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The European connectivity sector is at a turning point. The recently published State of Digital Communications 2025 report by Connect Europe highlights that the continent’s connectivity ecosystem — embracing network and service operators, hardware and software vendors, cloud, virtualization providers, and many others — is transforming at an unprecedented pace, driven by new technologies like artificial intelligence-powered networks, 5G standalone and open RAN. This ecosystem, worth €1 trillion and representing 4.7 percent of European GDP, can become the cornerstone of Europe’s economic fabric. Yet, for all this potential, Europe’s ability to seize the opportunity is far from guaranteed. Telecom investment in Europe declined by 2 percent in 2023 — the first drop in seven years — just as other global players are ramping up their resources into cutting-edge digital infrastructure. Europe’s ambition for digital sovereignty is at stake, since weaker investment in telecom networks and services ultimately chills the entire connectivity ecosystem. If we fail to reverse course now, we risk falling irreversibly behind in the race for technological leadership. There is no time to waste.
If we fail to reverse course now, we risk falling irreversibly behind in the race for technological leadership. There is no time to waste.
A shifting digital landscape: seizing the moment for Europe’s tech sovereignty
Connectivity is no longer just about providing fast internet access — it is the backbone of Europe’s digital economy, driving advancements in industrial automation, smart cities and next-generation AI applications.
The rapid digital transformation of connectivity networks presents both a challenge and an opportunity. AI is already being deployed to optimize networks, with 52 percent of European operators trialing AI-driven automation. This technology will be critical in ensuring more efficient, resilient and sustainable networks.
At the same time, research and development in 6G is already underway, and Europe must position itself at the forefront. The report tracks over 200 global 6G projects, with European operators leading more than half of them. This leadership in early stage R&D must be leveraged into commercial advantage, ensuring that Europe is not merely a follower but a global standard-setter.
In this race to bring telecom networks to the next generation, Europe’s connectivity ecosystem must play to its strengths to make sure they also offer value-added services that leverage AI and other enabling technologies. For instance, the growing role of application programming interfaces (API) in network services presents an opportunity for Europe to shape the future of Network-as-a-Service business models worldwide. European operators currently lead in API platform announcements, ahead of North America and Asia-Pacific. This is a rare instance where Europe is setting the pace, an advantage we must capitalize on.
Yet, Europe is lagging in key areas. By the end of 2024 only 40 percent of Europeans had access to 5G standalone networks, compared with over 90 percent in North America. Edge cloud deployment remains sluggish, with just 320 live operator edge nodes, in Europe, far from the EU’s ambitious 10,000-node target by 2030. These gaps highlight an urgent need to accelerate investment in digital infrastructure and foster a regulatory environment that enables innovation. If Europe is serious about its digital sovereignty, it must take decisive action now.
Closing the connectivity gap and breaking market barriers
For Europe to achieve its ambitious Digital Decade targets — full gigabit and 5G coverage by 2030 — massive investment is needed. Today, 82.5 percent of the continent is covered by gigabit-capable networks, far behind China (99 percent), the United States (90.3 percent) and Japan (93.9 percent). The 5G picture is similar, with Europe’s 87 percent coverage behind South Korea (99 percent) and the United States (98 percent). If this trend continues, 39.5 million EU citizens will still lack gigabit-speed connectivity by 2030, a failure that would undermine Europe’s digital ambitions.
The solution must include agile industrial policy, regulatory reform fostering a more investment-friendly environment, and allowing European operators to consolidate
Beyond investment, Europe’s telecom market remains excessively fragmented and overregulated. The continent has 41 major mobile operators, compared with just five in the United States and four in Japan and China. This fragmentation prevents economies of scale, limiting the ability of European firms to compete effectively on a global stage. The result? A sector constrained by financial pressure, limited innovation capacity and an inability to scale next-generation technologies at the speed required to remain globally competitive. The solution must include agile industrial policy, regulatory reform fostering a more investment-friendly environment, and allowing European operators to consolidate so they can interact on an equal footing with global tech companies.
The way forward: innovation as the cornerstone of tech sovereignty
Europe is at a now-or-never moment. The choices we make today will determine whether we remain a sovereign digital powerhouse or fall behind global competitors. This sense of urgency is reflected in a recent movement for creating a European technology stack, which mobilized both academia and technology experts, both calling for vigorous industrial policy action. Our State of Digital Communications 2025 report also makes it clear: Europe has the expertise, technology and ambition to lead, but excessive fragmentation and over-regulation threaten progress. Reports by Enrico Letta and Mario Draghi echo this concern, emphasizing the strategic importance of connectivity. But without bold policy choices, increased investment and a commitment to scale innovation, Europe’s digital future will be at risk.
