Broadband Internet access: the territorial divide

Fast broadband Internet access is essential to stimulate information society in Europe. Lack of broadband access in the less technologically advanced areas of the European Union (EU) is an issue which should be addressed urgently. This communication sets out the current situation as regards the territorial divide in broadband access in the EU. It identifies a number of instruments that could be deployed to improve the availability of broadband and proposes certain courses of actions to that end.

ACT

Communication from the Commission of 20 March 2006: Bridging the Broadband Gap [COM(2006) 129 final - Not published in the Official Journal].

SUMMARY

The importance of broadband

Broadband internet connections are a prerequisite for the information society, growth and jobs throughout the European economy. Broadband could potentially provide:

new applications and improvements to existing ones;
new services and new investment and job opportunities;
greater productivity for many existing processes.

Broadband may also have a considerable impact on everyday life, particular as regards telemedicine and eHealth applications, eGovernment, education and rural development. Broadband could also enable:

quicker access to healthcare services through the provision of eHealth applications, and simpler hospital management and provision for skills shortages;
greater capability of eGovernment services and better interaction between governments, easing access to government for citizens and businesses;
access to new forms of educational content, including real-time education for students from qualified teachers in areas where that type of tuition may not be available;
development of the rural economy by facilitating, for instance, e-business, and better contact between farms and national and international markets.

Digital territorial divide

Broadband connections have increased sharply in number, almost doubling in the period 2004-05. By the end of 2005, the broadband penetration rate was estimated to be 11.5% in terms of population, i.e. roughly 20% of households, corresponding to roughly 53 million connections in the EU25.

Although broadband is progressing fast, there is still a large gap between urban and rural areas. Broadband access in the EU's more remote and rural regions is limited because of the high costs associated with low population density and remoteness. Commercial incentives to invest in broadband deployment in these areas often turn out to be insufficient.

The need for public intervention

Public intervention at all levels could help improve broadband coverage in under-served areas. That said, the risks associated with public intervention - particularly the risk of distorting competition - should be taken into account.

Local and regional authorities are best placed to plan a broadband project. They are the most familiar with local needs and are able to determine the optimum technology mix for the local topography.

AVAILABLE INSTRUMENTS AND ACTIONS

Several instruments could be deployed at EU level to improve the availability of broadband within the Union. This Commission Communication presents actions targeted at supporting the spread of broadband for each of these instruments.

Implementation of the regulatory framework for electronic communications

The main aim of the regulatory framework for electronic communications is to stimulate competition in the sector. Greater competition will provide a greater incentive for the broadband market to develop.

Action 1:

full implementation of the regulatory framework for electronic communications with a view to enhancing open access and facilitating competitive access to rural areas;
a more coordinated EU radio spectrum policy to accompany the process of broadband development (Commission and Member States).

State funding

Public intervention may accelerate broadband deployment in the less profitable areas, while ensuring that competition is preserved.

Action 2:

encouraging public intervention in the forms of loans and grants in under-served areas;
exploring the possibility of fiscal incentives for subscribers (Member States).

State aid and competition policy

In order to avoid any distortion of competition through public intervention, Community state aid law provides for an appropriate legal instrument. There have already been a number of Commission decisions regarding publicly funded broadband projects in rural and remote areas.

Action 3:

providing guidance on state aid rules applicable to broadband projects (Commission).

EU funding: Structural Funds and Rural Development Fund

Structural Funds and the Rural Development Fund contribute to the development of regional and rural areas that are lagging behind. Structural Funds aim at ensuring availability of ICT infrastructure where the market fails to provide it at an affordable cost and to an adequate level. The new Rural Development Fund will also focus on investment in human resources and innovation, including the take-up of ICTs in rural areas.

Action 4:

a conference in the first half of 2007 to bring together the ICTs and rural constituencies. The aim of this conference will be to raise awareness of the potential of ICTs for rural development and better understand rural users' requirements (Commission).

Demand aggregation and procurement

Fluctuating demand inhibits commercial investment. With a view to reducing this uncertainty, local authorities are well placed to organise a registration system and assess the local demand which can eventually be brought to the market.

Action 5:

launching a website that will stimulate the exchange of best practices and facilitate demand aggregation (Commission).

Development of modern online public services

Development of modern online public services is a powerful instrument to further drive broadband demand.

Action 6:

implementing policies at Member State and regional level to provide connectivity for public administrations, schools and health centres;
proper consideration of the stimulation effect of e-government services in disadvantaged regions in preparing the Action Plan for e-government in 2006.

Background

This Communication acts upon one of the priorities of i2010 initiative, i.e. to create an inclusive information society, particularly by improving the geographical coverage of high-speed Internet in under-served areas.

The geographical digital divide was a problem highlighted in the eEurope 2005 action plan. This action plan emphasised the role that Structural Funds can play in improving broadband coverage in disadvantaged regions.

See also