IHS Global Insight Perspective | |
Significance | The European Union (EU) sees very-high-speed broadband infrastructure as crucial to creating jobs, increasing economic performance, and to unlock the competitive potential of member states. |
Implications | The European Commission has identified state funding as particularly important to bringing services to rural and remote areas, where privately funded roll-out may not be commercially viable. |
Outlook | The EU regulation of telecoms state-aid agreements is vital to ensuring a level playing field, and is undoubtedly encouraging investment and competition. |
The European Union (EU) has revealed that it approved some 1.8 billion euro (US$2.4 billion) in state aid for broadband investment during 2010—four times the amount it approved in the previous year.
The EU's executive arm, the European Commission, adopted a record number of 20 decisions covering key state-funding deals for broadband development in, among others, the Spanish region of Catalonia, Finland and the German state of Bavaria. The commission says that the sum will potentially generate up to 3.5 billion euro funding for broadband roll-out, as most of the investment was matched by the private sector.
The Commission stated that it plans to further encourage the smart use of public funds in line with the Broadband Guidelines to bring high-speed and very-high-speed internet access to as many Europeans as possible, as quickly as possible—to help them benefit from the advantages of a knowledge-based society.
Outlook and Implications
- EU Broadband Guidelines In Action: The EU commissioner for competition policy, Joaquín Almunia, stated that smart investments into high- and very-high-speed broadband infrastructures are crucial to create jobs, increase economic performance and to unlock the competitive potential of the EU in the long term, and that the commission is committed to helping member countries to accelerate private and public investments in this sector. Expanding broadband take-up across the 27-member bloc is a key plank of the EU executive's decade-long 2020 economic plan unveiled in March last year. The Commission said it had allocated 2.3 billion euro from its structural funds for broadband infrastructure investments and another 12.9 billion euro for information-society services during the 2007–13 period, while a further 360 million euro through the Fund for Rural Development was used for broadband funding (see United Kingdom: 1 October 2010: BT and EU to Jointly Fund Fibre Roll-Out to Under-Served Cornish Region). Elsewhere, the European Investment Bank invested 2.3 billion euro in 2009 in broadband infrastructures, making a total of 12 billion euro invested since 2000. The commission set out its approach with the September 2009 Broadband Guidelines, which stated that public support would be necessary to ensure universal coverage of broadband infrastructure, thus avoiding a digital divide between urban and rural or remote areas (see Europe: 18 September 2009: New EU Guidelines Propose Limit on State NGN Funding to Underserved Regions).
- Importance of Public Funding to Rural Broadband Roll-Out: When assessing public support to broadband networks, the Commission makes sure public support does not crowd out private investment, ensuring that alternative operators get effective and non-discriminatory access to subsidised broadband infrastructures, aiming to improve quality and choice of services. This approach is particularly important to bring state-of-the-art services at fair prices to rural and remote areas, where privately funded roll-out may not be commercially viable. Key projects mentioned by the EU include the ongoing state-aid scheme to improve the availability of broadband services in rural areas of Germany, which has already brought state investment of nearly 200 million euro (see Germany: 10 November 2008: EU Approves 45-mil. Euro in State Aid for Expanding Broadband in Rural Germany). Elsewhere, in Spain, the commission has approved the roll-out of a public open network in Catalonia (see Spain: 16 August 2010: ), while reported comments from Commissioner Almunia suggest that a similarly ambitious plan in Portugal may be about to get the green light (see Portugal: 17 January 2011: EU May Give Green Light to Portugal Broadband Investment Plan Next Week—Report).
- EU Regulation Begins to Bear Fruit: The EU has moved to eradicate unfair charges, particularly in the mobile sector, such as high roaming and mobile-termination rates (see Europe: 9 December 2010: EU Launches Consultation with Aim of Eradicating Roaming Charges by 2015). It recently set up its centralised "super-regulator", the Body of European Regulators for Electronic Communications (BEREC), to improve policy and enforcement procedures. Meanwhile, the Hungarian government has announced that one of its aims while it holds the rotating EU presidency is to establish a common spectrum policy, to boost the roll-out of mobile broadband technologies such as Long-Term Evolution (LTE) (see Europe: 17 January 2011: Spectrum Policy Prioritised by Hungarian Presidency of European Council). While a great deal of regulation has been decried by the telecoms operators (particularly when it hit revenues), the EU is largely succeeding in levelling the playing field and encouraging competition in the sector.