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MEMO/06/132

Brussels, 21 March 2006

[Figures and graphics available in PDF and WORD PROCESSED ]

The Commission's "Broadband for all" policy to foster growth and jobs in Europe: Frequently Asked Questions

1. What is broadband?

The term ‘broadband’ is commonly used to describe internet connections that are ‘always on’ and significantly faster than dial-up ones. But broadband is not just a faster way to connect to the internet - it fundamentally changes the way people use it. Connections are immediate and large volumes of data can be transmitted almost instantly. Broadband can change the internet's overall presentation from slow, and often user-unfriendly text format, to a fast, colourful stream combining still images, video, animations and sound. These features support the delivery of innovative content, applications and services regardless of geographic location. Broadband allows households to access advanced e-government, e-health and e-learning services, improving their quality of life and their ability to participate in social and democratic life. Broadband bridges distances and boosts the attractiveness to business of remote and rural areas.

2. What are the main broadband technologies?

DSL: this stands for "Digital Subscriber Line." It is today the predominant broadband delivery technology, a medium for transferring data over normal phone lines and can be used to connect to the internet. xDSL refers to different variations of DSL, such as ADSL (asymmetric DSL) and VDSL (very high speed DSL). In October 2005, 80% of broadband subscribers in the EU25 used DSL to connect to broadband Internet

Cable modem: a cable modem is a device that enables you to link your PC to a local cable TV line and receive data at similar speeds to DSL. Cable currently accounts for about 16% of all broadband connections in the EU25.

Fibre optic: a technology that uses glass (or plastic) threads (fibres) to transmit data. A fibre optic cable consists of a bundle of glass threads, each of which is capable of transmitting messages modulated into light waves. Fibre optics has several advantages over traditional metal communications lines including virtually unlimited bandwidth.

Power line communications: using electric power supply lines to offer high speed internet access.

Cellular solutions rely on the radio cells already established or being established for “second generation” and “third generation” mobile communications networks. Designed initially to serve the needs of mobile users, including while they are on the move, these networks can also be employed to deliver service to fixed users.

Wireless local area networks (W-LAN) provide a shared access bi-directional radio carrier over a limited area, which can provide a service to any suitably-equipped user terminal within reach of the signal. A new variant is called Wi-Max.

Satellite solutions: satellites promise a ubiquitous delivery platform for broadcast and broadband services over any part of the earth’s surface, except where cover or terrain obscures the line-of-sight path to the satellite. They can be used to give direct access links to individual users, or for backhaul.

[Graphic in PDF & Word format]

3. Why is broadband crucial for promoting economic growth in Europe?
A first attempt to measure the economic impact of broadband was made in 2005 by applying econometric techniques to national-scale US data. This research shows that communities for which broadband has been available between 1998 and 2002 have experienced more rapid growth in employment (1%), in the number of businesses (0.5%) and in the number of businesses in IT-intensive sectors (0.5%). (The article is available at

http://cfp.mit.edu/groups/broadband/docs/2005/MeasuringBB_EconImpact.pdf)
A recent study by the German Ministry for Economics and Technology and the German IT industry estimates the economic benefits of exploiting the full potential of broadband. Under the assumptions that broadband prices decline by 14%, broadband coverage increases by 8 percentage points by 2010, broadband take up continues to increase at an annual 15-25% rate, triple play services are launched in the summer of 2006, and there is a significant deployment of non-DSL technologies, including the upgrading of cable networks, advanced services in the field of entertainment, public services, eCommerce, business process-outsourcing, telework, are expected to expand quickly. This will spill over to the whole economy and generate a virtuous growth-productivity and employment cycle, leading to an increase of GDP by € 46 billion between 2004 and 2010 and to the creation of 265.000 jobs. (The report is available at

http://www.bitkom.org/files/documents/BITKOM_Studie_Breitbandnutzung.pdf).
At the European level, an attempt to measure broadband benefits has been made in the context of the Digital Divide Forum Report. A 2004 study by PriceWaterhouse Coopers estimates the net present value of benefits to be 69% larger than costs. The report suggests that the ratio should be regarded as strongly positive that the rewards of rolling out infrastructure to bridge the digital divide in Europe are likely to be substantially greater than the investment required to do so. (The report is available at

http://ec.europa.eu/information_society/eeurope/i2010/docs/implementation/pwc_final_report.pdf).

In this context, also the Annual Progress Report (known as the “Spring Report”) on the renewed Growth and Jobs Strategy, adopted by the Commission on 25 January 2006, is noteworthy. This report is one of the cornerstones of the new Lisbon process and includes an assessment of each Member State’s National Reform Programme. It makes clear and concrete proposals for European leaders to commit to when they meet this month and to implement by 2007. The report recalls that “Most national programmes also focus on the importance of modern transport infrastructure and of information and communication technologies (e.g. broadband availability). These are examples of precisely the kind of investments that Member States should seek to promote with the help of the resources of cohesion and rural development policies.” (p. 5). (The Annual progress Report is available at http://ec.europa.eu/growthandjobs/annual-report_en.htm)

4. What does the Commission do to promote the broadband growth in Europe?

It is a prime objective of the EU’s i2010 strategy – “a European Information Society for growth and employment” – to accelerate the roll-out of advanced broadband communications and create an open and competitive single market for information society and media services within the EU. Under i2010, the Commission targets the year 2010 for high-speed broadband lines being available everywhere in Europe.

The EU’s regulatory framework for electronic communications (today’s EU telecom rules) aims at stimulating competition and therefore investment and innovation while increasing consumers’ choice. The wholesale broadband market is one of the markets that is, under the EU rules, subject to telecom regulation by independent national telecom regulators with the objective of opening this market up to competition by new market entrants.

The Commission’s work on coordinating spectrum policy in Europe could become an important driver for the development of wireless broadband services, which could be particularly interesting for less-developed and rural areas where broadband cable could be too costly.

The Commission has also long been encouraging EU Member States to adopt and implement national broadband strategies to stimulate the supply and the demand side of the market whenever identified as a national priority.

The Commission is in addition supporting the research, innovation and the deployment of broadband infrastructure, broadband-enabled public services, digital content, the promotion of ICT skills, trust and confidence through its Framework Programme for research, Structural and Rural Development Funds and other specific initiatives such as the eContent and eLearning programmes as well as the regional policy innovative actions.

5. Where does Europe stand with regard to broadband coverage and take-up?

Broadband is one of the fastest among new communication technologies in Europe. The number of total broadband lines in the EU has quadrupled in just three years.

Broadband ‘take-up’ or ‘penetration’ rate is measured as the number of lines per 100 of population. In January 2006, broadband reached almost 60 million subscriber lines in the EU25 and a penetration rate of about 25% of households. Growth in broadband is mainly market-driven.

However, households and businesses with broadband access are concentrated in urban and suburban areas. In January 2005, DSL, the most common broadband platform in Europe, reached only about 62% of households in the rural areas of the EU15, as opposed to more than 90% in urban areas. Furthermore, in rural areas, only about 8% of households subscribe to broadband, compared to an average of 18% in urban areas.

On average, broadband deployment currently excludes about 13% of EU15 population. Data for new Member States will be available in the summer 2006, but the gap is expected to be much larger in their territories.

[Graphic in PDF & Word format]

Rural broadband connection speeds also lag behind urban ones. Download speeds between 144kbps and 512 kbps have been the most common in rural areas in the past two years, whereas in urban ones they are close to 1,000 kbps. Furthermore, whilst in urban areas there is a clear trend towards higher speeds, in rural ones they tend to remain constant. Lower speeds may constrain take-up of broadband connections by businesses in rural areas and also by households, if speeds are too slow to permit a true “multimedia” experience (text, sound and images combined).

[Graphic in PDF & Word format]

6. Which Member States are the fastest and slowest movers?
Broadband growth is uneven across Member States. The best performers on broadband penetration have been and are the Netherlands, Denmark and Finland with a penetration rate above 20%. Belgium and Sweden follow closely and the UK and France have achieved 15%. Most of new Member States and Ireland and Greece lag behind, with Greece, Poland, Slovakia, Cyprus, Latvia, Hungary, and Ireland at penetration rates below 5% in October 2005.

[Graphic in PDF & Word format]

In terms of broadband coverage, the Benelux countries and Denmark do not suffer any urban/rural gap mainly because they are relatively small, flat countries. However, large gaps can be found in France, Germany, Austria, Italy, Ireland and Greece. The chart below shows broadband coverage per country in EU15 in January 2005. As DSL in Europe is currently the most common technology and tends to overlap with cable modem, its coverage is a good approximation of broadband deployment.

[Graphic in PDF & Word format]

7. What are the national broadband strategies the Commission has asked the Member States to adopt? How do they compare among the EU25?

By 2003, all EU15 Member States had adopted national broadband strategies. Since their EU accession Poland, Hungary, Slovenia, Czech Republic and Lithuania have also adopted similar strategies. Some Member States have reviewed or are currently reviewing these strategies by introducing targets and better reflecting the needs of the different areas of each country (for example France, Finland, Netherlands). Developments will be further monitored through the i2010 High Level Group of Member State representatives.

The national broadband strategies are based on similar principles, e.g.:

  • recognition of the primary role of the market in the expansion of broadband, and
  • the role of public policy in complementing the effective functioning of the market, addressing both the supply and the demand side to stimulate the virtuous circle where development of better content and services depends on infrastructure deployment and vice-versa.

Supply-side principles

  • the importance of competition and convergence across alternative platforms, to be stimulated through the consistent implementation of the new regulatory framework for electronic communications.
  • the role of public policy in extending coverage of under-served areas (with particular care neither to distort competition, nor to inhibit private investment, and on the basis of a technology-neutral approach).
  • the need for an assessment of broadband availability and take-up through a continued monitoring of the market also at regional/local level.
  • the importance of R&D for the development of next-generation broadband, cost reductions and innovative applications and services.

Demand-side principles

  • the usefulness of demand-aggregation policies that improve certainty for investors and increase use by public administrations, educational and healthcare establishments.
  • the importance of developing broadband-enabled open and interoperable applications and services for businesses and administrations.
  • The need to overcome barriers to the development of innovative new content, including progress in areas such as Intellectual Property Right protection, Digital Rights Management systems and mobile payments.
  • The role of security and trust in stimulating broadband use.

8. What is the “Broadband gap” addressed in today’s Commission Communication?

The Communication “Bridging the Broadband gap” refers to the territorial or geographic differences in broadband access, speeds, quality of service, prices and use between urban and rural/remote areas as well as between more/less developed areas in Europe. Commercial deployment of broadband in remote and scarcely populated regions has been slower than in urban areas mainly because high costs (due to distance) and lack of demand (due to population scarcity) preclude the exploitation of economies of scale needed to reduce unit costs. In many cases, installing broadband infrastructure in rural areas is not economically viable for private firms. Technological innovation can help over time by reducing the minimum operational size of a broadband platform.

Because of distance, the quality of the infrastructure in terms of speed, capacity and quality of service may be reduced. As a result, users in rural and remote areas often suffer a lower price/quality ratio than those in urban ones.

There are also gaps in terms of usage (lower share of internet users in rural areas) and business take-up of ICT (fewer firms use e-commerce tools). These gaps restrict growth and employment opportunities in rural areas.

9. What is the Commission doing concretely to bridge Europe’s “broadband gap”?

The EU has several powerful instruments available to enhance broadband coverage in the EU and to bridge the broadband gap which are all mentioned in today’s Commission Communication and thereby mobilised:

EU Telecoms rules: They ensure open and competitive broadband markets and stimulate efficient spectrum management. The 11th Implementation Report published in February 2006 found that best performing countries in the area of broadband are characterised by a combination of competition between alternative platforms and effective regulation (see IP/06/188).

EU State aid rules: The Commission has a positive stance regarding the application of the state aid rules to public funding for broadband. A number of broadband projects were approved over the past year: The Commission came to the conclusion that either the aid was compatible with state aid rules (projects in UK (IP/04/1371, IP/05/646, IP/05/1231), Spain (IP/05/398), Austria, Ireland or that there was no state aid involved (two decisions in France – see IP/04/1371 and IP/05/530). Only once has the Commission opened a formal investigation procedure (Broadband Appingedam, Netherlands, October 2005 – see IP/05/1331) In Appingedam, the public authorities intended to support the deployment of an additional network where broadband services are already provided by market players over two existing networks.

Most recently, on 8 March 2006, the Commission authorised a € 170 million programme, co-financed through Structural Funds to boost broadband availability in Ireland. In partnership with the local authorities, the Irish Government decided to build open fibre-optic networks (“Metropolitan Area Networks”) in over 120 towns where such infrastructure is not supplied by market players (see IP/06/284).

EU Structural funds: the Commission is approving Structural Funds to co-finance a €210 million project on “Broadband Access Development in Underserved Greek Territories”. The project aims to boost access to broadband infrastructure and to stimulate demand. Greece lags far behind other EU Member States in broadband rollout and take-up, partly because of lack of competition. The EU’s electronic communications rules, which require Member States to open up markets to new entrants, were only recently transposed into Greek national law.

EU Rural development: the EU rural development policy has been experimenting with a wider use of ICT to promote growth and employment in rural areas. For example the Leader Community Initiative, now being mainstreamed, promotes a virtual learning centre (Breadalbane project) in Scotland’s Highlands and in Andalusia (with the @cerca project). Both projects seek to develop ICT-based local development strategies, reducing this way the digital divide and improving capabilities and employment opportunities. ICT has also greatly expanded the market in rural tourism activities.

In addition, the Commission is, under today’s Communication:

  • stepping up the exchange of best practices for closing the broadband gap. The Commission will support the development of a web site to provide a meeting point on broadband for the regions of Europe. This will also help facilitate meetings between the regions and industry and provide advice and support in overcoming common problems. The Commission will also hold a large event demonstrating the benefits of broadband to rural areas in February 2007,
  • pressing Member States to upgrade their national broadband strategies, which should reflect regional views and needs, as well as setting clear targets. Some countries are currently revising their strategies and many national reform plans submitted in the context of the renewed Lisbon strategy make explicit reference to the importance of implementing broadband strategies, and
  • monitoring the development of markets, particularly in the new Member States. Data for these countries will be available in the summer 2006. Further progress will be assessed in 2008, the European Year for Inclusion, in which enhancing broadband coverage will be one of the main themes.

Further information on the EU’s broadband policies 
http://ec.europa.eu/information_society/industry/comms/broadband/index_en.htm


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