Part Three – The Digital Revolution (Part Eight)

Economic Unit

In 2022, the Digital Connectivity Forum and Frontier Economics found that, under current conditions, the industry expects to invest around £9 billion in new network infrastructure by 2030.

According to the study, this amount is significantly lower than what is required to deliver full 5G capability, which is estimated to need an additional £23–25 billion.
The report stated that, while the projected investment will increase network capacity, it will not unlock the transformative services dependent on advanced 5G.

Last year, the UK government announced a £150 million investment package to boost 5G adoption over the next decade, but this figure lags far behind competitors:

• The United States has invested up to $9 billion,

• And South Korea will invest $130 million in 2024 alone, despite its smaller market.

National Infrastructure Commission Perspective and 5G Industry Trends

The National Infrastructure Commission (NIC) has said that the industry is capable of delivering 5G networks in densely populated areas of the UK without subsidies in the short term.

Although the commission acknowledges that the investment environment for new mobile networks is challenging, it argues that competition among operators and their expansion plans indicate continued significant network investment over the next decade.

The proposed merger between Three UK and Vodafone exemplifies the ongoing consolidation trend in the telecoms sector, as companies seek to strengthen their market positions and pool resources for large-scale 5G investments.

This follows earlier mergers such as BT with EE, and Virgin Media with O2, reflecting a strategic shift toward collaboration to manage challenges and seize opportunities within a rapidly evolving telecommunications landscape.

As these mergers proceed, the combined entities aim not only to optimise operational efficiency but also to leverage accumulated private capital to accelerate the deployment of advanced 5G technologies.

Policy Challenges

The industry has made it clear that the UK’s regulatory and policy framework must respond to the high costs of deploying digital infrastructure to realise the full benefits of 5G.

Industry revenues have been declining, and according to Vodafone, returns over the last 10–15 years have not offset investment levels.

While the government’s current approach is to introduce a “package of measures” to support commercial investment,
it remains uncertain whether these measures will be sufficient to fully drive the necessary infrastructure upgrades for 5G.

Rural / Urban Deployment Divide

An open question remains: how will the rural–urban gap in 5G deployment be addressed?

While the Shared Rural Network (SRN) focuses on expanding 4G coverage in rural areas,
there is currently no equivalent funding programme to support 5G rollout.

The Rural Services Network has criticised the lack of direct funding in the government’s wireless infrastructure strategy, stating:
“Even where there is marginal commercial viability, rural areas will be at the back of the queue for commercial investment. Only significant government investment can hope to address this market failure.”

Policies and Current Technology Situation

The UK was among the first European nations to ban Huawei from its 5G networks in 2020.

It is also a leader in OpenRAN policies, including:

• the 5G Supply Chain Diversification Strategy,

• a target for 35% of mobile traffic to run through OpenRAN by 2030,

• and the publication of OpenRAN principles in 2022, supported by Australia, Canada, and the United States.

However, funding remains very limited: only £88 million allocated so far,
compared to $9.1 billion of combined Nokia–Ericsson investment in 2022.

As a result, there is little incentive for mobile operators to deploy interoperable 5G infrastructure, especially given the lack of consensus around cost-saving benefits.

Implementation and Planning Barriers

Despite progress in reforming planning laws to allow taller and wider masts,
mobile operators have warned that planning uncertainty and constraints continue to negatively affect network deployment and increase infrastructure costs.

Key barriers include:

• obtaining planning permission,

• negotiating land access,

• coordinating with local authorities for street works.

With significant resource shortages and reduced local authority budgets, it remains unclear whether the planning system can manage the high volume of new network infrastructure applications.

Looking Ahead — Fixed Wireless Access (FWA)

When investing in future connectivity, solutions must meet future needs rather than merely providing minimum services that will quickly become outdated as demand grows.

Fixed Wireless Access (FWA) may be part of the solution.
In FWA, an internet signal is transmitted from a 4G/5G mobile tower to a fixed point within a building.

Analysys Mason evaluations have shown that line-of-sight FWA can deliver gigabit speeds, even without wired fixed connections.

FWA can partially “piggyback” on national 5G rollout, as it can use mobile towers as primary stations.

Although FWA faces limitations—especially when approaching high-capacity constraints—
it has the potential to serve communities that might otherwise be left behind.

Global growth in FWA has been significant, particularly in North America, where it has proved effective in rural regions.