The enormous competitive advantages enjoyed by Utility Forecaster Growth Portfolio Core Holdings AT&T Inc (NYSE: T) and Verizon Communications Inc (NYSE: VZ) in the US telecommunications market result from their ability to out-invest smaller rivals.

Asian telecoms such as China Mobile Ltd (Hong Kong: 941, NYSE: CHL) are also investing heavily in network technology. China is the world’s biggest mobile market, with 1.1 billion subscribers.

But there’s one region that stands out for its lack of network investment growth, on top of its continuing economic problems: Europe.

AT&T and Verizon spent about USD35.7 billion combined on their wireless and wireline networks in 2012. Last year overall US wireline spending was USD39.1 billion, while wireless investment was USD27 billion. The two giants accounted for approximately 54 percent of network investment.

This investment has allowed these companies to service customers in a world where data traffic is increasing exponentially, on fixed as well as mobile networks. The number of consumers and businesses that require constant and high-quality Internet access is growing constantly. And they need higher traffic allowances and faster connection speeds to accommodate new network services wherever they are.

US growth is being driven by accelerating demand for specialized services, including cloud computing, M2M (or machine-to-machine, which refers to technologies that allow both wireless and wired systems to communicate with other devices of the same ability) and cybersecurity.

Global demand for data delivered on fixed lines is expected to grow by 34 percent through 2015 and by 84 percent for wireless traffic. In the US–which, led by AT&T and Verizon, is the global leader in deploying 4G long-term evolution (LTE) technology–mobile operators are seeing year-over-year demand growth in excess of 100 percent.

The Telecommunications Industry Association (TIA) noted in its 2013 ICT Market Review & Forecast that US wireless penetration hit 102.5 percent of the adult population in 2012, surpassing 100 percent for the first time. Wireless carriers are on track to add 40.3 million subscribers over the next four years, for a penetration rate of 111.3 percent by 2016.

In 2012 more money was spent on mobile data services, USD94.8 billion, than on mobile voice services, USD92.4 billion. This is the first time this has happened. And TIA forecast mobile data spending will hit USD118.6 billion in 2013 versus USD86.4 billion for voice and USD184 billion by 2016 versus USD70.1 billion for voice.

These points support the conclusion that the information and communications technology (ICT) industry “is squarely in the middle of an historic transition.”

China’s three mobile operators–China Mobile, China Unicom Hong Kong Ltd (Hong Kong: 762, NYSE: CHU) and China Telecom Corp Ltd (Hong Kong: 728, NYSE: CHA)–plan to spend a combined USD56 in 2013 on network infrastructure, including investment in 4G, which multiplies mobile broadband speeds by up to five times for users of Apple Inc’s (NSDQ: AAPL) iPhone or Samsung Electronics Co Ltd’s (Korea: 005930, OTC: SSNLF, ADR: SSNHY) Galaxy phones.

China Mobile plans to spend USD6.75 billion this year on 200,000 4G base stations to provide services for its 710 million customers. China Mobile’s customer base, incidentally, is more than two times the total population of the US.

Telecommunications has a significant impact on productivity and competitiveness. Investment here is crucial for the success of individual companies as well for broader economies, not only to satisfy present requirements but to be flexible enough to support growth for the long term.

The level of investment in essential-service infrastructure is now widely viewed as a key indicator of socioeconomic progress.

The TIA report also notes that spending growth will increase faster in the US than internationally, reversing a trend that dates back to at least 2007. Asia is clearly doing its part. Europe, on the other hand, held back by a still-sluggish economy as well as a burdensome bureaucracy, is lagging.

Mobile and Internet service is relatively inexpensive and widespread across the pond. But current infrastructure is increasingly challenged to support new offerings such as video and cloud computing. The Continent trails the US and Asia in the adoption of 4G and fiber-optic technology.

In some ways service providers have no choice but to invest in their networks now. Some have been restricting CAPEX for so many years that they’re experiencing network outages, unable to handle exploding traffic. There is very high demand for telecom services everywhere, including Europe, particularly for mobile broadband.

Looking beyond the industry, a December 2012 report from the consulting firm McKinsey & Company concluded that Europe’s lack of telecom investment is costing jobs, slowing economic growth and eroding competitiveness. But McKinsey’s call for a “new deal” between industry and government to spur investment rather than competition may be winning converts.

Neelie Kroes, the European Union commissioner running the digital technology portfolio, supports a proposed EUR50 billion (USD68 billion) “Connecting Europe Facility” program for cross-border infrastructure projects that would be included in the EU’s next long-term budget for 2014-20.

EUR9.2 billion of this investment would support expanded broadband and digital networks.

Ms. Kroes also favors establishing a single telecom market for Europe. The plan is to pool all the networks of the national players into one supranational network, which would make it easier to find money to invest in new technologies such as 4G and fiber-optic cable. In exchange for pooling their network infrastructure, the national telecoms would participate in the European network.

It would also likely mean cheaper and easier data roaming around Europe, and that could lead to industry consolidation. Removing bureaucratic layers by making a single continent-wide entity responsible for wireless and wireline would simplify the regulatory environment as well.

It’s this type of landscape that’s allowed AT&T and Verizon to establish fast and reliable service in the US. And their ability to attract and keep valuable post-paid subscribers supports long-term dividend sustainability and growth.

Verizon, in particular, has been a star, with a total return since the March 2009 low for global equities of 160 percent-plus. It’s also been an outperformer over the trailing 12 months, with a total return of 32.7 percent.

AT&T is up more than 16 percent over the past year, 111 percent since March 6, 2009.

There’s hope that Deutsche Telekom AG’s (Germany: DTE, OTC: DTEGF, ADR: DTEGY) EUR30 billion, three-year investment plan announced in December 2012 will help lead a return to investment in the Europe, Middle East and Africa (EMEA) region.

More important will be EU-wide efforts to spur investment and growth. Allowing Deutsche Telekom and fellow European powers France Telecom SA (France: FTE, NYSE: FTE), Telecom Italia SpA (Italy: TIT, NYSE: TI) and Telefonica SA (Spain: TEF, NYSE: TEF) a greater profit for renting their networks to smaller competitors would be a positive start.

Ms. Kroes’ initiatives, which if realized would create a telecommunications market very much like the one in the US, carry the greatest promise.

Deutsche Telekom has enjoyed a solid run over the past year, posting a total return in US dollar terms of 26.9 percent. But the German giant’s current dividend rate is in doubt even after a December 2012 cut, as it continues to try to get of its T-Mobile USA venture.

Telecom Italia and France Telecom are both in the red over the trailing 12 months.

France Telecom is under pressure to cut costs, and though management reported some progress with first-quarter results this was likely low-hanging fruit. Comparable and necessary success in future quarters will be harder to come by, particularly as Orange France domestic mobile unit shed 3 percent of its customers.

Italy’s biggest phone company is currently evaluating a proposal that would make Hong Kong-based Hutchison Whampoa Ltd (Hong Kong: 13, OTC: HUWHF, ADR: HUWHY) its largest shareholder.

Debt-burdened Telecom Italia is also considering the sale of its fixed-line business as it seeks to raise cash and boost shareholder returns. Failure of Hutchison talks and/or progress on an asset sale could force the company to save cash in other ways, including through the elimination of its dividend.

Telefonica, for its part, is actively expanding its presence in South America. The company temporarily eliminated its dividend in 2012 but is on track to resume its payout later this year. Telefonica reported encouraging results for the first quarter of 2013, as revenue contraction stabilized in its home market and organic growth in South America was 6.8 percent.

Telefonica has a ways to go, but it is a good way to play a rebound in Europe.