Europe may have once led the world on 4G, but now it's the US that's way out in front

Europe may have once led the world on 4G, but now it's the US that's way out in front

Summary: Europe may have been the first to launch LTE, but the continent isbecoming a laggard, hampered by the failure so far to create a truly single telecoms market.

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TOPICS: Mobility, 4G, EU
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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.

Topics: Mobility, 4G, EU

Liam Tung

About Liam Tung

Liam Tung is an Australian business technology journalist living a few too many Swedish miles north of Stockholm for his liking. He gained a bachelors degree in economics and arts (cultural studies) at Sydney's Macquarie University, but hacked (without Norse or malicious code for that matter) his way into a career as an enterprise tech, security and telecommunications journalist with ZDNet Australia. These days Liam is a full time freelance technology journalist who writes for several publications.

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9 comments
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  • important remark

    One important remark that is not included in the article and partially explains the lower use of 4G in Europe. There are more 3G frequenties available in Europe than in the US, which means that European operators are not inclined to move as quickly to 4G. Because in the US in the big cities the available 3G bandwidth is saturated, operators are investing more in 4G and try to convince the consumer using 4G
    cropr
    • 3g lte 2g edge etc

      i think you guys are all pretty stuck up. since the US and Canada make it hard to have a prepaid mobile phone, you have to buy into the ridiculous plans offered by the companies. in europe, most people buy their phones and don't need the latest and greatest, they actually don't think the phone needs to dominate their lives as it does in north america. phones get replaced and bought so often and the marketing behind it is, make the economy work, have the latest and greatest because everything else is not good enough. reading posts of people having 3 or 4 different tablets in the house, plus desktop, laptop and 3 or four phones, that is sick.
      Apples marketing has flooded the market, but they are so difficult to move away from because its a religion in itself....
      PINASCOPY
      • No we don't

        "have" to do anything. It's called freedom of choice (for now anyways but the Administrations working on solving that "problem").

        Sorry that we are a wealth nation, I truly wish you could be too. We aren't sick, most just make rational choices based on their needs and finances. I have two kids and a wife and a home business, so we have two home pc's and a work pc. 2 smartphones, 1 Nexus 7 and a repaired and hacked Kindle Fire. None of which was purchased by marketing pressure. And my phone is on a $30 a month T-Mobile plan.

        And "stuck-up" is generally a term associated with ingrate Euro-trash that can't hide their resentments.
        stano360
  • Another factor that may account for the discrepancy in 4G LTE adoption...

    ...is that smartphones are usually unsubsidized in Europe. This means users probably don't upgrade their devices as frequently. Additionally, unsubsidized 4G LTE devices tend to be a little more expensive than unsubsidized 3G GSM (and CDMA) devices, meaning that cost-sensitive consumers may not be in a financial position to pay extra for a new 4G LTE device.
    CHIP72
  • Clarification

    Sorry for the misunderstanding.

    As of today June 6, 2013

    By definition the only 4G service provider in the world is Yota in Russia; in the city of Moscow, which has the equipment ready but has yet to release the first 4G capable phone in the world. But is scheduled to do it this year.

    What people call 4G and 4G LTE are really HSPA+(H+ for short) and LTE.

    LTE Advanced is the first 4G technology to be available in the world yet to be released. The other being IEEE 802.16m or WirelessMAN-Advanced which is currently under development.
    douken
  • Purely financial

    The reality is, except for a few countries (like the ones you listed) the average US consumer is wealthier than the average European, with more disposable income. And because they buy their phones outright they are probably far less inclined to replace it with a 4G model or pay for the service.

    Why is Verizon so popular? Because it's cheap? No, because it has the best and most coverage and best 4G coverage.
    stano360
  • What is not compared is the

    fragmentation of US carriers in using incompatible networks. Rest of the world has standardised on mobil network and you can use your unlocked phone with any provider.
    The US governement has to smack all the carriers around and tell them to fall in line and use the compatible networks so that unlocked phones can actually use any other network.
    warboat
  • CDMA

    That may be trye, but for anyone unlucky to get CDMA service, good luck getting your Smartphone to be anything other than an iPod when abroad. At least all GSM phones work globally.
    neil.postlethwaite
  • Phones

    Some important points here :-

    1. Apple products not supporting 4G
    2. Few 4G phones.

    You will not get big uptake if the hardware is not available

    I live in rural Sweden and get 7Mbs on 3G, my 4G mobile router on Telia doesn't even get 2G at my house

    The revenue thing is about contracts, I pay 299SEK per month for which I get a phone included (currently from a selection of 3G/4G/iPhone ) I get the value of the contract in calls or data or SMS or other services. Tethering is included at no charge with the phones data package, if we go over our data limits our speed is restricted, but you can buy more

    My son for 349Sek per month got iPhone 4S unlimited calls and SMS and 20GB data, what would that get in the US?

    I think we have better value.

    Robin
    englishinsweden