How environmental and social concerns will help shape the future telecoms landscape in Europe

The telecoms sector represents 1% of the economy (in the UK), but the communications services and equipment that it provides has an impact on the remaining 99% which relies on it. How is this responsibility affecting telecoms business' ways of working, deployment of new technologies and the allocation of spectrum? 

Potential to increase social inclusion

Enabling communications for all and eliminating digital exclusion is high on the "social" agenda among telecoms companies. 

Although work on terrestrial network roll-out (including the Shared Rural Network in the UK) continues, it is unlikely to reach everyone due to the cost and access barriers to installation and maintenance of physical on the ground infrastructure. Satellite could be part of the solution to plug remaining "not spots" and there is increasing traction in its deployment, despite remaining challenges in terms of cost (although these have fallen in recent years), in-building penetration, capacity limits and spectrum availability.

China, Russia and private players such as Starlink are investing in their own mega-constellations and the EU has its own €6 billion investment plan for an EU satellite communications network being facilitated through a new EU regulation adopted this month.

As well as growing the coverage map, the type of coverage deployed is also important to maximise the socio-economic benefits. 5G Fixed Wireless Access (FWA) has potential to bridge the digital divide as it is a comparatively quick and cheap alternative to fixed lines benefitting communities where the costs of wired connections are prohibitive. 

More 5G standalone (currently limited in the UK) is needed to realise the potential of a large number of connected devices via ultra-low latency solutions (for example smart traffic, driverless cars and energy management). Investment in 5G is being held back by consumers not being willing to pay for it when 4G already meets the majority of their needs.

In a sector operating on narrow margins, businesses will always need to justify the costs of investing with reference to expected revenues, irrespective of the social value that might be created. It is therefore likely that there will be more use of FWA and blended 5G and LTE (long-term evolution) for some years to come, with satellite and standalone 5G as longer-term solutions as the business case develops.

Customer ESG considerations

Customer environmental considerations are driving a more sustainable future. Many telecoms businesses have already set themselves stringent net zero targets. However, they need to be looking ahead to how they can support the businesses that rely on them to meet their ESG (environmental, social and governance) goals too.

There is likely to be an acceleration of decarbonisation resulting from digital transformation in sectors like energy, transport and farming when 5G standalone networks and more satellites are deployed and if more flexible, shorter term licensing of spectrum become available. Providers will need to adapt their products to make the most of the resulting opportunities. 

The role of spectrum licensing

Increasingly disruptors from non-MNO (mobile network operator) backgrounds are seeking to offer communications solutions to meet new customer demands (such as private networks) but they need spectrum (a limited resource largely in the hands of the traditional players).

The way in which spectrum is allocated may need to adapt and exclusive access licences could be reduced as regulators adjust their approach to licensing in a way that maximises access to broad and affordable connectivity across all sectors.

As well as its Local Access licence (for spectrum already licensed in areas where the MNO is not using it), and Shared Access licence (for the support of mobile technology locally), Ofcom may also need to adapt to shorter term and more affordable "pop-up" access licences in the future. This could enable providers to plug coverage gaps for deployment of time-limited technologies, such as farming equipment at certain times of the year.

The circular economy

The ability of the telecoms sector to create energy savings and efficiencies for others can be contrasted with the environmental impact resulting from the creation of the physical hardware it uses to deliver new technologies. For example, it takes 200kg of raw materials to produce just one new mobile phone.

Businesses in the telecoms space are now working to tackle network and mobile phone waste with a focus on recycling, refurbishment and reuse of technology where possible. One example is Vodafone's mobile phone recycling initiative. Vodafone purchases customers' unwanted used phones, refurbishes them and sells them onto other customers. Their lifecycle analysis showed that refurbished phones are 55% less damaging to the environment.

As well as industry-led schemes, the EU is currently consulting on its ecodesign for sustainable products proposal, which aims to make products sold in the EU such as mobile phones subject to performance and information-related requirements (similar to the current white goods regime) to ensure greater sustainability.

Osborne Clarke comment

Interesting times lie ahead for the telecommunications sector and the businesses that operate within it and rely upon it. With social and environmental concerns impacting the development of new technologies and informing the new ways of using existing ones, it is clear that the pace at which ESG shapes the future of telecoms will continue to accelerate.

The topic of this Insight formed part of Osborne Clarke's Communications Review 2023, on 1 March.

If you would like to discuss any of the issues raised, please contact your usual Osborne Clarke contact or one of the experts listed below. 

This Insight was produced with the assistance of Amelia Hodder, Trainee Solicitor.