Draft Documents Show Extensive Reform Proposals to Jump-Start Europe’s Digital Economy
The European Commission is eyeing a wide range of actions aimed at boosting broadband access and speed, spurring build-out of next-generation fiber networks and freeing up spectrum for new wireless services, draft documents show. The statements on broadband investment, regulating access to new networks and establishing a multi-year spectrum policy path make up a package of reforms the EC hopes will meet the goals of the digital agenda for a “smart, sustainable and inclusive economy,” it said. It’s unclear whether these are the final versions of the documents, which we're told the EC is expected to publish Sept. 20.
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One key target of the digital agenda is broadband access for all Europeans at more than 30 Mbps by 2020, with at least half of all households on subscriptions above 100 Mbps, the EC said in a statement to the European Parliament and Council on investing in digitally driven growth. But because the Internet is so important, its societal benefits as a whole “appear to be much greater than the private incentives to invest in faster networks,” it said. Stimulating investment in fast Internet access beyond the current market-driven rate is the way to achieve the broadband target, it said.
Construction of next-generation networks is uneven in Europe, the EC said. Cable networks serving around 73 million households are gradually being upgraded to higher speeds inducing copper network operators to invest in VDSL and fiber-to-the-home, it said. Cable and FTTH can meet the broadband targets, but outside areas where they face infrastructure competition, operators are reluctant to move from ADSL because they don’t see a convincing business case for it, the EC said. The estimated costs of meeting the 30 Mbps goal are $48 billion-$74 billion; for achieving the 100 Mbps goal, between $230 billion and $341 billion, it said.
National and local regulatory and funding measures can spur investment and cut investment costs, the EC said. These include making in-building wiring a requirement for planning authorizations, coordinating civil works such as duct construction, and removing obstacles to obtaining permission for new base stations, it said. In addition, authorities can support deployment via direct public investment or funding in line with state aid rules, it said. To help governments, the EC said it will publish guidance on broadband financing, review cost reduction practices and make a proposal with the European Investment Bank for funding. It urged countries to set national broadband targets and make concrete plans to carry them out.
The second piece of the broadband package is a recommendation to national telecom regulators on how to encourage spending on new networks while holding down investment risks. The draft sets out a common approach to help authorities act consistently in setting competition conditions on players with significant market power to ensure competitors have access to infrastructure.
The third document is Europe’s first multi-year spectrum policy program, which will guide government spectrum decisions until 2015 in order to meet the digital agenda goals. Among other things, it requires EU members to authorize use of the 900 MHz/1800 MHz GSM spectrum for wireless broadband services by January 2012, and the 800 MHz digital dividend band by 2013. The decision requires regulators to take a more flexible approach to spectrum allocation, including collective and shared use and trading. It calls for an inventory of existing spectrum use and possible future needs across the EU. It also seeks to give Europe a stronger voice in international spectrum negotiations.
The EC “has been making a valiant effort to find a fair solution that protects both network investment and competition in the face of heavy lobbying by dominant firms,” said a European Competitive Telecommunications Association spokeswoman. ECTA worries the final proposal may still not safeguard the future of challengers that pioneered affordable Internet and broadband services, she said. But letting the lengthy debate drag on is in no one’s interest, she said. ECTA wants the EC to adopt the next-generation access rules as soon as possible despite concerns that dominant players will be given too much flexibility in how regulated access is priced, allowing alternative providers’ margins to be squeezed, she said.
Network operators are “eager to contribute” to achieving the digital agenda goals by deploying next-generation access networks, said the European Telecommunications Network Operators’ Association, which said it’s reserving fuller comments until the package is officially published. New networks need a more targeted regulatory approach that takes into account today’s very competitive markets and high investment risks, said Director Michael Bartholomew. Opening up additional spectrum for mobile broadband services is also key to achieving those goals, he said.
"If the Commission asks who can fully commit to European broadband deployment goals, our answer is ‘Yes, we can!'” said Cable Europe Managing Director Caroline Van Weede. Cable operators “feel supported” by an EU policy that recognizes the full mix of technologies -- cable, fiber and 4G wireless -- to achieve those objectives, she said. Cable deploys at speeds of between 100 Mbps and 200 Mbps throughout Europe and can potentially reach over 100 million households, helping to achieve 50 percent of the digital agenda, she said.