Europe in the Intelligent Age 2025

and deployment of fibre and 5G coverage. The development of 6G infrastructure could depend on regional carriers working together to implement radio access network (RAN)-sharing agreements. To help support such efforts, public sector leaders may consider revising regulations around 6G infrastructure investments. –Increasing innovation capital and investment. Europe benefits from strong private funding, capturing 34% of global private- and public-market investments (excluding corporate investments) in advanced connectivity across the value chain, second only to the US.55 Yet Europe accounts for a small share of global venture capital investments. Deregulating financial investments in fibre, 5G standalone and IoT networks could potentially accelerate modernization and attract private capital crucial for scale. –Driving commercialization. Historically, Europe has been a laggard on advanced connectivity technology adoption and commercialization. Notable examples include many European countries still trailing the US on mobile 5G penetration. Several strategic initiatives have been launched to bolster its position in advanced connectivity adoption, including the 5G PPP for securing 5G leadership, Horizon Europe for research and Gaia-X for a federated cloud dataspace, but these have so far had limited impact on shifting market leadership. Yet telecom infrastructure build-out remains structurally challenged. To unlock a new level of investment, policy-makers could consider incentivizing industrial companies to invest in digital infrastructure projects, by, for example, becoming early adopters through B2B and public procurement of private wireless and smart cities. –Strengthening research and talent. Europe has a large base and strong talent bench to build on. It hosts two of the largest telecom equipment and services leaders in RAN and publishes nearly three times as much research as the US in this field.56 While Europe has been at the forefront of R&D and design for connectivity networks, the competition on research and commercialization is growing, most recently from China, despite the US- imposed trade restrictions. Europe could benefit from establishing itself as an early adopter and bolstering R&D investments in high-growth areas such as open, cloud-based and virtualized communication platforms, edge cloud, AI-RAN and 6G development. –Cultivating ecosystems and global leaders. Europe-based global leaders are already investing heavily in 6G research and leading wireless and next-gen tech development. But with underdeveloped standards for shared connectivity, the potential of cross-border advanced connectivity ecosystems remains largely untapped. Harmonizing rules across member states could foster the creation of ecosystems to help fuel the growth of regional services, networks and other digital infrastructure. Value chain priorities Within the advanced connectivity value chain, there are three areas leaders may want to explore57 (Figure 7): –Equipment manufacturing. Europe should consider focusing investments in its already significant stronghold in R&D and equipment manufacturing. Developing cloud-native 5G equipment and AI-RAN, for instance, is a prime growth opportunity, as European manufacturers already are among the leaders in this market and, with focused investment, could supply critical components worldwide. –Software. The software market is currently split between RAN vendors, which have a strong foothold and include the leading European equipment manufacturers, and specialized software companies that typically sit outside of Europe. European OEMs are investing in next- generation ORAN (open radio access network) technology but are facing severe cost pressure from operators due to their diminishing returns on investment (RoI). Synergies at component level in ORAN would occur mostly outside of Europe (given that some large US players are better positioned to capture potential standardization opportunities in security operation centres (SOCs)). One possible way to turn the tide could be to develop an application programming interface (API) ecosystem on top of ORAN architecture, in which European RAN vendors could – together with the European start-up and developer ecosystem, particularly in industrial segments – leverage their experience, capabilities and innovation capacity to champion this segment early on. –Connectivity services. Europe should also consider identifying mechanisms to improve profitability in connectivity services, which underpin advanced digital applications and drive global industrial scale in a wide range of sectors. It could, for example, tackle the challenge of stricter building regulations that drive up costs and lower average customer revenues compared to the US. To help close Europe’s fibre and 5G coverage gap – at around 81% coverage, Europe trails the US’s roughly 98% and China’s approximately 95% coverage58 – leaders could consider creating cross-company alliances to share the cost and risk of network deployments and eventually leapfrog to piloting early 6G roll-out and become pioneers in the next standard. Europe in the Intelligent Age: From Ideas to Action 21