Broadband: investing in digitally driven growth

The European Union (EU) broadband market is the largest in the world. Certain EU Member States are leaders in terms of the rate of take-up. However, only 2 – 5 % of broadband lines use fibre optics (Fibre-to-the-home or LAN), while this figure is 51.4 % in Japan and 46 % in Korea. Consequently, EU networks must be improved and updated. This Communication proposes solutions to improve the current framework governing broadband and to integrate it with the Digital Agenda for Europe.

ACT

Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions of 20 September 2010 – European Broadband: investing in digitally driven growth [COM(2010) 472 final – Not published in the Official Journal].

SUMMARY

This Communication presents a set of measures which aim to promote broadband in the European Union (EU). It forms part of a package of measures presented by the European Commission in September 2010 which include a Recommendation on Next Generation Access networks and a European Radio Spectrum Policy Programme.

The current broadband situation in the EU

There are currently 124 million fixed and 25 million mobile broadband subscriber lines in the EU. The rate of take-up is 24.8 %, while 94 % of the EU population are covered by DSL networks.

In terms of speed, download speeds are on average 2 Mbps (Megabytes per second) or more, while uploads are 256 Kbps or more. Download and upload speeds are therefore increasing consistently.

Substantial investment in broadband is still required in order to achieve the Digital Agenda targets. In fact, an investment of between EUR 38 and 58 billion would need to be made to achieve 30 Mbps coverage by 2020. In addition, between EUR 181 and 268 billion would be needed to provide sufficient coverage to 50% of households so that they have access to at least 100 Mbps services.

Measures for achieving the broadband target

Investing in national broadband plans

The Digital Agenda’s broadband targets can only be achieved if all Member States commit to them and develop operational plans defining their national objectives. The Commission will work with Member States to coordinate the establishment of national targets and will encourage peer-review processes among Member States in order to accelerate the transfer of best practice between policy makers. An action-oriented broadband platform will be established in order to coordinate the stakeholders concerned.

The aim of the national plans is to encourage private investment by reducing investment costs and enhancing infrastructure competition in order to implement the Regulatory framework for electronic communications.

These plans must give guidance on the uptake of European broadband funds and European Investment Bank (EIB) instruments in eligible regions.

Promoting investment and reducing investment costs

The Commission estimates that 80 % of the costs of deploying new fixed infrastructure are civil engineering costs which can be significantly reduced through measures taken by national and local authorities in the area of town planning. These authorities can support broadband deployment through direct public investment or public financing in line with State aid rules.

The Body of European Regulators for Electronic Communications (BEREC) also has a role to play by including measures to support broadband development as a priority in its 2011 work programme.

Promoting wireless broadband

Broadband can be accessed more easily through wireless technologies. Member States are therefore invited to implement the following measures regarding broadband coverage:

• making available sufficiently large bands of spectrum;
• awarding rights of use quickly;
• increasing flexibility and competition;
• allowing secondary trading to adapt to market developments.

Reinforcing and rationalising the use of the Structural and Rural Development Funds

The construction of broadband infrastructure and Internet take-up is supported by the Structural Funds and Rural Development Funds. For the 2007-2013 period, EUR 2.3 billion of Structural Funds have been allocated to broadband infrastructure, while EUR 12.9 billion have been allocated to information society services. In the same period, the European Agricultural Fund for Rural Development (EAFRD) received more than EUR 1 billion and, of this, EUR 360 million were invested in broadband projects.

The Commission wishes to increase the contribution of these Funds towards broadband development. Specifically, it plans to:

• provide, in 2011, guidance on broadband investment for local and regional authorities to encourage the full absorption of EU funds;
• provide guidance on the use of funds from public-private partnerships;
• develop a new version of the European Broadband Portal.

Developing broadband finance instruments

The lack of private finance acts as a brake on broadband development. The EIB, which already contributes to financing projects in the broadband sector, should increase its contribution as it refocuses its lending strategy on the Europe 2020 priorities. It is also necessary for local and regional authorities to explore alternative financing arrangements, including public-private partnerships. The EU and the EIB will make proposals to support this during the course of 2011.

Last updated: 18.10.2010