More Than Half of European Mobile Connections Running 4G by 2020; Industry Contributing to European Economic Recovery and Digital Future as Network Investments AccelerateBrussels: Europe's rapid migration to 4G services and devices is helping to stimulate a recovery in the continent's mobile industry, according to a new GSMA report published at the GSMA Mobile 360-Europe event in Brussels today. The new study, Mobile Economy: Europe 2014', finds that 4G will account for more than half of mobile connections in the region by 2020, up from 10 per cent in early 2015. This trend is fuelling consumer demand for a new wave of innovative mobile services, helping European operators move towards a stabilisation of revenues and margins following several years of declines in one of the world's most competitive mobile regions.
The report also calls for a new era of partnership between the mobile industry and EU policymakers aimed at encouraging next-generation network investment and innovation, and delivering a dynamic digital single market.
There are encouraging signs that Europe's mobile industry is beginning to recover as both operators and consumers begin to see the benefit from the billions of euros of investment in 4G networks over the last few years, said Anne Bouverot, Director General of the GSMA. Europe's mobile operators are embracing new technologies and new business models, leading innovation in areas such as M2M, digital commerce, mobile identity and advanced network services.
But this positive outlook for the industry remains fragile, especially in light of renewed concerns over the macro-economic situation in Europe. The industry is therefore looking forward to working with the new European Commission and Parliament to build a common agenda that enables a sustainable recovery and powers a world-leading digital economy and connected society.
Network Investments and Smartphones Driving 4G Adoption
Europe is expected to have 431 million unique mobile subscribers1 by year-end, representing 79 per cent of the region's population - the highest penetration rate of any region worldwide. Unique subscribers are forecast to rise to 454 million by 2020, an 82 per cent penetration rate. The number of mobile connections, excluding M2M, currently stands at 688 million and is forecast to rise to 762 million by 2020. 4G is forecast to account for 53 per cent of mobile connections in Europe by this point, up from just 5 per cent at the start of 2014 and 10 per cent at the start of 2015. This rapid technology migration is being driven by expanding 4G network coverage and the increasing adoption of 4G smartphones, tablets, dongles and other data devices.
4G networks currently cover 63 per cent of the European population, having surpassed the 50 per cent milestone earlier this year. 4G networks in Europe are increasingly being deployed using the Digital Dividend' spectrum freed up by the switchover from analogue to digital broadcasting for use by the mobile operators, which is enabling greater coverage reach. 4G networks are expected to be accessible by 83 per cent of the European population by 2020.
Meanwhile, smartphones are set to account for more than half of the region's mobile connections by the end of 2015 - a milestone that has already been reached in several major individual markets, including France, Italy, Spain and the UK. It is forecast that there will be 564 million smartphones connections2 in Europe by 2020, accounting for almost three quarters of total connections by that point.
The proliferation of 4G networks and devices is driving mobile data volumes. According to Cisco3, mobile data consumption in Western Europe will rise from 253,679 terabytes per month in 2013 to 1,900,486 terabytes per month in 2018, growing by 50 per cent a year over this period (CAGR) as consumers take advantage of new applications and services offered over 4G, particularly video content. European operators are successfully monetising data traffic growth via the use of tiered and family data plans.
Contributing to Europe's Recovery
Europe's mobile industry has seen significant revenue declines and falling profitability for several years, a result of competitive, regulatory and macro-economic pressures. However, while revenue growth in Europe is still expected to be negative over the next 2-3 years, the financial outlook has shown signs of improvement in 2014, due to the positive impact from 4G deployments and rising mobile data usage, which has helped operators offset declines in legacy services.
The ability for operators to sustain investments in networks and services will be dependent on improvement in the industry's financial outlook. Capital expenditure (capex) by European operators in the seven-year period between 2008 and 2014 will total EUR155 billion, but could be as high as EUR170 billion over the next six years (2015 to 2020) as operators continue to focus on adding network capacity and expanding 4G coverage.
The mobile industry is playing a central role in supporting economic activity and recovery in the region, contributing 3.1 per cent to Europe's gross domestic product (GDP) in 2013, equivalent to EUR433 billion4, including EUR105 billion generated directly by mobile operators. By 2020, it is estimated that the industry will generate a total economic value of EUR492 billion.
The sector provided direct employment to approximately 1.8 million people across Europe in 2013, and indirectly supported a further 600,000 jobs. It also made a contribution to public finances (via taxation) of approximately EUR74 billion in 2013, not including contributions made via spectrum auctions, which raised over EUR3.2 billion in Europe last year.
Ongoing investment in networks and services, and particularly extending network coverage, wi
