Ericsson Joins Alibaba in Criticism of Europe’s Heavy Regulations


May. 23 2019, Published 8:31 a.m. ET

Europe risks stifling innovation

Ericsson (ERIC) warned recently that Europe risks losing out in the 5G space if it fails to remove the regulatory barriers hindering the speedy rollout of 5G networks in the region. Speaking at the Viva Technology conference in Paris last month, Ericsson CEO Börje Ekholm said that European governments and regulators need to act fast on 5G or the region will regret it, as it will fall far behind the United States, China, and other regions in terms of tech innovation.

Alibaba (BABA) cofounder and executive chair Jack Ma also spoke at the conference and said he was worried Europe’s obsession with heavy tech regulations would stifle innovation in the region, according to a report by the South China Morning Post.

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Europe risks repeating its 4G blunder

Ericsson is a vendor of telecommunications equipment. Although the company is based in Europe, the large 5G equipment supply orders it has announced so far have come from customers outside Europe. In September last year, Ericsson secured a $3.5 billion multiyear 5G contract from T-Mobile (TMUS), an American mobile network operator. In February this year, US Cellular (USM), another American operator, signed Ericsson for a multiyear 5G contract. Ericsson is also one of the vendors leading American mobile operator AT&T (T) is procuring 5G equipment from.

According to Ericsson, Europe failed to act quickly on 4G, and the region ended up lagging behind its economic peers. For example, the arrival of 4G helped fuel the rise of digital service giants such as Netflix and Tencent from America and China, whereas Europe lacks its own comparable companies.

Ericsson predicts that there will be 1.5 billion 5G subscribers worldwide by 2024, with North America leading in 5G uptake.


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