Why Europe's telecoms market is lagging behind China and the US, says Ericcson boss

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The European telecoms market is lagging behind the United States and China. Europe has a market that is not working, Ericsson CEO Borje Ekholm has explained in an interview with the Financial Times.

“The problem is that those who are supposed to build the infrastructure are not making any money. There is a big cost in waiting,” Ekholm notes, explaining that it is rational that the big European telecoms are not making investments in the new 5G networks because many of them are failing to improve their cost of capital.

The president of Ericsson, one of the major manufacturers of equipment for 5G networks, expressed concern that Spain is lagging behind China and the United States in the deployment of 5G, a technology that is crucial for the digitization of business. The forecast, according to FT, is that the deployment of these 5G networks will allow Europe’s GDP to grow by 2% per year.

Telecoms face a 2021 marked by the heavy investment demanded by 5G as they seek new revenue streams to be viable in a hypercompetitive marketplace

“Without 5G, the industry will be less efficient and less competitive. Without the infrastructure, it will be very difficult for the digital industry to develop, and this has a huge potential impact of value and millions of future jobs,” as Ekholm notes.

Security issues with Huawei

In the 5G deployment for a few months now, accusations of a lack of security for Huawei that emerged from the Trump administration in the United States have been hanging over the 5G deployment.

European 5G equipment manufacturers, such as Sweden’s Ericcson or Finland’s Nokia, also have a major strategic role to play in the security area of the rollout, as the FT reminds us.

There are several European countries, including France, Poland, and the UK, that have imposed further restrictions on Huawei’s access to networks after pressure from the US administration on these potential security risks. It will now have to be seen what role Joe Biden’s new administration plays.

Ekholm again criticized Sweden’s decision to ban Huawei from its telecommunications networks due to concerns about possible espionage or information theft, warning that this carries “a significant risk of damaging our chances of competing on a global scale.”

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