29 January, 2021
The State of Digital Communications 2021
2020 turned out to be a radically different year from that expected, and at the time of writing it will doubtless throw up some unexpected turns of events. It is clear that the direct effects of the Covid-19 pandemic will continue to have a profound impact on Europeans’ lives at least well into 2021.
The dramatic events of 2020 brought to light the fact that telecommunications are both a lifeline and an enabler for modern societies. Facts and figures in this year’s report show clearly that Europe has resilient digital infrastructure, that European telecoms companies continue investing heavily and that their effort to innovate and become greener is measurable and concrete. 5G and fibre are confirmed as the two main pillars of the telecoms strategy going forward, along with increased innovation in the field of services and data.
At the same time, this report highlights the significant challenges facing Europe in the digital field, if it wants to lead the way on global digital markets based on innovative and strong networks. Compared to 10 years ago, Europe counts fewer and fewer companies in the “World Top 15” list of telecom operators. Investment per capita remains low compared to global competitors in America and Asia, essential spectrum resources for 5G are pricey and subject to complex conditions, and markets remain fragmented, leading to a weaker financial performance of the EU telecoms sector compared to peers. Facts and figures in this year’s report show a clear rationale for EU policies that help strengthen the sector, so that socio-economic growth can be further accelerated by 5G, fibre and innovative telecom services.
European telecoms in the pandemic The robustness of digital infrastructure and applications has been stress-tested like never before. Data traffic increased dramatically, practically overnight in some countries. However, telecom networks have proven to be largely resilient and have been pivotal in providing a measure of continuity to people’s lives and livelihoods, in sustaining economic activity and in assisting in public health efforts or mitigating the effects of the disaster. Most sectors of the economy have been hit hard by the pandemic. A few large companies, mostly in the digital sector, actually grew their revenue, while the digital infrastructure sector, such as telecom operators, continued to present declining revenues. Although it is true that the telecoms industry has suffered less direct negative impact on revenue than most other industries, any long-term recession in the total economy is bound to have, longer term, some indirect effect on telecoms revenue. Post-war Europe has seen sharp contractions before, but nothing quite as sharp as this. Most operators were recording abnormal falls in revenue by 2Q 2020: services for SMEs, pay TV, mobile roaming and equipment sales were the worstaffected parts of the business, fixed broadband the least-affected. Also, important “solidarity” offers (traffic and services for free or heavily discounted) provided by operators for citizens, hospitals, schools, administrations during the lockdown periods have had an impact. The revenue outlook at the time of writing was subject to a greater degree of uncertainty than usual, as a second wave of infection spread across Europe.
Though of course the pandemic has been a profound shock, in certain key respects it has accelerated trends we could already see in digital communications long before Covid-19 became a reality: digital interfaces replacing bricks and mortar retail; a rapid shift to online media consumption; a changing attitude of business, governments and citizens in the use and application of digital technology, including an accelerated shift to Cloud as home-workers shifted away from office LANs.