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Vice-President of the European Commission responsible for the Digital Agenda
Broadband investment in a difficult economic climate
Telecoms and Internet Federation Annual Conference
Dublin, 12 October 2010
Good morning everybody. Let me first say that I am delighted to be here this morning among such distinguished participants. Your theme for this year's event – 'The Next Economy' - is well chosen. We know that there are no easy choices – but we also know that tough decisions are needed to move us forward. Not only in Ireland but throughout Europe.
I am sure it is well recognised in this room that maximising the role of ICT will help us to build the next economy. That is certainly the view of the EU, and that is why we have put the Digital Agenda for Europe on the table, the first flagship under Europe's EU2020 strategy. Its principles have already been agreed by the EU's Heads of State and Government in June. And you have an important role as partners in this digital movement.
But I don’t want you to think the Digital Agenda is only about productivity. It is about people: it's about growth and jobs and improving quality of life. It is also a very good fit for Ireland, because it is about helping all of us to do more with less.
Did you know that more than a million Irish have never used the internet? I want them to have the skills and chances they need to be part of the digital era, and to contribute to Ireland’s recovery.
There is a long list of problem areas that the Digital Agenda is trying to tackle.
Today I would like to focus on investment in networks. How can we ensure investment in fast and ultra-fast internet access in a time of deep economic crisis?
Perhaps we need to flip the question: How can we afford not to invest?
Europe has some of the highest broadband penetration rates in the world but the rest of the world is catching up and some countries have better quality networks. That makes our businesses less competitive. In fact Irish businesses are now competing against Asian businesses with internet connections a hundred times faster than our own. We can’t accept that.
Our objective is to bring basic broadband to all Europeans by 2013 and to ensure that, by 2020, all Europeans have access to much higher internet speeds of above 30 Mbps and 50% or more of European households subscribe to internet connections above 100 Mbps.
At this point you will rightly be thinking: “that’s great – but where will the money come from.” It’s a question we have thought about a great deal.
The bad news and the good news is that I have not come here to write blank cheques.
Of course it would be easier if we had more resources, if we all lived closer together, or if we could learn to like big overhead cables everywhere. But that is not the world we live in. So we have to focus on changes that limit costs, and on extremely efficient levers.
Some of this may sound obvious, for instance co-ordinating network roll-out with other public digging work (such as for water pipes and electrical cables). But it is essential to make efficient improvements and reduce costs.
Overall, my point means we need a mix of technology, many sources of funding, and pragmatic co-operation by all stakeholders.
To this end I recently announced a package of measures that moves the Digital Agenda from 'vision' to 'action'. Broadband is ‘first out of the starting blocks’ with a package that includes:
All the details are available in these public documents. Today I want to tell you why they matter.
First, they back up the opportunities provided for in the revised legislative framework for electronic Communications and the 2009 Broadband State Aid Guidelines.
Second, there are specific benefits for Ireland in this framework.
For example, let’s look at radio spectrum policy.
Wireless networks will play a key role in delivering the objective of ‘Broadband for All.’ I know that Ireland is keenly aware of the role of wireless and has made great use of it through the Rural Broadband Scheme. The Commission proposal for a Decision on a multi-annual Radio Spectrum Policy Programme (RSPP) is particularly important here. We need your active support to get this proposed Decision adopted by the European Parliament and Council. Because this policy will create the more flexible spectrum allocation needed to allow wireless to develop.
If you want your phones to work everywhere, if you care about getting rural Ireland connected – then we need your support.
This will not be an easy debate because we have proposed a requirement for Member States to ensure that sufficient spectrum is allocated for coverage and capacity purposes so that wireless applications play their full role in broadband for all. What is more, we suggest setting a 1 January 2013 deadline for making the 800 MHz band of the digital dividend available for electronic communications services according to the EU harmonised conditions of use. This is a tough deadline but I think there is broad support and momentum behind this date.
My view is that setting the bar high is crucial for the wide deployment of wireless broadband.
Ireland has been an active participant in EU spectrum affairs over many years. We need your continued support at EU level. When it comes to broadband rollout this is one of the key levers at your disposal.
Next Generation Access networks (NGA) Recommendation
Our NGA Recommendation combines investment incentives with protection of competition. Why? Because although telecom operators need to invest a lot to deploy next generation fibre networks, we cannot take the risk that this fundamental transition may lead to a re-monopolisation of telecom networks.
We need both incumbents and new market entrants to deliver competitive broadband services. All investing companies have my strong support in this transition.
A particular part of the Recommendation may be useful for a small market such as Ireland: the strong support for arrangements which can reduce the level of risk taken by each individual company. I would urge you intensify your efforts here.
Finally, our Broadband Communication outlines how we will be working with Member States to introduce operational broadband plans at the national level. These should foresee concrete implementing measures, including provisions for the required funding.
We are working with the European Investment Bank to bring in more funds and new financing mechanisms for these investments. The EIB already invests €2 billion each year in broadband projects and this is likely to increase as part of the wider Europe 2020 strategy. The EIB involvement will have a catalytic effect on other banks, and could underpin gross investment up to 15 times greater than the EIB's initial contribution.
That is in addition to EU funds – yes there are some cheques! – that may support direct investment in broadband: the Cohesion funds and the Rural Development Funds. These funds have not been used effectively in the past for broadband development – that must change with the Digital Agenda.
For example Cornish authorities have just made excellent use of the Regional Development Fund to plan a €132m fibre network. We want to make it even easier for you to access these funds.
But please make every effort to understand the options and take advantage of the opportunities. There is no point in funds going unused as they do now!
Universal Service Obligations (USO)
Finally we can’t talk about ‘broadband for all’ without addressing the future of Universal Service Obligations. The rapid growth in scope and functionality of the Internet has changed the landscape since we put the 2002 regulatory framework in place. We have been consulting on this issue in 2010 to come up with a way forward.
No consensus has emerged from the consultation, and there are certainly cost implications to our decision. A huge investment would be needed to secure 1 Megabits per second coverage at an affordable price for all households in the EU. It is therefore crucial to determine whether an extended universal service obligation should be funded by the telecoms sector or rather a broader base, such as by the state budget.
In my view we should keep in mind that universal broadband offers benefits beyond the telecoms sector – any cost obligation should not be theirs alone. There may be different options to finance possible universal service obligations in line with their premises. The message I want you to take away is that whatever we decide on the future of universal service, the possible impact on all economic actors has to be kept in mind.
Information Society Services
Before I conclude I would like to come back to the Digital Agenda for Europe and the virtuous circle of activity we are trying to create with it. By removing bottlenecks to new services and innovation and bringing parties together, we increase incentives for the new investments in infrastructures and our capacity to innovate. This helps us to stimulate demand with new content and services. This in turn builds the business case for investment in faster networks.
You have made great strides in Ireland, for example in the areas of eCommerce and eGovernment for enterprises. You have for many years been a smart economy, with a great ICT sector. I would urge you to continue managing today’s economic difficulties by stimulating services such as eGovernment, eLearning and eHealth, which bring great benefits to Irish citizens by making smart use of the limited public resources available.
In conclusion, we are moving from vision to action with the Digital Agenda. We certainly cannot do this alone; success depends on all actors working together.
So please stay involved, join our 2011 annual Digital Assembly, and hold us to account on our progress. But please do it with a sense of responsibility for what you can offer to this Agenda.
I can’t stress enough how crucial this is to the battle for jobs and prosperity. There are many levers at your disposal. I urge that we work together towards these goals - and I look forward to working with you.