“Broadband for all” vs. universal service

1. “Broadband for all” vs. universal service CMT “Telecommunications Networks for a New Digital Age” conference Madrid, 23 November 2010 Antonio Robalo Almeida Executive Board Chairman Presentation slides; not a full record of remarks made

2. ETNO represents leading telecoms operators – most designated as “universal service providers” 2

3. Universal broadband is a distinct policy from universal service Universal Broadband strategies Universal Service policy • Economic development policy to ensure social inclusion • Public policy as opposed to sector-specific regulation • Tailored to specific country needs, including coverage, speeds, quality standards, pricing, technological options and affordability • To be funded by national government with support of EU and other financial instruments • ‘Safety net’ against social exclusion: • ensuring basic services’ are not denied to any user • affordability guarantee • Sector-specific regulation to correct for prior exclusive-rights, monopoly regime • Funded by industry – in most cases by designated universal service provider (USP) Source: Plum Consulting (May 2009); ETNO analysis 3

4. National and EU ‘Broadband for All’ strategies have varying speed and coverage targets Source: Cullen International (May 2010) 4

5. Digital Agenda investment challenge for fast and ultra-fast internet access is great * Differences are mainly due to varying distributions of household density and the mix of technologies. The sources are Plum/Cave for Broadband Stakeholder Group, JP Morgan and Analysis Mason (UK). Source: European Commission (Sept. 2010) 5

6. Market forces are delivering universal broadband National DSL coverage, end-2008 Coverage even greater when all technologies considered – and now two years on Source: IDATE for European Commission (Dec. 2009)  6

7. Take-up, however, lags considerably Source: European Commission 15th Implementation Report (May 2010)  7

8. EC Vice-President Kroes is trying to shape the debate “In my view we should keep in mind that universal broadband offers benefits beyond the telecoms sector. The others who benefit range from currently uncovered citizens to companies offering internet services, content and applications. So [ . . .] it might be unfair to force the telecoms companies to fund the entire exercise.” speech, 15 September 2010 “It is therefore crucial to determine whether an extended universal service obligation should be funded by the telecoms sector or rather a broader base, such as by the state budget. In my view, we should keep in mind that universal broadband offers benefits beyond the telecoms sector – any cost obligation should not be theirs alone.” speech, 12 October 2010 Neelie Kroes Commissioner for Digital Agenda 8

9. But the way forward is not clear FOR DISCUSSION Digital Agenda Improving and coping with the existing regime • ‘House cleaning’ for existing regime  narrowing (e.g., pay phones) • Modernising the ‘safety net’/universal service concept • Improving equity and efficiency of financing mechanisms • Awaiting coherent member states’ broadband strategies in context of Digital Agenda, NGA Recommendation, etc. • European Commission guidance to inform the above Universal Service reform • Next step communication: early-2011? Broadband for All • 2011 guidance on EU funds • 2011 EIB financing instruments Source: European Commission; ETNO analysis 9

10. Thank you for your attention For any follow-up questions, please e-mail ETNO Regulatory Affairs Manager Victoria Gerus:gerus@etno.be 10

11. BACK-UP

12. ‘Broadband for all’ should be funded through central budgets – supplemented where necessary • Public-private partnerships • Member state public funding (central, regional, municipal) • European sources • European Economic Recovery Plan (EERP) • European Regional Development Fund (ERDF) • Emerging Regions Development Programme (ERDP) • European Agricultural Fund for Rural Development (EAFRD) • Trans-European Networks (TEN), • Competitiveness and Innovation Framework Programme (CIP) • European Investment Bank (EIB) mechanisms, such as the Risk Sharing Finance Facility Source: European Commission (May, Sept. 2010) 12