In the midst of decisions on European defence, economic competitiveness and shaping Europe as a military power another strategic sector in the global competition has similar challenges as the military field, altering Europe’s traditional potential to be a genuine power of innovation and connectivity: the telecom sector.
In an interview for CaleaEuropeană.ro during a trip to Bucharest, Joakim Reiter, Chief External and Corporate Affairs Officer at Vodafone, has urged EU institutions to put in practice the recommendations on telecom sector provided in the report issued by former Italian PM Mario Draghi. With his advice, Reiter cautions that European failure in the telecom industry is not a “market-failure”, but a “policy-failure”.
“Telecom is more akin to military systems in terms of its level of fragmentation”, he said, comparing both multiple systems that Europe has in weaponry and telecom.
Unlike the US and China, where each country has three operations, Europe has 120 operators in telecom area and the continent experiences the same “hyper-fragmented” situation that we see in the military domain.
“That hurts competitiveness directly”, Reiter added, while providing also the example of car industry consolidation through the creation of the single market in the 1980s.
“Even if you have different brands, they co-create platforms, so there are both different brands under a single owner, but there is also collaboration between different companies (…) None of that exists currently in telecoms. That’s part of Europe’s self-imposed handicap, which we simply cannot afford if we want to be productive, competitive, and secure”, Vodafone’s Chief External and Corporate Affairs Officer explained.
Joakim Reiter welcomed that the ambitions formulated in the Draghi report, which are a “wake-up call”, were included in the mission letters of each European commissioner. He also highlighted that Brussels will present by the end of the year a new legislation piece for digital networks, while deploring the fact that 30 years ago Europeans “were the world leaders in mobile telephony and mobile technology”.
Vodafone representative pointed out that Europe’s gap in the global tech race with US and China si not about innovation, but more an issues of commercialisation and scale.
“Europe’s problem has mainly been commercialization and scale, not innovation. This is where we really lost out to the Americans, the Chinese, and many others”, he said.
“But telecom is not ultimately a market failure; it’s a policy failure. And if you eliminate the policy failure, private capital will flow into it, and private investment will be able to fill the investment gap”, Reiter concluded, displaying a sign of “cautiously optimistic” for the future of telecom sector under the condition of implementing the Draghi report.
Full text interview:
CaleaEuropeană.ro: Good afternoon, Mr. Joakim Reiter, Chief External and Corporate Affairs Officer within the Vodafone Group, and thank you for this interview for Calea Europeană. We know that at the beginning of 2025, Vodafone conducted the world’s first space video call using commercial satellites. It was a major moment both for the company and for Europe as a whole, when it comes to technology. What role do you see for European satellites in this global competition that we have for connectivity? And how can Europe remain competitive in the strategic field and in other fields like this, related to connectivity and technology?
Joakim Reiter: It was the world’s first. We were very proud. I mean, it’s not a small thing. We successfully managed to make a video call using a flying base station in low Earth orbit that connected two phones at two different locations. And a phone call was made from an area where there was no mobile coverage — a complete white spot. Of course, we were very happy that we pulled that off. In space, there’s a lot of innovation that doesn’t relate to our sector or to telecom, but in the area that we’re looking at, which is now very exciting and where a lot of players have a huge interest, the question is how space technology can supplement the ground antenna, the base, and the mobile network on the ground, for example, in geographical areas where there is no mobile connectivity. Or in case there are natural disasters like the floods in the Czech Republic or Poland, or the recent storms in Ireland, where one-third of the citizens got disconnected because of the power of the storm. If you can flip the current traffic that sits on the ground to have some basic coverage via satellite, that would be a game changer from a security point of view, from a resilience point of view, and from making sure that people in distress can reach their loved ones, and of course, very importantly, for the many areas that still exist in Europe where we don’t have any mobile connectivity. Now, it’s not a fantastic service, and it’s never going to be a replacement for the mobile network, because the mobile network’s capacity is just so much more advanced. But as a supplement, it’s hugely exciting, and we’re at the cutting edge of figuring out how to merge this earth-based mobile network with a flying base station. And that’s technologically super advanced. Now, what does it mean for Europe? Well, there’s a perception in Europe sometimes that Europe is behind in innovation. I tend to disagree.
CaleaEuropeană.ro: So, is that a fact or a truth-based argument?
Joakim Reiter: Well, I mean, there are certain things that surely — if you look at large language models or generative AI — most of the models, if not almost exclusively, are developed by major players who are either Chinese or American. But in a number of frontier technology areas, Europe is still really advanced, both from an engineering point of view and from a research and development point of view. Europe’s problem has mainly been commercialization and scale, not innovation. This is where we really lost out to the Americans, the Chinese, and many others. For Vodafone, which has devoted significant R&D to bringing space technology together with mobile technology, this was a very important moment for us. And it remains a very important moment for us and our partners because the space solution that we have in mind fully integrates into a European operator’s network. So, for a single customer, they won’t notice the difference when they flip from a base station on the ground to a flying base station. That integration ensures sovereignty; it creates something that is symbiotic and mutually beneficial between the operator and the satellite solution. So, we are very excited about this, and we think it has great potential. But of course, there’s a real space race going on — one that we’re prepared to compete in by offering our solution in partnership with both governments and other operators.
CaleaEuropeană.ro: It happens these days that it’s a race in almost everything: technology, defense, industry, tariffs, and so on. But you have a leading role in a company that proposes a new era of connectivity on a large scale, both in the European Union and in Europe as a whole, as a continent. What concrete steps do you think the European Union should take to support this transformation, especially in the context of the Draghi report on European competitiveness, but also considering that the European Commission has proposed a lot of, let’s say, bold measures within the first 100 days?
Joakim Reiter: I think your first point is really important. This is a race. Technology moves incredibly fast. So if you’re slow, you’re always going to lose out. And Europe’s problem has been that it accepted being slow. And that is not true for all companies. You know, Europe has a lot of things to be proud of in the technology space. If I look at our company, we run the largest platform outside of China on the planet. We own one of the biggest estates of submarine cables, around 12% of the internet traffic or 14% — somewhere around there. A significant portion of the world’s internet traffic runs on our subsea cables. We’re now innovating in satellite technology. We’re innovating in post-quantum encryption. We’re innovating in how we think about network architecture with open-source, software-defined networks. So a number of European companies are quite cutting edge. But if your regulation slows you down or prevents you from pushing the boundaries of technological frontiers, you will ultimately lose out. And so Europe’s challenge has been that it’s been too complacent about being a technology leader. Draghi rightly points out that there is a very significant investment and innovation gap in Europe. And the way to resolve that is to have many more policies that are aimed at and fully focused on stimulating investment and stimulating innovation. That’s not a magic, one-single policy; a lot of it has to do with getting rid of legacy policies in telecoms. There’s a lot of old policies that basically are no longer relevant. But it’s also about trying to simplify and significantly simplify what it means to run a telecom network or what it means to run a technology company in Europe. And to start benefiting at both the local scale, because in telecoms it’s basically an infrastructure business, you need to have local scale with European scale for digital services. Europe has chosen, not by design but by default, to be hyper-fragmented. It’s a very fragmented continent when it comes to technology.
CaleaEuropeană.ro: And this is where we move the discussion towards a single market, because we are talking about the single market as a whole being fragmented, but we look at it in different sectors, like telecom, like defense, like others, and we feel this.
Joakim Reiter: I mean, it’s quite interesting. Telecom is more akin to military systems in terms of its level of fragmentation. If you think about when the Ukrainians were saying they receive different ammunition from the Nordics compared to the Germans, the French, or the Spanish. Donations across Europe were essential for Ukraine’s defense, but they had to manage multiple weapon systems. Telecom is exactly the same. It’s hyper-fragmented. Every single member state basically has slightly different variations of the same regulation, and that drives fragmentation. Today, in the US, there are three operators. In China, there are three operators. In Europe, we have 120 operators. It’s basically operating at subscale. That hurts competitiveness directly. If you then compare that with, say, the car industry, the car industry faced a similar situation in the 1980s. Through the creation of the single market, we saw a consolidation of the car industry to what it is today. Even if you have different brands, they co-create platforms, so there are both different brands under a single owner, but there is also collaboration between different companies in building the platform. And that is about utilizing the benefits of scale. None of that exists currently in telecoms. That’s part of Europe’s self-imposed handicap, which we simply cannot afford if we want to be productive, competitive, and secure.
CaleaEuropeană.ro: We know that the European Commission right now is increasingly focusing on some of the issues of the Draghi report. It is about to present some proposals on simplification and reducing bureaucracy in general. It also discusses the possibility of finding more money for different types of projects, but what does this imply for the telecommunications sector, and what measures do you think are necessary in this part when it comes to these measures that the European Commission is about to propose? Also, we are expecting a union of savings and investments.
Joakim Reiter: The ambitions formulated by Draghi were then translated into the mission letters for each of the commissioners. This is something that we as Vodafone strongly support. And the Draghi report is a real wake-up call for Europe. And as such, this was even before the latest worsening of the geopolitical situation. Clearly, Draghi points his finger at that Europe needs to shape up. If you take the telecom sector, which is quite interesting, look back 30 years — we were the world leaders in mobile telephony and mobile technology. Today we’re the laggard. It’s not only the US and China that are ahead of us on 5G rollout. Frankly, a lot of middle-income countries are now ahead of us. That’s just not good enough. 5G standalone, in particular, or 5G networks, is ultimately a programmable platform that you provide for industry solutions. So if you’re slow in rolling out 5G, it means that you will be slow in automating factories, in driving a new productivity gain within your broader industrial sector, or things like smart cities, or things like sensor technology in water distribution, energy distribution, resource efficiency. So there are huge ramifications across the entire economy if you’re behind on 5G standards. It’s also one of the key ingredients for unleashing the power of generative AI. And if you believe in generative AI as a real step-change for productivity, well, again, if you’re behind on 5G, it’s likely you’re going to be behind on AI as well, in real-time applications of AI. Europe can ill afford to continue with this situation. I think what Draghi points out is correct. Now, is there a simple solution? No. But what you can do, and what the Commission rightly points out, and they’ve already identified a number of things, is proposing a new Digital Networks Act by the end of this calendar year. I sincerely hope that it will embody the Draghi proposals and translate them into legislative improvements. If they do that, it will be a real success.
CaleaEuropeană.ro: There was also a discussion about the future of telecom networks as well in the Letta report.
Joakim Reiter: Basically, you need to have scale, and that includes changing the merger guidelines and allowing for more consolidation within an infrastructure layer. Why? Because you cannot run multiple infrastructures; you just destroy capital. It’s very expensive to deploy modern infrastructure, and therefore, you need to have more scale to drive down unit costs and provide consumers with more benefits. You need to align your spectrum policies across Europe with this overriding objective of maximizing benefit for consumers through investment. Third, you need to make sure that in the digital ecosystem, where different players compete against each other, even if they come from different historical sectors, there is a level playing field, that there is no lack of symmetry, and ensure that competition works well. But broadly speaking, I think that’s the key thing, because you did mention money. Europe has enough private money to invest. The problem is that it’s not attractive to invest in Europe. Many times, it’s more attractive to invest in Africa than in Europe. That’s a fundamental problem. Private capital flows to the countries and regions where governments show that they’re open for business. I think what Draghi, more than anything, points out is that, yes, there is a role for some form of state subsidies when you have market failures. But telecom is not ultimately a market failure; it’s a policy failure. And if you eliminate the policy failure, private capital will flow into it, and private investment will be able to fill the investment gap.
CaleaEuropeană.ro: Before concluding, one final take in one sentence from you. How do you see the future of the telecommunication industry in Europe by the end of the decade?
Joakim Reiter: By the end of the decade, I am cautiously optimistic if we implement Draghi’s recommendations.
INTERVIURI1 day ago
