Vodafone executive: 5G laggard Europe faces ‘terrifying’ consequences for competitiveness and jobs

For Joakim Reiter, the telecoms industry is somewhat of a new venture. At seven years into his term at Vodafone, he is considered “long service” – something he describes as ridiculous. His previous role was a little more high profile. Before joining Vodafone in 2017, he was assistant secretary-general of the United Nations and deputised for the secretary general of UN Conference on Trade and Development. And before that, he held several high-profile roles in trade and as a diplomat.

He has a long history in negotiating, skills that have come in handy in his role as Vodafone’s chief external and corporate affairs officer. Essentially, he is chief executive Margherita Della Valle’s second in command.

The decision to make the jump to telecoms came after a conference in Nairobi, where Robert Collymore, the former chief executive of Safaricom, was speaking about what technology could do to improve people’s lives in Africa. That, plus the ability of it to transform development prospects of nations, appealed. “One source of frustration for me in the UN, which I didn’t really have when I was a trade negotiator was: there’s a lot of declarations that have very little practical impact on the ground,” he says. Working with a private company could change that, he thought.

Europe was behind on the shift from 3G to 4G, which is why the digitally native smartphone-first applications came from China and the US

When the Vodafone opportunity came up in 2017, he says, a lot of the work he did in the UN was applicable to the private sector: dealing with the ongoing challenges of balancing investment needs with market realities, remaining innovative while also delivering services people need, and satisfying consumer demands for ever-increasing services while also keeping an eye on spiralling costs.

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The company has invested heavily in its network in Ireland, but the launch of 5G has been met with significantly less consumer fanfare than its predecessor. That isn’t necessarily a bad sign, though, says Reiter, as the focus of 5G is on industry rather than the consumer focus of 4G.

The technology is the infrastructure that will help introduce future technologies such as smart cities, autonomous driving and the next generation of manufacturing. And if Europe falls behind – as already seems to be happening – then it has wider implications than whether you can download a TV show in a matter of seconds.

“This is the first generation of machine-to-machine communication,” he says. “The 5G standard is basically an industrial internet. If you are late with that, it means all your different factories – no matter if it is agriculture, pharmaceuticals, car manufacturers – they’re going to be behind in utilising 5G slicing and all the low-latency applications and robotics and other things compared to other jurisdictions. They’re going to experiment with how to drive productivity in manufacturing production far later than China. That’s not a very smart move if you want to compete against China in the future.”

“To be handicapped in experimenting with applications for industrial use is terrifying for European competitiveness and European job creation and future.”

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The new generation of networks is being rolled out. Vodafone Ireland has done so to select sites across the State; it will take a while before it reaches the 99 per cent population coverage Vodafone claims for 4G.

But across Europe, 5G is lagging behind. To put it in context, the best-performing city in Europe in terms of 5G is Helsinki in Finland; that is currently being beaten by Bangkok, meaning Europe is not only being outstripped by the US and China, it is also falling behind southeast Asia, the Gulf and other regions. That brings a certain risk to jobs and investment.

“You don’t have to care about telecoms; a lot of people don’t. And they shouldn’t. A lot of policymakers don’t. And they maybe shouldn’t either. But what they really should care about is whether they have a competitive economy, whether the economy is modern, whether it creates the right jobs,” he says.

“Europe was behind on the shift from 3G to 4G, which is why the digitally native smartphone-first applications came from China and the US: China, because it was a closed market, and they had to scale to experiment in their home market before then going abroad; and the US because they were four years ahead of us. Unfortunately, they shouldn’t have been by the way.”

The blame for this is being laid at the feet of the 3G auctions in Europe in the early 2000s, which saw networks invest large sums. An auction in Germany raised €50 billion in 2001; another in the UK raised £22.5 billion. By the time the Irish spectrum auctions took place in 2002, the market had cooled somewhat. Still, with three initial bidders for four licences, it raised under €1 billion for Irish coffers.

That was followed by the financial crash in 2007 and 2008, leaving telcos even more cautious with their cash. By the time it came to rolling out 4G and then 5G, the appetite – and ability – to plough large amounts of cash into the new technologies had waned. The 4G auctions were much more muted, and companies delayed rolling out the technologies in Europe. All that put in motion the current lag on innovation that Reiter sees in the European market.

“Increasingly you have what are called middle-income countries that have realised this is a leapfrog moment for them from the point of view of manufacturing, and they’re therefore doubling down on accelerating their 5G roll-out,” he says.

The 3G networks that were put in place then have now begun to be shut down; Vodafone Ireland expects to complete the shut-off of its 3G network before next spring, and recently closed the network in Limerick city and Cork city in recent weeks. Resources will be redirected to 4G and, increasingly, 5G networks.

While Europeans now take mobile communications for granted, it is not the same everywhere.

“Africa never lost the mojo for telecoms. In Europe it’s become sort of utility; people don’t see it in the same light as it was during the heyday. In Africa the heydays have continued. It doesn’t matter where you talk to someone – on the street, all the way up to the presidential palace – everyone fully gets why it’s important.”

Vodafone is particularly keen on its Siro partnership in Ireland, a joint venture with the ESB that is bringing broadband to under-served parts of the country. That, says Reiter, is “a stroke of genius”

During the pandemic, says Reiter, there was proof that when the historical division of labour between the state and private sector was parked, the joint creation of solutions was possible.

“During Covid everyone could understand why it did matter, in a fundamental way; whether your kids could access education, whether you could get information around how to get your vaccines, whether you could have your QR code so as to be able to travel,” he says. “So in a way that I think Covid, to some extent, brought back a [fuller] understanding of what telecoms in a modern way is about – everything from connectivity and reliability of connectivity all the way to the digital services you build on top.

“Crisis allows you to break taboos, it allows you to reimagine how to do things. In telecoms that was certainly the case. We fundamentally changed the way we operate, and how we relate to governments. And governments, in very different ways, moved from arm’s-length policing to actually sit and put the problems on the table, and then allow us to co create the solution.”

Although things have started to return to the old normal, Vodafone is particularly keen on its Siro partnership in Ireland, a joint venture with the ESB that is bringing broadband to under-served parts of the country. That, says Reiter, is “a stroke of genius” that was a way of thinking differently about “fixed” and “mobile”. That model may be one for the future of mobile networks when it comes to covering unprofitable areas of the country – a shared network with government support that all networks could access.

Vodafone is also planning a €500 million investment in its Irish network in the coming years in its network to improve network quality.

But other battles loom. The increasing use of data is putting strain on resources. Some telcos want to see the main beneficiaries of this – service providers who require high-speed networks to reach their customers – put their cash behind the development of resources.

Vodafone has taken a different tack. It wants to work with companies on new technologies that can make the networks more efficient, using fewer resources to send data traffic rather than ploughing more cash into creating bigger pipes. It’s about responsible use rather than transferring resources.

“We think there should be an economic incentive for them to do so. It saves resources, it saves energy consumption,” he says. “Because once the network is congested, everyone in that area, all the end users, suffer the consequences. That makes no sense.”

But again, it comes back to a willingness to embrace 5G in Europe. And that is at the heart of what is troubling networks at the moment.

“We are way past being laggard; the only question we can face now is: do we see a scenario whereby we continue to be a laggard, in which case only the big companies will deploy 5G standard through mobile private networks? Or would we wake up, smell the coffee and move much faster and be serious about this?”

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