Low revenues and takeup of 4G across Europe's fractured mobile market is causing the continent to lag behind the US when it comes to fourth-generation mobile services.
While Europe launched the world’s first LTE networks, it has since lost its edge to the US, where consumers spend more, use more data and are more likely to have an LTE subscription, according to a report by Navigant Economics and the GSMA.
At the end of 2012, 18.9 percent of US mobile subscribers were on an LTE connection, while in Europe, 1.7 percent were on LTE.
Even in Sweden, where TeliaSonera launched the world's first LTE network in 2009 which now covers 95 percent of the population, just 4.7 percent of connections were on 4G networks, according to GSMA data. Verizon Wireless in the US, with network spanning 86 percent of the population, has 18 percent of its subscribers on LTE.
The report was launched as Europe's digital agenda commissioner Neelie Kroes pleaded with Europe's politicians to make compromises to push through a legislative package needed to create a single telecoms market in Europe. Besides eradicating data roaming charges, the EC wants to overhaul its regulatory structure and make it easier for carriers to merge and gain the economies of scale their US counterparts enjoy.
"While there are several factors leading to this divergent performance, it can be partially attributed to the relatively inefficient structure of mobile markets in Europe," said Jeffrey Eisenach, managing director at Navigant Economics.
"EU regulatory policies have resulted in a fragmented market structure that prevents operators from capturing beneficial economies of scale and scope and inhibits the growth of the mobile ecosystem."
The gap between US and European operators' average revenue per user (ARPU) is also signficant. While data plans are helping sustain and even drive up ARPU in the US, it has been falling in Europe where carriers are tending to commoditise data services, according to the report.
The average monthly revenue per user is $38 in Europe and $69 in the US; however, consumers in the US use more voice minutes and nearly twice as much data for their money.
According to the GSMA, subscribers in the US will consume 810MB per month, while the average in Europe will be 415MB by the end of 2013.
Revenues per user in Luxembourg, Sweden and Ireland are close to US levels, but those in the EU's largest economies such as Germany remain well below the US average.
The big driver of growth in the US is high-end mobile devices and separate connection types, such as dongles. But Europe's smaller markets and local operators have not been sizeable enough to secure support from the likes of Apple.
While Sweden and Germany launched 4G networks in 2009 and 2010 respectively, Apple opted not to support them, and other European 4G networks, with the 4G iPad and iPhone 5, although more recently it has been switching on support in some areas.
The GSMA notes however that first non-Apple 4G devices only arrived in Europe's small LTE market in early 2012, whereas they have been available in the US since mid-2010.
Americans are also more likely to access the web on mobile devices and are expected to be accessing it with increasingly greater speeds than Europeans. Cisco forecasts that average mobile connections speeds in the US will rise from around 2Mbps in 2012 to 16Mbps in 2017, while western Europe's will average 7Mbps by then.