2021 marked a key year for the European development of last generation networks and ultimate digital services, with several promising milestones concerning not only financial and technological aspects, but also a wider spread among consumers and businesses. Together with operators and national governments, consumers have in fact started appreciating the opportunities and benefits arising from its use, finally overcoming the misleading prejudices that had affected its full deployment, and highlighting the need for further investments in network security.
ACCESSIBILITY AND COVERAGE: THE IMPROVEMENTS IN 5G NETWORKS
Over the last year important steps forward have been made in the allocation of a large number of 5G frequencies through national auctions and in the launch of innovative services by a large number of operators. Together with significant public and private investments in physical infrastructures, these developments have strongly helped to shape the market and to reach large parts of the EU population. Although 4G is still the dominant network in the vast majority of European countries, covering more than 90% of the continental population (even in rural areas), 5G services are now available in all EU-27 countries with the exception of Portugal and Lithuania.
This expansion marks a considerable improvement compared to the picture described by the Eurostat Digital Scoreboard data, which reported that fewer than 14% of European households had access to 5G mobile broadband coverage in 2020. At the time, the only countries where 5G coverage was at least 80% were Denmark and the Netherlands, followed by Austria (50%) and Ireland (30%), whilst as many as 15 countries still hadn’t any coverage in 2020.
NATIONAL AUCTIONS ARE SPEEDING UP
The EU appears keen to match the progress in 5G services that is taking place around the world, particularly regarding the global polarisation in digital and technological services that is still mainly revolves around China and the US. According to EU 5G Observatory estimates, more than 180 operators had already launched 5G services by June 2021 (marking an increase of +100 operators compared to June 2020), highlighting the major developments taking place on the supply side of the sector in Europe.
This considerable improvement in 5G infrastructure is mainly due to the many spectrum trials and auctions which have taken place over the last year. In terms of 5G trials on the so-called “Pioneering” spectrum bands (700 MHz, 3.4-3.8 GHz, 26 GHz), as of June 2021 the most widely tested frequency band in Europe was by far the 3.6 GHz (69% of tests). The percentage of assigned spectrum for this is almost 55% at continental level, whereas only 46% of the spectrum in the 700 MHz band had been assigned. Instead, values are much smaller for the 26 GHz band, which is being deployed at a much slower rate, with 80% of the spectrum still to be assigned.
The only countries which have already assigned and made available the whole pioneering spectrum are Finland, Germany and Greece. Bulgaria, Sweden, Spain, Slovenia and Denmark had also finished their national auctions in 2021, although only the latter two had completed the assignment procedures for the vast majority of their available spectra (about 98%). All other EU countries appear to be lagging behind in assignments, resulting in the EU-27 average percentage of assigned spectrum to be as low as 45.8%. Many small countries, in fact, such as Croatia, Poland, Estonia, Lithuania and Malta, are still waiting to start the allocation procedures.
Further progress is expected for 2022, in particular, after the end of April, when all Member States will have to provide the Commission with national reports on the implementation status of the Connectivity Toolbox and the ultimate Digital Single Market goal of ensuring the achievement of a comprehensive continental coverage by 2025. This year will also be crucial for the passage from Non-standalone (NSA) to Standalone (SA) 5G infrastructures, the former still being dominant because of investment decisions arising from the transition period towards full 5G deployment in which many operators have made use of techniques allowing them to offer ‘partial’ 5G services by simply upgrading previously installed fourth generation Radio Access Network (RAN) infrastructures. In the near future, most non-standalone 5G deployments in Europe, as well as in the rest of the world, are expected to be migrated to, or be augmented by additional, 5G standalone networks. Interest in SA architecture is increasing yearly and, according to a IDG survey, 41% of mobile operators in Europe have deployed, or plan to deploy soon, a core network with 5G standalone architecture, while 90% say they intend to complete the transition to 5G standalone by the end of 2023.
WHO WANTS 5G CONNECTIONS?
As structural investments are planned to further increase over the following years, the demand for 5G services and networks is also expected to grow considerably, leading to broader opportunities in economic growth and global connection. Although nearly three in five connections at global level still make use of 4G technologies, about 8% of all connections are already being made on 5G. The fifth generation network is now made available by operators, at least to some extent, in every region of the world, and is expected to be used for more than 20% of all mobile communications at global level by 2025.
This growing interest from producers is probably being fostered by changes in consumer preferences, as they seem increasingly interested in accessing the most efficient and effective networks on the market. With 5G expanding not only in the mobile phone sector, but also in several other devices thanks to the development of new applications and augmented and virtual reality (AR/VR) technologies, estimates seem to suggest a considerable global boost in terms of 5G subscriptions. In particular, Asian countries will undergo a steady growth in 5G usage rates, eventually reaching more than a billion connections on 5G networks. Forecasts for Europe and the US obviously show lower absolute levels but considerable values in percentage terms, with about 240 million connections in Europe (accounting for 35% of total mobile users) and 220 million in the US (over 50% of users).
According to a survey run by GSMA, the majority of worldwide users in fact intend to upgrade their mobile service so as to guarantee their access to 5G networks. As many as 30% of all mobile users would also be willing to change provider, thereby probably incurring additional costs, if this were necessary in order to access the fifth generation networks. However, it is interesting to notice that almost a third prefer to wait for further developments on the market, highlighting that these network innovations still have room for further progress in terms of service availability, reliability, and spreading among customers.
A marked increase in 5G adoption is also expected in the business sector, as new technologies such as IoT, IA and augmented reality, are becoming both essential in production and demanding in cutting-edge network services. According to a research conducted by Interdigital in 2020, only 11% of responding firms reported that a transition to 5G networks was not part of their business plans, while 60% state that they will adopt 5G within the next two years – adding to the 12% that already make use of it.
THE OPPORTUNITIES OF DIGITAL IMPROVEMENTS
The economic crisis triggered by the Covid-19 pandemic has led to a slowdown in the progress of 5G networks especially throughout 2020, both in infrastructural terms (for example, the delay in the implementation of base-station components and antenna mast systems) and in governmental and administrative terms. Nevertheless, 2021 seems to have reversed the trend as the numerous, and sudden, shifts to digital activities (i.e., schooling, office jobs, medical assistance) may well have played an accelerating role in terms of the population’s awareness of the need for broadband and of the importance of advanced, safe and accessible digital services. This is expected to have a lasting impact on investments over the coming years, with financing from both government-run development programmes and the establishment of private networks, as profit opportunities seem to increase in both value and in geographic distribution.
By 2025, a total of approximately $900 billion is expected to be injected into transmission networks worldwide, with 80% being allocated to upgrading to the new 5G standard. GSMA estimates over $170 billion in Europe, almost $300 billion of investments in the US, about $200 billion in Asia, and more than $200 billion in China alone. In China and Europe, the share of investments in 5G networks is expected to account for more than 85% of total investments in the whole telecommunications sector, while in North America this share will be even larger.
Overall, according to GSMA estimates, investment in 5G networks, combined with their intensive use in both the private and public sectors, will in fact contribute $2.2 trillion to the global economy between 2024 and 2034, with the major growth expected to occur in the US (over $650 bln), followed by Europe ($480 bln) and China ($460 bln). Within the EU, 5G is mainly expected to benefit the professional and financial services ($170 bln), followed by the manufacturing sector ($129 bln) and public services, with the share of the latter being three times that of the public services in China ($91 bln vs $30bln).
CYBERSECURITY: THE NECESSARY INGREDIENT FOR PROSPEROUS NETWORKS
As stated previously, having a secure digital ecosystem has become increasingly important over the last year, all the more so considering the expansion of last generation networks and the pandemic-driven transition of many daily activities to digital environments. Cybersecurity was stated by the Davos World Economic Forum of 2021 as one of the greatest economic risks of the year, and several figures seem to confirm this concern. According to the EU Commission, as many as 40% of European workers have experienced forms of telework since the start of the pandemic, making home computers, which are generally less protected than office and company devices, the point of access to data and valuable digital activities. Together with many advantages (especially in terms of accessibility), this increasingly widespread way of working has brought to light many new problems in terms of security and, specifically, cybersecurity.
The above advantages arising from 5G and other new technologies are closely correlated to the safety standards that can be provided for networks, especially concerning the protection and storage of data. With the development of new technologies, mobiles, smart devices connected to the Internet of Things and many AI applications, the digital environment is in continuous expansion and is being accessed by a general public which, in most cases, lack the latest knowledge relating to cybersecurity. It therefore represents an ideal ground for cyberattacks and other illegal activities, exposing both private and public organisations to attackers, increasing the risks of, for example, shutdowns or subversion of industrial control systems.
ATTACKS ARE INCREASING IN FREQUENCY AND CAUSING ECONOMIC DAMAGE
Non only is the number of breaches increasing, but attacks are becoming worryingly more sophisticated and costly to detect, as well as more damaging in economic terms. The latest version of the CLUSIT Cybersecurity Report, which annually considers cyberattacks classified as serious globally, detected 1,871 cyberattacks in 2020, marking a significant increase compared to the 1,670 attacks recorded in 2019 and the 1,552 recorded in 2018. The trend for serious attacks over the last 4 years has shown that the number of particularly significant actions increased by 40%, with a fourth occurring in the first months of the pandemic. 81% of these attacks can be classified within the typical Cybercrime category, that includes all those illegal practices aimed at obtaining an economic profit from stolen data, although the percentage of crimes related to espionage and sabotage has also reached a worrying value of 14%.
The values concerning the economic damage caused by these attacks is also of great concern, as the average cost of violations globally was estimated to be around $4.2 million in 2021, an increase of 15% since 2017 and 9% over the last year. These percentages highlight the need for additional investments in IT security, both at national levels and among European and international institutions. The average IT security spending of European organisations (in relation to the IT budget) is 3.5%, quite insufficient to counter this complex phenomena, and also considerably lower than the average spending in US organisations (6%). Specifically, among European countries, the French organisations allocate the largest share of their IT budget to security (4.9%), followed by Austria (3.8%), Finland (3.7%) and Germany (3.6%). All other countries, including major international players, such as Italy and the UK (3.1% in both), fall below the continental average.
Shifting the analysis onto the specific market sectors, the largest share of IT security budget is invested in banking and financial services (5.6%) and pharmaceuticals (5.5%), closely followed by software publishing and Internet services (4.7%) and professional services (4.6%). On the opposite side of the spectrum, the worst performance is recorded in education (2%) and transport (1%).