Br0kenTeleph0n3

Following the broadband money

Posts Tagged ‘European Investment Bank

NGA funding chasm revealed as Kroes meets industry CEOs

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A massive funding gap will make it hard or impossible to meet the European Commission’s Digital Agenda targets by 2020, yesterday’s meeting between Digital Agenda champion Neelie Kroes and communications industry CEOs revealed.

Kroes told the CEOs yesterday she hoped the commission’s proposal for €9.2bn between 2014 and 2020 would unlock over €100bn in private investment.

McKinsey, a consultancy, estimates the cost of achieving the Digital Agenda goals at around €300bn. The European Investment Bank told Br0kenTeleph0n3 it would cost €200bn.

The Digital Agenda targets are basic broadband for all by 2013, universal access to 30Mbps, with 50% using 100Mbps services by 2020. Kroes asked the CEOs in March for proposals on how to fund the investment needed to achieve them.

There was clearly no consensus. Kroes said in a statement, “While it is understandable that commercial players try to maximise their own advantages, we also need to recognise that we have common interests.”

She said there was more mutual understanding about the issues, especially that digital video distribution is likely to be crucial in stimulating demand for high speed broadband.

However, there is growing evidence, such as the rise in uploads to YouTube, that audiences are becoming increasingly prolific producers. This will increase demand for higher upload speeds.

Kroes reiterated the European Commission’s support for a “robust best-efforts internet to which everyone has access”, saying it’s up to industry players to find commercially acceptable contracts, and that regulation will be a last resort.

Kroes said she wanted more time to study the CEOs’ proposals, but added some points were already clear. These were:

  • The maturity of high-speed networks differed across Europe and take-up levels were “disappointing”.
  • Investors were unwilling to commit funds for a massive NGA (next generation access) roll-out.
  • With uncertain short term demand for very fast broadband, a switch-off date for copper was unclear.
  • Consolidation and specialisation of network operators could create the scale and certainty required to attract investors.
  • There should be a single pan-European regulatory regime.
  • More open and interoperable technical standards were needed to improve efficiency and create uniform wholesale network access products.
  • Net neutrality, i.e. a robust best-efforts internet to which everyone has access, should be preserved. “Players at different levels of the internet value chain should be free to reach commercial agreements to innovate and develop new business models,” Kroes said.
  • The commission accepted that internet service providers should self-regulate the transparency of the terms, conditions and performance characteristics of the products they sold.

The CEOs’ proposals were put to Kroes by Ben Verwaayen of Alcatel-Lucent, René Obermann of Deutsche Telekom and Jean-Bernard Lévy of Vivendi.

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EU broadband budget is 80% underspent with two years to go

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Less than 20% of the money budgeted for European broadband projects this year has been allocated, according to the European Commission.

Speaking at the Every European Digital event in Brussels, the director of policy coordination for the regional policy directorate, DG Regio, Dr Rudolf Niessler said that of the €2.3bn set aside to support the roll out of broadband access networks in Europe, just over €418m has been allocated to projects. However, as these figurs are for the end of 2009, things may have improved somewhat.

Dr Harald Gruber, who evaluates broadband project proposals for the European Investment Bank (EIB), said the bank was looking for projects, especially high speed broadband.

“There is a lack of compelling business cases, especially outside cities,” he said. “It is hard to find backers for fibre to the home (FTTH) projects.”

However, the EIB recently gave €150m to France’s Iliad group for a four million home FTTH scheme.

Niessler said a total of €15.2bn was up for grabs for this budget period, which ends in 2013. He called on countries to come up with suitable projects before then or else the money would disappear.

“It is not acceptable to fail to spend the money allocated,” he said.

Several speakers suggested that the countries that were providing most of the funding were unlikely to encourage uptake or to warn of the impending deadline. “It’s money back in their pockets,” said one.

DG Regio was now working with member states and public authorities to find processes and projects that would speed up broadband spending. It had identified three “RegioStar” case studies, in the Auvergne in France, in Brandenburg, Germany and Lithuania that countries could refer to for ideas and best practice.

The UK had done relatively well, finding projects worth almost €91m, just over 80% of its €113.5m budget. Latvia and Ireland were overbudget, allocating 119% and 114% of their budgets respectively, Niesseler said.

Niessler said many member states suffered from a broadband “absorption” problem. “They find it easier to identify road building projects than broadband projects,” he said. Poland, he said, had been given a €1bn broadband budget this year but less than 1% had been allocated.

Take-up of budget allocations in EU

Source: DG Regio

Written by Br0kenTeleph0n3

2011/06/06 at 16:23

Where will the €200bn for the Digital Agenda come from?

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Europe’s Digital Agenda could cost €200bn to complete by 2020. The member states don’t have it, and if the sovereign debt of Southern Europe gets worse, they may never have it. Indeed, the continent could easily experience a digital divide between the rich north and the poor south that could  last generations.

In three exclusive video interviews from the  Every European Digital conference in Brussels. I explore the options with experts.

Satellite-based broadband is now comparable to and price-comeptitive with terrestrial broadband networks and so should be part of governments’ plans to provide citizens with access to high speed broadband, argues Aarti Holla, secretary general of the European Satellite Operators Association.

The European Investment Bank can at present provide only about 10% of the money needed to pay for the Digital Agenda, so what can governments do to entice the private sector to invest in broadband infrastructure? Harald Gruber, who evaluates broadband project proposals for the EIB, looks for ways to bridge the funding gap.

Bridget Cosgrave, the director general of DigitalEurope, which represents European ICT equipment makers, welcomes the Digital Agenda targets, but wants governments to start implementing projects that will consume the money allocated to the Digital Agenda targets.