Home When Did Europe Become Such A Mobile Backwater?

When Did Europe Become Such A Mobile Backwater?

Europe used to dominate mobile in every area: speedy networks, slick handsets and cutting-edge applications. No more. As a graduate student in the United Kingdom in 2006, I marveled at how advanced Europe was. My friends had all dumped their landlines and were fully mobile, flaunting their sleek Nokia candy bar phones while I languished in a tethered existence to my home phone.

But this week while traveling in Turkey and France, it became painfully obvious that Europe now lags the U.S. in mobile, in networks, handsets and just about anything else you can imagine.

What happened?

The iPhone Shifts The Industry Toward Cupertino

About the time I was writing my Masters thesis on the decline of American hegemony, a new hegemon was rising in Cupertino, California. In early 2007 Apple CEO Steve Jobs announced the iPhone. The mobile industry would never be the same.

The iPhone was initially locked to AT&T, with international markets not open to the iPhone in 2008. This gave the U.S. pole position on experimenting with calling plans and networks to support the popular smartphone. In particular, U.S. data plans that offered unlimited data trounced European plans that metered data. 

The more data allowed to mobile users, the more they centered their lives around their phones. And the more this happened, the more entrepreneurs sprang up to feed the mobile addiction. 

Quickly the handset world reshaped itself around the iPhone, with touchscreens, unlimited data plans and network build-outs becoming de rigeur.

European 3G Networks Bask In Their 90s Glow

Except in Europe.

Europe, having spent over $100 billion on 3G spectrum licenses and then even more building out 3G networks, hasn’t been in a hurry to build out 4G/LTE networks. They’re still focused on squeezing returns on their 3G investments, which continue to offer better service and faster speeds than U.S. 3G networks.

Perhaps because of the shoddy quality of U.S. 3G networks, the U.S. has been much faster to move to LTE networks. As a consequence, European mobile broadband speeds lag U.S. speeds by a considerable margin, and won’t make up the gap anytime soon according to Analysys Mason:

I felt this acutely last night in Paris. I was waiting for an interview candidate to join me for dinner, so I decided to update a Google Doc on my phone. Bad idea. Not only was it tough to maintain a signal in the center of Paris, but when I did I often found myself on a GPRS connection.

Yes, GPRS. Remember that?

Europe Needs To Invest

While understandable, Europe’s unwillingness to invest in 4G licenses will cost it. It has already lost handset and operating system leadership to Apple and Google, respectively, and risks becoming a wasteland for mobile opportunities. The big Mobile World Congress may persist in meeting in Barcelona, as if Europe remains the center of mobile action, but a look at venture capital activity or any other measure suggests that Europe has a long, hard slog to regain its relevance in mobile.

As the Financial Times puts it:

[I]t is a tribute to the US ecosystem, led by Silicon Valley, in overtaking an early European lead that was enabled by regulation and standards-setting. Its depth of capacity to innovate, and the ability of the US telecoms industry to adapt itself, turned the tables.

What this means, in practice, is that virtually every service I use on my phone, including the phone and its operating system, are born in the U.S. Instagram, SnapChat, Square and other innovative mobile services were all started in the U.S. Just seven years ago, this would have been unheard of.

But the very things that led to Europe’s undoing—government complacence and regulatory overreaching—could be reversed to ensure European competitiveness. This won’t mean that iOS and Android will fade into the distance overnight, but it could well mean that European innovators could be positioned to unseat the U.S.’ new mobile dominance.

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