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Broadband policies in the European Union

Broadband policies in the European Union. Sofia, 11 April 2014 " ICT Clusters Collaboration for Growth, Prosperity and Competitiveness in the Black Sea Region " Nicolas GYSS Policy Officer Broadband Policy Unit (CNECT B5) Nicolas.gyss@ec.europa.eu.

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Broadband policies in the European Union

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  1. Broadband policies in the European Union Sofia, 11 April 2014 "ICT Clusters Collaboration for Growth, Prosperity and Competitiveness in the Black Sea Region" Nicolas GYSS Policy Officer Broadband Policy Unit (CNECT B5) Nicolas.gyss@ec.europa.eu

  2. Part 1ICT and broadband – economic importance

  3. The “virtuous circle” of the Digital economy Applications & e-Services Business & individual end-users ICT infrastructure

  4. ICT : not just a "sector" (telecom) > enabler for all socio-economic sectors ICT : no longer "hardware v.s. software" > cloud computing, mobility and ubiquity ICT : from "nice-to-have" to "must-have" > pre-condition for productivity, growth & innovation

  5. ICT: a must for competitiveness and innovation • 5 % of GDP but driving 20% of overall productivity growth (3.2 trillion by 2016 in G20 economies) • Companies adopting IT based processes improve labour productivity by 5% in manufacturing and 10% in services • SMEs grow 2 to 3 times faster when connected • For every job lost, 2.6 new ones created

  6. Broadband drives competitiveness "An increase in the broadband penetration rate by 10 percentage points raises annual growth in per-capita GDP by 0.9 to 1.5 percentage points" (Czernich et al. - CESIFO WORKING PAPER NO. 2861, Ifo Institute for Economic Research, 2009)

  7. Part 2Broadband deployment Where do we stand now?

  8. Digital Agenda for Europe (DAE) 2010-2020 • ICT and BB full potential not yet fully exploited • Over 100 actions for the Commission and Member States • 3 targetson Broadband: • Basic broadband for all citizens by 2013 • Coverage: Next Generation Networks (NGN) (30 Mbps or more) for all by 2020; • Uptake: 50% of households having 100 Mbps subscriptions or higher by 2020.

  9. Broadband targets EU Digital Agenda Progress • Basic broadband target achieved in autumn 2013 • Challengesahead for fast and ultra-fast broadband coverage and take-up 2020 targets • "close to target" in areas such as eGov, internet usage and partly eCommerce Source: Digital Agenda Scoreboard

  10. EU National broadband plans • "Member States should: […] Develop and make operational national broadband plans by 2012 that meet the coverage and speed and take-up targets defined in Europe 2020, using public financing in line with EU competition and state aid rules" • Communication "A Digital Agenda for Europe", 26.8.2010 • 6 MS have an operational broadband strategy fully aligned with DAE targets. • 11 MS mostly meet these criteria. In 9 of these cases one of the main divergences concerns the choice of targets, often the need of imposing a take-up target. In some cases coverage targets are higher than in the DAE. • 3 MS have an updated strategy in place but should adopt or reinforce implementing measures. • 8 MS are updating or working on a new Broadband strategy.

  11. Basic broadband for all by 2013 Standard fixed broadband* availability adding wireless, EU coverage is 99.97% *xDSL, Cable, FTTP and WiMax; Source: Point Topic

  12. At least 30 Mbps for all by 2020 NGA* availability (54% of EU homes) But only 12% of EU rural areas are covered * Next Generation Access (NGA): VDSL, Cable Docsis 3.0 and FTTP; Source: Point Topic

  13. Fixed broadband take-up Fixed broadband lines penetration in the EU 28.8% (lines as a % of population)(equivalent to 72.5% of EU homes subscribing to broadband) Source: Communications Committee

  14. Share of High-speed broadband 20% of EU fixed broadband subscriptions are NGA Source: Communications Committee

  15. Fixed broadband lines by speed 3.4 % of EU fixed broadband subscriptions are at least 100 Mbps Source: Communications Committee

  16. Part 3EU policies and the way forward

  17. Tools & Investment impact of EU policy market framework financing and funding • Cost reduction • eComms regulation, e. g. Recommendation on non-discrimination and costing methodologies • Demand stimulation • Single EU authorisation • European inputs for high-speed broadband: Spectrum and virtual access products • Single consumer space: Net neutrality, harmonised end user rights, roaming • European Structural and Investment Funds (ESIF) • Connecting Europe Facility (CEF) • Broadband state aid guidelines Single Market for Telecoms

  18. EU regulation: A set of top regulatory principles and objectives to ensure predictability and consistency… • Promotion of competition and investment • Development of the Single Market • Promotion of citizens' interests

  19. Main components: • Connected Continent Package: • The Communication: Commission's vision for a Single Telecoms Market • The Costing and Non-discrimination Recommendation • Proposal for a Regulation concerning the EU Telecoms Single Market (TSM Proposal) • Measures to reduce the cost of deploying high-speed electronic communications networks (Cost reduction) • Review of the Relevant Markets Recommendation

  20. TSM Proposal: key measures • Single consumer space • Harmonised end-user rights and easier switching • Open Internet: netneutrality • Phasing out roaming • European inputs for high-speed broadband • Wireless: spectrum coordination; facilitating small cells • Fixed: European virtual access products • Single EU authorisation • Simplified and more convergent regulation

  21. A Single Telecoms Market essential for Europe's return on the growth path… If the internal market for electronic communications were completed, the EU's GDP could grow by up to 110 billion euros a year … • Economies of scale • Higher productivity in other economic sectors through more efficient cross-border electronic communications services to companies • Affordable cross-border prices for consumers • More diversified products and services available to consumers • Innovation * Ecorys, TU Delft et al., Steps Towards a Truly Internal Market for e-Communications, 2013.

  22. Cost reduction – what is at stake? Rolling out high-speed communication networks is expensive and cumbersome • Up to 80% of the costs are linked to civil engineering • These costs are unnecessarily high due to the presence of various bottlenecks and economic inefficiencies. • As a result: grey and white areas often too expensive to cover.

  23. BB Cost Reduction: objectives Better use of existing infrastructure and more transparency, incl. cross-utility Reduce costs of broadband rollout by 20 to 30% and make it easier Improved coordination of civil engineering Simplify permit granting process Buildings ready for access to high-speed internet

  24. Costing & Non-discrimination Recommendation • Objectives: • Enhance the Single Market for electronic communications • Increase legal certainty and predictability on remedies • Promote competition and foster investments in NGN • Three interlinked pillars: • Stricter non-discrimination rules • Stable prices for access to copper networks • No price regulation on access to NGA networks 24

  25. A few steps closer towards a Digital Single Market • Adoption of broadband cost reduction Directive by EP in first reading on 3 April 2014; transposition 1 January 2016 • TSM: EP vote in first reading on 3 April, agreement expected in 2014 • Revised Recommendation on Relevant Markets: adoption by the Commission foreseen in autumn 2014

  26. Public financing • Where the market cannot deliver, local, regional, and national authorities will have to close the financing gap • New guidelines on State aids • Main financing instruments: • Connecting Europe Facility (CEF): Some complementary EU support by means of financial instruments • 2014 - 2020: ICT a priority in the European Structural and Investment Funds

  27. State aid: new guidelines • Achievingthe right mix between public and private investment: public interventions targeted at market failures; faster decisions. • Principles: • Technological neutrality: Next Generation Access networks can be based on different technological platforms. • to protect private investors, publicly financed infrastructure can only be allowed if it provides a substantial improvement ("step change") over existing networks. • public funding of ultra-fast broadband networks (of more than 100 Mbps) will be possible also in urban areas subject to very strict conditions to ensure a pro-competitive outcome. • when a network is realised with taxpayers' money, competitors will benefit from a truly open network for the benefit of consumers. • Transparency has been reinforced: publication of documents, a centralised data base for existing infrastructure and ex post reporting obligations to the Commission.

  28. Connecting Europe Facility (CEF) • DG CONNECT is currently analysing in a sector-specific study what requirements CEF financial instruments must fulfil to suit the specificities of the broadband sector • CEF debt instrument for transport, energy and broadband will be set up in the course ofthis year • Project Bonds to be continued in CEF debt portfolio, likely to be complemented by other debt facilities • CEF technical assistance launch is targeted for 2014 . It will improve the pipeline of broadband projects in general andmakemore projects financeable

  29. Cohesion Policy in 2007-2013 ICT– a priority of Cohesion Policy in 2007-2013 ? ICT Programmed investments of total ERDF and Cohesion Fund (€ 271 billion) Environment Transport 455 Operational Programmes 50% at national level 50% at regional level Research/Innovation Information society Tourism Social infrastructure Culture Energy Institutional capacity

  30. Cohesion Policy in 2007-2013 ICT– a priority in 2007-2013 ? Low level of programming : • ICT : 4,2 % of Structural Funds • Broadband : 0.7 % of Structural Funds Difficulties in the execution: • Delays & substantial de-programming in some Member States • Current execution rates are catching up • Important in the future to ensure good coordination at national level for the management of the funding of ICT and BB projects

  31. Cohesion Policy in 2007-2013 Funds allocated to ICT in 2007-2013: Shift from infrastructure to e-Services & applications both in the public sector (eHealth, eGovernment, etc.) and for SMEs (eLearning, eBusiness, etc.) Cohesion Policy

  32. Cohesion Policy in 2014-2020

  33. TO-1: Research and Innovation TO-3: SMEs competitiveness TO-4 : Energy efficiency and renewable energy Cohesion Policy in 2014-2020 2014 - 2020: ICT one of four "concentration themes" (out of 11) in the European Regional Development Fund (ERDF) TO-2: ICT access, quality and use Concentration on "two or more" of the four thematic objectives 1, 2,3 and 4whichthenshare 50% to 80% of ERDF Less developed regions (min. 50%) Developed regions ( min.80%)

  34. Areas covered by ESIF • ICT Infrastructure:Next Generation Networks, H2020 R&D/e-Infrastructure for R&D, Cloud Computing, Key Enabling Technologies (KETS) for Europe, Network and Information Security; • e-Services and Applications:eGovernment, eHealth, Active and Healthy Ageing, Digitalisation of cultural heritage, language resources, intelligent transport cities, smart cities, smart grids; • ICT Take-up: Web entrepreneurship to boost start-ups, Open data portals, living labs, digital skills, ICT innovation vouchers. • Broadband infrastructures (NGN) are eligible to ERDF in all EU Regions

  35. Partnership Agreement (PA) • A "high level business plan" which the MS agrees with the Commission; • Setting the direction of the funding programmes ensuring how the funds are best deployed to support maximum impact (sustainable growth and jobs).

  36. Operational Programme (OP) Document written by the MS and/or Regions defining the investment of EU funds for each priority chosen and proposing concrete Measures for funding; It includes: • Priorities (axes) setting out specific objectives; • Financial appropriations (ESI Funds + national co-financing); • Indicators to assess progress (absorption, output, results); • Description of the Measures: framework for the selection of operations (= projects) : main target groups, specific territories, types of beneficiaries, major projects, etc.

  37. ICT Ex-Ante Conditionalities(EAC) • They reflect existing commitments or obligations that should be met. They help ensure an effective and efficient implementation of the ESIF in a wider policy framework. • Two EAC for Thematic Objective 2 (ICT): - Digital Growth – 2.1 - National Broadband plan NGA – 2.2 • If an EAC “not met”, an action plan is required by 2016 – possibly with a suspension of payment?

  38. EAC 2.2: NGN Plan (National or Regional) Criteria include • A plan of infrastructure investments based on an economic analysis taking account of existing private and public infrastructures and planned investments; • Prioritisation, available budgetary resources, and investment models that should enhance competition and provide access to open, affordable, quality and future proof infrastructure and services; • Measures to stimulate private investment.

  39. At the cross-road of two EU policies: • Implementation of the Digital Agenda for Europe (DAE) 2010-2020 • Definition of investmentprioritiesunder the EuropeanStructural & InvestmentFunds(ESIF) 2014-2020

  40. Thank you for your attention

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