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Digital Agenda: Commission measures to deliver fast and ultra-fast broadband in Europe – what would they do for me?

European Commission - MEMO/10/426   20/09/2010

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MEMO/10/426

Brussels, 20 September 2010

Digital Agenda: Commission measures to deliver fast and ultra-fast broadband in Europe – what would they do for me?

(see also IP/10/1142, MEMO/10/424, MEMO/10/425 and MEMO/10/427)

Three complementary measures to facilitate the roll out and take up of fast and ultra-fast broadband in the EU have been adopted today by the European Commission. Giving all European citizens and businesses access to a fast and ultra-fast broadband internet connection is one of the key objectives of the Digital Agenda for Europe, the EU's plan to maximise the social and economic impact of Information and Communication Technologies (see IP/10/581, MEMO/10/199 and MEMO/10/200), and the Europe 2020 strategy for smart, sustainable and inclusive growth (see IP/10/225). The measures presented today set out a common regulatory approach for access to new high-speed fibre networks, propose a 5-year policy programme for radio spectrum to ensure, inter alia, that spectrum is available for wireless broadband and outline how best to encourage private and public investment in fast and ultra-fast broadband networks. Practical examples of exactly how the measures stand to benefit people and businesses are outlined below.

Consumers - putting the digital world at your fingertips

The Broadband package aims to ensure that people have access to the very fast internet that will enable citizens to shop, create, learn, socialise and interact online and play a full part in today's digital society. At the moment too many people in Europe find themselves stuck in the internet slow-lane because they don't have access to a high-speed internet connection.

For example, with connection speeds over 50Mbps per second it is possible to offer remote diagnostic examinations. This could make it possible to offer the world's best diagnostics to a patient wherever they are in the EU, and to ensure always-on remote back-up to the health professionals looking after frail or ill people living at home.

The proposal to ensure EU-wide coordination in radio spectrum management would safeguard the growth of innovative wireless broadband services in rural areas (where fixed high speed broadband networks may not be economically viable) and elsewhere. These offer an extra dimension to consumer choice on the internet. Moreover, wireless services can be personalised for each user, which is not just convenient but can for instance offer a safer means of making online payments. They are available at any time and any place and bring simple practical advantages – knowing when the bus will arrive; turning on the heating on the way home; having a local map combined with information on all services in the area.

The Commission's NGA Recommendation will encourage the vital investment in very high speed fibre networks because it provides regulatory certainty to telecom operators, ensuring an appropriate balance between the need to encourage investment and the need to safeguard competition. As a result, people will be able to access fast and ultra-fast internet services at competitive prices.

People in rural and remote areas - connecting communities

One of the Digital Agenda's objective is to bring basic broadband internet to all of Europe's citizens, including people living in isolated areas, by 2013 and to ensure that, by 2020, all European have access to internet with higher speeds (30 Mbps or higher). However, the high costs of building new infrastructures combined with the lower density of demand means that telecoms companies may be deterred from installing the necessary broadband infrastructure, especially in these tough financial times.

The Commission's proposed Radio Spectrum Policy Programme would ensure that part of the digital dividend – the radio frequencies freed up by the move from analogue to digital broadcasting – were earmarked for use by for wireless broadband technologies. This is particularly important because wireless broadband can bring high-speed connection to people in remote areas, or others, where it is not economically viable to install a fixed line.

The Commission is asking Member States to step up a gear by issuing quickly licences to operators to use spectrum bands which have already been technically harmonised at EU level for the use of wireless broadband and to open up the 800 MHz band to wireless broadband by 2013.

Finally, the broadband Communication outlines how best to encourage private and public investment in high and ultra-high speed networks, inter alia by using the EU's Structural Funds and the European Investment Bank.

Small and medium sized businesses– faster access to "the cloud"

Many SMEs are not able to afford the high costs of some business software applications - which means they are not able to benefit from the productivity gains this software can trigger.

High speed broadband connections would enable SMEs to connect to "cloud" services. These are applications or tools that are stored on an internet server and can be accessed as and when a business needs them. This is frequently far more cost effective than if a company itself purchases expensive software which they would only use occasionally.

Businesses need the guaranteed higher bandwidth, speed, reliability and security of next generation connectivity, to fully exploit the possibilities of cloud computing.

The Commission has also committed to develop an EU-wide strategy on "cloud computing" notably for government and science as part of the Digital Agenda for Europe.

Telecoms operators – encouraging investment and opening up networks for incumbents and alternative operators

According to Commission estimates, the private and public sectors would have to invest between €180 and €270 billion to ensure that at least half of all European households can subscribe to broadband connections of 100 Mbps or higher by 2020. A large proportion of this would be for investment in fibre networks to complement or replace the traditional copper-based wire networks that can offer only limited internet speeds.

The Commission's Recommendation on Next Generation Access networks has indicated how national telecoms regulators should regulate access to ultra-fast fibre networks, ensuring an appropriate balance between the need to encourage investment and the need to safeguard competition.

Under article 19 of the telecoms Framework Directive (2002/21/EC), national regulators are obliged to take "utmost account of the Commission's Recommendation, justifying any departure from it". The Recommendation provides regulatory certainty for established and newer telecom operators across the EU, and so gives a stable environment for investment.

For example, when setting cost-oriented access prices for companies with dominant positions in national broadband markets, regulators will have to take into account the significant risks taken by companies which invested heavily in fibre networks, normally in the form of granting a risk premium.

The Commission also wants to ensure that alternative providers have the access and incentives they need to compete in broadband markets. The Recommendation preserves competition in NGA markets by granting new market entrants reasonable access to the new fibre infrastructures. This will enable alternative operators to establish their business and invest progressively in their own infrastructure. The Recommendation gives national regulators sufficient leeway to support fair market entry and infrastructure-based competition.

The Commission has also indicated that regulators can be flexible when they tackle market differences in urban and rural areas. For example where competition is strong, or market dynamics change, national regulators will be able to adapt or withdraw their regulatory measures to reflect this.

Finally, the Recommendation strongly supports arrangements for co-investment in NGA networks and allows setting lower access prices to the unbundled fibre loop in return for up-front commitments on long-term or volume contracts

Regions – making the best use of EU funding

European Union rural development and structural funding is available to support the construction of broadband infrastructure and encourage internet take-up in Europe's region. For example, for the 2007-2013 financing period of the EU Structural Funds, a total of €2.3 billion was allocated to broadband infrastructure investments and € 12.9 billion to information society services; and a further €360 million through the Fund for Rural Development was used for broadband funding. This follows last year's clarification of state aid rules on use of public funds for broadband deployment which gave national and regional authorities the confidence to plan their own infrastructure projects (see IP/09/1332).

However, the EU regions sometimes find it hard to target available funds. For example, only 18% of the structural fund allocation has so far been committed to broadband compared to an average of 27% for all other areas covered by the fund. In 2011 the Commission will publish guidance on broadband investment for local and regional authorities to encourage the full absorption of EU funds. It will also invite stakeholders to an EU-wide event on good practice in ICT implementation in regions and rural areas. Exchange of good practice in broadband project implementation will be encouraged and supported through the multilingual re-launch of the European Broadband Portal (www.broadband-europe.eu/)

Investors - developing broadband finance instruments

Unfortunately many potential investors in fibre-based high speed broadband networks are put-off by the very long pay back period and uncertainties on the rates of return. Local broadband projects pushed by regional bodies also tend to be too small and /or inexperienced to attract the interest of large financial institutions

The European Investment Bank (EIB) already lends an average of €2bn each year to economically viable broadband projects. EIB involvement is planned to increase as the Bank re-focuses its lending strategy on the Europe 2020 priorities. The Bank's direct capital contribution is usually exceeded by the positive catalytic effect that EIB involvement has on private sector investment - the banking sector and other potential private investors are much more like to invest in a broadband project if it has won the endorsement of the EIB.

The Commission's Broadband Communication announces new cooperation between the European Investment Bank (EIB) and the European Commission, which will set out concrete proposals for broadband financing instruments to complement existing broadband infrastructure financing by spring 2011.

By the end of 2013, the Commission will also reinforce and rationalise the use of funding of high-speed broadband through EU instruments under the current financial framework (e.g. ERDF, ERDP, EAFRD, TEN, CIP).

The environment - a greener and safer Europe

The Radio Spectrum Policy programme would also ensure that spectrum was available for policy priorities including environmental protection, the fight against global warming, public protection and disaster relief and transport. For example, Member States would have to protect the radio frequencies necessary for monitoring the Earth's atmosphere and surface and make spectrum available for wireless technologies with a potential for improving energy saving, including smart energy grids and smart metering systems.


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