Europe Wants Big Telecoms to Merge

Big Tech mergers are out in Europe. But Big Telecom mergers? They’re way, way in.

On Tuesday, regulators at the European Commission signaled their willingness to approve mergers in the telecom space that could hasten the rollout of 5G and full-fiber networks. It’s a de facto infrastructure exception to the group’s antitrust zealotry.

On the Count of 5G

Add telecom infrastructure to the list of ways that Europe is nothing like the US. Here, just three telecom giants — AT&T, Verizon, and T-Mobile — control roughly 94% of the market, per a recent study from the United States Telecom Operators Country Intelligence Report. The EU, meanwhile, is far more fragmented, with roughly 100 telecom operators servicing customers across the continent.

A competitive market has been good for consumers, offering typically cheaper prices with little or no data caps compared to the US market. But amid the costly transition to faster 5G and fiber networks, EU telcos are hurting. And, in a white paper expected to be published next week and seen Wednesday by the Financial Times, EC regulators argue that consolidation could offer a remedy:

• The commission writes that “fragmentation [of the sector] could impact the ability of operators to reach the scale needed to invest in the networks of the future, in particular in view of cross-border services.”
• Faster 5G availability varies widely across Europe but is generally lower compared to the US. About 31% of mobile connection in the US is through a 5G network, per a research study published last summer by Open Signal, good for fourth in the world; 5G availability in Europe’s five biggest markets, meanwhile, ranges from 20% (France) to just 10% in the UK — though speeds are comparatively faster versus the US.

Fair Share: In typical European fashion, the region’s telcos are demanding that Big Tech players contribute to infrastructure investment. Just five tech firms — Google, Meta, Amazon, Netflix, Apple, and Microsoft (the usual suspects) — account for about half of all internet traffic in the bloc, telcos say. Just wait until they hear how much of a crunch is involved with generative AI.