By Sérgio do Monte Lee and Pedro Tavares
At the beginning of 2021 and looking back on 2020, we can say that telecommunications networks and operators in Portugal were resilient and capable of managing the huge growth in mobile and fixed traffic resulting from the pandemic situation we are experiencing. However, there is still an “elephant in the room”. The 5G spectrum allocation process is involved in litigation, without any of the players involved appearing to be satisfied. The customer because he does not enjoy it, the operators because, without spectrum, they cannot implement it and the regulator, who, having failed to close the process, is the target of severe criticism.
5G is seen globally as one of the main levers of economic recovery in the post-covid period, accelerating digital transformation processes in the most varied sectors, with significant benefits for companies and consumers. Portugal rightfully shares the same expectation and ambition. Although historically our country has been at the forefront of Europe when it comes to the adoption of new technologies in telecommunications networks, in relation to 5G this does not happen. And it is not because of a lack of desire to try the technology because, according to the European Observatory for 5G, Portugal will have been one of the countries that will have tested the most 5G.
Missing the lead train in 5G will naturally mean canceling the power of innovation as the driving force behind the country’s economic regeneration, a flag that Portugal has promoted internationally. In addition, the country will be able to leave the radar of technological companies, which will give priority to investments in other geographies, where the respective governments, taking advantage of the “5G ride”, are creating incentives and allocating relevant budgets dedicated to research and development in the areas science and technology, as a mechanism to revitalize the respective national economies.
And what can we expect in 2021? Another mobile operator in Portugal or the logic of consolidation to prevail?
ANACOM justified the measures that will regulate the 5G spectrum auction as essential to promote access to technology, reinforce coverage levels and help users benefit from new options for choice, price and quality of service. In this sense, it considered reserving spectrum for new operators that intend to bid for the auction and enter the fifth generation mobile networks.
Portugal today has three main operators, which have spectrum. MEO leads with a 41.0% share, followed by Vodafone with 30.1% and NOS with 26.2%, according to the figures for the first half of 2020, released by the regulator. There are also two MVNOs, NOWO and Lycamobile, with a residual market share of less than 3%.
In the absence of a consensus on the ideal number of operators for a market such as Portugal, comparisons with other countries are inevitable. Spain, England or France, markets with significantly higher populations, have four operators. In Germany, the 5G spectrum auction similarly generated a lot of contention. However, regardless of the opposition, the established rules encouraged investors and 1 & 1 Drillisch got the spectrum needed to become the fourth operator in the country.
Although the entry of new operators may stir the market, there is a consolidation trend in Europe and globally. With the progressive reduction in the profitability of operators, it becomes increasingly difficult to invest in new technologies such as 5G. The increase in traffic volumes and price regulation have forced the decrease in the average price value for each gigabit of data, leading operators to consider the adoption of different strategies as a response measure, including the sale of assets (telecommunications towers) , for example), internal restructuring, investment reduction or consolidation with competitors. In large markets such as the United States, the merger of T-Mobile with Sprint opened the door for the birth of a new 5G operator, DISH, with four mobile operators returning to the market. In China, there are only three operators.
Europe, and in particular Portugal, were pioneers in the implementation of the second generation mobile network and then lost some breath in the following generations. It is the right time for Portugal to assume a leadership position again through the ubiquitous application of 5G technology. The connectivity of the future will make it possible to connect all the elements that can be sensed, intensifying, at an extraordinary level, the connections between people and between companies. Artificial Intelligence (AI), Internet of Things (IoT), Virtual Reality (VR) and Augmented Reality (AR) will gain another dimension when catapulted by the technological structure offered by 5G, bringing to the present still futuristic scenarios such as smart cities , autonomous cars or smart surveillance systems. Technology will be everywhere and all the time. In Portugal and in all countries that maximize the use of technology, public services, working methods, social and family relations, professional productivity, the way we exercise citizenship and how we prevent diseases and educate ourselves will be impacted.
If we are properly equipped, the connectivity of the future, provided by 5G, will have a transformative impact on people and businesses. But if we allow ourselves to be exceeded, Portugal will hamper its economic growth, penalizing the sustainable development of its companies and its population.
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This article is part of the Dossier The best and worst of 2020. And expectations for 2021