Improvements for Orange might also come from beamforming, a technique that focuses the mobile signal on user devices, rather like a flashlight on a distant object, although Leon doubts this would really improve coverage and says beamforming is more about delivering a capacity boost.
Orange, BT and Telefónica all declined to comment on the data that Ericsson shared.
Deutsche Telekom supplied the following statement: "Our ambition is to create the best network experience for our customers wherever they are. That means to boost capacity with 5G in addition to 4G/LTE in rural areas, for example with DSS, and to bring high speed in areas where it's really needed (e.g. more speed in dense or urban areas with more than 1Gbit/s download with 3.6GHz, ultra-low latency to the business customers or highly reliable campus networks for critical businesses).
"5G is more than an app benchmark measurement showcase, and speaking only about speed is far away from customer centricity. For us it's the evolutionary next step to save the best customer experience in Germany, for private and for business customers."
Innovation outside Europe
As Europe's largest vendor of 5G products, Ericsson clearly has a vested interest in calling for greater investment. Nevertheless, the concern for regional authorities and even operators is that Europe could miss out as applications that genuinely need a 5G network start to appear.
The data gathered by Ericsson shows that China and South Korea, as well as Saudi Arabia and the United Arab Emirates (UAE), are now in a far better position to support applications based on immersive augmented reality and 360-degree virtual reality.
European countries not as capable of delivering 5G experiences
Source: Ericsson analysis on Speedtest Intelligence data from Ookla, February 1 to May 15, 2021. Note: Green lines correlate with market frontrunners in previous chart (UAE, South Korea, Saudi Arabia, China) and red with followers
Those findings roughly tally with new research by OpenSignal, another performance monitor, which has recorded 5G download speeds of more than 230 Mbit/s in both Saudi Arabia and the UAE but less than 125 Mbit/s in the UK, France, Germany and Italy.
"All these use cases that happened on top of mobile broadband were invented in the countries that more quickly had ubiquitous 4G coverage and I foresee a potential trend that is the same on 5G," says Leon. "These apps might be fine-tuned in other parts of the world because of what you can experience on the network, and that might be where the innovation happens."
5G speeds in Europe, the Middle East and Africa
One question for Ericsson is whether heavy European reliance on DSS – which the Swedish vendor was promoting energetically in late 2019 and early 2020 – has come at the expense of midband.
Leon insists both are needed as part of a comprehensive network strategy. "If you only do DSS and never go to the next step then the risk is that you never get the full 5G experience," he says.
Even so, DSS has been criticized by Vodafone CEO Nick Read, who has sounded unhappy about the technology despite his company's use of it in parts of Europe. "Some operators are taking DSS, which is effectively giving you a 5G symbol but 4G performance," he told analysts on a call in November.
"We know that if we deploy the significant 3.5GHz-type spectrum along with 700MHz when it is available in each of the markets, that is real 5G," said Read.
In the London area, Vodafone appears to have relied mainly for its 5G service on DSS in the 2.1GHz band, making little apparent use of 3.5GHz technology, said Brown in a recent tweet.
— Gabriel Brown (@Gabeuk) June 10, 2021Anecdotally, around London, Vodafone seems to rely on DSS in 2.1 GHz for the 5G icon with 2.6 GHz LTE for capacity/speed and 800MHz LTE for coverage. I'm out and about a bit more nowadays and rarely encounter 3.5 GHz NR on Vodafone. https://t.co/UFUN8sdgq7
Taking the blame
Midband spectrum unavailability has not been a major factor in Europe's lag, according to Leon. While some countries were initially slow to award licenses, all the main European markets have now held auctions of spectrum in or around the 3.5GHz band.
Authorities are partly culpable because obtaining permits for sites has been too "complex" in some European countries, he says. Parts of Asia have also shown more appetite for investing in technology.
"China is basically an investment strategy and industrial policy – it is almost like state-directed or encouraged policy," says Brown. "In South Korea, it is partly about national prowess. They like the idea of being a tech-led economy and Samsung is becoming more successful internationally." He also notes that repurposing lower-band 4G spectrum for use with 5G is not allowed in South Korea.
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High levels of debt, competitive mobile markets and the disappointing returns associated with investment in network infrastructure might all explain why Europe's operators are unable or unwilling to spend more on 5G rollout.
Ericsson drew attention to some of those issues in its last annual report. "Return on capital for European operators is lower than cost of capital. We believe that Europe needs to review its regulation of operators, spectrum policies, while also allowing for industry consolidation."
The company's sales in the European Union fell more than 17% last year, to around 29.5 billion Swedish kronor ($3.5 billion), despite a 2% increase in total revenues, to roughly SEK232.4 billion ($28 billion).
Other factors may have discouraged operators from investing in midband 5G, according to Brown. "European operators have a very good 4G spectrum position," he says. "With non-standalone 5G, they are adding a bit of capacity where needed but are mostly in a good position." Strategies could change when operators start to launch the standalone version of 5G, which does not rely on the existing 4G network, he says.
Deployment may also have been hindered by geopolitics. Operators in the UK, in particular, are being forced by government authorities to replace China's Huawei due to security concerns – an overhaul that BT and Vodafone previously said would slow down 5G rollout. Service providers in China, South Korea and the US have not faced the same upheaval.
Wary of criticizing operators' own decision-making for the perceived 5G lag, Leon says he is encouraged by some of the recent announcements that have come from major European service providers like Deutsche Telekom, which aims to cover 97% of the German population with 5G technology by 2024.
"The need is understood," says Leon. "There is lots of communication on 5G investment and 5G launches by operators. That is the good news."