• European enterprises are beginning to recognise the benefits of 5G cellular technology and broadband connectivity, according to a new report
• The State of Connectivity in Europe 2024 report from Cradlepoint is based on responses from business leaders in France, Germany, Italy, the Netherlands and the UK 
• Improved connectivity is increasingly linked to growth potential and achieving productivity gains from other tech developments, such as AI and the internet of things
• The outlook is broadly optimistic but major challenges remain

In the aftermath of the bleak economic conditions that pertained throughout 2023, European enterprise leaders more greatly appreciate the benefits that enhanced connectivity will bring to their businesses. That’s one of the key takeaways from a recent report, The State of Connectivity in Europe 2024, from Cradlepoint, the enterprise wireless connectivity vendor that was acquired by Ericsson in 2020.

The vendor commissioned a survey of more than 2,500 high-level technology decision-makers at businesses with more than 250 staff based in France, Germany, Italy, the Netherlands and the UK. As you might expect from a report published by a company that sells wireless connectivity products to enterprises – Adam Smith’s invisible hand of self-interest is in plain sight here – the headline figures are positive: A vast majority (98%) of the technology decision-makers surveyed expect revenues to grow if they improve their connectivity infrastructure, with more than a fifth (22%) expecting it to increase by up to 29%. 

In addition, 42% believe that updating their connectivity to take advantage of technologies like the internet of things (IoT) and AI is the most important investment they can make to improve the resiliency and efficiency of their business, ahead of training existing staff (19%) and hiring new talent (15%).

Interestingly, 72% of European businesses now use IoT devices across their facilities, and 24% plan to invest in them in the future. Meanwhile, 48% of firms plan to invest in AI and machine learning (ML) technology within the next three years. On the macro level, individual regions across Europe are at different stages in the development of their connectivity strategies and, as the report points out, “The process of localising the large-scale 5G strategies for specific countries highlights the strengths and weaknesses that national governments need to resolve.”  

That said, these leaders must also understand that technology, per se, is not a universal panacea that will instantly result in growth and solve all organisational problems. Business leaders must identify what solutions they want and why they want them. 

Throughout Europe it is now a given that enterprises across the spectrum, from SMEs to multinational corporations, regard all connectivity, and 5G connectivity in particular, as being of great importance, given the increasing reliance of businesses on digital platforms and applications to which secure and reliable connections are required. The European Union (EU) has a strategic plan to develop secure connectivity across all member states to improve 5G connectivity at key locations, including universities, hospitals, and other civic institutions, to improve the delivery of services to the public. It also funds projects to improve 5G along transport corridors to lay the groundwork for connected and automated mobility in the future. This, the report says, “aligns with ensuring 5G is available in urban areas and along main transport links by 2025.”

Additional investment to the value of €1.2bn is being made in cloud and edge computing technologies, and that, the report says, is expected to unlock €1.4bn in private investment. Self-evidently, the EU regards 5G as key to future prosperity and social cohesion but in many technological regards, Europe remains well down the global field and is struggling to keep pace with the likes of Japan, South Korea, and the US, where 5G deployments and user uptake is more advanced. 

The report identifies 5G gaps, suggests how enterprises can reap greater benefits from the technology and how governments and state institutions can temper connectivity policies over the next 12 months. 

James Bristow, senior VP for the EMEA region at Cradlepoint, noted: “Despite the fact the benefits of cellular networks are becoming more understood, it is clear from our research that there is still a lot of work to do if businesses are to unlock their full potential. Our data shows security risks, concerns over complexity and a lack of skills remain key concerns for organisations keen to explore this technology more acutely.”

Development differences vary by country and national economies

The report delves into the detailed responses from each country: Here are some key takeaways from two of the markets, Germany and the UK. 

The report has it that Germany continues to struggle with the long-standing economic problems that are blamed for the perceived stagnation of the country’s digital

transformation since 2021. This nationwide concern is mirrored in the number of German businesses striving to improve their connectivity infrastructure. Indeed, 77% of companies polled in Germany are upgrading their connectivity right now and 47% expect it to improve their efficiency and resilience. Expectations of the sum of financial benefits that will accrue from improved connectivity vary, but all are optimistic, with 24% of respondents saying it could improve revenues by 19% over the course of a year. 

The need to improve connectivity now is pressing because 36% of German companies reported increased operating costs during 2023, and 35% suffered operational inefficiencies – both negatives were perceived to be the direct result of inadequate connectivity. Furthermore, 55% suffered routine weekly fixed line connectivity downtime of between one and two hours, while 22% had to put up with three to four hours of downtime every week. A mere 4% were able to report that they suffered no weekly downtime to their fixed line connectivity over the past year. 

To make matters worse, structural problems have made enhancing connectivity particularly difficult. A full 27% of companies surveyed said they lack the requisite workforce skills for deploying or maintaining a private 5G network, while 25% said they are worried about the security of their connections. Meanwhile, 27% complained that improving connectivity is a distracting, overly complex and time-consuming problem.

The fact is that, in Germany, there is a mismatch between the available workforce and the skill sets required by the digital economy, and despite there being more than 2.5 million unemployed in the country, enterprises find themselves unable to recruit suitably qualified skilled workers. Organisations say they need an adaptable workforce capable of flourishing in an environment of continual change, but it does not exist.

Because of its strong industrial sector, Germany also faces a bigger and more intense cybersecurity threat than other European economies do and there is a pressing need for the most robust data protection as the automation and digitalisation of manufacturing operations and services grow: German companies are adopting connectivity solutions, such as secure access service edge (SASE), a cloud architecture model that combines network connectivity and security-as-a-service functions and delivers them as a single service. 

Of the companies surveyed in the report, 64% are prioritising security when choosing network providers to ensure their connectivity is robust enough to handle increasing, and increasingly sophisticated, threats. However, despite the well known and accepted benefits of enhanced connectivity, the lack of available money to pay for upgrades have led 27% to postpone investments and 40% to press for greater government intervention and the provision of grants to help pay for improvements.

In the UK, meanwhile, the Cradlepoint research indicates that as British businesses strive to be more efficient, there is a strong focus on increasing automation. Some 41% of respondents believe that improving connectivity to increase automation is the most important factor in making themselves more efficient and resilient, and 23% of business leaders believe more efficient operations, via improved connectivity, could grow revenue by 29%. The UK government concurs with this assessment and has forecast that the widespread uptake of 5G could be worth an additional £159bn by 2035 just in terms of productivity benefits. It also announced a £40m fund to create 5G innovation regions across the country whereby local authorities can apply for funding to develop solutions for specific industries.

However, while connectivity is improving, 61% of UK businesses reported fixed line downtime of two hours a week on average, lower than the 72% of 2023, but still far too high. What’s more, 44% of businesses said they are facing higher operational costs, and 37% struggle with operational inefficiencies, due to poor connectivity. To get around these problems, 32% of UK organisations polled now use cellular connectivity as a primary network to support security and surveillance, while 25% use it to enable critical operations, and 26% use it for pop-up networks. 

Furthermore, some 49% of organisations use cellular networks for failover or backup support, while 23% plan to invest in cellular failover in the next year. Meanwhile, 40% believe cellular networks confer a greater control over their businesses, 39% believe they can improve the security of their networks, and 35% believe cellular networks are more reliable than other comms technologies.

On the downside, 68% of UK enterprises believe that overall investment in wireless connectivity across the country is still too low and is holding the UK and its businesses back, with 62% of the belief that poor connectivity is leaving rural areas behind and 59% saying it prevents students from developing the high-tech skills they will need in the future. 

- Martyn Warwick, Editor in Chief, TelecomTV