Mike Fries, CEO of Virgin Media’s parent company Liberty Global, and French telco giant Orange say current mobile market is unsustainable and businesses could suffer eventually
The relentless march towards 5G was one of the most obvious themes of Mobile World Congress (MWC) in Barcelona, with 2020 seemingly the deadline for the first commercial next generation networks.
But there’s one telco that thinks such a target is too aggressive, that there’s plenty of life left in 4G yet and that the true potential of 5G can’t be realised without market consolidation and a more favourable regulatory environment.
Liberty Global operates several cable networks across Europe, including Virgin Media in the UK, said the current environment might have led to lower prices for consumers, but diminishing returns and intense competition means the ‘true 5G’ that has been touted is in jeopardy unless things change.
Future of 5G
“One thing that will prevent Europe from achieving the 5G vision is capital,” said Mike Fries, Liberty Global CEO. “The regulatory environment makes return on capital difficult. We worry about making that leap. 5G is not pre-destined, it’s more than spectrum and chips, it requires massive investment.”
Fries said that in many markets, its cable networks were the main competitor to large incumbents like BT and this had stimulated competition without threatening the sustainability of a business. He wanted to see the same in the mobile sector and urged the EU to take a more favourable view on consolidation.
Some network mergers have been approved in the past, but most recently, proposed combinations in Norway and the UK (Three and O2) have been blocked. However, Fries praised the EU for allowing other cable mergers in the past (such the one between NTL and Telewest in the UK that created Virgin Media) because it had created a strong competitor to long-established providers.
“[We could have] the same benefits [as fixed] in mobile if there were less competitors,” he argued. “People could pay more and get more.”
Fries, who was joined on stage by the EU’s Digital Commissioner Andrus Ansip and the new head of the US Federal Communications Commissioner, was supported by the CEO of Orange, Stephane Richard.
“In France we have tried to consolidate the market because we think, given the size of the French market, we would be more able to reach optimum between investment and prices for consumers,” he said, lamenting how “affordable” the European market had become.
He demanded a more favourable regulatory environment with harmonised spectrum, long licences and relaxed small cell rules.
“No-one can consider the current state of the industry as the ideal one with fragmentation,” he concluded. “It’s easier to make returns on huge investments when you have the critical size. It’s so obvious.”
Do you know all about mobile operators in Britain? Take our quiz.