Transport Sector and Telecommunications Sector in Europe 1
TRANSPORT SECTOR AND TELECOMMUNICATIONS SECTOR IN EUROPE
BY [Name]
Course
Professor’s name
Location of Institution
Due Date
Transport Sector and Telecommunications Sector in Europe 2
Transport Sector and Telecommunications Sector in Europe
Industry Structures and Main Financing Mechanisms
The Transport Sector
In Europe, the transport network is regarded as the backbone of economic development.
It serves the diverse aspects of the economy. According to Brueckner (2011, p.64), the transport
system in Europe is a complex system with immense influence on the region's multiple variables
such as product process organization, the consumption among the population, and the region's
capacity infrastructure, and the settlement patterns. Well-throughout, fully and sustainable
interconnected transport networks and systems exist in Europe. They connect diverse member
states, making these networks the most important condition for collecting and completing every
market in the region (Brueckner, 2011, p.64). The European transport industry's structure entails
diverse transport systems that feed the needs, populations, and others. According to Waddell
(2002, p.297), the European transport system's structure has allowed for seamless passengers and
freight transportation through diverse modes such as railways, airport transport, seas transport,
and road transport systems. Brueckner (2011, p.64) states that it is also highly operatable with
the seamless ability of goods and services and human portability. They are highly integrated and
coordinated with a high level of accessibility.
The transport industry in Europe is financed in diverse ways by diverse players.
According to Brueckner (2011, p.66), the transport industry's financial needs in Europe are
immense, which means that its financing has to be done collaboratively through numerous
funding organizations, initiatives, and programmers. Rutherford and van Nieuwkoop (2011,
p.144) indicate that the primary method of funding the transport sector in Europe is through
Transport Sector and Telecommunications Sector in Europe 3
public funding. The governments and the European Union play a critical role in allocating
national and international networks, respectively. However, Brueckner (2011, p.66) adds that the
industry's needs are overwhelming for public funding to address it exhaustively, which has led to
the private sector's involvement. Therefore, other players funding the sector since 2015 include
the European Regional Development Fund (ERDF), the Cohesion and Fund (CF), Multilateral
and National Funds, Research and Developments (R&D), and the TEN-T European co-funding
investment.
The Telecommunications Sector
Unlike the transport sector, the telecommunication sector in Europe is considered one of
the fastest growing sectors in the region. It attracts immense attention in the political, social, and
economic domains. According to the EU Policy framework – European Gigabit Society (2016,
nd), the telecommunication sector comprises numerous companies that make the communication
process possible on national and regional space in Europe. Unlike the transport system, the
telecommunication sector entails internet services, phone communication, cable and airwave
communication, and wireless and wired communication (EU Policy framework – European
Gigabit Society, 2016, nd). These services are provided by companies that establish
infrastructures that allow for the transmission of data in the form of voice, video, words, and text
to be disseminated throughout the region and also outside the region (EU Policy framework –
European Gigabit Society, 2016, n.d)) categorizes the companies in this sector into sub-sectors
such as satellite companies, telephone companies, internet service providers, and cable
companies. Unlike the transport sector, the telecommunication sector in Europe is a bit volatile
regarding individual stock, but with an overall stable and long-term growth.
Transport Sector and Telecommunications Sector in Europe 4
The telecommunication sector's financing is critical in the region because it serves the
critical role of improving its growth, advancement, and the nature of products and services
provided. Medda and Modelewska (2010, p.99) articulate that in the transport industry, the state
governments, through public funding, have little influence on the telecommunication industry
since the private sector companies primarily operate them. However, Combes, Mayer, and Thisse
(2008, p.68) state that the European Union and the states offer telecommunication companies
telecom subsidiaries through monetary gifts or grants and reduced taxes, allowing these
companies to finance their projects in an enabling environment. The sector also receives aid from
the World Bank and supplier and vendor financing, which play a supportive role in running day-
to-day activities and projects (Combes, Mayer & Thisse, 2008, p.68). Medda and Modelewska
(2010, p.99) state that they are financed through pre-paid systems reverse bids, public and
private partnerships, and self-financing.
Historic and future drivers of investment
The Transport Sector
There are diverse drivers, which have influenced the investment in the transport sector in
Europe. Since the transport sector dates back hundreds of years ago, there have been factors
influencing how investment is made in the industry. Waddell (2002, p.301) says that one of the
vital drivers of investment in the transport sector in Europe during the 18th and 19th centuries was
structural changes. Capital productivity was another driver of investment in the transport sector.
Brueckner (2011, p.102) states that the continued shift in technology has influenced the transport
sector's investment attractiveness as new forms of technology. They include improved engines,
which have driven companies to spend more in the industry due to increased efficiency
effectiveness, leading to more returns. Also, Kemmerling and Stephan (2008, p.37) indicate that
Transport Sector and Telecommunications Sector in Europe 5
finances' availability influences the transport sector level. For instance, periods of inflation lead
to low lending from banks, and diminishing returns in the sector reduced investment level. The
government policies in the region also influence investment in the transport sector as changing
government policies. The variation of government policies in the region makes it easier or
difficult for private sector players to invest in it. The future drivers of investment, Kemmerling
and Stephan (2008, p.37) state that technology advancement will be a fundamental driver of
investment in the industry. It will determine the efficiency and effectiveness of the machines
involved sector, which will attract more investment. The availability of finances and changes in
international border issues such as the BREXIT will immensely impact the sector's investment.
The Telecommunication Sector
The telecommunication sector investment is also driven by almost some drivers in the
transport sector apart from few differences. In the same way as the transport sector, a historical
driver of investment in this sector is technological change. DESI report (2020, nd) states that
technology changes have been critical factors affecting investment in the telecommunication
industry. It determines the type of equipment, complexity, and intensity of investment needed by
new entrants and existing companies to establish and improve their products and services, hence
the level of investment. Also, the DESI report (2020, nd) adds that the expected return,
uncertainty, and risks associated with the industry's investment are higher than in the transport
sector. As a result, it makes investors more interested in the industry. Even though uncertainty
and subsequent risks are higher, the returns are higher. Government policies and regulation is
also another determinant of investment in the telecommunication industry. Stack, Ravishankar,
and Pentecost (2017, p.87) articulate that unlike in the transport sector, government regulation is
stiff in the telecommunication sector, making it undesirable for investors, especially in the
Transport Sector and Telecommunications Sector in Europe 6
private sector. Like the transport sector, finances' availability plays a critical role in determining
the investment and viability of investing in this sector. The future investment driver is the
advancement in technology. Stack, Ravishankar, and Pentecost (2017, p.87) say it will lead to
the emergence of new products and services in the industry, determining how new entrants and
the existing companies invest in the sector.
Sector (or sub-sector) regulations
The Transport Sector
The transport industry regulation plays a critical role in ensuring that diverse functions
and factors work in favorable money among the member states. Brueckner (2011, p.267) notes
that the transport sector in Europe is regulated through the European Union transport policy,
which aims at providing efficient, environmentally friendly, and safe mobility solutions for the
member state populations. The regulation also establishes the necessary conditions for
competitiveness in the sector which serve the purpose of generating jobs and growth. According
to Van de Velde (2008, p79), the transport sector regulations and policies in Europe aim at
addressing transport emissions through laws on the reduction of green gasses from the sector. It
also aims to create modest transportation through the roads, rail, inland waterways, and the air
(Van de Velde, 2008, p79). These policies and regulations aim to regulate the transport
infrastructure by closing gaps between the state transport networks, ensuring smooth operations
and functions of the single market in the region, and overcoming apparent technical barriers.
The regulations also address other themes in the sector considered critical in serving the
region's economic, political, and social aspects. For instance, Van de Velde (2008, p79) indicates
that the region's regulation policies address the issue of passenger rights by laying down how
Transport Sector and Telecommunications Sector in Europe 7
companies in the sector respect and meet them. They also handle all players' safety and security
due to the increase in insecurity brought by terrorism and other threats on the sector's
stakeholders (Van de Velde, 2008, p79). They also address issues of intelligent and sustainable
transportation as matters on climate change and corporate social responsibility emerge as crucial
factors in determining the industry's success and others that depend on it (Van de Velde, 2008,
p79). Therefore, regulations in this sector serve to create an enabling environment for its
operations.
Telecommunication sector
In the same way as the transport sector, the telecommunication sector is regulated by
European Union through the European Commission on telecommunication liberalization. Like
the transport sector, the regulations in this sector are aimed at providing environmentally friendly
services and products and the operation of companies, both private and public ones. However,
the difference between the two is that the telecommunication industry regulation is strongly
emphasized for the regulation of competition. Cave, Genakosand Valletti (2019, p.49) say that
the telecommunication sector's regulation policies aim to control the monopoly of service and
product provision by telecommunication networks. It is considered unfavorable to unleash new
technology and offering unique services. The other purpose of the regulation laws is to
harmonize the market in Europe by establishing standard rules for regulating the unified
European market (DESI report, 2020, nd). It led to creating the Open Network Provision, which
allowed new entrants to compete with existing companies under equal terms. These regulations
created conditions and terms for the ex-monopolies in the region, which did not apply to new
entrants enabling them to operate effectively. Lastly, the European Union made competition
rules meant to liberalize the telecommunication market segments. The DESI report (2020, nd)
Transport Sector and Telecommunications Sector in Europe 8
indicates that these liberalization rules ensure that companies are controlled from making abusive
dominant positions. It also prevents them from colluding and establishing dominant positions
that are abusive for customers and new entrants. Therefore, there are diverse simulates between
the transport and telecommunication sectors' policies and diversity regarding their terms and
conditions.
Predominant sector risks and their mitigants
The Transport Sector
Like most sectors in Europe, the transport sector faces imminent threats from both new
and old risks. One of the biggest threats to this sector is cyber-attacks. According to Polishchuk
et al. (2019, p.3573), the presence of cyber-attacks in the transport industry is due to
technological advances that link the internet to the industry's automation and supply chain. These
threats do not face one company but all companies in the sector and across partners. The other
threat is the shortage of drivers, which has continuously plagued the industry. Kubanova and
Kubasakova (2020, p.234) indicate that by the year 2022, the shortage of drivers in Europe will
have grown by 100,000. Due to increased e-commerce demands, the aging population, and the
associated problems with the acquisition of recruits. Kubanova and Kubasakova (2020, p.234)
add that this risk has led to other risks such as driver fatigues due to working extra hours on the
roads, leading to additional risks such as accidents and losses and the increase in pressure to
deliver goods and services on time. Another risk is the deteriorating infostructure as highways,
railways, airports, and ports are becoming increasingly dangerous for vehicles, trains, airplanes,
and ships because of deteriorations (Rutherford and van Nieuwkoop, 2011, p.45). They have
increased delays in delivering goods and services, causing an estimated $3.2 billion in fuel and
goods destruction.
Transport Sector and Telecommunications Sector in Europe 9
For efficiency and effectiveness to be achieved, there is a need for creating mitigating to
address these problems. The more prepared and informed the companies and the regulators are in
addressing these vulneraries, the more prepared they can manage them and reduce impacts on the
sector. Kubanova and Kubasakova (2020, p.235) state that the best way to mitigate cyber-attacks
in the transport sector is to create comprehensive and integrated strategies to prevent breaches.
Kubanova and Kubasakova (2020, p.235) suggest creating incentives that make the occupation
more attractive for young drivers and invest more in occupational insurance to address the risk
posed by drivers' shortages. It protects employers and drivers from accident-related injury and
damages. Concerning the deteriorating infrastructure, increasing budgetary allocation to the
industry and intensifying the need for quality infrastructure and repairs will reduce the effects of
the deterioration.
The Telecommunication sectors
The telecommunication sector, unlike the transport sector, faces numerous risks. One of
them is the inability to provide quick and empathic services. Unlike the transport sector risks, the
telecommunications sector risks are related to the emergence of new technology such as the
internet. According to Drobyazko et al. (2019, p.3), telecom services face a threat from the ever-
increasing customer needs and requests due to the high number of people using telecom services
companies overwhelmed. Also, the complexity in the operation process has become a significant
risk for this sector due to customized solutions and products. It makes the operation of tasks
more complex each day (Cave, Genakos & Valletti 2019, p.48). The other threat is the intensive
remote working due to pandemics' emergence and the increased online presence. It overwhelms
contact centers, making it impossible to provide services and support to customers and
employees effectively. The other risk is cyber-attacks which has made network securities more
Transport Sector and Telecommunications Sector in Europe 10
porous than before. Cave, Genakos, and Valletti (2019, p.48) indicate that telecom operators are
faced with a significant challenge of ensuring that network security is guaranteed on applications
and networks.
These problems need mitigants to ensure that practical solutions help the industry thrive.
The solution to the inability to provide quick and empathic services can be addressed by
improving companies' immediacy omnichannel communication and personalization (Drobyazko
et al. (2019, p.5). Addressing the second issue of the complexity in operations to the need for
customization can be addressed by increasing tools and resources to improve flexibility and
speed processes. Also, the problem posed by remote working overwhelming the contact centers
requires heavy investment in easy-to-use technology. It could be operated in the cloud to reduce
congestions and ease operations (Cave, Genakos and Valletti 2019, p.48). Lastly, regarding
cyber-attacks threatening network security, the DESI report (2020, nd) suggests that companies
need operational and technical upgrades to meet system needs and customer expectations.
Available Intricacies
The Transport Sectors
In the transport sector, the economic appraisal method plays a fundamental role in
assessing the industry's importance to the economy of Europe. The most significant economic
aerials method applied widely in the European transport sector is the Cost-Benefit Analysis
(CBA) method. According to Andersson et al. (2018, 120), the Cost-Benefit Analysis method is
a conventional tool used to evaluate the potential costs and the significant benefits of a particular
public project like road and rail transport. It is founded on the welfare economic theory to
achieve efficiency in resource allocation while maximizing resource benefits for public social
Transport Sector and Telecommunications Sector in Europe 11
welfare. Andersson et al. (2018, 123) indicate that this method involves valuing investments on
the transport facilities in momentary terms and expressing benefits and costs to represent overall
value aggregated for individual well-being. In Europe, it has played a critical role in evaluating
the impacts of transport policy changes and projects in rail, road, air, and sea transport. Lastly,
some of the subsectors related to the transport sector include warehousing that handles storage of
goods, handling, value-added services providers, and stevedoring. According to Andersson et al.
(2018, 123), the sector operates effectively with these sub-sectors' presence due to the relations
among their products and services.
Telecommunication sector
In the same way as the transport sector, the telecommunication sector heavily employs
cost-benefit analysis, an essential economic appraisal method. In the modern market, the
telecommunication sector strives to keep up with the ever-increasing competition level by
offering auspicious services, prone to making losses (Yannis et al., 2020, p.14). As a result,
players in the sector have devised a cost-benefit analysis approach. It allows them to reduce their
spending while meeting the increasing demand for networking capabilities, which is seamless for
customers. Yannis et al. (2020, p.15) indicate that through this method, they gain more insight
into the comprehension of their cost structures regarding important aspects of their operations,
such as supply chain management. Yannis et al. (2020, p.16) say it has also allowed them to
devise negotiation strategies superior to their suppliers. It has also allowed the players in this
telecommunication sector to gain a stronger foothold and achieve a better competitive advantage
against their competitors (Yannis et al., 2020, p.16). Lastly, some of the sub-sectors closely
related to the telecommunication sector are numerous. They support meeting its bottom-line
goals and objectives. Yannis et al. (2020, p.17) say they conclude wireless communications
rrr
oT
OO
~yoccccccn
Transport Sector and Telecommunications Sector in Europe 12
companies, foreign telecom services companies, domestic telecommunication services,
communication equipment companies, and processing systems and products companies.
Transport Sector and Telecommunications Sector in Europe 13
References
Andersson, H., Hultkrantz, L., Lindberg, G. and Nilsson, J.E., 2018. Economic analysis and
Investment priorities in Sweden’s transport sector. Journal of Benefit-Cost Analysis, 9(1),
pp.120-146.
Brueckner, J.K., 2011. Lectures on urban economics. MIT press.
Cave, M., Genakos, C. and Valletti, T., 2019. The European framework for regulating
telecommunications: a 25-year appraisal. Review of Industrial Organization, 55(1),
pp.47-62.
Combes, P.P., Mayer, T. and Thisse, J.F., 2008. Economic geography: The integration of regions
and nations. Princeton University Press.
DESI report. 2020. Broadband Connectivity: Shaping Europe’s digital future. europa.eu.
Retreived on April 13,2021, from,
https://eur01.safelinks.protection.outlook.com/?url=https://www.agcom.it/documents/
Drobyazko, S., Hryhoruk, I., Pavlova, H., Volchanska, L. and Sergiychuk, S., 2019.
Entrepreneurship innovation model for telecommunications enterprises. Journal of
Entrepreneurship Education, 22(2), pp.1-6.
EU Policy framework – European Gigabit Society. 2016. Communication – Connectivity for a
Competitive Digital Single Market - Towards a European Gigabit Society. Shaping
Europe’s digital future. europa.eu.
Kemmerling, A. and Stephan, A., 2008. The politico-economic determinants and productivity
effects of regional transport investment in Europe. EIB papers, 13(2), pp.36-60.
Transport Sector and Telecommunications Sector in Europe 14
Kubanova, J. and Kubasakova, I., 2020. Security Risks in the Trucking Sector. Transportation
Research Procedia, 44, pp.234-239.
Medda, F., 2012. Land value capture finance for transport accessibility: a review. Journal of
Transport Geography, 25, pp.154-161.
Medda, F.R. and Modelewska, M., 2010. Land value capture as a funding source for urban
investment.
Polishchuk, V., Kelemen, M., Gavurová, B., Varotsos, C., Andoga, R., Gera, M.,
Christodoulakis, J., Soušek, R., Kozuba, J., Blišťan, P. and Szabo, S., 2019. A fuzzy
model of risk assessment for environmental start-up projects in the air transport sector.
International journal of environmental research and public health, 16(19), p.3573.
Rutherford, T.F. and van Nieuwkoop, R., 2011, April. An integrated transport network-
computable general equilibrium models for Zurich. In Swiss Transport Research
Conference. April (Vol. 29, p. 2011).
Stack, M.M., Ravishankar, G. and Pentecost, E., 2017. Foreign direct investment in the eastern
European countries: Determinants and performance. Structural Change and Economic
Dynamics, 41, pp.86-97.
Van de Velde, D., 2008. A new regulation for the European public transport. Research in
Transportation Economics, 22(1), pp.78-84.
Waddell, P., 2002. UrbanSim: Modeling urban development for land use, transportation, and
environmental planning. Journal of the American planning association, 68(3), pp.297-
314.
Transport Sector and Telecommunications Sector in Europe 15
Yannis, G., Kopsacheili, A., Dragomanovits, A. and Petraki, V., 2020. State-of-the-art review on
multi-criteria decision-making in the transport sector. Journal of traffic and
transportation engineering (English edition).
