Growing data consumption demands policy rethink in Europe


Viewpoint

The recent anti-dumping measures against the fiber optic cable exporters may delay the fiber deployment in the region even as data consumption continues to rise and businesses must accelerate digitalization to remain competitive

Key takeaways:

  • Fiber deployment is crucial for Europe to address the growing data demand by enabling it to provide high-quality and affordable broadband connectivity.
  • The imposition of antidumping measures by the EU against exporters negatively impacts the cost economics of fiber deployment and may lead to delays in building Fiber-to-the-Home (FTTH) infrastructure in the region.
  • The import of optical fiber cables has played a critical role in providing cost-effective and quality connectivity solutions to EU citizens.

The telecommunication networks in Europe are witnessing a consistent increase in data consumption. A recent report forecasts that Europe’s mobile data consumption per user will grow five times from 15 GB per month in 2022 to 75 GB per month by 2030, indicating an annual growth rate of 25%. On the other hand, the fixed data consumption per household will increase from 225 GB per month in 2022 to 900 GB per month by 2030, an annual growth rate of 20%. [1]

The ever-increasing popularity of video-based content, along with the use of social networks, are the key reasons for the growing data consumption in the region. This consumption is only likely to increase with the emergence of high-definition 4K and 8K videos, high-definition video and the growing use of Augmented Reality (AR) and Virtual Reality (VR) based use cases. In addition, the Artificial Intelligence (AI)-generated content and the increased use of short-form video on social networks is only going to fuel the data consumption.

The outbreak of the COVID-19 pandemic widened the gap between the connected and unconnected as people used the digital infrastructure to execute their professional and personal tasks. It was no longer enough to be just connected as high-speed quality digital infrastructure became the differentiating factor. Efficient digital infrastructure emerged as a crucial factor during the pandemic. The countries/regions with superior digital infrastructure were able to better respond to the pandemic while others struggled to maintain economic continuity.

As the digital economy continues to become all-pervasive, the state of the digital infrastructure is becoming an important differentiating factor for the economic growth of a nation. It forms the bedrock of the digital transformation of the industries. It is not possible to take advantage of digital transformation for businesses from different industry verticals without investing in digital infrastructure. In addition, high-quality and, more importantly, accessible digital infrastructure is crucial for ensuring widespread digital connectivity, fostering inclusive growth and accelerating economic growth

Growing relevance of affordable fiber deployment in Europe

Fiber deployment is critical for the service providers to not just address the ever-increasing data consumption but to build a formidable foundation of the digital economy for years to come. A critical aspect of fiber, when compared with legacy broadband technologies, is that it offers a considerable price advantage without compromising on quality. This makes it central to ensuring inclusive growth.

The deployment of fiber is also vital for meeting sustainability targets. Fiber-based networks are known to consume less electricity than legacy technologies. This is crucial for Europe as electricity costs have skyrocketed post Ukraine-Russia war.

Just like how railways emerged as vehicles of economic growth in the last century, fiber deployment is known to provide an unprecedented boost to economic and social growth. Optical fiber cables offer unmatched resilience, capacity and cost economics when compared to copper or microwave.

European Union (EU) Commission is well aware of the vast benefits of fiber deployment, and this is the prime reason why it introduced the Gigabit Society Policy in 2016 to stimulate capacity networks required for a burgeoning digital economy. The strategy is focused on three pillars of 5G coverage in all urban areas, access to 1Gbps for all socio-economic drivers and access to 100Mbps for all households. [2]

The European Union is striving to meet the connectivity goals for the year 2025. These include providing all European households with 100 Mbps networks, with the flexibility to upgrade to even higher speeds, as and when required. Additionally, ensuring gigabit connectivity for all socio-economic entities such as schools, universities, research centers, transport hubs, hospitals, public administrations, and digital technology-dependent enterprises.

The plan outlines the objective of providing uninterrupted 5G coverage in all urban areas and major terrestrial transport routes to facilitate connectivity for both individuals and objects. Furthermore, the EU aims to ensure access to mobile data connectivity in all areas where people live, work, travel, and gather, emphasizing comprehensive coverage across various settings.

EU’s goal for Europe is to be the most connected continent by 2030. It has also come up with a Digital Decade program, which seeks to provide high-speed internet coverage by 2025 and gigabit connectivity by 2030. [3]

Even as Europe’s digital infrastructure continues to grow, it still has a lot of ground to cover. Only 59% of rural households had access to a broadband connection of 30Mbps. In addition, the coverage of households with high capacity networks reached only 20% of the total households and only 18% were covered by Fiber to the Premises. This prevents the rural communities from accessing growth opportunities, thus hampering their growth. It also puts them in a disadvantageous position by not allowing them to access online learning and telemedicine, among other services. [4]

Recent anti-dumping investigation initiated on OFC Imported by EU

In this context, the potential issue of imposition of antidumping measures by the EU against exporters may be counterproductive. This not only impacts the cost economics of the fiber deployment in the region but will also have repercussions on the deployment of 5G and Fiber-to-the-Home (FTTH) infrastructure in Europe. The import of optical fiber cables has played a crucial role in providing cost-effective connectivity solutions to EU citizens.

Any potential antidumping measures taken by the EU Commission may end up increasing the cost of broadband services for the end user, thus failing the very purpose of deploying fiber-based infrastructure in the first place. The increased cost may prevent the customers from benefiting from the transformative impact of fiber connectivity and thus may end up widening the digital divide.

Policy decisions, like a potential imposition of anti-dumping duty on optic fiber manufacturers imported by the EU, can have a far-reaching impact on the timelines as well as the quality of optic fiber networks being set up in the region. Fiber-based digital infrastructure is critical to not only address the growing data demands of the region but also to build a robust digital ecosystem, stimulating innovation and ensuring inclusive growth. Hence, a broader outlook by the EU may benefit the region and have far-reaching positive consequences while achieving the objectives of the policy.

[1] https://www.adlittle.com/en/insights/report/evolution-data-growth-europe

[2] https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52016DC0587&from=de

[3] https://digital-strategy.ec.europa.eu/en/policies/connectivity

[4] https://digital-strategy.ec.europa.eu/en/library/connectivity-european-gigabit-society-brochure