EU tech sovereignty: new digital communications report underlines need to act now
Brussels, January 28, 2025 – Connect Europe unveiled today its 2025 State of Digital Communications report, with research conducted by global consulting firm Analysys Mason.

The report estimates for the first time the worth of Europe’s connectivity ecosystem and it underscores the transformative potential of technologies like 5G, FTTH, 6G, and AI-driven networks. However, figures also reveal a 2% decline in telecom investment in 2023, the first drop in 7 years, signalling a critical juncture. The findings confirm the analysis of key reports by Enrico Letta and Mario Draghi, which underline the strategic importance of a sector that is excessively fragmented and over-regulated. As Europe faces a decisive moment, the path forward demands swift action to secure the future of its connectivity value chain and capitalize on emerging opportunities, ensuring its technological leadership and digital future.
Europe’s €1 trillion connectivity ecosystem: empowering competitiveness, sustainability, and sovereignty
The connectivity ecosystem – comprising telecom services, network equipment, and content & applications in Europe – was worth about €1 trillion in 2023, contributing 4.7% of the continent's GDP and surpassing traditional industries like agriculture, fisheries, and forestry combined. This vital ecosystem directly and indirectly employs over one million individuals, with Connect Europe members providing essential services to 276 million Europeans alone.
Beyond its economic impact, the connectivity sector is crucial for Europe's societal growth, sustainability, security, and resilience. In 2023, Connect Europe members achieved an 86% recycling rate, up from 82% in 2022, with waste dropping to 481,000 tonnes from 508,000 tonnes in 2020. Simultaneously, the sector is tackling critical security issues such as submarine cable integrity, AI security, supply chain integrity, and quantum encryption.
The technology gap: Europe must accelerate on 5G and edge cloud
This year's report shows that technology is reshaping the connectivity ecosystem, offering both opportunities and risks for Europe's control over its value chain. Although Europe has made progress in critical areas, it still lags behind global peers. For example, 5G Standalone (5G SA) – the most advanced form of 5G, designed to meet the complex needs of industrial customers – reached only 40% populationcoverage in Europe by the end of 2024, compared to 91% in North America and 45% in Asia-Pacific.
In Open RAN, Europe has made strides, with 16 trials and commercial deployments in 2024, outpacing North America (10), but still trailing Asia (24). This progress reflects growing momentum among European operators, 52% of whom have already implemented, or are trialling, AI functionalities for network automation and optimization. Meanwhile, edge cloud deployment in Europe remains limited, with just 320 live operator edge nodes and 1100 overall edge nodes, falling short of the EU’s ambitious 10,000-node target. These gaps highlight the urgent need for Europe to accelerate innovation in network infrastructure to secure its competitiveness and technological sovereignty.
EU Digital Decade Targets: more investment needed to close the gigabit divide
The EU’s Digital Decade targets, which aim for full gigabit and 5G coverage by 2030, face significant risks without increased investment. By 2024, gigabit-capable networks covered 82.5% of Europe, lagging behind China (99%), South Korea (97%), USA (90.3%) and Japan (93.9%). By the end of 2024, 5G coverage in Europe is set to grow to 87% of the population, up from 80% the previous year. However, Europe will still trail behind all its global peers: South Korea (99%), the US (98%), Japan (97%), and China (90%).
In addition, Europe’s FTTH coverage of the population reached 70.5%, outperforming the USA (54.8%). Despite this progress, estimates indicate that approximately 45.4 million Europeans (of which 39.5 in the EU alone) will still lack access to a fixed gigabit connection in 2030, falling short of the EU Digital Decade targets. Alarmingly, for the first time in over a decade, total telecom operator investment in Europe declined by 2% in 2023, dropping from €59.1 billion in 2022 to €57.9 billion. This downward trend happens at a time when Europe is still far from its gigabit targets. In addition, investment per capita also lags significantly, with Europe at €117.9 compared to €187.6 in Japan and €226.4 in the USA.
Breaking barriers: the need for a healthier and less fragmented sector
Europe’s telecom sector faces mounting financial and structural challenges, jeopardizing its ability to stay competitive on the global stage. In 2023, European telecom revenue declined by 4.4% in real terms as operators struggled with rising inflation. In 2023, Mobile Average Revenue Per User (ARPU) in Europe remains the lowest globally at €14.8, starkly contrasting with €41.7 in the USA, €26.0 in South Korea, and €22.6 in Japan.
Adding to these financial pressures is a fragmented market landscape. In 2024, Europe had 41 large mobile operators (over 500 000 subscribers), compared to just 5 in the USA, 4 in both China and Japan, and only 3 in South Korea. This lack of market consolidation hinders growth, limits economies of scale, and stifles competitiveness, creating additional obstacles for the sector. Despite these challenges, Connect Europe members remain the backbone of investment in the region, contributing around 70% of total operator CapEx.
Alessandro Gropelli, Director General of Connect Europe, said: “Strong and innovative operators are crucial to build a European technology stack and boost competitiveness. Deregulation and more scale are both needed to free up investment and ignite innovation”.
Rupert Wood, Research Director at Analysys Mason, said: “Current regulatory frameworks and competition policies not only hinder meeting challenging build-out targets, but also the development of the kind of new businesses, adjacent to connectivity, which could deliver real economic growth”.
Correction (31.1.25): We added a number specifying that, of the 45.4 million Europeans who risk being unconnected to gigabit in 2030, 39.5 million reside in the EU.