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Regulatory relief may elude Europe's 5G carriers despite COVID-19 pressures

The coronavirus crisis has highlighted the importance of high-speed internet connectivity, but political goodwill may not translate into regulatory relief for Europe's cell carriers as they undertake massive 5G deployments.

Investment in the next-generation wireless network technology is key to the region's economic recovery, the European Commission said as it unveiled proposals for a €750 billion coronavirus economic recovery package. Member states also committed to increasing public and private investment in 5G, alongside other high-speed networks, such as full-fiber broadband, as the bloc readies a reboot of its digital agenda in the wake of the pandemic.

Financial help may not be matched with regulatory relief though, experts told S&P Global Market Intelligence, as the telecoms industry is seen to have weathered the crisis well.

"Though the surge in internet usage during lockdowns has emphasized the need to develop high-speed networks relatively quickly to further enable people to work from home, governments feel the telecoms industry has not really suffered at the hands of the crisis, with demands for their services actually increasing," Brussels-based telecoms lawyer Dirk Van Liedekerke said.

The industry should not rest its hopes on a "flexible approach" from regulators when it comes to corporate arrangements such as network sharing, which can help reduce the cost of rolling out 5G, Liedekerke said. Local relief efforts, including subsidies, have so far focused on the hardest-hit industries, such as hospitality, he said.

The lawyer, who is representing Belgian carrier Proximus in its network-sharing agreement with rival Orange, said there were "no signs" in that case that "these efficiency-creating projects would get priority to be fully cleared from a competition law or regulatory perspective."

The firms were ordered to halt the planned joint venture in January following a complaint to the regulator from competitor Telenet. That interim injunction ended in March, allowing the two to push ahead with their plans. Proximus and Orange SA said the deal was aimed at accelerating 5G rollout in Belgium and would deliver operating and capital expenditure savings of €300 million over 10 years.

Telecoms analysts also believe that economic realities mean that some of the industry's main concerns may go unheard by governments. The region's biggest carriers, including Vodafone Group PLC, Orange and Deutsche Telekom AG, have complained of rising 5G spectrum fees, which have so far totaled €6.55 billion in Germany, €6.6 billion in Italy and €1.55 billion in the United Kingdom.

As of January, commercial 5G services in Europe were mainly available on mid-band spectrum, with only Italy and Finland using other frequency ranges, such as low band and millimeter wave, data from Kagan, a research division within S&P Global Market Intelligence, showed. Since then, a number of spectrum auctions have been delayed across Europe due to COVID-19, including in Spain, Portugal, Austria and the Czech Republic.

Despite the disruption, it is unlikely that EU member states will lower the price of 5G frequencies due to the huge financial challenges accompanying the pandemic, telecoms consultant John Strand said.

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Vodafone and Telefónica UK Ltd. recently argued that the next U.K. spectrum auction should be scrapped and that regulator Ofcom should assign low- and mid-band frequencies, designed to increase mobile capacity by 20% at the reserve price to help their networks cope with increasing usage. This would have followed an example set by New Zealand. However, the chances of EU member states or the U.K. taking a similar tack are "not very probable," according to Dimitris Mavrakis, telecoms research director at analysis firm ABI Research.

To say that the pandemic has had no impact on the industry would be incorrect, according to experts. The "biggest hassle" the pandemic has created for operators is a rise in misinformation linking the spread of the coronavirus to the rollout of 5G, Liedekerke said.

Claims that 5G frequencies are behind the pandemic have resulted in over 140 attacks on telecoms infrastructure such as mobile masts as well as assaults on maintenance workers in 10 European countries, according to industry groups ETNO and GSMA. Britain has witnessed 87 arson attacks and the Netherlands 30, while cases have also been reported in Italy, France, Germany and Belgium.

Similar conspiracy theories briefly circulate every time a new technology takes root, Mavrakis explained, adding that the 5G claims should subside in the near term. The difference this time around is that fake news is being amplified on social media, Mavrakis said, which creates a far larger risk of 5G becoming a flashpoint in the ongoing culture wars.

Telecoms companies in June called upon the EU to tackle 5G misinformation as part of its revised rules for online services, known as the Digital Services Act. The proposed regulation, which includes a potential legal clampdown on fake news online, is now under consultation and is due to be implemented by the end of the year.