EUROPEAN COMMISSION 
Brussels, 19.10.2011 
SEC(2011) 1229 final 
  
COMMISSION STAFF WORKING PAPER 
IMPACT ASSESSMENT 
Accompanying the document 
Proposal for a Regulation  of the European Parliament and of the Council  
on a series of guidelines for trans-European telecommunications networks 
{COM(2011) 657 final} 
{SEC(2011) 1230 final}  
 
EN 2   EN Lead DG: DG Information Society and Media 
Disclaimer: This report commits only the Commis sion's services involved in its preparation 
and does not prejudge the final form of any decision to be taken by the Commission.
 
EN 3   EN TABLE OF CONTENTS 
1. Policy Context, Procedural Issues and Consultation of Interested Parties................... 5 
1.1. Legal base, existing legislation a nd the Connecting Europe Facility .......................... 5 
1.2. CEF policy framework................................................................................................. 6 1.3. Financing the future: developing a new policy using new means ............................... 7 
1.4. Consistency with other Union policies ........................................................................ 8 1.5. Consultations and evaluations...................................................................................... 9 1.6. Commission inter-service consultation and Impact Assessment Board process ....... 10 
2. Problem Definition..................................................................................................... 10 
2.1. High-speed internet and the services it s upports: potential for gr owth and societal 
benefits are untapped.................................................................................................. 11 
2.2. Broadband networks – the need to stimulate investment in the infrastructures of the 
future ......................................................................................................................... . 12 
2.2.1. The investment challenge........................................................................................... 13 2.2.2. Market failures and the limitations of regulatory policy............................................ 14 2.2.3. Existing Member State and EU policies .................................................................... 16 2.3. Digital service infras tructures: The Digital Single Ma rket is still far from being 
reality........................................................................................................................ .. 17 
2.3.1. The elements of a digital service infrastructure ......................................................... 17 2.3.2. Public interest and market failures in digital service infrastructures ......................... 18 
2.3.3. The cross-border policy challenge ............................................................................. 19 2.4. Baseline scenario for broa dband and digital services ................................................ 20 
2.4.1. Sensitivity analysis.................................................................................................... . 21 
2.5. Justification for EU action: subs idiarity and EU added value ................................... 22 
3. Objectives................................................................................................................... 2 3 
3.1. Overall objective ........................................................................................................ 2 3 
3.2. Operational objectives................................................................................................ 23 
4. Policy Options............................................................................................................ 24 
4.1. Remarks on the approach........................................................................................... 24 
4.2. Option 1 – no policy change ...................................................................................... 24 
 
EN 4   EN 4.3. Option 2 – broadband networks and digita l service infrastruc tures in the trans-
European networks of infrastructure (CEF)............................................................... 25 
4.3.1. Sub-option 2.1: Financing through grants.................................................................. 26 4.3.2. Sub-option 2.2: Financing thr ough financial instruments.......................................... 27 
4.3.3. Sub-option 2.3: Combined  financing approach ......................................................... 28 
4.3.4. Option 2 – synergies with Structural Funds............................................................... 28 4.3.5. Guiding principles...................................................................................................... 28 
5. Analysis of Impacts.................................................................................................... 28 
5.1. Impacts from the adoption of option 1: no policy change ......................................... 29 
5.2. Impacts from the adoption of option 2: br oadband and digital service infrastructures 
in the trans-European networks  of infrastructure (CEF)............................................ 30 
5.2.1. General impacts stemming from option 2.................................................................. 30 5.2.1.1. Economic impacts ...................................................................................................... 31 
5.2.1.2. Positive externalities ................................................................................................ .. 32 
5.2.1.3. Social impacts ........................................................................................................ .... 33 
5.2.1.4. Environmental impacts............................................................................................... 34  
5.2.1.5. Sector specific impacts of digital service infrastructure ............................................ 35 5.2.2. Assessment of sub-options against the programme's objectives: effectiveness and 
efficiency.................................................................................................................... 3 6 
5.2.2.1. Sub-option 1: Financing through grants..................................................................... 36 
5.2.2.2. Sub-option 2: Financing thr ough financial instruments............................................. 37 
5.2.2.3. Sub-option 3: Combined  financing approach ............................................................ 38 
6. Comparison of Options39 
7. Monitoring and Evaluation ........................................................................................ 41 
Annex 1 – Glossary............................................................................................................. ..... 42 
Annex 2 – What is a digita l service infrastructure ................................................................... 45 
Annex 3 - Thematic areas and fast start pr iority digital service infrastructures ...................... 48 
Annex 4 – Broadband and its impacts: an overview................................................................ 56 Annex 5 – Results from public co nsultations and evaluations................................................. 76 
7.1. Main results of public consultations .......................................................................... 76 7.2. Other studies and ev aluation carried out.................................................................... 79 
 
EN 5   EN IMPACT ASSESSMENT REPORT  
1. POLICY CONTEXT , PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES  
This is the Report of the impact assessment of  the legislative proposal for the Regulation on 
guidelines on broadband networks  and digital service infrastruct ures in the trans-European 
networks of infrastructure (CEF) for the post 2013 programming pe riod. These guidelines 
build on and update the former guidelines for trans-European Telecom networks from 1997, 
as amended in 20021. 
1.1. Legal base, existing legislation a nd the Connecting Europe Facility 
Articles 170-172 TFEU provide a legal context for the EU intervention supporting the 
establishment and development of trans-Europ ean networks in the areas of transport, 
telecommunications and energy infrastructures . Action by the Union sh all aim at promoting 
the interconnection and interoperability of , and access to, national networks, taking into 
account in particular the need to link islands, landlocked and peripheral regions with the 
central regions of the Union. To this end, the Union shall establish a series of guidelines 
covering the objectives, priorities and broad lines of measures envisaged in the sphere of 
trans-European networks; these guidelines shall identify projects of common interest. The Union may support these project s of common interest supporte d by the Member States, 
particularly through feasibility st udies, loans guarantees and, in the field of transport, also 
through the Cohesion Fund. Articles 169 and 173 TFEU  are also of relevance since industrial 
policy and consumer issues are an integral part  of the broadband networ ks and digital service 
infrastructures objectives.  
The proposed intervention will be pursuant to Article 172 TFEU. The Council Regulation 2236/95 of 18 September 1995 laid down the firs t general rules for 
the granting of Community financia l aid in the field of trans-Eur opean networks for transport, 
telecommunications and energy infrastructu res. The 1995 Council Regulation was amended 
several times with specific Regulations taking into account the developments for the fields 
covered and their intrinsic characteristics, but also  in order to refine the eligibility criteria and 
the level of co-financing according to the t ype of projects. The Regulation No 1159/2005 
amended the 1995 Regulation with specific modifi cations for the area of telecommunications. 
Specific guidelines for the trans-European Te lecom networks were also adopted in 1997 by 
way of the Decision 13 36/97/EC of the European Parliame nt and of the Council and amended 
by Decision 1376/2002/EC. It is necessary to re place the existing acts by the newly proposed 
guidelines for trans-European telecommunications networks in  order to reflect new policy 
priorities, namely the use of EU funds to s upport the roll-out of broadband internet networks. 
The proposed guidelines for trans-European te lecommunications networks are part of a 
legislative package for a Connecting Europe Facility (CEF), including a general CEF 
Regulation and specific guideli nes for energy and transport ne tworks. While the Regulation 
establishing the CEF defines the conditions, methods and procedures for providing Union 
financial aid to trans-European networks in the fields of transport, energy and 
                                                
 
1 DECISION No 1336/97/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 17 
June 1997 on a series of guidelines for trans-Eu ropean telecommunications networks. Decision No 
1376/2002/EC of the European Parliament and of the Council of 12 July 2002 amending Decision No 
1336/97/EC on a series of guidelines for trans-European telecommunications networks 
 
EN 6   EN telecommunication infrastructures, the guideli nes proposed here lay down the objectives, 
priorities and broad lines of measures envisaged for broadband networks and digital service 
infrastructures in the field of telecommunicat ions. Similar guidelines are proposed for the 
fields of transport and energy respectively. 
The current eTEN Guidelines have been proposed  and adopted as a Decision of the European 
Parliament and of the Council which is specifica lly addressed to the Member States, rendering 
the Guidelines binding in their entirety for all the Member States. This reflected the scope of 
the previous guidelines, which did not cover private investments in telecommunications 
infrastructure and ensured consistency with the approach in transport and energy respectively. 
The present guidelines are addre ssed to broad categories of inve stors, including in particular 
telecom operators, utility companies, regional decision makers, including municipalities and 
partnerships. With more actors besides the Member States beco ming involved in the planning, 
development and operation of projects of common  interest in the field of telecommunications, 
it is important to ensure that the Guidelines be binding for all. The Commission has therefore 
chosen a Regulation as the legal instrument for this proposal. 
1.2. CEF policy framework 
In its Europe 2020 strategy, the European Commission has recognised the need to act in 
support of the digital society:2 "Europe is falling behind on high-speed internet, which affects 
its ability to innov ate, including in rural areas, as we ll as on the on-line dissemination of 
knowledge and on-line distri bution of goods and services ."  
One of the flagships for the Europe 2020 strategy is the Digital Agenda for Europe  flagship 
initiative3, which aims " to deliver sustainable economic and social benefits from a Digital 
Single Market based on fast and ultra fast  internet and inter operable applications ". The DAE 
also outlines the following targets:  
• broadband access for all by 2013;  
• access for all to much higher internet speeds (30 Mbps or above) by 2020; and  
• 50% or more of European households subscrib ing to internet connections above 100 Mbps 
by 2020. 
Europe 2020 also commits, inter a lia, to facilitate th e use of the EU's st ructural funds in 
pursuit of these goals with a view to overcome social, economic and territorial gaps with the 
provision of an open, affordable and good quality infrastructure to high speed internet across 
Europe. 
The Commission in its Communication "European Broadband: in vesting in digitally 
driven growth"4 concluded that the critical role of the internet means that the benefits for 
society as a whole appear to be much greater th an the private incentives to invest in faster 
networks. Therefore, public s upport for this area is necessa ry, but should not unduly distort 
competition. The Council subsequently inv ited the Commission to make a proposal, in 
                                                 
2 COM (2010) 2020 
3 COM (2010) 245 
4  COM(2010) 472  
 
EN 7   EN cooperation with the EIB and in  collaboration with the MS, to support broadband financing 
without prejudice to the current multi-annual financial framework. 
The European Parliament in its 8 June 2011 Resolution on "Investing in the future: a new 
Multiannual Financial Framework (MFF) for a competitive, sustainable and inclusive 
Europe"5 stressed the importance of ensuring the rapid execution of the Union's Digital 
Agenda and of continuing efforts towards r eaching by 2020 the targets of making available to 
all EU citizens access to high-speed inte rnet, also in less developed regions 
Finally, in its Communication "A Budget for Europe 2020"  (hereinafter the MFF 
Communication), adopted on 29 June 2011, the Commission proposed to establish the 
Connecting Europe Facility, which is new in that it seeks to realise synergies across the fields 
of telecommunications, transport and energy.  
1.3. Financing the future: developing  a new policy using new means 
The Commission's MFF Communica tion is breaking new grounds in that it extends the 
existing policy approach for Trans-European Netw orks to a new field, i.e. broadband internet. 
Apart from limited amounts of financial supp ort granted under the St ructural Funds, the 
Union has so far not given support to the deve lopment of broadband netw orks with European 
public funds. As opposed to the decentralised management system used in the Structural 
Funds, it is proposed to manage these funds and financial instruments centrally, for reasons of 
critical mass and to favour th e cross-border nature of th e investments. A new set of 
instruments have also been devised. 
As argued in the policy papers above, the Commission considers access to high-speed internet 
a crucial catalyst for smart, sustainable and inclusive growth. Clearly, investing in this infrastructure is, first and foremost, the rem it of the private sector. However, the problem 
definition developed in this document (section 2) argues that due to a number of imperfections in the market, such as long time ho rizons for return on investment and a lack of 
competitive pressure on incumbent telecoms operators as well as the cross-border nature of crucial digital services, the market is not making the necessary investments.  
The Commission aims to address this problem th rough a mix of proven instruments, i.e. grant 
funding, and innovative financial instruments (the  term “innovative” is used to differentiate 
them from grants). Financial instruments can  provide equity/risk ca pital, guarantees to 
International Financial Intermediaries (IFIs), such as the European Investment Bank, that 
provide lending to a large number of final beneficiaries who have difficulties in accessing finance (in this case infrastructure project comp anies) or through risk sharing with financial 
institutions. This creates a leve rage effect, multiplying the volu me of finance resulting from 
the EU intervention. Hence, financial instrument s are not a substitute for private investment, 
but indeed a way to stimulate private invest ment. That said, financial instruments cannot 
replace grant funding but complement it. As will be argued below, the optimum mix of 
instruments will be determined by the financ ial viability of the projects proposed.  
As regards digital service infrastructures, most  of the proposed action lines have come out of 
research and innovation activities, and have enjo yed Union support, on a small scale, for some 
                                                
 
5  European Parliament resolution INI/2010/2211  
 
EN 8   EN time. Here the step change is in the proposed scaling up from pilot projects into Europe-wide 
deployment, by connecting digital public infr astructures offered separately (or in a 
"disconnected" manner) by a Member State or its regional and local authorities to a Europe-
wide network, thereby making them interoperable and enabling a true Digital Single Market. 
1.4. Consistency with other Union policies 
Reinforcing the Single Market   
The suggested CEF initiative aims to benefit seve ral policy fields. First and foremost, work on 
the Digital Single Market is to be seen in the context of the Single Market Act6, which, for 
example, addresses the need for interopera ble and mutually recognised systems of e-
identification, e-authentication and e-signatures.  These are essential to ensure the free 
movement in the Single Market and in particul ar cross-border access to online public services 
for citizens and businesses. Likewise, eff ective functioning of cross-border public 
procurement is dependent on appropriate interope rable electronic infrastructures. Transport, 
energy and digital networks are seen as the ba ckbone of the single market. Indeed, efficient 
infrastructures foster rapid free movement of people, goods and services and various types of 
energy and data (with the allo cation of a sufficient radio sp ectrum) at a reasonable cost. 
Efficient economic integration relies on the integr ation of efficient infr astructure networks. 
Therefore, the development of those networks and of the digital single market have been also 
retained as part of the "Twelve levers to boost growth and strength en confidence" in the 
Single Market Act. 
Synergies with Energy policy – smart grids  
Smart grids are considered essential to bette r manage energy consumption. They allow for 
decentralised energy production and delivery to improve conservation and energy efficiency, 
moving consumption from peak to off-peak hours, and maintaining a supply/demand balance 
in energy networks. Having households and enterprises connected to communication 
networks is a pre-requisite for smart grids. The proposed guidelines foresee actions to support 
synergies between broadband and smart energy distribution infrastructure and services 
deployment. 
Synergies between digital and transportation  networks: Intelligent Transport Systems  
The deployment of ICT servic es and broadband networks is  an essential part of the 
development of Intelligent Transport Systems (ITS). The ITS systems will integrate sensors 
and broadband networks to collect and distribute  key pieces of traffic information among cars, 
roadside infrastructures and traffic planners . The use of broadband networks will allow 
providing more targeted information to individu al commuters and has a particularly strong 
potential in the areas of reducing traffic c ongestion, lowering fuel consumption and helping 
users avoid accidents.  
Synergies with environmental policies  
The deployment of digital infrastructures w ill contribute to the development of energy 
efficient low-carbon economy in the areas incl uding, but not limited to, tele-working, 
eCommerce, eGovernment. In addition, the abov e mentioned synergies with the policies in 
the area of transport and energy have a high po tential for contributing to the reduction of 
                                                 
6  COM(2011) 206 final 
 
EN 9   EN carbon emission. Certain minor adverse environmen tal effects in the construction phase of 
broadband networks (i.e. digging the ditches n ecessary to put down th e cables) could be 
possible. 
Beyond the above areas, other policy fields would be  directly impacted as well, for example, 
the healthcare sector stands to benefit from huge saving s through eHealth and telemedicine 
applications. In addition, the efficiency and quality of public services will be enhanced through cross-border onl ine access to them. 
1.5. Consultations and evaluations 
The Commission has consulted exte nsively with the relevant st akeholder groups in the areas 
of broadband networks and digital service infrast ructures. In this it became clear that the 
entire stakeholder community is in favour of the proposed activities. This section will only 
briefly discuss a few examples. A full overview of the consultations a nd evaluations carried 
out can be found in Annex 5 of this document. 
As for large companies and broadband netw orks, in March 2011 Vice-President Kroes 
convened a "roundtable" of CEOs to request them  to come forward with concrete proposals 
on how to address the broadband investment ch allenge. The CEOs, from a broad range of 
companies and stakeholders with an interest  in broadband networks  (including content 
providers, equipment makers, investors and te lecoms operators from the world's leading 
companies such as Nokia, Alcatel Lucent, Google, Ericsson, News Corp etc
7), submitted a 
paper in July 2011 summarising their common position8. As far as financing of broadband 
networks is concerned, a clear signa l in support of the CEF was sent: " The European 
Commission should provision public f unding (incl. structural funds) to  be used in risk sharing 
mechanisms between the EIB and the EC, for viable telecom infrastructure  projects. It should 
also expand the RSFF’s investment capac ity & eligibility to broadband investments ". This 
signals that the telecom sector is not only receptive to the propose d instruments but also 
acknowledges its importance in m eeting the broadband targets. It is remarkable in that the 
Roundtable comprised a cross section of seni or decision-makers from large telecoms 
operators, i.e. the main privat e sector investors that might be crowded out by the proposed 
CEF funding for broadband networ k projects. As regards the rising demand for ultrafast 
internet, the CEOs were equally clear: "Internet traffic is expected to be multiplied by 4 
between 2010 and 2015".  
As for SMEs and broadband networks, a rece nt public consultation on Cloud Computing 
revealed that " despite the great opportunities offered by web-based services, the reality is very 
different for small businesses. Almost two in ten small businesses cann ot access even basic 
broadband. And even those that can access basic broadband, the service received often does not meet the needs of the business – eighteen per cent say there are services they are unable 
to use via their existing Current Gene ration Broadband. (…) Inadequat e connectivity and 
speed is resulting in reduced productivity. An FS B (UK Federation of Small Businesses) study 
found that inadequate broadband speed  reduces productivity by  33 per cen t for small 
businesses. "  
                                                
 
7 For a complete list of participants see: 
 http://europa.eu/rapid/pressReleasesActio n.do?reference=MEMO/11/508&type=HTML  
8
 http://europa.eu/rapid/pressReleasesAction. do?reference=MEMO/11/ 508&format=HTML&ag
ed=0&language=EN&guiLanguage=en 
 
EN 10   EN As regards digital service infrastructures, most  of these activities have been developed by the 
Commission on a smaller scale for quite some time, e.g. through CIP pilots. Accordingly, the Commission services are in close touch with the respective stakeholder communities. As an 
example, the Comité des Sages for digitisati on recently endorsed the approach by Europeana 
so far, and recommended continuing the effort.
 9 In a respective public  consultation 75% of 
the participants advocated EU  funding as an accelerator for digitisation processes across 
Europe. 
1.6. Commission inter-service consultation and Impact Assessment Board process 
The Impact Assessment inter-service steering gr oup for this measure was consulted twice in 
July 2011 on the drafts of this Impact Asse ssment. The financial meeting took place on 28 
July 2011 and the minutes from this meeting ar e included in an an nex to this IA. The 
consulted DGs included MOVE ENER RTD, SG, ENV, CLIMA, MARE, REGIO, ECFIN, 
BUDG, COMP, ELARG, EMPL, ENTR, SJ, MARKT, as well as the EEAS. 
The Impact Assessment Board examined a dr aft of this document on 31 August 2011. Its 
assessment was that the document could be fu rther improved, namely with regard to the 
intervention logic and by providing further detail on the policy options. Subsequently, this 
document was updated to current form, including more information on the baseline scenario, a 
reworked problem identification chapter, intr oducing sup-options to the option "Broadband 
networks and digital service infrastructures in the trans-European networks of infrastructure", 
and re-defining the policy and objectives as well as updating the assessment of impacts. 
 
2. PROBLEM DEFINITION  
The main problems for both broadband and digita l services identified are listed in the box and 
will be developed in the chapter below: 
Summary of problems identified 
Problem 1a: High-speed internet is a key infra-structure for the 21st century, but Europe falls 
far short of the necessary investments, l eaving potential for growth and societal 
benefits untapped.  
Problem 1b: There is little competitive pressure  on incumbents to invest in modern broadband 
networks. Even where projects could be fi nancially viable, alternative public and 
private investors (including local administrations and public utilities) are held 
back by high capital costs (interest ra tes) and the lack of long-term funding.  
Problem 1c: There is currently no adequate  strategy to publicly support the rollout of 
broadband networks in areas where there is no business case. Current levels of 
European support are sub-cr itical and are hampered a lack of planning and 
absorption capacity at  the regional level.  
                                                 
9 http://ec.europa.eu/information_society/activities/dig ital_libraries/doc/refgroup/annexes/results_consult.pdf 
 
EN 11   EN Problem 2a: The private sector will not replac e public investment in the digital services 
central elements (platforms, generic serv ices etc) essential to ensure trans-
European connectivity, acce ss and interoperability.  
Problem 2b: Despite efforts on t echnical interoperabili ty, on-line public services may stop at 
the border.  
 
2.1. High-speed internet and the s ervices it supports: potential for growth and societal 
benefits are untapped. 
High-speed broadband is a cruc ial infrastructure of the 21st century. The internet, and 
technologies using the internet, support i nnovation, economic growth and improvements in 
daily life for both citizens and bus inesses. Wider deployment and more effective use of digital 
technologies enable Europe to address its key challenges and provide Eu ropeans with a better 
quality of life through, for example, better health care, safer and more efficient transport solutions, cleaner environment, new media opport unities and easier access to public services 
and cultural content. 
Broadband networks are generating much of the innovation that is shaping user demand in the 
electronic communications markets of the futu re. These investments will stimulate new 
demand for content/services, new innovation, wh ich will in turn trigger more/new supply 
(virtuous cycle). Broadband networks will also be important for ICT progress which will in 
turn bring unique and radical solutions for the societal challenges  ahead in areas such as 
health and demographic change, energy and reso urce efficiency, transport and congestion as 
well as climate change where broadband networ ks can offer potential for speedier green 
transformation, among others by facilitatin g deployment of smart energy networks. In 
addition, the availability of broa dband networks will allow for more flexible ways of working. 
One example is self-employed who work virtua lly for firms that can increasingly source the 
best workers in cyberspace, while workers can maximise the return on their knowledge and experience. Increasingly, users will be able to generate content which will become a source of 
income, especially in creative industries and entertainment. At the same time, reconciling 
work and family life will become more feasib le and will provide a new impetus for including 
currently excluded groups. 
However, the digital infrastructu re of the future is more than  connecting pipes or installing 
antennas. In the digital world networked services are an infrastructure on their own  
(regardless of the physi cal networks they are channelle d through). The Europe 2020 has 
acknowledged that: " The single market was conceived before  the arrival of Internet, before 
information and communication technologies became  one of the main drivers of growth and 
before services became such a dominant part of the European economy. The emergence of new services (e.g. content and media, health, sm art energy metering) shows huge potential, 
but Europe will only exploit this  potential if it overcomes the fragmentation that currently 
blocks the flow of on-line conten t and access for consumers and companies ". Digital service 
infrastructures are the innovative, interoperable and cross-border services which address fields 
such as education and culture  (eg Europeana see box below) , eID management systems, 
eProcurement services, service infrastructure for PSI, cross-border eHea lth services, security 
infrastructures, critical information infrastructures and safe internet service infrastructure.  
Example: Europeana 
 
EN 12   EN Europeana is the European digital library that provides a single en try to digital c ontent held by 
public cultural institutions (Libraries, museums,  archives,..). The digitisation and preservation 
of this content is done by the public sector  in the Member States with public support, 
sometime in partnership with the private sect or. The EU effort in the CEF will enable the 
aggregation of this content into a unique pl atform providing ultimately access to all EU 
cultural resources. With around 40 M€  investment per year at EU level in the last 4 years, 
Europeana provides access today to  more th an 19 million cultural objects held by cultural 
institutions in the 27 Member States. Althoug h it is already a world reference for digital 
cultural material, it presents stil l a small part of European cu ltural material held by public 
institutions.  
The effort needs to be pursued both at national level (digitisation and pr eservation) and at EU 
level (integration and aggregation) to ensure not only the widest access and diffusion of our 
culture to all citizens but also its re-use by European cr eators to develop innovative content 
material and services. It is the role of the pub lic sector, as indicated in the "Comite des Sages 
report" of 2010 on digitisation, to maintain and make access to publicly held cultural content. 
This is essential to ensure that exploitation and re use of this content is open to all EU creators 
and creative industries (cultural arts, cinema and audiovisual, education, games, design and 
fashion,..) and not only to a limited number of  private actors that  would monopolise the 
exploitation of our cultural resources. Creative industries re present more than 3.3 % of EU 
GDP and consist of a large number of small size companies for which publicly owned content 
represent a major creation resource.  
Both components of the proposed CEF interven tions for telecommunications infrastructures 
(broadband networks roll-out and deployment  of digital service infrastructures) are 
interconnected and mutually reinforcing. While  sufficient broadband capacity is the key 
enabling technology not only for web growth, but  also for research, innovation and digital 
services, its business case – and he nce the incentive for the private sector to invest - is heavily 
dependent on its use. Conversely, both th e design and take up of new broadband enabled 
services and solutions relies on the availability, speed, reliability  and resilience of the physical 
networks.  
However, a general problem is externalities i.e.  that many benefits from services provided 
over high-speed internet, such as tele-medicin e applications, accrue to public benefit and 
cannot be captured by private investors. Ther e is also a problem of suboptimal resource 
allocation. Low penetration rate s impede the development of va lue added bandwidth intensive 
services, and they reduce the ove rall impact that ICT related investments have on productivity 
and competitiveness of the EU economy as a whole. 
2.2. Broadband networks – the need to stimulat e investment in the infrastructures of 
the future 
As mentioned above, broadband networks are a cr ucial infrastructure for Europe to get on a 
track for smart, sustainable and inclusive growt h. However, about 7% of citizens are not at all 
connected to broadband internet  – they live in "white spots"10. What is more, Europe's current 
internet infrastructure relies on old networks of copper cables. Only 1-2% of citizens are 
connected to ultra-fast internet via fibre ne tworks (compared to 12%  in Japan and 15% in 
                                                 
10 Reported in "Broadband coverage in Europe", available at: 
http://ec.europa.eu/information_society/eeurope/i2010/benchmarking/index_en.htm  
 
EN 13   EN South Korea). These modern networks can gua rantee connections of 100 Mbps and more and, 
in times of ever increasing internet traffic are widely regarded as the infrastructure of the 
future. 
This old infrastructure limits the potential be nefits from the intern et, because many of the 
services offering social benef its or creating value-added requi re large bandwidth capacities. 
This is why the Digital Agenda for Europe ai ms to achieve the objec tives of broadband access 
for all by 2013, access for all to much higher internet speeds (30 Mbps or above) by 2020, and 50% or more of European households subscrib ing to internet connections above 100 Mbps. 
 
Figure 1 – Bandwidth need of a selected samp le of digital technologies and services 
2Mbps8Mbps25Mbps100Mbps
VoIPOnline 
radioeHealth: 
Remote 
Diagnostic 
Examination
Fast
internet 
browsingStandard 
def TV 
MPEG4P2P file-
sharingeHealth: Virtual 
Care Unit
HD 
telepresence
HDTVHD education 
fast downloadsMultiple 
application 
usage
Standard 
def TV 
MPEG2Downstream bandwidth requirements
Source: Analysis based on Broadband Stakeholder Group 
2.2.1.  The investment challenge 
As evidenced in the most recent DAE scoreboard, Europe is currently not  on track to achieve 
these ambitious targets. 11 
• The EU coverage of high speed internet is well behind that of other competitors around 
the world 
• The DAE scoreboard also indicates that the EU has today almost the lowest number of 
FTTH lines and estimates indicate that growth  in the adoption of this technology in the 
EU will increase at lower speeds than in other countries.  
 
                                                 
11  http://ec.europa.eu/information_society/digital-agenda/scoreboard/docs/scoreboard.pdf  
 
EN 14   EN Figure 2 – FTTP: number of broadband access connections  
 
 
If Europe wants to achieve its ambitious broadband targets, substantial investment will be 
needed. The exact amounts needed are difficult to  calculate but a review of recent studies 
indicates that between € 38bn a nd € 58bn would be needed to ach ieve the 30 Mbps coverage 
for all by 2020 (using a mix of VDSL and next ge neration wireless) and  between € 181bn and 
€ 270bn to provide sufficient coverage so that  50% of households are on 100 Mbps services. 
Market analysts' estimates ar e that major teleco mmunications operators alone (and under the 
current investment environment) will invest  not more than. €50bn by 2020 in ultra-fast fibre 
access networks. This would leave an investment gap of up to €220bn. 
The problems with the roll-out of  the broadband infrastructure touch primarily areas which do 
not have a high density of popul ation, both in Cohesion and in non-cohesion Member States.  
The EIB has recently commissioned a study which de monstrates that most of the investment 
challenge is with large countries of the EU . For instance Germany, France, Italy and the UK 
account for approximately half of the total inve stment need. The EU-15 countries account for 
77% of the investment challenge and ne w Member States for the remaining 23%.1 
Problem 1a: High-speed internet is a key infra-structure for the 21st century, but Europe falls 
far short of the necessary investments, l eaving potential for growth and societal 
benefits untapped.  
2.2.2.  Market failures and the lim itations of regulatory policy 
The shortcoming in private investment as identif ied above can be attributed to a number of 
market failures: 
• There is little competitive pressure on  incumbent network operators , which are mainly 
ex-state monopolies.  
• Limitations of regulatory approaches: Incumbent network operators  have no interest to 
invest because regulation imposes open network access for (competitor) service providers. 
But open access is the essence of competition and without competition on a level playing 
field services are expensive and only few customers would be willing to pay for them. Since coverage is directly linked to penetra tion (and vice versa), the business case is weak 
in a vast range of areas except for those areas where not only population density is high 
 
EN 15   EN but also where people are educated and w ealthy enough. The combination of these factors 
makes the business case, for certain areas, very  difficult. This resu lts in "islands of 
connectivity" and very large ar eas where the current model is not working. Existing (or 
planned) regulatory instruments can only partially address this issue. 
 
The regulatory context 
The EU regulatory framework aims at promo ting efficient investment and innovation in new 
and enhanced infrastructure, taking due acco unt of the risks incurred by all investing 
undertakings and the need to maintain effective competition, which is an important driver of 
investment over time.  
In particular, under under Article 16(4) of  Directive 2002/21/EC National Regulatory 
Authorities (NRAs) are develo ping regulatory re sponses to the chal lenges raised by the 
transition from copper to fibre-based networ ks, in the form of asymmetric regulatory 
obligations imposed to undertakings enjoying significant market. Member States may also 
impose obligations of reciprocal sharing of facilities on undertakings operating an electronic 
communications network to overcome bottlenecks in the civil engineering infrastructure and 
terminating segments. 
In addition, the Commission has recently a dopted a Recommendation on regulated access to 
Next Generation Access Networks with the view  to provide guidance to NRAs in order to 
ensure regulatory consistency across the EU  while providing more legal and regulatory 
certainty for market players.12  
Finally, Community Guidelines for the application of State aid rules in relation to rapid 
deployment of broadband networks13 designed to facilitate in vestments through summarising 
the Commission's policy in applyi ng the State aid rules of the Tr eaty to measures that support 
the deployment of traditional broadband networks  and the rapid roll-out of NGA networks.  
However, the Commission acknowledges that the funding gap can only pa rtially be addressed 
through existing or planned regulatory instruments. 
• Where there is a business case for investment, alternative public and private investors  
(including local administrati ons and public utilities) face capital constraints , because 
banks perceive them as higher risks, ther eby charging higher interest. Hence, even 
potentially viable projec ts are not undertaken.  
• Similarly, capital constraints are linked to long-term nature of infrastructure projects : 
Alternative investors are not able  to obtain long-term loans – loan maturities do not reflect 
the specificities of infrastructure investment.  
 
Problem 1b: There is little competitive pressure  on incumbents to invest in modern broadband 
networks. Even where projects could be fi nancially viable, alternative public and 
                                                 
12   2010/572/EU  
13   2009/C 235/04)  
 
EN 16   EN private investors (including local administrations and public utilities) are held 
back by high capital costs (interest ra tes) and the lack of long-term funding.  
2.2.3.  Existing Member State and EU policies 
Both Member States and the EU have recognised  that the benefits which the internet creates 
for society as a whole are much greater than pr ivate incentives to invest in faster networks. 
Public intervention is particularly needed in areas where the business case for investment is 
weak. These are mainly areas with low or medium levels of population density. 
Not least as a result of coordination work unde r the Digital Agenda fo r Europe, a number of 
Member States have adopted national broadban d plans but few have fu lly operational plans 
for next generation networks w ith concrete implementing measures to realise their targets, 
notably as regards the necessary funding. It app ears that Member States have no solution to 
the investment gap and, as mentioned above, Me mber States have invited the Commission to 
make a proposal, in cooperation with the EIB and in collaboration with the MS, to support 
broadband financing on the EU level. 
Certain efforts exist on the EU  level to support the roll-out of broadband networks, mainly 
under the Structural Funds and the European Agri cultural Fund for Rural Development as part 
of the recovery plan: In the 2007-2013 financia l period the Structural Funds have made a 
modest but important contributi on to investment in broadband  infrastructure: 2.3bn, of which 
1.9bn in convergence regions but only 370M in  competitiveness regions, although today both 
convergence and competitiveness regions face a sim ilar challenge in terms of investment in 
high speed internet. Under the European Agricultural Fund for Rural Development, ca. €1.02bn have been earmarked for broadband investment. 
Structural Funds and European Agricultural Fund for Rural Development support has so far 
exclusively relied on grant funding. Although ava ilable in principle, financial instruments 
have not been used to finance infrastructure, which has limited the potential impact of the 
funds. The management of Structural Funds is de -centralised, i.e. European funds are spent by 
national and regional authorities. 
There are severe limitations to  what the current Structural Funds model of supporting 
broadband networks can achieve: The 2010 Strategic Cohesion Report
14 highlighted great 
difficulties in regional capacity to plan, manage and implement broadband projects. Only 18.1% of the available funds had been absorbed  by March 2010 against an  overall average for 
all other themes of 27.2%. Subs tantial problems of absorption exist particular in Member 
States such as Romania, Bulgaria, Greece and Poland. 
Other existing EU activities supporting the roll out of broadband networks are carried out 
under the Risk Sharing Finance F acility (RSFF) and the EIB but th e current levels of funding 
are sub-critical.  
Problem 1c There is currently no coherent  strategy to publicly support the rollout of 
broadband networks in areas where there is no business case. Current levels of 
European support are sub-cr itical and are hampered by a lack of planning and 
absorption capacity at  the regional level.  
                                                 
14  http://ec.europa.eu/regional_policy/policy/reporting/cs_reports_en.htm 
 
EN 17   EN See also annex 4 on broadband and its impacts for more information. 
2.3. Digital service infrastructures: The Digita l Single Market is still far from being 
reality 
As mentioned above, digital service infrastr uctures are the innovativ e, interoperable and 
cross-border services which address fields su ch as education and culture, eID management 
systems, eProcurement services, service infrastructure for PSI, cross-border eHealth services, security infrastructures, critical informati on infrastructures and safe internet service 
infrastructure. 
In practice, the policy challenge on the European le vel is mainly to ensure the interoperability 
and cross-border availability of online servi ce infrastructures developed by the public sector 
in Member States, regions and localities. Wit hout these infrastructure s, the Digital Single 
Market will remain incomplete. 
Example: Public Sector Information 
The platform for open access to public sector in formation follows the same line as Europeana 
but addresses all publicly held information that  can be made available for access and re-use. 
National portals providing access to informa tion held by administrations and public 
organisations are being devel oped today in several Member  States and the trend is 
acceleration to cover all of them. The trend is driven not only by transparency and democracy 
considerations but also and mainly by economic  considerations given the huge potential for 
re-use of this content in new business opportun ities. Examples are geographical information, 
statistics, weather data, business information, archives and publicly funded research data. 
Currently the potentia l of the re-use of public  sector data in new information products and 
services and for efficiency gains in administ rations is largely untap ped. That is why the 
Digital Agenda for Europe singled  out the re-use of public sector information as one of the 
key areas for action.  
The EU effort will enable the creation of a sing le access point to data sets produced by public 
bodies in the Member States at national, regional or local level and by the European 
institutions (data.eu infrastructure). This can only be done only th rough EU funding in order 
to support the harmonisation and th e interoperability of datasets  at European level and to 
provide easy access to these sets which an esse ntial condition for  the development of EU-
wide innovative applications and services. Publ ic sector information is a public good that 
should available to all businesses at a marginal  cost The overall economic gains from further 
opening up PSI by allowing easy access are estima ted at around EUR 40 billion for the EU27, 
and aggregate economic impacts across the whol e EU27 economy are estimated to be of the 
order of EUR 140 billion, showing clearly that th ere are large economic benefits from easier 
access to and greater use of PSI. 
2.3.1.  The elements of a digita l service infrastructure 
A digital service infrastructure is mainly composed by three elements:  
a) Core platforms  are the central element(s) or  hub(s) of the digital service 
infrastructures essential to ensure trans-European connectivity, access and interoperability. This may encompass the continuous coordination, operation, 
maintenance, enhancement and promotion of digital service infrastructures. This may 
also encompass physical equipment, such as servers, dedicated networks and software 
tools. Core service platforms are open to all Member States. 
 
EN 18   EN b) Generic services  provide the functionality an d content of digital service 
infrastructures, e.g. making public sector in formation open to online access. They may 
be interconnected through a core service platform.  
c) Applications add value to the core service platforms and/or generic services. They are 
developed by the private or public sector, or both in partnership, also for the purpose 
of commercial exploitation. .  
The CEF will finance only the core platforms and the generic service levels. 
2.3.2.  Public interest and market failures in digital service infrastructures 
As far as financing is concerned, for public serv ices the first two layers are often relying on 
investments by public administrations at nationa l and European level, while the third may 
concern new business models eg. take up of the public eID systems in eBusiness or eCommerce by the private sector as well as cr oss-border public 'services' using eID e.g. 
university registration. In areas where services could be entir ely private (eg. smart energy 
distribution), initial public investments might be needed for the first two layers to encourage 
private actors recover sunk costs  of early adopter and minimise the risks of engaging into 
innovative business models (layer 3).  
The rationale for public (mainly: Member State) investment in digital service infrastructures 
is based on the public good created, be that in  reducing energy consumption through smart 
grids, in making transactions more trustwor thy through electronic id entification, or through 
protecting children from harmful online content. 
Example: Safer Internet 
Children across the EU have adopted the Internet  as a main part of their everyday life for 
discovering, studying, comm unicating or for simply playing. As the benefits of the Internet to 
our kids continue to grow, so  are also some important risk s. These include exposure to 
harmful content, grooming, the circulation of ch ild abuse images and videos as well as the 
relatively limited availability of high quality  content specifically targeting children. The 
infrastructure will provide support to create a better and safer intern et for kids on line. 
The services are of public interest where exte nded EU funding is likely to be needed to 
maintain the EU level cooperation and inte gration. Industry, including online content 
providers, may subscribe to maintaining some of the services (that suppo rt actions they have 
committed to under the self regulation – e.g. ag e verification, rating) and even contribute 
under corporate responsibil ity goals to more general awarene ss services but there will still be 
a need for EU funding on top of the services and activities funde d at national level by the MS. 
 
The basic infrastructures, i.e. funding layers 1 and 2 of digital infrastructures in areas of 
public services is often affected by a strong degree of market failures for several reasons:  
• Economies of scale and scope:  The lack of interoperable public services impedes the 
provision of cross-border services by private businesses. This is especially the case for 
markets that depend highly on ICT infrastructure  such as the European energy market that 
needs European interoperability for the wide spread deployment of smart metering systems 
based on broadband.  
• In small countries they risk being "sub-dimensional"  (lacking sufficient scale) and in 
large countries they risk enga ging with fragmented solutions  which are not interoperable 
 
EN 19   EN on a cross-border basis (and often on a cross-re gions basis) and/or lack the suitable 
incentives to be interoperable.  
• Network effects  can be associated to the provision of European cro ss-border services 
such as eSignature or eInvoicing. The value of  these services to economic operators will 
increase as more operators use them. 
Indeed, regarding layers 1 and 2, the Union has made, for example, good experiences with the 
pan-European research and e ducation network "Géant", the sp ecific governance of which 
minimises the sub-dimensional risks and ensure s efficient cross-border interoperability. 
Moreover, a cost-sharing model sees the partic ipation of Member States (represented by the 
National Research and Education Networks "NRENs") and European Commission, optimising administration, operation and pr ocurements trough "DANTE", the European 
Research Networking Organisation
15. 
 
Problem 2a: The private sector will not replac e public investment in the digital services 
central elements (platforms, generic serv ices etc) essential to ensure trans-
European connectivity, acce ss and interoperability.  
2.3.3.  The cross-border policy challenge  
Whereas Member States can be expected to engage in the modernis ation of their public 
services to realise efficiency gains and savings  resulting from the use of digital technologies, 
they have currently few incentives to invest in the interoperability and cross-border dimensions of such digital public  services, even in areas in wh ere technical viability of the 
interoperability has been demonstrated. The resulting fragmentation of systems and (often sub-optimal) solutions will be a major obstacle to the emergenc e of the digital single market, 
prevent the market expansion and growth of cr oss-border service and perpetuate transaction 
costs for pan-European companies.  
An additional challenge for pan-European public  services is caused by the multilinguality of 
the EU. If these services are to be adopted by the citizens and admini strations of all EU 
countries, the users must be served in their own languages. Yet the system needs to provide 
for real-time exchange of information, making the language barriers disappear. Each Member 
state primarily has an interest  to support and promote its own language(s), therefore the pan-
European service infrastructure must provide th e necessary incentives and facilities to make 
public service infrastructures multilingual. 
Indeed to reap the benefits of Single Market acquis  as regards areas such as the provisions of 
the Services Directive, eInvoicing, eProcurement  wide implementation of such cross-border 
services are essential. In addition, the DAE a nnounces that the ICT s ector will lead the way 
on reporting its greenhouse gas emissions, set-up wi de-scale pilot actions that give Europeans 
secure online access to their medical health data so  that wherever they are, they can also give 
doctors access to their medical r ecord. Effective cross-border solu tions are necessary to fulfil 
these commitments.  
                                                
 
15  DANTE (Delivery of Advanced Network Technology to Europe),  limited liability company and a “Not 
for Profit” organisation established in 1993 in Cambridge, plans, builds and operates advanced networks for 
research and education. It is owned by European NRENs (national research and education networks), and works 
in partnership with them and in cooperation with the European Commission.  
 
EN 20   EN In summary, the current situation results in hi gh transaction costs for European companies, in 
particular SMEs in search of growth opport unities beyond their home markets, but also for 
increasingly mobile Europeans. More direct impact of limited inter-operability of public 
services affects in particular  citizens living in state border areas, or working, studying or 
seeking medical treatment cross-border. 
 
Problem 2b: Despite efforts on t echnical interoperabili ty, on-line public services may stop at 
the border  
See also more information in annex on the digital service infrastructures. 
2.4. Baseline scenario for broadband and digital services 
Based on the above discussion, the baseline scen ario for broadband networks can be assumed 
to be the following: 
• The revamped regulatory framework, incl uding the NGA Recommendation, cannot be 
expected to sufficiently improve the business case for investment, in particular outside 
densely populated areas.  
• Alternative investors will con tinue to face capital constraints, with high interest rates and 
insufficient long term loans.  
• A gap in private investment of up to € 220bn will remain.  
• Public support for broadband will remain sub-critical and lacking impacts. Under the new 
financial period (2013-2020) the Structural Funds  can be expected to continue to make 
support available, at l east for convergence regions, but the problem lacking planning and 
absorption capacity will remain. Another impor tant source of funding, the recovery plan 
financing, ca. €1.02bn earmarked for broa dband investment under the European 
Agricultural Fund for Rural Development as  part of the recovery plan, would be 
discontinued.  
• Using exclusively grant funding, public support will continue to leverage only limited 
private investment. 
The baseline scenario for digital service infras tructures can be assumed to be the following: 
• As mentioned above, many of the digital servic e infrastructures have been promoted by 
the Union for some time, e.g. as pilots under the Competitiveness and Innovation 
Programme. Although most of these digital service infr astructures are ready for 
deployment, current circumstances would not allow for this deployment to happen. 
• Federating sufficient common support from the Me mber States at the ti me of austerity is 
unlikely and the private sector will not replace public investment in central (and generic) 
service elements such as platfo rms or interoperable protocols. 
• Many public online services would continue to st op at the border. This in turn would keep 
citizens from benefitting from public services across borders 
• The important potential for business mode ls which rely on the availability of 
interoperable, European-wide digital infrastructures will remain untapped. 
 
EN 21   EN The physical infrastructures (b roadband networks) a nd digital service in frastructures are 
closely interlinked . Should the EU not be able to reach  its targets for broadband penetration, 
this would slow down the development of va lue added bandwidth intensive services, and 
reduce the overall impact that ICT relate d investments have on productivity and 
competitiveness of the EU economy as a whole. 
A study commissioned by the European Commission  (Micus 2008), identifies three scenarios 
concerning the cumulative growth effect of br oadband deployment, as is shown in the graph 
below. However, it identifies the worst case s cenario as the most realistic, meaning that 
Europe's broadband penetration levels as they  are in 2010 no longer permit the economies to 
exploit the potential of broadband growth.  
Figure 3 - Broadband-related GDP growth (EU27) 2006-2015 (cumulative), source Micus 2008 
 
In sum, private investment in broadband woul d thus continue to be insufficient in many 
regions due to lack of competitive pressure and high commercial risk. Equally, public online services can be expected to remain under-dev eloped and not inter-operable across borders due 
to fragmentation of sub-optimal efforts and te chnical solutions, lack of critical mass, high 
costs for service providers and beneficiaries of services.  
2.4.1.  Sensitivity analysis 
Considering the high degree of uncertainty su rrounding projections over a relatively long time 
horizon, especially for such complex systems as  digital infrastructures and networks, an 
evaluation is provided below for the possible imp act of external factors on the assumptions 
underlying the baseline scenario.  
First, the high degree of uncer tainty regarding budge tary constraints at the level of the 
Member States needs to be taken into cons ideration. The development of hard and soft 
infrastructure, being costly, very much depends  on the coherent and e fficient use of public 
and private resources available. Fiscal austerity and structural  reforms in many EU countries 
will drive or have already driven public authorit ies to reassess their infrastructure investment 
programmes. For example, " in Portugal and Spain, stopping or postponing infrastructure 
projects by downscaling investmen t expenditures is one of the most important contributions 
on the expenditure side. In Spain, a reduction of 0.5% of GDP is pl anned between 2011 and 
2013. In Portugal, cumulative savings on invest ments will amount to 1.2% of GDP by 2013. 
 
EN 22   EN In Ireland and Slovenia, infrastructure spendi ng will be reduced, resp ectively, by 1.6% of 
GDP from 2011-14 and 0.8% of GDP in 2010-13"16. 
Moreover, access to financing by companies and infrastructure projects is particularly 
challenging in the countries with relatively high  sovereign risk and s ubsequent uncertainties 
as regards the economic/regulatory environment (c ost of capital, reduction of agreed support 
under existing incentive schemes, scaling down of public investment programmes, taxation, 
impact of sovereign rating on investor behavi our, etc). Finally, potential future liquidity 
shortages of financial institutions will have an impact on the availability of financing even for healthy corporations and projects. 
It is uncertain to which extent these aspects wi ll impact the implementation of infrastructure 
projects (in general). It is however likely that  this uncertainty will be reduced by the creation 
of the CEF with its strengthened and more ta rgeted financial EU c ontribution. In sum, 
although there are considerable uncer tainties related to large scal e EU infrastruc ture projects, 
the CEF would to a certain extent counter-b alance these and consequently reduce risks 
perceived by investors, thus in creasing their incentives to inve st in infrastructure projects. 
2.5. Justification for EU action: s ubsidiarity and EU added value 
As mentioned above, the Commission will base its proposal for a Connecting Europe Facility 
on articles 170-172 TFEU: "Action by the Union shall aim at promoting the interconnection 
and interoperability of, and access to, national networks, taking into account in particular the need to link islands, landlocked and peripheral re gions with the central regions of the Union 
(Art 170 TFEU)."  Thus, the Union has th e legal basis to act. 
In terms of subsidiarity and on the basis of the Treaty mandate, the proposal for a Regulation 
on guidelines will not change th e general division of competencies between the EU and the 
Member States, but will rather aim at improvi ng the effectiveness of both the EU and Member 
States action in achieving the Trans-European Networks policy objectives within this division of competencies. The objectives outlined be low will not be achieved by voluntary 
coordination among Member States alone due to the risk of dup lication of efforts, setting 
different standards, difficulties in targeting the projects genera ting most externalities and the 
transnational characteristics of the spillovers generated by ICT.  
As mentioned in the problem definition section, the economic and social benefits of network 
investment accrue not only to the investor but to society as a whole. Indeed, while the costs 
for infrastructure investment accrue  locally, a considerable part of the benefits accrue across 
the Single Market  or, indeed, even globally. This very  characteristic ar gues in favour of 
action at a higher level than simply the Member State.  
The more and the better people are connected, the larger is the market for eCommerce and 
online services, including innova tive, high value-added busine ss models. Broadband networks 
are a basis for a more efficient organisation of  the European economy as  a whole, increasing 
productivity and reducing transaction costs, bo th within Member States and across borders. 
These benefits will be reinforced through the network effects: the more users benefit from 
high-speed broadband, the more visible and effective are the above impacts.
 17 
                                                 
16 OECD, Restoring public finances, 2011. 
17 Deloitte report "background support study to the DAE"  
 
EN 23   EN As regards broadband networks  in particular, investment in  modern telecommunications 
infrastructures needs to come, mainly, from th e private sector. However, as seen above, the 
market is falling short of the necessary inve stments, and traditiona l policy approaches to 
infrastructure investment seem to be unable to  deliver solutions. That is, not least, because 
private capital markets are or ganised globally, and investors perceive national markets in 
Europe as too small, and bottom up diversif ication as costly. As a solution, EU-level 
intervention including the joint establishment of financial instruments such as loan guarantees 
or equity funds supporting pan-European projec ts can provide tools for attracting private 
sector funds from both within and beyond the EU.  
As regards digital service infrastructures  in particular, there is a clear case for EU added 
value through coordinating and connecting Memb er State activities ac ross borders, thereby 
ensuring interoperability and EU-wide usability.  Indeed, due to non-territoriality of digital 
service infrastructures, and often their inheren tly cross-border character such as for example 
in case of seamless cross-borde r eGovernment services, releva nt objectives of Europe 2020 
and the DAE can only be achieved by a pan-Eur opean coordinated infrastructural approach. 
This is the case with the co mmon services supporting cros s-border and cross-sectoral 
interaction between European public administrations defined and implemented under the ISA 
program but where their sustainability remain s nevertheless an issue.  In the case non-EU 
action, Member States action is prone to coordi nation failure, setting different standards and 
not targeting projects wh ich generate the most externalities. The current situation is indeed 
marked by "national islands" even in sectors pr one to duplicability or transferability of 
solutions without major issues of culture or not-invented-here syndromes such as e-health 
applications. 
  
3. OBJECTIVES  
3.1. Overall objective 
In addition to addressing the Treaty mandate as  stated above, the overall objectives of the 
proposed initiative are those of  the Europe 2020 strategy and its Digital Agenda flagship 
initiative: delivering sustainable economic and social benefits from a Digital Single Market based on fast and ultra fast internet and inte roperable applications, with broadband access for 
all by 2013, access for all to much higher inte rnet speeds (30 Mbps or above) by 2020, and 
50% or more of European households subscr ibing to internet connections above 100 Mbps
18. 
3.2. Operational objectives 
In order to achieve the above, a nd reflecting the problems as defi ned in the prev ious chapter, 
the Union should aim at achieving achi eve the following operational objectives: 
1. Influence the market dynami cs for broadband investment , by encouraging both 
traditional and new investors to engage in broadband infrastructure roll-out and ensuring a 
level playing field among them.  
                                                 
18 By 2020, all Europeans should have access to intern et of above 30 Megabits per second (Mbps) and 
50% or more of European households have subscriptions above 100Mbps.  
 
EN 24   EN a) In areas where broadband netw ork projects are potentially financially viable, ensure 
that investors, including al ternative public and private investors, have access to 
capital, at reasonable costs (interest rates) and with a sufficiently long time-horizon. 
b) In areas where there is no business case, provi de sufficient levels of public financial 
support for the roll-out of broadband networks. 
c) Across the Union, ensure that public and pr ivate investors develop the capacity to 
conduct broadband infrastructure projects, by providing technical assistance, e.g. for 
planning and mapping. 
d) In supporting infrastructure projects, en sure that Union funds have a maximum 
mobilising (leveraging) effect on pr ivate and (other) public investment. 
2. Facilitate additional effort by Member St ates needed for the use of interoperable 
digital services in order to permit for these essential se rvices to function in a cross-border 
manner and to unlock the digital content re sources generating opportunities for business 
development. 
 
4. POLICY OPTIONS  
4.1. Remarks on the approach 
The options appraised in this section are pres ented in the context of ensuring the necessary 
consistency with the Commissi on proposal for the MFF.  
The no policy change scenario will therefore be only briefly discussed under the next section 
as option 1. The present impact assessment will screen only option 2 on the inclusion of DG INFSO specific guidelines for the implementa tion of the broadband networks and digital 
service infrastructures part of the CEF. Option 2 has been divided into three sub-options that 
present three different scenarios for the implemen tation of CEF. This is the only option that is 
fully consistent with the Budget for Europe 2020
19, as discussed in the SEC(2011) 868, and 
in part II of the COM(2011) 50 final.  
Note that option 1 includes a discussion of the 'no change' policy option. The baseline for 
option 2 will be the overall leve l of expenditure that has been  already decided in the Budget 
for Europe 202020.  
4.2. Option 1 – no policy change  
This option corresponds to the baseline scenar io developed under 2.4. In order to recall the 
main points, no policy change would mean the following: 
For broadband: 
• Mainly reliance on regulatory appr oaches to stimulate investment. 
• Continuing capital constraints for alternative investors. 
                                                 
19 All documents are accessible at 
http://ec.europa.eu/budget/biblio/docum ents/fin_fwk1420/fin_fwk1420_en.cfm   
20 All documents are accessible at 
http://ec.europa.eu/budget/biblio/docum ents/fin_fwk1420/fin_fwk1420_en.cfm   
 
EN 25   EN • An investment gap of up to € 220bn. 
• As regards public support, mainly reliance on the Structural Funds, with the persisting 
challenge of absorption cap acity, and on grant funding.  
For digital service infrastructures the baseline scenario would mean the continued limited 
support through project pilots (although most of the technologi cal solutions have reached 
maturity and are ready for deployment) and policy coordination efforts, whereby Member 
States have no incentive to make existi ng solutions interoperable across borders.  
 
4.3. Option 2 – broadband networks and digita l service infrastructures in the trans-
European networks of infrastructure (CEF) 
The infrastructure networks concerned by opti on 2 consist of (i) broadband networks covering 
a geographically diversified portfolio of project s which contribute to th e objectives set out by 
the DAE, and (ii) the development, deployment and sustainability of inter-operable, cross-border digital servi ce infrastructures: 
This option is the line of action included in  the MFF proposal released by the European 
Commission on 29 June 2011, creating a "Conn ecting Europe Facility" to finance 
infrastructure. The new facility will " finance infrastructure projects with high EU added 
value, not only 'hard' infrastructure, but al so 'soft and smart' infrastructure and governance 
structures to realise the transport "Core Networ k", the energy "priority  corridors" as well as 
digital infrastructure. The fa cility would target projects with high European value added, 
such as cross-border interconnections or the de ployment of EU-wide sy stems, which must be 
implemented by 2020. Specific mechanisms would ensure that expenditure for each of the sectors would be ring-fenced, while preservi ng the necessary flexibility and performance 
orientation. At the same time, funding woul d continue for the Comprehensive Network 
through the Cohesion and Structural Funds (CSF),  which would target pr ojects of a national 
and/or regional interest. In order to maximise impact, appropriate provisions would ensure 
the combination of market based instruments an d EU direct support, in order to encourage 
the participation of specialised infrastruc ture investors. The Commission would remain 
responsible for the overall planning and project selection, with the support of an executive 
agency, while project promoters would ensu re physical implementation on the ground ". 
The joint implementation of the CEF by Co mmission DGs INFSO, MOVE and ENER will 
allow for flexibility  within the limits established by th e Financial Regulations and for the 
implementation of synergies between different netw orks (joint use of civ il works, synergies in 
case of smart grids and smart transport solutions).  
For broadband networks , Union financial support would be provided to individual 
companies, special purpose vehicles and cons ortia involving, but not  limited to, telecom 
companies (incumbents, alternatives), equipm ent suppliers, other utility companies (water, 
sewage, energy, transport), or construction companies which ma y find synergies in combined 
infrastructure investment and wh ich may invest either alone or in partnership with regional 
and local authorities, including municipalities, who will most likely establish concessions for managing wholesale services of broadband in frastructures. Many equi pment providers, but 
also content providers and other pl ayers in the value chain can be expected to be interested in 
such an arrangement. 
 
EN 26   EN For digital service infrastructures , Union financial support w ould be provided to industry, 
public administrations (national, regional, lo cal) and non-profit entities individual companies: 
• The industry at large: private operators  such as ICT hardware and software 
companies, telecom companies (incumbents, alternatives), equipment 
suppliers, utility companies, Social Networking Sites, mobile and broadband operators, device manufacturers, busi nesses re-using and exploiting open 
data/public sector information. These operators may find synergies in combined or selective investments in infrastructure, core, generic and application services. In all areas, a la rge involvement of SMEs, in particular 
innovative SMEs in the ICT and creative industries sectors could be expected. 
• Member States, regional and local public bodies, and EU institutions as data 
providers and re-users. In the particular case of Safer internet, it would also 
involve the Ministries of Justice, In ternal Affairs, Education, alongside NGOs. 
• Profit and non profit content providers an d other players in the value chain can 
be expected to be interested in such an arrangement. For Europeana particularly, one of the major benefici ary would be the Europeana foundation 
(for developing and co-ordinating the cen tral Europeana service) and national 
and regional content provide rs (cultural institutions  such as museums and 
libraries, and private content holders). 
Option 2 can be divided into three main sub- options, in relation to the way in which the 
guidelines could implement financing of the above mentioned digital infrastructures and 
services. The three sub-options can be enunciated as follows. 
4.3.1.  Sub-option 2.1: Financing through grants 
This sub-option entails that financial support fo r both broadband networks  and digital service 
infrastructures would uniquely take place through grants. The operational implementation would mainly be outsourced to an existing executive agency, such as the TEN EA. This 
agency would be in charge of launching cal ls for proposals aimed at selecting potential 
beneficiaries. Overseeing activities would be carried out by the Commi ssion, liaising with the 
relevant executive agency. 
Criteria for project selection would be: 
o contribution to the Europe 2020 objectives  of fostering smart, sustainable and 
inclusive growth, in particular by achieving the policy goals of the Digital Agenda for Europe, notably by creating a vibrant digital single market through 
more effective use of digital technologies; 
o being based on mature tec hnology ready for deployment, 
o demonstrating clear European added value. 
Additional, more specific selec tion criteria would be establis hed in an annual and/or multi-
annual work programme, as developed by the Co mmission with the assistance of a Member 
States Committee. 
 
EN 27   EN As far as indicative co-funding rates  for grants targeting works;  operation and maintenance 
are concerned, they would not exceed the following rates ( disclaimer: these figures are given 
as indications and may change o ver the course of negotiations ): 
o actions in the field of broadband networks up to 50%;  
o Core service platforms: up to100 % of the eligible cost;  
o actions in the field of generic servic es up to 75 % of the eligible costs. 
Grant funding would also allow for the Uni on to finance support actions and studies, 
including infrastructure mapping and technical assistance, in order to help the absorption 
capacity on the ground. Such support actions should be funded at a relatively high rate, such 
as 75% of the eligible costs. 
For broadband networks, grant financing would target project proposals by one or several 
public or private undertakings/bodies or in ternational organisations having received 
agreement from national authorities. 
4.3.2.  Sub-option 2.2: Financing through financial instruments 
Under this sub-option financial support to infrastructure proj ects would be given uniquely via 
financial instruments. The Commission would work closely with relevant International 
Financial Institutions (IFIs), e.g. the European Investment Bank. IFIs would select projects 
based on their financial viability and applying established practices of due diligence. This 
option would thus put in place a due diligence m echanism that would be tasked with assessing 
the viability of investment pr ojects taking into consideratio n a number of variables including 
population density, and other socio- economic factors such as aver age income level, education, 
age and ICT training. The combination of thes e factors and the situ ation on th e ground in 
terms of broadband market will determine the most  suitable set of invest ment models and the 
different contributions from priv ate and public finances that will  be required with a view to 
use, where possible, a variety of financial engineering tools.  
The following financial instruments could be used:  
o capital participations for investme nt funds or comparable financial 
undertakings with a priority fo cus on providing risk capital for 
infrastructures; 
o a financial contribution to the provisi oning and capital allocation for loans 
and/or guarantees or other risk-shari ng instruments issued by an IFI on its 
own resources or by other financial inte rmediaries including with a public 
mission. Such risk-sharing schemes incl ude but are not limited to project 
bonds, 
o other specialised financial instruments, be they of loan, guarantees, counter 
guarantees, risk capital and any othe r legal forms of instruments. 
The guidelines should allow the Commission to fully reap the benefits from the market 
potential of main financial institutions. This sub-option is therefore entirely market driven. 
 
EN 28   EN 4.3.3.  Sub-option 2.3: Combined financing approach 
The approach proposed under sub-option three w ould combine the two approaches presented 
above. Accordingly, the governance structure w ould combine elements of both sub-options 
presented above. The decision co ncerning the appropriate blendi ng of grants and financial 
instruments would be included in the annual wo rk programmes, in line with the policy and 
sector necessity. Broadband networks might re quire a different financ ing mix than digital 
service infrastructure. Furthermore, broadband ne twork deployment in re gions where projects 
are potentially financially viable would rather be s upported via innovative financial 
instruments whereas in regions where the busine ss case is weak, e.g. in rural regions, support 
would rather take the form of grant financing. 
The three sub-options are reviewed for the financing of broadband and digital service 
infrastructure in the impact section. 
4.3.4.  Option 2 – synergies with Structural Funds 
However, the governance model proposed in th e previous section for broadband networks 
deployment leaves room for synergies with the st ructural funds. For inst ance, local authorities 
could be part of the consortia financed by financial instruments and still benefit from 
Structural Funds at a co-funding rate foreseen by  the structural funds re gulations. In addition, 
the Cohesion policy could continue targeted investment in cohesi on countries and rural 
regions in the form of grants. 
4.3.5.  Guiding principles 
In the EU there is infrastructure based comp etition with telecom incumbents, new entrants 
and cable companies providing broadband access.  Regulatory authorities can impose access 
remedies, price regulation and functional sepa ration on dominant operators. This means that 
also service providers can compete based on th ese regulated access services at the wholesale 
level. Access prices and condi tions take due account of inve stment risks and promote co-
investment and risk-sharing mechanisms.  
The CEF will of course be applied in full respec t with principles of competition policies, in 
particular state aid rules. Indee d, an important argument in favour of an EU action in this field 
is preventing market partit ioning and creation or mainte nance of entry barriers. 
The guiding principles for the functioning of the Fund will be correcting market and 
coordination failures, intervening only where an  incentive effect is demonstrated and only to 
the extent necessary to  trigger market participation. Th e Fund will indeed function as a 
subsidiary instrument only where and to the extent to which the market does not offer 
satisfactory outcomes (in terms of availability of funding or volume thereof). To prevent the 
risk of crowding out private fi nancing of infrastructure, a nd thus delivering sub-optimal 
results in the longer term, these prin ciples represent a crucial safeguard. 
 
5. ANALYSIS OF IMPACTS  
This chapter presents in a succinct fashion th e analysis of the main  impacts that can be 
envisaged from options 1 and 2. As far as the la tter is concerned the impact assessment will 
firstly concern the general impacts stemming from the adoption of option 2 and then will 
 
EN 29   EN analyse the impacts associated with each of the three sub-options pr esented in chapter 4 
above.  
5.1. Impacts from the adoption of option 1: no policy change 
This section presents the main impacts that are likely to be generated by the continuation of 
the current policy framework. 
The option is not likely to influence the market dynamics  for broadband investments. The 
main problem of fragmentation would remain untouched. Option 1 would entail not to invest 
in broadband networks at all, with the ex ception of the Structural  Funds. No financial 
instruments would be foreseen even if they wo uld better ensure the mobilisation of private 
and public capital in areas where broadband netw orks are potentially financially viable, but 
their cost of capital is too hi gh or the payback time too long. A number of evaluation studies 
and reports provide useful insi ghts on the strengths and weakne sses of current EU funding for 
infrastructure. In the area of ICT funding, the mid-term evaluation of the RSFF, completed in 
201021, stressed the positive impact of the fac ility in expanding pr ivate financing and 
considered it as a highly efficient and effec tive instrument. Less positiv e is the evaluation of 
the performance of Structural  funds in supporting ICT meas ures. The 2010 Strategic Report 
on Cohesion policy22 highlighted a low absorption rate and pointed to a lack of administrative 
capacity for project preparation and implemen tation, compliance with state aid rules and 
inadequate assessment of possible future needs as problematic aspects. Thus there is very 
little indication that this option would, on its own, be effective. 
Overcoming these problems would require the de ployment of different rates of both private 
and public investment depending on the pr esence of these ob stacles on the ground. 
Under option 1, the market failure  in the broadband market would not be addressed, or only 
very partially and in an uncoordinated manner e.g. through structural funds. There would be 
lower penetration rates which would produce a number of eff ects such as lengthen the 
investment payback time in infrastructures,  slow down the development of value added 
bandwidth intensive services, and reduce the overall impact that ICT related investments have on productivity and competitiveness of the EU economy as a whole. 
Numerous EU regions have no broadband or high-speed broadband coverage . According 
to the 2009 IDATE survey some 7%  of the EU territory had no broadband coverage at the end 
of 2008. The situation has since probably not improved significantly due to substantial 
general decrease of investment activity in 2009 and 2010. Green-field investment justifies the 
roll-out of high-speed broadband ne tworks to these white areas, as  the roll-out cost difference 
compared to basic broadband networks capit al expenditure is ra ther negligible.  
Current network capacities cannot meet the dema nd for new content. Bandwidth demand from 
current applications alone, such as high-defi nition video, is projected to quickly saturate 
current broadband networks capacity if no subs tantial upgrades are implemented. Broadband 
demand is not limited to high-definition video delivery; as we have noted, many new innovative content, applications and services (e.g. for creative and cultural industries, high-
                                                
 
21 Available at http://ec.europa.eu/research/evaluations/index_en.cfm?pg=rsff  
22 COM(2010)110 of 31.03.2010. Available at 
http://ec.europa.eu/regional_policy/policy/reporting/cs_reports_en.htm  
 
EN 30   EN definition tele-presence, cloud computing, telemedicine and remote surgery, e-learning and 
virtual campuses)  would need expanded bandwid th to operate efficiently. 
Under this option, private investment in broadband wo uld continue to be insufficient  in 
many regions due to lack of competitive pre ssure and high commercial risk. Equally, public 
online services can be expected to remain under-developed and not inter-operable across 
borders due to fragmentation of sub-optimal e fforts and technical solu tions, lack of critical 
mass, high costs for service provider s and beneficiaries of services.  
Hence, this option would not contribute to attaining the Digital Single Market, and many 
Europeans would continue to mi ss out on digital opportunities.  
In terms of facilitating additional effort by Memb er States for the deployment and use of 
interoperable cross-border digital services , option 1 would entail th e continuation of the 
current CIP ICT PSP programme. The programme would therefore be una ble to build on the 
experience gathered during the pilo t phase of a number of initiativ es and would not be able to 
deploy the pilots. This would hinde r the implementation of services in the core layer of digital 
service infrastructure and ther efore would prevent reaching the critical mass needed for the 
take up of applications built on the core layer (digital services layers are described in the 
problem definition section).  
Moreover, the potential offered by content-based services would be put in jeopardy if the EU 
fails to improve radically the level of trust and security of the relevant infrastructures, 
products and services. Today even very limited disturbances to the Internet a nd web services 
generate shock-waves through the so ciety as a whole. Only a coll ective effort at EU level can 
help us improve the safety of content on the web. 
Finally, when considering both polic y options but notably option 1, the cost of non-Europe 
has to be considered as well . An estimate by Copenhagen Economics23 situates the cost of 
non-completing the European dig ital single market, in the region of 4.1% of GDP by 2020. 
But also on an individual level, the cost of not facil itating investments in digital services and 
broadband can be important. As an exampl e from only one country, the UK offline 
households are missing out on savings of a bove 600 € (£560) per year only from shopping 
and paying bills online. 
5.2. Impacts from the adoption of opti on 2: broadband and digital service 
infrastructures in the trans-European  networks of infrastructure (CEF) 
5.2.1.  General impacts stemming from option 2 
The broadband and digital serv ice infrastructures in the trans-European networks of 
infrastructure (CEF) will assist in achieving the DAE targets on broadband coverage, utilization and speed. This will in turn assist Europe in coming out of  the economic/financial 
crisis better equipped and in better structural shape, when compared to entering the crisis. 
Europe has been structurally tr ailing behind the US, in particul ar in the context of knowledge 
economy. The number of digital jobs that can be nefit from the availability of broadband 
networks within Europe's largest companies for instance is much smaller compared to the US 
and more than four fifths of Europe's dig ital jobs are in companies founded before 1950. The 
availability of broadband, and in particular high-speed infrastr ucture, can help Europe reduce 
                                                
 
23 The Economic Impact of a European Digital Single Market, 2010 
 
EN 31   EN the digital gap. In addition, as this is considered as a vehi cle for developm ent of innovative 
digital services, with focus on increasing the ad ded value of products and services, it would 
indirectly improve the competitiveness of companies in the European economy. 
Broadband networks would al so have an impact on improving the efficiency of public 
services . The public sector holds enormous amounts of knowledge that needs to be more 
easily accessible. The use of E-government pro cedures has demonstrated an ability to 
generate savings for European companies th rough the reduction of administrative burdens. 
Other examples include, E-solutions, such as st andardised and shared registration systems and 
data bases, e-portals to provide access to public services, digitalisation of financial 
management and tax administration, which all of fer significant scope fo r efficiency savings. 
This is why the impacts from the deployment of broadband networks ca nnot be disentangled 
from the impacts of endowing the EU with pan- European digital service infrastructures. The 
impacts analysed below thus also pertain to the digital services infrastructures. 
The following sections will present some of th e main economic, social and environmental 
impacts that could descend from the implemen tation of the CEF. A comprehensive list of 
impacts, divided by thematic area is included in annex. 
5.2.1.1.  Economic impacts 
The preliminary results of a quantitative analys is being conducted by the OECD suggest that 
the expansion of broadband positively affects labour productivity . For OECD countries, 
raising broadband penetration rates by 1 per centage point in 2009 (e.g. 24.3% instead of 
23.3%) results in a labour  productivity growth rate  that is higher by 0 .02 percentage point. 
Broadband penetration rates higher by 5 percentage points translate into a rise in the labour 
productivity growth rate of 0.07 percentage  points. A ten per cent higher broadband 
penetration in any year is correlated with a 1.5 per cent increase in labour pr oductivity over 
the following five years24 i.e. the effects of broadband pe netration on pro ductivity are more 
than proportional.  
According to estimates of a leading consultancy25 a 10% increase in broadband household 
penetration delivers a boost to a country’s GDP  that ranges from 0.1 percent to 1.4 percent. 
In addition, an OECD study26 suggest that governments can achi eve a ten year return on fully 
funding a national, point to point, open access FTTH network. 
Digital service infras tructure can also generate larg e economic impacts.A 2010 KPMG study 
estimated that the cadastre's online access and digital certifications  provision was saving 
Spanish tax-payers at least 157 million euro a ye ar (against cadastral budget of 118 million for 
the same year). Another cost-benefit-analysi s conducted by RSO and Ca p Gemini for showed 
the Cadastre’s electronic office was sa ving the tax payer about 7,758 million euro.27  
                                                 
24 Roman Friedrich, Karim Sabbagh, Bahjat El-Darwiche, and Milind Singh (2009): Digital Highways. 
The Role of Government in 21st Century Infrastructure. Booz & Company. 
25 Mobile Broadband for the Masses, McKinsey & Company, 2009 
26 OECD (2010), OECD Information Technology Outlook 2010, OECD Publishing. Available at   
http://dx.doi.org/10.1 787/it_outlook- 2010-en  Accessed 17th May 2011 
27 Pricing of Public Sector Information Study, Deloitte, July 2011, forthcoming 
 
EN 32   EN In the sub-area of environmental impact assessment  study states that this market was worth 
EUR 1 billion per year in 2009, with improved access to information saving up to EUR 200 
million per year; including sub-national assessments could increase values by a factor of 10.28  
In the geospatial sector, bene fits could be increased by some 10-40%, depending on the 
estimation method, by improving access and data standards. Better policies in the area of geospatial applications in local government  could help the productivity gains from 
applications almost double ove r the next 5 years. Large markets are also estimated in 
financial, energy and construction sectors.
29 
Better access and re-use of Public Sector In formation through the creation of a European 
digital hub may have a relevant  economic impact. In  the United Kingdom we lfare gains to the 
whole economy of easier access were estimated to be worth at the upper end EUR 5.1-6.7 billion per year, with middl e range estimates of EUR 1.8- 2.25 billion. Although the UK PSI 
access and licensing system remains somewhat different from other EU27 countries, UK 
estimates of the positive impacts of removing ba rriers to access are like ly to be a realistic 
proxy across the EU27, due to the ge neral nature of disincentives to  use, lack of information, 
poor interoperability etc. that  have stifled easy use of PSI. At a different level there are 
quantifiable benefits in time saved in work and leisure activities from making information flows simpler and more efficient.
30  
5.2.1.2.  Positive externalities 
Positive externalities are benefits that do not ac crue to only a single economic actor, but spill 
over to society as a whole – thus  making the social returns to capital investment higher than 
initial outlays31. The following main categories of positive externalities of common European 
action in broadband networks and digital servi ce infrastructures deployment would emerge 
both at regional / MS level where the project is  located and at the EU level. Note that 
synergies from digital service infrastructures  are embedded in these categories and are 
referred to below :  
a. The Innovation Diffusion Externality. New and more innovative services emerge that 
would benefit a growing number of users, thus  ultimately improving the overall quality of 
life. From the infrastructure side, broadba nd coverage and penetration rates correlate 
positively with the “e-Readiness ”, or the capacity of consumers, businesses and 
governments to reap the full benefits of the Information Society.32 As an example on the 
importance of infrastructure, the Irish Manage ment Institute (IMI),  together with the 
National Irish Bank, noted in a survey fr om 2008 that the strategic importance of 
broadband availability moved up twelve pos itions in the ranking from 18th to 6th place in 
only three years. 
                                                 
28 Pricing of Public Sector Information Study, Deloitte, July 2011, forthcoming  
29 Op.cit. Graham Vickery, July 2011 
30 Pricing of Public Sector Information Study, Deloitte, July 2011, forthcoming  
31 Deloitte report "background support study to the DAE" 
32 A positive correlation is evident with the “200 9 e-Readiness Rankings” compiled by The Economist’s 
Intelligence Unit (EIU) 
 
EN 33   EN b. The Economic Efficiency Externality. Transaction costs are reduced; which makes it 
easier to conduct online business and attrac t foreign investments to certain locations33, the 
effect of this can spill over to other geogra phical areas. Broadband development is already 
supporting a wide and increasi ng number of dedicated busin ess, government and leisure 
applications and services. Br inging broadband to new area s means expanding the market 
for e-Commerce (which is a European one): mo re consumers would be able to purchase 
on-line, including across border, thus enlarg ing the market base, and to access public 
services on-line.  
c. The Comparative Advantage Externality . As a General Purpose Technology enabler, 
broadband diffusion positively affects produc tivity (a ten per cent higher broadband 
penetration in any year is correlated with a 1.5 per cent increase in  labour productivity 
over the following five years34), capital accumulation, and ultimately, GDP growth. This 
mechanism of transmission is not limited only to the region where broadband is deployed.  
d. Network Externality. The more users that benefit from high-speed broadband, the 
more visible and effective are the above imp acts. The benefits of broadband extend across 
many different social groups in many di fferent ways, reinforcing each other. 
Technological progress e.g. in remote care, which directly lowers health care costs, 
postpones or eliminates the need for institutionalised care, and makes it possible to increase workforce participat ion from home. As an example, the Scottish West Lothian 
council independent living programme has succeeded  in ensuring that elderly couples with 
severe impairments can stay in their own ho mes. They have thus saved the public budget 
£84,000 on an annual basis. 
5.2.1.3.  Social impacts 
The European Commission estimates that broadb and can contribute to net creation of over 
100,000 jobs per year, which can as a structural phenomenon in turn affect the jobs of more 
than 1 million people each year
35. In terms of direct job creation , only in Germany, the 
construction of broadband networks constr uction would create almost a million jobs 
(968,000) over the ten years up to 2020. In France, according to PMP36, the construction of 
FTTH network would generate some 365.000 man-y ear employments, which translates into 
some €20 billion of added value. If extrapolated  to an EU-scale, this could amount to some 
2.770.000 man-year employments and €152 billion of added value to the EU economy. 
In terms of indirect job creation , a study on broadband impacts in France conducted by 
CdDC37, reveals that the number of newly estab lished companies in regions that enjoyed 
public support in broadband investment, grew  by 52.5% more in sectors largely depended on 
ICT and by 8.1% more in non-ICT sectors, be tween 2002 and 2007, compar ed to the growth 
in regions not enjoying such support. As s hown by the same study, broadband, which in this 
                                                 
33 In October 2008, the IMI, together with the National Irish Bank, published the results of its tenth survey 
of multinational companies located in Ireland. Compared to three years ago, the strategic importance of 
broadband availability moved up twelve positions in the ranking from 18th to 6th. 
34 Roman Friedrich, Karim Sabbagh, Bahjat El-Darwiche, and Milind Singh (2009): Digital Highways. 
The Role of Government in 21st Century Infrastructure. Booz & Company. 
35 The Impact of Broadband on Growth and Productivity, Micus, for the EC, 2008  
36 Rapport d’étude de l’impact d’une accélération du dé ploiement du FTTH en Fran ce, PMP, for CdDC, 2010 
37 Caisse des Dépôts et Consignations, Évaluation de l’impact territorial des RIP,  2010  
 
EN 34   EN particular case benefited from public investme nt, had a strong entrepre neurial effect, as it 
accelerated the take-up of entrepreneurship by  54% compared to regions without such a 
comprehensive broadband coverage.  
Further social (and environmental) impacts can  affect depopulated ru ral areas through the 
development of tele-working, eCommerce or sm art metering. In rural areas the value added 
from people going online to profit from e.g. eGovernment , education and cu lture, eInclusion 
and eHealth services is even hi gher than in urban areas. This also argues for a high EU added 
value in creating synergies betw een broadband networks  and digital servi ce infrastructures. 
Indeed, savings derived from the possibility  of using broadband for information sharing 
among public services (eAdministration) are up  to four times higher than savings at the 
interfaces between public ad ministration and users.  
In the area of trans-European access to cultural resources  a digital service infrastructure 
providing an easy-to-use, single access to Europe an cultural content online would provide the 
necessary critical mass and turn Europe's cultural resources into a lasting asset for the digital 
economy. Coupled with a dedicated rights infra structure, it would serve as a hub for the 
creative industries, nurture creativity, contri bute to education, and spur innovation and 
entrepreneurship. This potential was underlined  by the recent report 'The New Renaissance' 
by the 'Comité des Sages on bringing Europe's cultural heritage online'. It is also shown by the 
recent 'hack for Europe' contest, developing applications based on Europeana content. 
The initiative would have i ndirect positive impact on the Fundamental Rights . It would 
indirectly contribute to the ach ievement of certain rights in the area of Solidarity, namely the 
right to health care through the ac tivities in the area of eHealth (Article 35) and the right to 
environmental protection (Article 37) through ove rall positive environmental impact of the 
initiative.  
5.2.1.4.  Environmental impacts 
Broadband-enabled smart grid services and devi ces could result in over  €850 billion in gross 
energy savings.  This approach is expected to reduce end-use energy consumption in the USA 
in 2020 by roughly 23 per cent of projected demand, potentially abating 1.1 gigaton of 
greenhouse gases annually (Davidson, Santorelli and Kamber, 2009).  
A Smart Grid combined with broadband networ ks can contribute to sustainability by 
facilitating the reduction of CO2 emissions, enabling the integration of larg e scale renewables 
and increasing energy efficiency in the power sector. It supports co mpetitiveness and open 
and efficient markets by increasi ng market participation through th e aggregation of distributed 
prosumers (consumers also able to produce  power) and through th e strengthening of 
interregional markets.38  
Creating “smart buildings” tied to the local pow er grid would enable utility companies to 
reduce the level of (wasted) re serve power held, leading to “l ower prices and less price 
volatility”39  The United States are already reaping th e benefits of this. In California 33 per 
cent of all electricity consumed in the State is by commercial  buildings – about US$10 billion 
per year (€7.09 billion in Ju ly 2008).  The goal of the High-Performance Commercial 
                                                 
38 http://ses.jrc.ec.europa.eu/index.php?option= com_content&view=article&id=93&Itemid=137 
39 (US Department of Energy, 2002; quoted in Baller Herbst Law Group, 2008) 
 
EN 35   EN Buildings Project (HPCBS), launched in 2000, is  to cut energy use by 70 per cent in new 
buildings and save 50 per cent in retrofits of older buildin gs using broadband connections 
combined with other technologies. (The Baller Herbst Law Group, 2008). 
5.2.1.5.  Sector specific impacts of digital service infrastructure 
The effects of investing in broadband networks and digital service infrastructures are not only 
confined to the macro-economic level but also  to economic and social (thematic) areas and 
sectors. The box below provides, in a nutshell the ma in impacts that broadband networks and 
digital service infrastructures will spill over re lated sectors. These are developed in detail in 
annex40. Where no data about Europe were available,  data and insights fro m US studies are used. 
These should be interpreted with caution due to existing US-E U differences, e.g. in 
transport/commuting patterns. 
Box: sectoral impacts from broadband networks and digital service infrastructures investments 
(US and EU) 
Rural areas 
Broadband is a key location factor for businesses 
Broadband and services make it easier for rural businesses to grow and improves quality of 
life. 
Broadband prevents de-population of rural areas. 
Education and Skills 
4.5 per cent increase in e ducational attainment;  
Education is enhanced by providing students a nd teachers with access to a vast array of 
resources;   
Several educational services  already require internet speeds in excess of 100Mpbs . 
Health and care  
The net total benefit from telemonitoring is in the order of €27.89 bill ion, this equates to 
0.299 per cent of EU GDP for an average impl ementation cost of €1.11 billion per year  
Reductions in hospitalisations due to tele-health were greater in remote areas (with a 50 per 
cent decrease in bed-days) compared to urban areas (29 per cent re duction in bed-days)  
Employment and economy   
                                                 
40 Note that whilst the categories provide a comprehensive overview of potential benefits (implicitly including 
eHealth, eLearning, smart grids and enhanced transport systems within environmental benefits and 
online gaming within wellbeing benefits) it does not capture explicitly cross-cutting initiatives (such as eGovernment, eCommerce, ePayment  and SEPA) or technologies such as cloud computing and Web2.0 
which will enhance the volume of uploaded user created content.   
 
EN 36   EN There is about a 15 per cent productivity boost from broadband. 
FTTP can boost the US economy by at least €312 b illion, this equates to 2.9 per cent of GDP  
Environment, energy and transport 
Broadband-enabled smart grid services and devi ces could result in over  €850 billion in gross 
energy savings.  This approach is expected to reduce end-use energy consumption in the USA 
in 2020 by roughly 23 per cent of projected demand, potentially abating 1.1 gigaton of 
greenhouse gases annually.  
One (temporary) negative environmental aspect would be construction works in urban areas 
and in natural areas (Natura 2000 sites). 
5.2.2.  Assessment of sub-options again st the programme's objectives: 
effectiveness and efficiency  
5.2.2.1.  Sub-option 1: Financing through grants 
Sub-option 1 is based on the provision of grants for achie ving the objectives of the 
Connecting Europe facility on th e area of telecommunications. With  regard to the objective of 
influencing the market dynamics  for broadband, grants are lik ely to be only partially 
efficient and effective. In terms of efficien cy the co-financing ratio  needed by broadband 
networks is going to be high in relative (around  50%) and absolute term s, given the expected 
average size of the projects to be financed. Hence, a significant amount of resources would 
have to be mobilised to reach a modest impact on the estimated 220-270 billion Euros needed 
to reach the DAE targets. This would not  trigger any leverage effect and would de facto 
overlap with the acti on of the Structural Funds. The am ount of money provided by the CEF 
would not be sufficient in this case to gene rate a critical mass a nd demand would remain 
latent. Only some "islands of connectiv ity" would be endowed with broadband. 
In areas where there is no business case, grants can be effective but given the amount 
proposed in the MAFF proposal, grants alone are not  likely to reach a critical investment mass 
in the EU. Without critical mass, network e ffects and positive extern alities engendered by 
them would not be perceivable. Grants can be  effective in supporting and providing technical 
assistance, but are not the best tool to mob ilise private investment (while may have some 
leverage effect on public investor, although in the current economic downturn this is not to be 
taken for granted). 
However, grants are an effective mechanism to facilitate efforts by Member States to 
deploy cross-border digital services . In this case grants would serve as a pivot investment 
that grants EU co-financing towards infrastr ucture that Member st ates alone would not 
develop. Co-funding rates, as mentioned in chap ter 4, for digital service infrastructure are 
typically high, up to 100%  for the core service platforms th at i.a. support cross-border and 
interoperable services since there are no "natur al" Member State owners of these platforms. 
For the higher level generic services where th e private sector can be assumed to be more 
present a co-funding rate of 75% will apply.  Grants are thus an efficient financing mechanism for this set of projec ts as private investors have only a limited interest in the 
deployment of this type of infrastructure. 
 
EN 37   EN Nevertheless, this grant only sub-option is likely to achieve only partially the overall objective 
of delivering sustainable economic and social be nefits from a Digital Single Market based on 
fast and ultra fast internet and interoperable applications 
5.2.2.2.  Sub-option 2: Financing thr ough financial instruments 
Sub-option 2 envisages the commitment of b udgetary appropriation exclusively through 
financial instruments. The set of financial inst ruments foreseen has been described in chapter 
4 above. The objective of influencing the market dynamics for broadband investment  
would be mostly achieved by financial instrume nts. Clearly the proposed resources in the 
CEF (9.2 Bn. €) are not sufficient to fill the ga ps between the overall investment needs and 
the actual spending plans (based on our current u nderstanding of the situation). In areas where 
broadband networks projects are potentially fina ncially viable, financial instruments would 
act as an enabler of investment by public an d private investors, lowering de facto their 
Weighted Average Cost of Capital (WA CC) and shortening their payback time.  
Using financial instruments would also foster efficiency through the higher leverage they can 
ensure. Leverage effects take place via co-inve stment and co-financing structures through 
financial instruments, where one  € of EU budget invested in a field affected by a market 
failure has a strong multiplying effect on the tota l finance provided to final beneficiaries. In 
principle, leverage is not about simply co-investing with other investors, but rather attracting 
investment from other investor s who would not invested withou t EU support. Based on RSFF 
and project bonds estimations, a financial contri bution of €1bn from the EU budget is likely to 
attract other funds from public or private sectors which could underpin gross investment of 
€6bn - €15bn  in broadband networks depending on the fi nancing needs and th e risk profiles of 
the underlying investments.  
Although financing broadband networks only th rough financial instru ments would boost the 
leverage generated by the EU contribution, it may not be ideal from the equity point of view. 
Without any grants, projects in sub-urban areas , which are inherently more bankable would 
always be preferred –other things bei ng equal- to projects in rural areas. 
Hence, using financial instruments alone would be less effective in areas where the business 
case is limited. In these so-called "white areas" pr ivate investors are not likely to invest due to 
low rate of return and high fi xed costs generated by low popul ation density. If the business 
case is so weak, co-investment and co-financi ng through financial instruments (which have 
typically a much lower co-financing rate than  grants) becomes irrele vant. Also, financial 
instruments would probably struggle in mobilising a significant leverage effect technical assistance, planning, mapping and other support ac tivities which are typi cally co-financed by 
grants. 
Finally, financial instruments are unlikely to be an effective mechanism to facilitate efforts 
by Member States to deploy cross-border digital services . The experience from the CIP 
has shown than in this field is already difficu lt to have the Member States engaged in the 
process. Private investors are expect to invest in  the application layer, but they are not likely 
to commit to invest in the core layer of digi tal service infrastructure, as this architecture 
cannot be commercially exploited.  
This financial instrument only sub-option is th erefore likely to achieve only partially the 
overall objective of delivering su stainable economic and social benefits from a Digital Single 
Market based on fast and ultra fast in ternet and interoperable applications. 
 
EN 38   EN 5.2.2.3.  Sub-option 3: Combined financing approach 
Sub-option 3 provides for a combined financia l approach that would help reaching the 
objectives presented in chapter 3, striking a good balance between gr ants and financial 
instruments. Although no formal earmarking for gr ants and financial inst ruments is advisable 
at this stage, potentially this sub-option implies that the main effort of investment relies on financial instruments, leaving the remainder for grants. In this scenario, grants and financial 
instruments would combine not only vertically (both funding schemes would be available for 
broadband networks and digital service infrastructu res) but also horizonta lly, within a project. 
The right mix of funding schemes will be identified at work programme level. The governance for grants will be in line with the new financial Regulation as above, the 
governance for financial instruments will be in line  with the conditions to be decided for risk-
sharing and equity platforms for innovative fina ncial instruments (forthcoming proposal of 
the Commission). 
The potential of influencing the market dynami cs for broadband investment  would be 
fully achieved under this sub-option. In the fi eld of broadband the bulk  of funding would be 
allocated through financial instruments, so that the market potential is ex ploited to the full and 
that the wider range of actors as possible is  involved in the consor tia to be funded. The 
solution would be effective as public and priv ate actors would get access to capital at lower 
cost and would have sufficient long-time horiz on for their investment. No crowing out would 
therefore take place.  
This sub-option takes into account that in a c onsiderable number of cases there would be a 
mixture of support as projects are likely to invol ve areas which are closely to be economically 
viable with areas that are less attractive to the market. Hence a combination of instruments 
and funds would be required.  In convergence regions, the grant would be provided by SF and CEF would provide financial engineering.  In  competitiveness regions, CEF could provide 
both type of assistance with a combination of  financial instruments and grants depending on 
geographic and socio-economic situ ation.  Should SF provide grants also for competitiveness 
regions, then CEF would proportionally limit its  support (up to and not above the limit of EU 
support for those regions). 
In this respect, under this s ub-option there is clear syne rgy between the CEF and the 
Structural Funds  both in terms of grants, financial en gineering and support for streamlining 
project implementation that has so far prevented absorption of EU funds both in  the cohesion 
and rural development domains. 
Efficiency would prevail in areas where financial viability exists or almost existing, as a small 
EU investment would be levera ged as described in sub-opti on 2 above. Moreover, this sub-
option would complement financial instruments w ith grants in areas where the business case 
is not strong enough. This would guarantee – thr ough specific calls for "white areas" -that 
investment takes place also in rural and less pop ulated areas. Finally other calls for proposals 
would be organised for support and technical assistance activi ties, mainly through grants. 
As far as the objective of facilitating efforts by Member States to deploy cross-border 
digital services is concerned,  this approach woul d allow the Commission to be flexible 
towards financial instruments, w ithout the risk of crowding out private investors from digital 
service infrastructure. On the other hand it w ould ensure the disbursal of grants at high 
funding rates for the top la yers (core services). 
 
EN 39   EN This sub-option which combines the focus of gr ants and the leverage effect of financial 
instruments is therefore likely to fully achieve  the overall objective of delivering sustainable 
economic and social benefits from  a Digital Single Market based on fast and ultra fast internet 
and interoperable applications. 
 
6. COMPARISON OF OPTIONS  
 
The following efficiency and effectiveness ta ble provides a graphic comparison of the two 
options and the three sub-options  presented in section 4 against the objectives described in 
section 3. The table summarises the line of r easoning and the impacts presented in section 5. 
 
EN 40   EN  
Option 2 CEF Objectives Option 1 no 
policy 
change Sub-option 1 
grants Sub-option 2 
financial 
instruments Sub-option 3 
combined 
approach 
Overall objective  
Delivering sustainable economic and 
social benefits from a Digital Single Market based on fast and ultra fast 
internet and interoperable applications, 
with broadband access for all by 2013, access for all to much higher internet 
speeds (30 Mbps or above) by 2020, and 
50% or more of European households subscribing to internet connections 
above 100 Mbps. 0 + + ++ 
Specific objective 1: Influence the mark et dynamics for br oadband investment , by encouraging both traditional 
and new investors to engage in broadband infrastructure roll-out and ensuring a level playing field among them.  
1a In areas where broadband network 
projects are potentially financially 
viable, ensure that investors, including alternative public and private investors, 
have access to capital, at reasonable 
costs (interest rates) and with a sufficiently long time-horizon. 0  
(N/A) + ++ ++ 
1b In areas where the business case is 
weak, provide sufficient levels of public 
financial support for the roll-out of 
broadband networks 0 ++ + ++ 
1c Across the Union, ensure that public 
and private investors develop the 
capacity to conduct broadband 
infrastructure projects, by providing technical assistance, e.g. for planning 
and mapping 0 + 0 + 
1d In supporting infrastructure projects, 
ensure that Union funds have a 
maximum mobilising (leveraging) effect on private and (other) public investment. 0 - ++ ++ 
Specific Objective 2: facilitate additional effort by Me mber States needed for the use of interoperable cross-
border digital services and unlock the digital cont ent resources generating opportunities for business 
development. 
Facilitate additional effort by Member 
States needed for the use of interoperable 
cross-border digital services and unlock 
the digital content resources generating opportunities for business development. 0 ++ - ++ 
 
EN 41   EN  
Conclusion:  option 2 with sub-option 3 (combined financ ing) is more suitable to meeting the 
DAE and the Europe 2020 targets in  the field of ICT than option 1. 
 
7. MONITORING AND EVALUATION  
The Commission and other implementing bodies,  such as EIB, EBRD and the TEN-T EA, 
will continuously monitor the impact of CEF investment in broadband (as well as in transport and in energy) in line with the indicators proposed in the CEF general Regulation
. The 
indicators will cover areas such as (non-exhaustive list): 
• Supply: Broadband access (to be  checked against the DAE ta rgets of access to 30 Mbs 
for all citizens by 2020 and access to 100 Mbs for at leas t 50% of citizens by 2020) 
• Demand: Broadband uptake (to be checked agai nst the DAE target of 50% of citizens 
having subscriptions for 100 Mbs by 2020) 
• General monitoring indicators for investment  programmes such as  uptake of funds, 
time to grant etc 
• proportion of grants vs. Innova tive financial instruments 
Starting from the entry into force of the Regulation and after consultation of the relevant 
Committee(s), the Commission will regularly publish a progress report on CEF broadband 
networks and digital service infrastructures in vestment, which will be submitted the European 
Parliament, the Council, the European Economi c and Social Committee and the Committee of 
the Regions.  
The guidelines as such will not be evaluated bu t the scope of these will be assessed in the 
framework of the final assessment of the Digital Agenda for Europe. The guidelines will also be regularly monitored and updated as the need arises, this will supervised through the work 
in the relevant committees. 
In addition to continuous monitoring by th e Commission and other implementing bodies, an 
independent evaluation of gene ral CEF framework shall be car ried out at mid-term, taking 
into consideration the timing and advancement of programming as well as  ex-post, a certain 
number of years after the end of the progr amming period. The evaluations will assess the 
intervention's relevance, efficiency, effectiven ess, and preliminary impact. Specific emphasis 
shall be put on issues of governance and the appropriateness of implementation mechanisms. 
 
EN 42   EN ANNEX 1 – GLOSSARY  
CCTV Close Circuit TV 
CEF Connecting Europe Facility CERT Computer Emergency 
Response Teams 
CIP Competitiveness and 
Innovation Programme 
CSF Cohesion and Structural 
Funds 
DAE Digital Agenda for Europe EBRD European Bank for 
Reconstruction and Development 
ECTA European Telecoms 
Association 
EISAS European Information 
Sharing and Alert System 
EIB European Investment Bank 
ENISA European Network and 
Information Security Agency 
epSOS Smart Open Services for 
European Patients 
ESOA European satellite operators' 
association 
EUTC European Utilities Telecom 
Council 
FP6 Framework Programme 6 FP7 Framework Programme 7 FTTH Fibre To The Home FTTP Fibre To The Premises FTTS Fibre To The Subscriber 
 
EN 43   EN ICT Information and 
Communication Technology 
ICT PSP Information and 
Communication Technology Policy Support Programme 
IMI Irish Management Institute MEPSIR Measuring European Public 
Sector. Information Resources 
META-
NET Multilingual Europe 
Technology Alliance 
MFF Multi-Annual Financial 
Framework 
NGA Next Generation Access OECD Organization for Economic 
Cooperation and Development 
PSI Public Sector Information 
R&D&I Research, Development and 
Innovation 
PEPPOL Pan-European Public 
Procurement On-line 
RSFF Risk Sharing Finance Facility SCADA Supervisory Control and Data 
Acquisition 
SEPA Single European Payments 
Area 
SPOCS Simple Procedures Online for 
Cross-border Services 
SSRN Social Science Research 
Network 
STORK Secure idenTity acrOss 
boRders linKed 
TEN-T Trans-European Transport 
 
EN 44   EN EA Network Executive Agency 
TFEU Treaty for the Functioning of 
the European Union 
VOD Video on Demand 
 
EN 45   EN ANNEX 2 – WHAT IS A DIGITAL SERVICE INFRASTRUCTURE  
In the area of public services  the first two layers are ofte n relying on investments by public 
administrations at national and European level,  while the third concerns new business models 
spanning from those (eg. uptake of eID system s in eBusiness or eCommerce by the private 
sector). The layers are the following: 
1) the core service platforms (networks, interoperable rela ys, communication protocols, 
specifications that permit to carry our transactions and servers);  
2) the generic services layer (to enable functionality and carry forward instructions which 
may be specific to the applic ation domain (e.g. health, pub lic procurement, etc.);  
3) the applications  (mainly developed, depending on the application domain, by the private 
or public sector, or both in partnership, using core service and value added service 
infrastructures)  
European Digital Infrastructures
Core service platformsGeneric servicesApplications
L1L2L3
EUMSEUMSEUMS
Digital 
InfrastructuresFunding / Investments
 
In areas where services could be entirely priv ate (eg. smart grids), initial public investments 
might be needed for the first two laye rs to encourage private actors recover sunk costs  of early 
adopter and minimise the risks of engaging into innovative business models (layer 3). 
Funding layers 1 and 2 of digital in frastructures in areas of public services is  often affected by 
a strong degree of market failures.  The incapability of markets to  fund those layers is due to 
two reasons: 
The areas to be funded relate to public serv ice delivery (hence not commercial by definition 
as a start); 
In small countries they risk being "sub -dimensional" (lacking sufficient scale);  
In large countries they risk e ngaging with fragmented solutions  which are not interoperable on 
a cross-border basis (and  often on a national basis) and/or lack the suitable incentives to be 
so. 
Investments in layer 3 also reflect initial ma rket failures as the "development costs" are 
perceived as sunk by business entities enga ging in the delivery of those services, return on 
investments are uncertain or pay-back times too long increasing the financial exposure of 
business willing to provide innovative  value-added networked  services. 
What kind of digital services  
 
EN 46   EN The digital service infrastructures, as decided in the MFF, and their ar eas of application are 
the following: 
(a) Trans-European high-speed backbone conn ections for public administrations  
Support to a public trans-European backbone  service infrastruc ture that will 
provide very high speed and highly re liable connectivity between public 
institutions in areas such as public administration, culture, education and 
health.  
(b) Cross-border delivery of eGovernment services 
Support to standardised, cross-border, a nd user-friendly interaction platforms, 
which will generate efficiency gains both throughout the economy and in the 
public sector and will contri bute to the Single Market.  
(c)  Cross-border eHealth services  
Support to actions making the use of modern information and communication 
technologies in the field of  health and in related fi elds to meet needs of 
citizens, patients, healthcare professi onals, healthcare providers and policy 
makers. 
(d) Multilingual access to online services 
Support to enabling any business in the EU  to offer online se rvices in its own 
language that will be seamlessly accessibl e and usable in any EU language  
(e) Enabling access to digital resources of European heritage 
Support to digitalization of large collectio ns of European cultural resources and 
fostering their re-use  by third parties.  
(f) Access to public sector information- data.eu 
Support to achieving full access for re-use  to all disclosable information held 
by the public sector in the EU by 2020.  
(g) Safer Internet serv ice infrastructure 
Support to centres handling requests and alerts across Europe with the aim to 
dramatically reduce the time to take down illegal content from the internet. 
(h) Smart Energy Services 
Support to the use of modern informa tion and communication technologies in 
the field of smart energy services to meet the needs of citizens (who can be 
producers as well as consumers of energy), energy providers and public 
authorities. 
What kind of investment is n eeded and what role for the EU  
 
EN 47   EN The deployment of European digital service infrastructures will require important 
investments, the major part of which is to  be done by the Member States. However, EU 
investments are needed to: 
Ensure cross-border and cross-sectoral availability, access and use of services; 
Provide the essential core and ge neric layers for services to be  run on a cross-border basis in 
support of the digita l internal market; 
Provide the initial funding of i nnovative networked services w ith a European dimension and 
impact; 
Enable businesses to capitalise on the size of an EU-wide internal digital market. 
There is therefore an opportunity  within the next MFF to provide support to deployment of 
these digital service infrastructures in areas of public interest. 
The EU support would co-finance the development, implementation, maintenance, operation 
and evolution of core digital service infrastructures and their generic service layers.  
- It will ensure that conditi ons for interoperability and standardisation are met.  
- It would bring piloted and tested soluti ons to a state of operational maturity. 
- It would identify and resolv e interoperability  bottlenecks and language barriers 
with a cross-border dimension (e.g. the depl oyment of cross-border health records 
exchanges platforms; e-identification and e-authentication, eProcurement platforms, etc).  
- It would seek guarantees that the connecti ng links (physical and service interface) 
of cross-border services are established a nd that Member States  administration would 
invest in them.  
- It would establish common frameworks e ndeavouring to ensure interoperability 
and would bring already piloted and tested so lutions to a state of operational maturity.  
- In the end, it would ensure that key digi tal infrastructures for cross border public 
services are deployed for real-life use. 
Lack of EU support to the implementation of digital service infrastructures means that 
common technical specifications, pilot and test versions of th ese infrastructures already built 
up by past and current programmes would probably  cease to exist. It would also be more 
difficult to achieve pan-European interoperabi lity and multilinguality without incentives, and 
there is a risk that Member States would seek individual solutions, falling back to a 
fragmented approach. Any European cross borde r service solutions in support of the digital 
internal market would need EU support, in addition to national fi nancial investments. 
 
EN 48   EN ANNEX 3 - THEMATIC AREAS AND FAST START PRIORITY DIGITAL SERVICE 
INFRASTRUCTURES  
The digital service infrastructures, as decided in the MFF, and their ar eas of application are 
the following: 
(a) Trans-European high-speed backbone conn ections for public administrations  
Support to a public trans-European backbone  service infrastruc ture that will 
provide very high speed and highly re liable connectivity between public 
institutions in areas such as public administration, culture, education and 
health.  
(a) Cross-border delivery of eGovernment services 
Support to standardised, cross-border, a nd user-friendly interaction platforms, 
which will generate efficiency gains both throughout the economy and in the 
public sector and will contri bute to the Single Market.  
(b)  Cross-border eHealth services  
Support to actions making the use of modern information and communication 
technologies in the field of  health and in related fi elds to meet needs of 
citizens, patients, healthcare professi onals, healthcare providers and policy 
makers. 
(c) Multilingual access to online services 
Support to enabling any business in the EU  to offer online se rvices in its own 
language that will be seamlessly accessibl e and usable in any EU language  
(d) Enabling access to digital resources of European heritage 
Support to digitalization of large collectio ns of European cultural resources and 
fostering their re-use by third parties, in full respect of copyright and related 
rights.  
(e) Access to public sector information- data.eu 
Support to achieving full access for re-use  to all disclosable information held 
by the public sector in the EU by 2020.  
(f) Safer Internet serv ice infrastructure 
Support to centres handling requests and alerts across Europe with the aim to 
dramatically reduce the time to take down illegal content from the internet. 
(g) Smart Energy Services 
Support to the use of modern informa tion and communication technologies in 
the field of smart energy services to meet the needs of citizens (who can be 
 
EN 49   EN producers as well as consumers of energy), energy providers and public 
authorities. 
 All of these services will no t be established without a de dicated large scale funding as 
Member States do not immediately find the incentives to invest in interoperable solutions for 
pan-European service integration. Investments in cross-border interoperability will also have a 
positive knock-on effect at local level as Me mber States will replicate the model in 
deployment service interoperability with regions and municipalities. 
The list is not exhaustive and will be expanded to  include further projects. These projects will 
be identified at a later stage in co llaboration with the Member States.  
Public trans-European backbone ("Mi d mile") very high speed network
 
Trans-European Digital infrastr ucture should be deve loped to guarantee a digital continuum 
between citizens and the public services of European value thought unlimited, integrated, 
controlled and secure European backbone. 
This service will be based on a very high speed network covering all Member States (and 
potentially beyond in neighbouring countries) connec ting public institutions in areas such as 
public administrations, culture, education or health. The network will interconnect institutions either through the regional/nati onal networks or dire ctly. In particular it will provide the 
connectivity services for the higher-level European services previously listed. More generally, 
it will provide the backbone on which clouds for trans-European public services can be built. 
This service will draw on the experiences made with the existent STesta network
  
In this way demand will be aggregated, theref ore reducing costs and reaching critical mass in 
service provisioning much more quickly. 
Interoperable online authentication schemes and eID management systems  
The large-scale CIP Information and Comm unication Technology Policy Support Programme 
(ICT PSP) pilot STORK41 aims at making the cross-border use of electronic identification 
possible, allowing citizens and businesses to use the eID tech nology of their home country to 
access eGovernment services in any Member  State they live in or travel to. 
STORK has a decentralized architecture based on technology nodes - PEPS (Pan European 
Proxy Service) - in the part icipating countries. The PEPS communicate among themselves 
using the Internet as communication carrier. The aim is to make it easier for citizens and businesses to use their eID for online transactions in the public and private sector. 
Implementation of cross-border STORK solutions would be built on the STORK technical 
platform and implement the common specifi cations. Implementing cross border STORK 
solutions would mean a large step forwards to wards 'Digital Living' for EU citizens and a key 
building block and enabler for other cross-border services. It also allows for service delivery 
tailored to the specific needs of a person as it allows for secure transmission of personal 
information (e.g. age above 18 years) under the control of the online user. 
                                                
 
41  http://www.eid-stork.eu  
 
EN 50   EN  
Interoperable cross border eProcurement services  
The large-scale CIP ICT PSP pilot PEPPOL42  aims to make it easier for companies to bid for 
public sector contracts anywhere in the EU  in a simpler and more efficient way;  
Implementing cross border PEPPOL solutions  would mean implementing the various 
technical building blocks, such as eSignatures,  virtual company dossier  (VCD), eCatalogues, 
eOrdering, eInvoicing and archit ecture development. The ai m is to make electronic 
communication between enterpri ses and government bodies po ssible throughout the EU for 
all procurement processes.  
Implementing the cross-border PEPPOL solution will enable EU-wide interoperable public 
eProcurement. PEPPOL implementation will allo w any company in the EU to respond to 
European public tenders from any Member St ate covering as well pre-award and post-award 
electronic procurement activities. 
Interoperable cross-border electronic procedu res for setting up a business in another 
European country (in the context of the Services Directive)  
The large-scale CIP ICT PSP pilot Simple Procedures Online for Cross-border Services  
(SPOCS)43 aims to provide seamless cross-border electronic procedures for setting up a 
business in another European country in the c ontext of the Services Directive, making the 
'Points of Single Contact' easier to use across borders. 
Implementation of SPOCS will remove the admi nistrative barriers that European businesses 
face when offering their services abroad. It will contribute to the compe titiveness of European 
businesses and particularly SMEs by enabling all businesses to benefit from available, 
efficient and interoperable electronic procedures.  
Implementing cross-border SPOCS  solutions would mean buildi ng on existing efforts of other 
large scale pilots (i.e. STORK solutions for eID and PEPPOL solutions for signature 
authentication), but also, via a dditional technical solutions, enha ncing the cross-border use of 
eDocuments, eDelivery a nd content syndication.  
SPOCS contributes to the development of high  performing next generation Points of Single 
Contact through the availability of seamless electronic procedures. The aim is to make it 
easier for service providers willing to offer prof essional services outside their home country to 
deal with all necessary administrative procedur es electronically through the Points of Single 
Contact. 
Cross border eHealth services  
The large-scale CIP ICT PSP pilot epSOS  aims at making it easier for people to receive 
medical assistance anywhere in  the EU by removing linguistic, administrative and technical 
barriers;  
                                                 
42 www.peppol.eu . 
43  http://www.eu-spocs.eu/  
 
EN 51   EN Implementing Smart Open Services for Euro pean Patients (epSOS) solutions on a pan-
European scale would mean building on existing efforts and would strengthen the political momentum. Eleven additional countries have jo ined epSOS Consortium in its second phase; 
the eHealth Governance Initiative of state secretaries which provides political support has 
been launched; Member States are committed to follow up on the Council Conclusions on eHealth; in addition the Directive on patient ri ghts for cross border care has been recently 
adopted, and a specific article ( 14) calls for MS cooperation in eHealth in the areas covered 
by epSOS.  
Scaling up epSOS services to a pan-European in frastructure would also  aim to: i) support and 
achieve eHealth intero perability, ii) support  cross-border deploym ent of telemedicine 
services, iii) contribute to  implement mechan ism article 14 of the Directive on patient's rights 
for cross border healthcare on eHealth by  adop ting common sets of rule for health records 
semantics and procedures; iv) ensuring se amless connection between e-Identification 
platforms and services (as from STORK) and epSOS services. 
Data.eu – Service infrastructure for PSI
 
The central objective of the DAE is to chart a course to maximise the social and economic 
potential of ICT, including through enhanced ac cess to digital content to spur innovation and 
economic growth.  
Public data is an increasingly important source of input for ma rkets of online content. Open 
data re-use spurs growth of innovative commercial and non-commercial services and 
products. All studies show relatively rapid grow th in PSI-related markets, no matter whether 
they are more or less open. Growth rates ar e estimated variously in  the range of 6-11%. 
Estimates of the gains from the removal of current barriers to access and improving the 
underlying infrastructure are more scattered but they too are positive. Recently, an in-depth 
survey across the EU27 presented a picture of generally dynamic growth in the geographical 
information, meteorological information an d legal information sectors through 2008. 
Although care needs to be taken with these estimates as they come from a wide range of 
sources using different methodol ogies, overall economic gains from further opening up PSI 
by allowing easy access at marginal cost ca n bring gains of around EUR 40 billion for the 
EU27, and aggregate economic impacts across th e whole EU27 economy are estimated to be 
of the order of EUR 140 billion, showing clearly  that there are large economic benefits from 
easier access to and greater use of PSI.  
The legal framework obliging public bodies to ope n up data resources ha s been put in place 
and will be improved. What is needed for the cro ss-border potential to be realized is a solid 
infrastructure consisting of data platforms within Member States and a single European 
aggregate access point.  
The full potential of open data is dependent on a concerted effort to establish standardised, 
interoperable solutions for data publication an d access. To this day, national infrastructures 
are only starting to develop and a full EU support is required to ensure their coherence and to 
provide a pan-European aggr egating infrastructure.  
By providing exactly the type of solution enabling  data discoverability and interoperability for 
re-use and creation of commercial and non-co mmercial added-value se rvices and products 
across Europe, the data.eu in itiative will address a key i ssue for innovation and growth. 
 
EN 52   EN Europeana, the European digital library, archive and museum  
The DAE aims to promote wider access to knowl edge, cultural diversity and creative content 
as well as to promote the digitisation and di ssemination of cultural works in Europe. In line 
with the DAE, the aim of the Commission initi ative is to make know ledge resources from 
Europe's cultural institutions easily accessible to all for work, study and leisure, and to turn 
these resources into a lasting asset for the digital economy. The report  of the 'Comité des 
Sages' further underlines the potential of  this area for innovation and job creation. 
Given the nature of the cultural content as Europe's common good, the preservation and 
dissemination of which requires a common approach, the scope of the initiative cannot be 
limited to a national or regional level. Interventi on at EU-level will protect Europe's culture as 
an invaluable asset, ensure that this inherita nce can remain a living a sset over time and that it 
can be passed on and shared as widely as possibl e without distinction or  barrier. Activities on 
an EU-wide scale will ensure higher visibility of national cultural treasures and national 
institutions while creating a common ground for the developments which go beyond the 
national borders. 
Further expected spin-off effects are the redu ction of differences in the rights status of 
digitised materials, adoption of best practices  in digitisation and pr eservation of digitised 
content, unification of market s in the content sector, encour agement of innovation and private 
business involvement by raising the commerc ial interest of a ggregated content. 
The digitisation of their assets will help Europe ’s cultural institutions to  continue carrying out 
their mission of giving access to a nd preserving our heritage in th e digital environment. It will 
also give an important input to the creativ e industries, which account for 3,3% of EU GDP 
and 3% of employment.44 These industries are faced with a digital transition that is shaking up 
traditional models, transforming value chains and calling for new business models. Digitising 
and providing wider access to cultural resources, in full respect of copyright and related rights, is an essential condition for the further development of Europe’s cultural and creative 
capacities and of its industri al presence in this field. 
Safer Internet service infrastructure
 
Internet provides children with  new opportunities; however, it also  raises a number of risks to 
children and allows an array of ways to distribute online child  abuse material.  
To increase the trust of citizens, including parents and children, as part of pillar 3 of the DAE 
"Trust and security", the development of  broadband-for-all must be accompanied by a 
coordinated and consistent set of  instruments to keep children safe online and remove illegal 
content, in particular child abuse images.  
Building on the results of the Safer Internet programme and in particular on the existing 
cooperation infrastructure, the ini tiative will scale up activities of  European services to keep 
children safe online ar ound three objectives: 
- Provide access to high qual ity content online for al l children, by supporting 
interoperability between information systems of white lists. 
                                                 
44 EU Competitiveness report 2010 
 
EN 53   EN - Empower and protect childre n through interoperable info rmation systems and web 
services to report abuse to the appropr iate agency, online service supporting the 
verification of minimum age in online envi ronments, and associated exchange of 
expertise. 
- Fight against child abuse material, with es ervices that enable hotlines (web based 
reporting points) to share more efficiently acro ss Europe reports of child abuse images on 
the internet, and service oriented infrastructure to make available and interoperable 
technical tools are available to law enforcement agencies. 
Infrastructure for multilingu al access to services   
One of the obstacles holding back the creation of a pan-European digital service infrastructure 
is the inability of current solu tions to address Europe's wide diversity of languages. In order 
roll out over the entire EU, the digital service infrastructure must address citizens and administrations in the national and local languages. It should enable information exchange 
and full functionality across language barriers. Th is will mainly need to be achieved by means 
of automation (e.g. machine translation, automatic text analysis, summarization or 
classification) because the instant and urge nt processing needs of online systems cannot 
otherwise be served. Automation in all EU languages requires a comprehensive base of 
language resources and tools. To date, such a base does not exist, except for a few languages 
and for a few use domains.  
The impacts and benefits of a truly multilingual  service infrastructure are obvious. Firstly, 
addressing the language barriers will help Europ ean industry, especially SMEs, outgrow their 
national markets. Secondly, the deployment of language tools and the st ructural reinforcement 
of the underlying language infrastructures will increase the choice and o ffer of attractive and 
valuable content and services  in all languages which can si gnificantly contribute to making 
every European truly digital. Thir dly, tackling language barriers is a critical success factor for 
cross-border public services a nd cross-border access to PSI as  well as creative and cultural 
content.. Failure to provide multilingual digital services would leave the digital single market 
and digital public services divi ded and fragmented. Implementing these services in English 
only would entirely exclude about half of EU's c itizens, in some member states a much larger 
majority. An effective multilingual service infrast ructure, on the other hand, will ensure a full 
coverage of EU's territory a nd, in addition, open new global markets, especially in areas 
where European languages are spoken (e.g. USA, Canada, Latin America).  
The infrastructure for multili ngual access to services will f acilitate and ensure the wide 
deployment of language technologies and automa ted tools for cross-border access to content 
and services by building and maintaining the n ecessary linguistic infras tructures. This is 
particularly important for countries whos e languages are currently poorly covered by 
language technology tools because of a lack of  market incentives or by a lack of public 
funding 
Critical Information Infrastructures, in cluding aspects of interdependencies
 
This would include support to: 
 
EN 54   EN - Establishment and operation of a network of well functioning National/Governmental 
Computer Emergency Response Teams (CER Ts), by supporting adoption of baseline 
requirements, CERTs drills etc45; 
- The development of a European Information Sharing and Alert System (EISAS) targeting 
in particular citizens and SMEs, to be built as a network of national level capabilities 
covering all of Europe; 
- Pan-European and International cyber inci dent management exercises (with focus on 
contingency, mitigation, mutual assistance a nd recovery strategies and measures) with a 
view also to enhance the security a nd resilience of underp inning communication 
networks; 
- The development of innovative services and tools (like CERTs for Supervisory Control 
and Data Acquisition (SCADA) or smart-gr ids) to manage cross-domain security 
interdependencies. 
The importance of protecting Critical Information Infrastructures (CIIs46), by granting their 
security and resilience, has been acknowledge d by the Commission in the CIIP action plan47 
of 2009 and, in continuity with this, by the DAE48, which announced measures focusing on, 
among others, preparedness, prevention and respons e. In this respect, the role of national 
capabilities in preventing, detec ting and responding to cyber att acks and cyber disruptions, is 
to be leveraged and developed by means of a European inte grated approach, which would 
benefit from the efforts of a ll actors involved (the Commissi on, the Member States and/or 
industry), with the support of the European Network and Information Security Agency 
(ENISA). 
Smart grids deployment.  
Investments in large-scale projects for demand/ supply balancing using smart grid solutions 
for high and medium voltage elect ricity grids in large cross-bor der regions with significant 
variable electricity generation. The deployment of  "Smart Energy' networks to increase the 
efficiency, flexibility, safety, reliability and quality of the European electricity and gas 
systems and networks to facilitate the transi tion to a more sustainable energy system. These 
address the transformation of current electricity grids into resilient and interactive service networks, controlling the real time flows an d removing the obstacle s to the large-scale 
deployment and effective integration of renewa ble energy sources and distributed generation. 
The objective for gas networks is to demonstrat e more intelligent and efficient processes and 
systems for gas transport and distribution, incl uding the effective integration of renewable 
energy sources and the use of bi ogas in the existing networks. 
 
Horizontal priorities as mentioned in the MFF
 
                                                 
45  Often also referred to as Computer Security Incident Response Teams  (CSIRTs) 
46  A definition of CIIs was proposed in COM(2005) 576 final 
47  COM (2009) 149 final of 30 March 2009 on Critical Information Infrastructure Protection “Protecting  
Europe from large scale cyber-attacks and disruptions : enhancing preparedness, security and resilience.  
48  COM (2010) 245 final/2 of 26 August 2010, A Digital Agenda for Europe 
 
EN 55   EN Innovative Management & Services . Technical assistance measures including project and 
investment planning and feasibil ity studies, in support of invest ment measures and financial 
instruments. For example, mapping of pan-Eur opean broadband networks will develop an on-
going detailed physical surveying and documentation of relevant sites, analysis of rights of 
way, assessments of potential for up grading existing facilities, etc. 
 
 
 
 
 
EN 56   EN ANNEX 4 – BROADBAND AND ITS IMPACTS : AN OVERVIEW  
Introduction  
The present annex was devel oped as part of an ongoing st udy by Deloitte and Tech4i2 on 
behalf of the European Commission (SMART  2011/0024). The annex is  divided into six 
sections.  The next section pr ovides an overview of the key imp acts of high speed broadband 
that can be found in the annex.  The second section provides a brief overview of key sources 
of literature reviewed.  The third section provides an overview of the impact of high speed broadband structured into ten benefits categorie s.  The fourth section examines the current 
and potential future need for broadband connect ivity in excess of 30Mbps.  The final section 
provides an overview of the econom etric literature that has i nvestigated (using input output 
analysis or regression an alysis) the impact of broadband and high speed broadband 
investment.   
Key Impacts
 
More than 270 stud ies have been reviewed in creat ing this broadband impact report. 
Studies primarily sugges t four major areas of benefit fro m the deployment of high speed 
broadband: 
Education and Skills  
• 4.5 per cent increase in e ducational attainment;  
• Education is enhanced by providing stude nts and teachers with access to a vast 
array of resources;   
• Several educational services already require internet speeds in excess of 
100Mpbs. 
Health and care  
• The net total benefit from telemonitori ng is in the order of €27.89 billion, this 
equates to 0.299 per cent of EU GDP for an average implementation cost of €1.11 
billion per year; 
• Reductions in hospitalisations due to tele -health were greater in remote areas 
(with a 50 per cent decrease in bed-days) compared to urban areas (29 per cent 
reduction in bed-days). 
Employment and economy   
• There is about a 15 per cent productivity boost from broadband; 
• FTTP can boost the US economy by at leas t €312 billion, this equates to 2.9 per 
cent of GDP. 
Energy and transport 
• Broadband-enabled smart grid services and devices could result in over €850 
billion in gross energy savings.  This approach is expected to reduce end-use 
 
EN 57   EN energy consumption in the USA in 2020 by roughly 23 per cent of projected 
demand, potentially abating 1.1 gigatons of greenhouse gases annually.  
Macro-economic meta-analysis  
Meta-analysis of several studies estimated th at high speed broadband deployment investment 
of  €270 billion will create about 3.99 million jobs in EU27 Member States. 
Meta-analysis of several European studies estim ated that the average level of GDP growth 
arising from broadband investment  is 7.03 per cent, this would e quate to an increase in EU27 
GDP of €862.47 billion. 
Meta-analysis of several US studies estimated that the average level of GDP growth across 
the US studies is 3.47 per cent, this would equate to an increase in EU27 GDP of €425.71 
billion arising from high speed broadband investment.   
An OECD study49 suggest that governments can achieve a ten year return on fully funding a 
national, point to point, open access FTTH network. 
High speed broadband and its applications 
Viewed separately, very few of the areas or applications examined in this report require 
bandwidth above 30Mbps.  However, utilisati on of a small number of applications by 
households and businesses will already exceed this bandwidth requirement. 
It is probable that developers  of bandwidth hungry applicatio ns have been restrained in 
developing applications since hi gh speed bandwidths have not been deployed sufficiently to 
enable mass-market utilisation of their i nnovations. The recent introduction of video 
conferencing style facilities for Facebook an d Google+, requiring up  to 8Mbps, and the 
development of bandwidth hungry high-definiti on telepresence applications (requiring over 
24 Mbps) are perhaps examples of the way that developers are starting to utilise the growing bandwidth provided to an incr easing number of  users. 
It is likely that bandwidth hungry applications w ill develop more rapidly in the future as the 
growing numbers of potential (high bandwidth en abled) users starts to provide developers 
with a growing market and thus enha nced economic case for development.  
Literature overview
 
More than 200 academic papers and reports have been reviewed in preparing this annex.  In 
addition 54 hard copy documents and 15 digital documents prov ided by the Commission have 
also been reviewed. It is impor tant to note that the literature on the impact of high speed 
broadband is relatively  poorly developed.   
Only 22 (11 per cent) of the papers reviewed investigate high speed broadband.  High speed 
broadband deployment is relatively rece nt and impact stud ies are sparse.  Studies largely 
examine the impact of internet connectivity an d applications and services that are provided 
                                                 
49 OECD (2010), OECD Information Technology Outlook 2010, OECD Publishing. Available at 
http://dx.doi.org/10.1 787/it_outlook- 2010-en  Accessed 17th May 2011 
 
 
EN 58   EN using broadband; rather than examining the connectivity requ irements in Mbps and other 
technical details .  The focus is on the services that ar e provided (and thei r impact) not on the 
underlying broadban d networks. Econometric studies are amongst the small number of studies 
that focus on the nature of the infra structure.  To ad dress this deficiency in each of the ten sections 
examining impacts detail s about bandwidth requirements a nd the significance of different 
bandwidths have been provided. 
It is important to note that achievement of 
high speed deployment goals will also lead to the deployment of broadband in many areas where broadband is not currently available or is currently of very low quality.  For example the 2010 iDATE report
50 notes that fixed broadband has a 
24.8 per cent penetrat ion rate (24.8 
subscribers per 100 inhabitants – 125.8 
million fixed broadb and subscr ibers in 
EU27 States).  This le vel of (inhabitant) 
adoption is similar to the 55.8 per cent 
household broadband adoption found by a 
recent EIB study51 . 
The EIB study highlighted  that average DSL 
coverage in Europe (EU-27 + 2) was 94.4 per cent. This European average figure masks the fact that DSL coverage in rural areas was only 80 per cent.  In additio n, Europe has relatively 
low levels of deployme nt of infrastructure 
capable of meting the hi gher 2020 bandwidth 
targets (i.e. 50% or mo re of EU households 
subscribe to Internet access above 100 Mbps by 2020).  Investment to achieve DAE targets will 
bring basic broadband to  many households that 
are not currently covere d by broadband (Target 1 Basic Broadband for all by 2013), particularly 
in rural areas. 
Broadband benefits overview
 
This section provides an ove rview of benefits arising fro m high speed broadband in ten 
categories52. 
It is important to point out that whilst the te n categories provide a co mprehensive overview of 
potential benefits (implic itly including eHealth, eLearning, smart grids and enhanced transport 
                                                 
50 IDATE. 2010.  Broadband coverage in Europe; 2010 Survey.  DG INFSO 80106 B 
51 Koutroumpis, P. 2010. An assessment on the total in vestment requirement to reach the Digital Agenda 
broadband targets: Study prepared for the EIB PJ/INCO/ICT Division 
52 The categorisation was developed by Tech4i2 in collaboration with the UK Digital Inclusion Team 
(http://www.esd.org.uk/esdtoolkit/Docum ents.ashx?doc=ESD03338g&agency=573 ) to capture the 
benefits arising from broadband deployment and digital inclusion. 

 
EN 59   EN systems within environmental benefits and on line gaming within we llbeing benefits) it does not 
capture explicitly cros s-cutting initiatives  (such as eGovernment, eCommerce, ePayment and 
Single European Payments Area (SEPA)) or technologies such as cloud computing and 
Web2.0 which will enhance the volume  of uploaded user  created content .  These, together 
with a consideration of CIP ICT PSP pilots, are th erefore included in releva nt sections throughout 
the ten categories.  
Community and cohesion: Broadband benefits 
Dickes et al (2009) in a report about rural co mmunities in the USA stat e “overall, it appears 
that access and diffusion of high quality, high speed broadband networks is a critical 
economic and community development tool for a ll communities in the twen ty-first century”.  
They go on to point out that when considering rural areas as communities the role of broadband in supporting and en hancing economic development can be seen as essential 
“without access to high-speed, high-bandwidth internet service, rural communities already 
suffering from the economic effects of industrial restructuring and the cu rrent economic crisis 
may continue to find their communities increasingly less competitive”. 
Headline community broadband bene fits can be described as: 
Improved access in rural areas 
• Broadband benefits rural areas in two key wa ys.  First, broadband telecommunications 
has become a key location factor  for businesses, almost as important as sewer, water, 
telephone, and electricity serv ice.  Second, broadband doesn’t just make it easier for 
rural businesses to grow, it improves the quali ty of life in rural communities, making it 
easier for smaller locales to attract and retain residents (Hedlund, 2007).  
• The tenth survey of multinational companie s located in Ireland found that, compared 
to three years earlier, the strategic importa nce of broadband availability had moved up 
12 places in the ranking, from 18th to 6th (beh ind wage inflation, price inflation, skills 
and availability of workforce) (IMI, 2008) 
Improved communication be nefiting communities 
• The Digital Impact Group (2010) report that  80 per cent of br oadband users reported 
using the Internet to get local or community news.  At the local level, a total of 78 per 
cent of broadband users surveyed cited “keep ing up with the news in my community” 
as very important or somewhat important. 
• A JRC Study on Smart Grid projects in Euro pe (2011) points ou t that Smart Grid 
projects and investment s are not uniformly distributed across Europe.
53 Most of them 
are located in EU15 countries, while EU 12 Member States still lag behind. The 
uneven distribution of projects and the differe nt pace, at which Smart Grids are being 
deployed across Europe, could make trade and cooperation across national borders 
more difficult and jeopardize the timely achie vement of the EU energy policy goals.  
Development of social networks 
                                                 
53  http://ses.jrc.ec.europa.eu/index.php?opti on=com_content&view=ar ticle&id=93&Itemid=137 
 
EN 60   EN • The recent emergence of online social networking, with groups such as Facebook and 
Twitter, provides users with a forum to conn ect with friends, colleagues, and family 
(Crandall and Singer, 2010). 
• The Baller Herbst Law Group (2008) re port a study by Datamonitor, “social 
networks” revenues are expected to grow nearly four fold from €387 million in 2008 
to €1.52 billion in 2012. 
Several high speed broadband init iatives (such as Nuenen in th e Netherlands) have used their 
enhanced bandwidth to support community TV in itiatives.  Communities that are not part of 
these initiatives have also developed comm unity TV projects inde pendently.  Bandwidth 
requirements for TV vary depending upon comp ression techniques used.  Users of the BBC 
iPlayer and Skyplayer applications recomme nd at least 2Mbps connections to view 
programmes54.  HD TV requires between 8 and 5 Mbps to deliver crisp video to consumer’s 
televisions.55 
Crime and public safety: Broadband benefits 
The impact of broadband in improving public sa fety and addressing crime is mentioned in 
only a small number of studies, thou gh in many reports it is part of a generic expectation that 
broadband will improve government services.  Th e role of broadband in  improving the ability 
of the police and other agencies to respond to em ergencies, including natura l disasters, is seen 
as a benefit arising broadband. 
Headline crime and public safety benefits include: 
A contribution to the general im provement in public services 
• Dabson and Keller (2008) note that a rapidl y growing area of broadband use is for 
government services and public safety.  Advocates for “eGovernment” identify its 
potential to increase transparency, improve  customer service, update and streamline 
bureaucratic management pr actices and cut costs. 
Improvement in disaster and emergency response 
• A number of studies cite the significance of  broadband in helping to improve disaster 
response (Digital Impact Group, 2010). 
Improved outcomes through vi deo communications and CCTV 
• The improved use of video transmission is seen as helping a number of aspects of 
crime and community safety.  For example, it can act as a deterrent to burglaries on 
businesses, (Scottish Government, 2011) or  improve court functioning by enabling 
input to proceedings from remote locations (Barr, 2010). 
Improved tackling of specific incidents 
                                                 
54 http://www.sky.com/helpcentre/tv/sky-go/about-sky -go/technical-and-device-specifications/sky-go-
recommended-broadband-speeds/ , accessed 15th July 2011 
55 http://gigaom.com/2008/08/12/why-we-need-fat -pipes-the-top-5-bandwidth-hungry-apps/ 
 
 
EN 61   EN • The Digital Impact Group (2010) note benefi ts from greater connectivity, for example 
between health centres and utility providers.  This can make for more resilient systems 
and more accurate responses to threats such as infectious outbreaks, bioterrorism and attacks to the energy grid. 
Crime oriented video applications, such as th e use of video transmissions for CCTV and also 
allowing witnesses to use video appearances in  court, do not consum e significant bandwidth. 
However, the higher quality images or the tr ansmission of several images simultaneously, 
such as multiple CCTV feeds to a remote recording location (essentially a cloud computing situation) is more easily facilitated using high-speed broadband access.  Two IP cameras 
using MPEG-4 video compression, with a screen resolution of 640 X 480 pixels at 7.5 frames 
per second require approximately 650Kbps upload bandwidth
56.  More cameras or higher 
quality images will require commensurately more bandwidth. The Scottish Government 
report (2011) notes the importance of higher sp eeds to allow improved CCTV functions to 
take advantage of cloud computing. 
Education and Skills: broadband benefits 
Education and skills development is the fi rst of the three major areas that many 
commentators57 suggest will make the greatest use and derive the largest benefits from high 
speed broadband deployment.  The ot her two areas are health and economy. 
The relatively large number of initiatives that provide high-speed broadband deployment to 
educational establishments supports the importa nce of high speed broadb and.  For example in 
New Zealand approximately €112 million is being earmarked specifically for improving schools’ access.  Korea has completed a Fiber to the subscriber (FTTS) program, connecting 
all 11,414 schools with at least 10 Mbps. 
Headline education and sk ills benefits include: 
Education as investment in human capital, with economic benefits 
• Productivity within edu cation itself can be enhanced through broadband - eLearning 
courses are considered 50 per cent less expensive than traditi onal face-to-face courses.  
Blended learning is 20 per cent less expens ive than equivalent face-to-face seminars, 
but is more efficient than e- learning (Fornefeld et al., 2008) 
• Children with internet access have been found to have higher standa rdized test scores, 
graduation rates, and earning poten tial (Digital Impact Group, 2010). 
Increased employment in education 
• In the USA the estimated effect of a fi ve per cent increase in  capital spending from 
second generation broadband de ployment would be an incr ease of $4.3 billion (€3.5 
billion in July 2010) in GDP and 43,871 jobs  in education services (Crandall and 
Singer, 2010). 
                                                
 
56 http://www.cctvcamerapros.com/IP-Camer a-Internet-Connection-Speed-s/323.htm  
57 Liebenau, J., Atkinson, R. Kärrberg, P., Castro, D. and Ezell, S. 2009. The UK’s Digital Road to Recovery. 
LSE Enterprise Ltd. & the Information Technolo gy and Innovation Foundation.  Available at   
http://www.itsa.org/itsa/files/pdf/digitalrecovery.pdf   Accessed on 10th July 2011 
 
 
EN 62   EN Increased availability of education 
• One advantage of broadband is  that education can be made more widely available 
through the internet.  One aspect  is in rural areas, Mulas et  al. (2009) report that rural 
residents can also access college-level dist ance learning courses and degrees that may 
not be offered at local institutions. 
• Broadband can facilitate di stance-learning opportunitie s through teleconferencing. 
This has potential benefits for rural communities that may lack access to top-flight 
education resources.  There are several examples of distan ce tutoring programs 
internationally (Crandall and Singer, 2010). 
Improved education services 
• 4.5 per cent increase in educational a ttainment (PriceWaterhouseCoopers, 2009) 
• Education is enhanced by pr oviding students and te achers with access to a vast array 
of resources.  Text-based materials, photos and images, videos, animations, interactive 
lessons, data-manipulation tools, oral hi story collections, music, and educational 
gaming programs are just a few of the valu able benefits (The Baller Herbst Law 
Group, 2008). 
• The development of online resources such as eBooks, Google Scholar, and Social 
Science Research Network (SSRN) provide academic institutions with access to fast 
and reliable research (Crandall and Singer, 2010). 
There have been some dissenting views ab out the value of high-speed broadband in 
education. Kenny and Kenny (2011) do not question the principle bu t assert that the average 
secondary school in the UK already had internet  access at 19.2 Mbps and this was sufficient 
to meet needs. An alternative view is put forward by the Commu nications Workers of 
America (2010) who list several educational services that require internet speeds of between 100mpbs to 1gbps. The Baller Herbst Law Group (2008) also highlight the need for high-
speed broadband to enable meaningful two- way, interactive, real-time educational 
experiences using uncompressed high definition video streams. 
 
EN 63   EN Employment and economy: broadband benefits 
There are a large number of studies that conc lude that broadband and high-speed broadband 
has a significant and positive impact on economic growth (as measured through GDP).   Some 
of this growth is created by i nvestment in the infrastructure and works undertaken to deploy 
broadband, multiplier values have been applied to  estimate the impact that this investment 
will have throughout an economy.  Further deta ils of these and an estimate of potential 
impacts in Europe are provided in section 6. 
Several studies suggest that productivity of em ployees is increased by ICT and broadband, but 
not all studies find this.   Some studies fi nd that innovation, associated with broadband and 
high speed broadband may have a more significant affect.    
Headline employment and ec onomy benefits include:- 
Increased economic output 
• A recent report by Pike Research (http:// www.pikeresearch.com/research/smart-grids-
in-europe) forecasts that during the peri od from 2010 to 2020, cumulative European 
investment in Smart Grid technologies will reach €56.5 billion, with transmission 
counting for 37% of the total amount. The report also suggests  that by 2020 almost 
240 million smart meters will have been deployed in Europe.  
• The annual average investment by broadband service providers in the USA over the 
next six years (2010-15) is predicted to be  $30.4 billion (€24.7 billion in July 2010) in 
all broadband technologies, which corres ponds to over 509,000 jobs created (Crandall 
and Singer, 2010) 
• According to the International Energy Agen cy (IEA), Europe requires investments of 
€1.5 trillion over 2007-2030 to renew the elect rical system from generation to 
transmission and distribution. This figur e includes investments for Smart Grid 
implementation and for maintaining and e xpanding the current electricity system. 
• FTTP can boost the US economy by at leas t $440 billion (€312 bi llion in July 2009, 
this equates to 2.9 per cent of GDP58).  Greater utilisation of peer to peer applications 
with 100 mbps symmetrical capability can provi de a further increase.  There is about a 
15 per cent productivity boost from broadband. (Next Big Future, 2009). 
• Consumers receive more than $30 billion (€21.2 8 billion in July 2009) of net benefits 
(consumer surplus) from the use of fixed line broadband at home. Dutz et al (2009) 
also estimate, based on 2009 survey data, that the benefits of an increase in broadband 
speed from 100 times the typical historical sp eed of dial-up intern et service to 1,000 
times dial-up are in the orde r of $6 billion (€4.26 billion in July 2009) per year for 
existing home broadband us ers (Dutz et al, 2009) 
• Looking at a panel of OECD countries in 1996-2007, Czernich et al (2009) found that 
a ten percentage-point increase in broa dband penetration raised  annual per-capita 
growth by 0.9 to 1.5 percentage points. 
Increased productivity 
                                                 
58 Bureau of Economic Analysis US GDP 2010 US$14.7 trillion in 2010 
 
EN 64   EN • Broadband has contributed a ve ry significant proportion — pe rhaps ten to 20 per cent 
— of productivity growth in some OECD countries (LECG Ltd, 2009)  
• ACIL Tasman (2004) looking at the impact  of broadband in Victoria (Australia) 
conclude that their projecti ons show how the financial, insurance and business service 
sectors are expected to experience the fastest and greatest productivity gains from 
broadband use. Agriculture and forestry and fishing sectors are expected to gain the 
least from direct productivity gains. 
Increased employment 
• Data from 1999 to 2006 revealed that co mmunities with new access to broadband 
experienced 6.4 per cent higher employment growth on average than before they had 
broadband (Milano, 2010).   
• The internet is a catalyst for generating jobs.  Among 4,800 small and midsize 
enterprises surveyed, broadband access and technology created 2.6 jobs for each lost 
to technology-related effi ciencies (McKinsey, 2011). 
• Kolko (2010) looked at br oadband availability and ec onomic activity throughout the 
USA between 1999 and 2006 and concluded that  the boost to employment growth was 
5.0 per cent (statistic ally significant). 
Building or maintaining the infrastructure for broadband 
• The Internet in the USA employs 1.2 million people directly in jobs that build or 
maintain the infrastructure, facilitate its use, or conduc t advertising and commerce on 
that infrastructure (Hamilton Consultants (2009 ).  This represents 0.86 per cent of total 
US employment59  
In general economic and employment benefits  are identified as increasing through the 
increased take up of broadband rather than pa rticular advantages of high speed broadband.  
For example cloud computing require speeds of up to 2 Mbps and 10 milliseconds of latency, 
and increased bandwidth will become more necessa ry as enterprises begin to store and save 
more data in the cloud60.  A survey of firms in Scotland found that 58 per cent of businesses 
perceive that reliable, high- speed broadband is very import ant to the operation of their 
business (Scottish Government, 2011).   
High Definition TelePresence applications provi de high-definition 1080p video, spatial audio, 
and a setup designed to link two physically se parated rooms so they  resemble a single 
conference room even though the two rooms ma y be on opposite sides of the world.  The 
application is a deluxe version of video conferen cing aimed at businesses, it requires at least 
requires 24 Mbps and about a 50 millisecond latenc y to recreate the f eeling of sitting in a 
room speaking with people61. 
Environment and transport: broadband benefits 
Few studies identify the partic ular benefits for the environm ent of high speed broadband.  The 
primary benefits identified were greater use of telecommuting, smart grids and smart 
                                                 
59  US Bureau of Labor Statistics. 2011. Total US employment in May 2011 139.334 million 
60  http://gigaom.com/2008/08/12/why-we-need-fat-p ipes-the-top-5-bandw idth-hungry-apps/   
61  http://gigaom.com/2008/08/12/why-we-need-fat-pipes-the-top-5-bandwidth-hungry-apps/ 
 
EN 65   EN buildings. Telecommuting could benefit from e nhanced deployment of high speed broadband.  
Enhanced high speed deployment could enab le greater use of higher quality video-
conferencing.  High speed broadband could also enable more efficient use of cloud computing 
and transfer of large documents and files.  
Enhancements to logistics were quoted in some studies.  However, these rely rather more on 
enabling wireless internet connectivity with lorries  or trucks than enhanced utilisation of fixed 
broadband networks. It is doubtfu l that the prov ision of high speed broadband would improve 
logistics significantly compared to standard broadband. 
Headline employment and ec onomy benefits include:- 
Reduction in greenhouse gas emission  
• Enhanced adoption and use of broadband could achieve a net reduction of one billion 
tons62 of greenhouse gas over 10 years in the US.  If converted into energy saved this 
would constitute 11 per cent of annual U.S. oil imports (Fuhr and Pociask, 2007) 
• Robust use of a smart grid may save betw een 60 million and 480 million US tons of 
carbon emissions per year (Davidson, Santorelli and Kamber, 2009). 
Reduced travel  
• 2006 estimate - 28 million Americans telecommuted at least once a month.  Predicted 
to rise to nearly 100 million by 2010 (Crandall and Singer, 2010) 
• Telecommuting will reduce greenhouse gas emissions in the US by 248 million tons 
due to less driving, 28 million tons due to reduced office construction, and 312 million 
tons because of energy saved by businesses. (Davidson, Santorelli and Kamber, 2009) 
• Broadband and on-board computers in lorries will allow logistics managers to better 
coordinate and utilise trucks  and enhance loads carried.  This will boost capacity 
utilization by 3.3 per cent, saving US$16 billion (€10.14 billion in July 2008) annually in the US$500 billion (€307 billion in July 2008) trucking industry. (The Baller Herbst 
Law Group, 2008). 
Reduced energy use 
• Broadband-enabled smart grid services and devices could result in over US$1.2 
trillion (€850 billion in July 2009) in gross energy savings.  This approach is expected 
to reduce end-use energy consumption in  the USA in 2020 by r oughly 23 per cent of 
projected demand, potentially abating 1.1 US gigatons of  greenhouse gases annually. 
(Davidson, Santorelli and Kamber, 2009) 
• ICT and energy policy goals - A Smart Gr id can contribute to sustainability by 
facilitating the reduction of CO2 emissions , enabling the integration of largescale 
renewables and increasing energy efficien cy in the power sector. It supports 
competitiveness and open and efficient markets by increasing market participation through the aggregation of di stributed prosumers (consum ers also able to produce 
power) and through the strengthening of interregional markets.
63  
                                                 
62  One US ton is approximately 907kg, so 1billion US tons would represent just over 900 billion kg. 
63  http://ses.jrc.ec.europa.eu/index.php?opti on=com_content&view=ar ticle&id=93&Itemid=137 
 
EN 66   EN • Creating “smart buildings” tied to the local power grid will enable utility companies to 
reduce the level of (wasted) re serve power held, leading to “l ower prices and less price 
volatility” (US Department of Energy, 2002;  quoted in Baller Herbst Law Group, 
2008) 
• In California 33 per cent of all electricity consumed in the State is by commercial 
buildings – about US$10 billion per year (€7.09  billion in July 2008).  The goal of the 
High-Performance Commercial  Buildings Project (HPCBS), launched in 2000, is to 
cut energy use by 70 per cent in new buildings  and save 50 per cent in retrofits of 
older buildings using broadband connections combined with other technologies. (The 
Baller Herbst Law Group, 2008). 
Many of the above studies identify how broadba nd deployment can contribute to the 2020 
climate and energy targets:-   
• Reduction in EU greenhouse gas emissions of  at least 20 per cent below 1990 levels 
• 20 per cent of EU energy consumption to come from renewable resources 
• 20 per cent reduction in primary energy use co mpared with projected levels, to be 
achieved by improving energy efficiency. 
As Timmers64 identified at the ManagEnergy Annual conference broadband can contribute to 
the achievement of targets in two ways.  Firstly, by bringing direct efficiency gains through 
measuring, monitoring, intelligent management  and control.  Seco ndly, through driving 
behavioural change by providing reliable da ta, identifying energy c onsumption (how much, 
where), enabling comparative analysis (identif y common inefficiencies , best practices and 
opportunities). 
Most smart grid and smart build ing applications require wirele ss connectivity in some form, 
and several studies note the need for more br oadband spectrum for utilities.  An IEEE Smart 
Grid project65 estimated that data rates of ‘40 Kbps  to 1 Mbps’ were required.  High speed 
broadband appears to offer few additional benefits  to these initiatives (viewed in isolation) 
due to the relatively low bandwidth requirements. 
Equality and inclusion: broadband benefits 
This category of benefits relate to activities, which address inequalities, empower ‘voiceless’, 
isolated individuals and comm unities, and tackle exclusion. 
Few studies directly identified the impact of hi gh speed broadband on equa lity and inclusion.  
Most reports identified that high speed br oadband could facilitate  the development of 
applications or services that would tackle exclusion. Rural areas  were, in most cases, expected 
to benefit most from the introduction of broa dband, not least because in some rural areas 
internet access is very poor or non-existent thus  depriving inhabitants of these rural areas of 
benefits that people in other areas often take for granted. 
                                                 
64 Timmers P. 2011. ICT contributing to the development of a more efficient Europe. EUSEW, “Local and 
regional action for sustainable energy”. Brussels.  13 April. 
65 IEEE P802.15 Working Group for Wireless Person al Area Networks (WPANs) (2009) Preliminary 
Proposal for Smart Utility Networks  aka Smart Grid Communications 
 
 
EN 67   EN Headline equality and incl usion benefits include:- 
Tackling exclusion 
• In their Local Broadband Plan, Suffolk r ecognise the ability to use broadband in 
caring for the elderly by using telecare to enab le the elderly to stay in their homes for 
longer while receiving the he lp and care that they need  online and improving their 
quality of life. Social care customers w ill receive a personalised budget and high speed 
broadband will enable them to use their budget to maximum effect by sharing 
information or booking services and equipm ent online (Suffolk development agency, 
2011) 
• Assessment of the benefits of the Broa dband Wales Programme suggested that 
individuals could be more included within  new personal, employment and social 
networks (Atkins, 2006) 
• One of the wider social bene fits of FTTH coverage is the promotion of community 
links and an enhanced sense of be longing to a community (Plum, 2008) 
Empowering ‘voiceless’, isolated individuals 
• As early broadband adopters exploit new oppo rtunities to have th eir voices heard, 
improving access for only a particular group may in fact undermine democracy by 
creating inequalities of acce ss to crucial communication services (Plum, 2008) 
Empowering rural areas 
• Targeting key rural centres in the West Midlands will deve lop rural broadband 
networks and maximise th e opportunity for economic growth (Ecotech, 2010) 
In general equality and inclus ion benefits are identified as increasing through the increased 
take up or access to the internet rather than particular advantages of high speed broadband.  The Baller Herbst Law Group (2008) identify that  remote server services for telecommuting 
are an application that could require speeds of up to 100Mbps.  Improved video conferencing 
is seen as an advantage particularly in relati on to video-conferencing with consequent reduced 
travel, particularly for those living in rural areas.   
The key equality and inclusion issue highlighted  in the studies reviewed relates more to 
equality of broadband access, than to any part icular advantages from high-speed broadband.  
Several studies voice fears about  rural areas being ‘left behind ’ and potentially disadvantaged 
by not having broadband or high-speed broadb and access at the same speeds as other 
locations. 
Finance and income: broadband benefits 
This category of benefits complements the ec onomy and employment section (4.4).  This 
previous section, which contained a large num ber of reports, focused on wider economic 
benefits.  This secti on will focus on financial savings, main ly for the individual or household, 
which can arise from broadband connectivity.   
The impact of broadband on pay through economi c development can arise in a number of 
ways, for example – increased pay in an existing job, th e acquisition of more skills leading to 
 
EN 68   EN higher pay, or more income through more o pportunities or profit from running a small 
business. 
Headline finance and income benefits include:- 
Average Pay 
• Direct jobs related to the “building a nd manufacture of broadband networks” pay 42 
per cent more than the average for manuf acturing jobs in othe r sectors (Columbia 
Telecommunication Corporation, 2009) 
• Between 1998 and 2002 communities in which mass-market broadband became 
available by December 1999 experienced more rapid growth in employment, the 
number of businesses overall an d businesses in IT-intensive sectors.  But the data did 
not demonstrate statistically significant  impacts on wages (Lehr et al, 2005) 
• If the 1.6 million children who live in familie s which do not use the internet got online 
at home, their educational improvement could boost their total lifetime earnings by 
over £10 billion (€11.68 billion in Ju ly 2009) (PriceWaterhouseCoopers, 2009) 
Household Income 
• Strategic Economic Solutions (2007) examin ed the potential of the economic impact 
of a metropolitan broadband network for the city of Cape Town.  They estimate that 
the project will contribute to indirect hous ehold income, and by 2026/27 it is expected 
that the project will have cumulatively added over R106bn (€11.1 billion in July 2007) 
to indirect household income. 
Impact of lack of broadband access  
• The Digital Impact Group (2010) conclude that each of the over 40 million digitally 
excluded households in a US study they were  undertaking may have  a current cost in 
the order of over US$2.5 billion (€2.04 billion in July 2010) 
• UK households offline are missing out on savings of £560 per year (€654 in July 
2009) from shopping and paying bills online. 
Dutz et al. (2009) estimate that  the increase in benefits of an  improvement in broadband speed 
from 5 to 50 Mbps would equate to US$5.8 b illion (€4.11 billion in  July 2009) for U.S. 
households. However, the study was relative ly unclear about how access to high speed 
broadband would deliver these benefits. 
None of the studies investigating finance a nd income provide robust details of how high-
speed broadband will lead enhanced financial and income benefits.  It is unlikely high-speed broadband will have a significant impact in this area. 
Health and care: broadband benefits 
The impact of broadband in improving health and care is mentioned in  a large number of 
studies.  Indeed, this is one of the top three areas where broadband is perceived as having the 
greatest impact.  Benefits can be seen in a nu mber of ways.  The Digital Impact Group (2010) 
looks at telemedicine, online health education, electronic health record s and chronic disease 
management.  Fornefeld et al (2008) in Eur ope look at benefits from electronic health 
insurance cards, secure messaging systems betw een health providers, and electronic patient 
 
EN 69   EN records.  Telemedicine is defined as the deli very of health care by a physician to a patient 
using some type of interactive video technol ogy when distance separate s the two. Telehealth 
is a broader form of telemedicine that include s additional technologies, other types of health 
providers and distance education using bot h interactive and asynchronous platforms. 
Headline health and care benefits include:- 
Save consumers money 
• Litan (2008) estimates the net total benef it from telemonitoring is in the order of 
US$44 billion per year (€27.89 billion in July  2008, this equates to 0.299 per cent of 
GDP10) for an average implementation cost of US$1.75 billion per year (€1.11 billion 
in July 2008) 
• Connected Nation (2008) report that if every US state were to develop initiatives 
similar to ConnectKentucky, the United Stat es could expect to gain US$662 million 
(€420 million in July 2008) saved per year in re duced healthcare costs. This equates to 
0.0045 per cent of GDP66).   
Save consumers time and travel 
• 83 per cent of parents of children with spec ial health care needs report driving more 
than an hour to see a specialist (Californi a Broadband Task Force quoted in the Baller 
Herbst Law Group, 2008).  If telemedicine can  allow families to be treated in local 
clinics then their time and money will be saved. 
• Monitoring conditions virtually by phone and the internet allows people to stay in their 
homes and avoid expending time and money on travel.  The Digital Impact Group 
(2010) report that one Vete ran Affairs telehealth program was found to reduce bed 
days of care by 25 per cent and hospital admissions by 19 per cent. 
• The introduction of tele-cons ulting in rural Queensland saved Aus$125 (€79 in July 
2007) per visit avoided as opposed to sending patients to the nearest city (Nooriafshar 
and Maraseni, 2007)  
• Reductions in hospitalisations due to tele-health were greater in remote areas (with a 
50 per cent decrease in bed-days ) compared to urban areas (a  29 per cent reduction in 
bed-days) (Darkins et al, 2008) 
                                                 
66 Bureau of Economic Analysis US GDP 2010 US$14.7 trillion 
 
EN 70   EN Improve outcomes and treatment 
• Access Economics (2010) report a study that showed a weekly tele-nurse visit to 
patients with congestive heart failure resulted in 84 per cent lower readmission rates 
and also had significantly fewer emergency visits.  
• Tele-health home monitoring of patients with dementia improved their medication 
compliance rates to 81 per cent against 66 per cent in the control group (Smith et al 
(2007) 
Increased employment 
• Kolko (2010) looking at wh ether broadband boosts local economic development 
examines broadband and industry empl oyment growth, 1999–2006. 7.4 per cent of 
employment growth in health care and social  assistance is associated with an increase 
in broadband availability. 
The Baller Herbst Law Group (2008) report that a cr ucial part of effectiv e telehealth services 
is the transmission of high-definition medical im ages.  Under the FCC’s former definition of 
“broadband” (200 kbps), it would take nearly a full day to download a 10 minute diagnostic 
video clip.  With a symmetric 100 Mbps broadband connection, it would only take three 
minutes to transmit the video clip. 
Health care and the development of telehealth and telemonitori ng, particularly those elements 
requiring real-time uncompressed video or HD video connectivity, app ear to require high-
speed broadband of 10 Mbps or more.   
Housing: broadband benefits 
Only a handful of studies refer to the imp act of broadband on housing issues.  The most 
significant studies include research on the imp act on housing by looking at communities that 
were among the early adopters of mass-market broadband. 
Headline housing benefits were thought to be:- 
Impact on the environment of broadband from home 
• The use of broadband at home increases the ab ility to work from home and so reduces 
travel and associated CO2 emissions.  Fo r example a 2006 estimate suggests that 28 
million Americans telecommuted at least on ce a month (this equates to 12.2 per cent 
of the working population67).  This was predicted to rise to nearly 100 million by 2010 
(Crandall and Singer, 2010).   
• Each internet telecommuter saves about 3,500 kilowatt hours a year (Dutz, Orszag and 
Willig, 2009). 
Economic benefits of broa dband facilitated homeworking 
• Broadband, allowing work from home, resulted in an increase in productivity of 20 
per cent (Zhen-Wei Qiang, Rossotto and Kimura, 2009). 
                                                 
67  US working population in 2006 was 228.8 million Bureau of Labor Statistics 
 
EN 71   EN • Homeworkers took on average a quarter of the nu mber of days sick leave a year (three 
days) than their office attending counter parts (twelve days - Zhen-Wei Qiang, 
Rossotto and Kimura, 2009). 
Impact on the community of broadband from home 
• Using broadband at home individuals can acq uire skills and devel op social networks 
through broadband-enabled web applications.  These can facilita te peer-to-peer 
communities and their integra tion with the economy (quoted  in Zhen-Wei Qiang, C. 
Z., Rossotto, C. M., and Kimura, K., 2009). 
In general benefits are identified as increasing through the greater take up of broadband rather 
than particular advantages of high speed br oadband.  However impr oved video conferencing 
is seen as an advantage particularly in rela tion to reduced travel be tween home and work.  
Wellbeing: broadband benefits  
This category of benefit relate s to activities, which focus on people’s social wellbeing. This 
includes “The Need for Being”, for meaning, purpose and fulfilment in life e.g. support for 
purposeful activities and ‘quality of life activi ties’ such as hobbies a nd interests. It also 
focuses on the “Need for Relating” and the need fo r social interaction with family, friends and 
others. These activities often fundamentally relate to ‘happiness’ . High-speed broadband 
provides many opportunities for HD and UHD vide o applications.  Wellbeing benefits can 
obviously arise from some of the preceding benefits  (a return to full health or possession of a 
job are known to improve wellbeing), this sec tion therefore highlights on those that focus 
specifically on wellbeing. 
Headline wellbeing benefits include:- 
Time Saving 
• A key benefit from broadband is the opportun ity to save time.  A prime example is 
increased teleworking reducing the amount of time spent on commuting.  Connected 
Nation (2008) estimate that in the US US $35.2 billion (€22.31 billi on in July 2008) in 
value could be attributed to 3.8 billion hours saved per year by accessing broadband at 
home (if every state were to develop initiatives sim ilar to ConnectKentucky). 
Improvement to home / work life balance 
• The benefits from telecommuting resulting from broadband are not just the time 
resulting from the elimination of the commute  to work.  Fuhr a nd Pociask (2007) note 
that telecommuting allows workers to fi nd more time savings by reorganizing their 
lives to take advantage of lo w congestion periods.  To give one example - quality of 
life can increase as workers use a le ss crowded health club saving time. 
The preceding benefits largely focus on time saving.  Faster broadband will probably mean 
that online tasks can be completed more quickly.  However, if the user still sits in front of a 
computer and simply does ‘more of the same’ it is questionable whet her there is any net 
benefit.   
 
EN 72   EN Bandwidth requirements for social networking applica tions that facilitate social interaction and thus 
enhanced wellbeing are relatively limited.  VOIP applications such as Skype use between 100kbps (for a single call) to 1.5Mbps for HD video calling
68.  Skype recommends 8Mbps download speeds 
for group video calling with seven or more people.   The recent developmen t of single and multiple 
person VOIP applications by Facebook69 and Google+70 suggest that the previously limited 
bandwidths required by these applica tions will expand in the future. 
Broadband requirements: An aggregate view  
The preceding sections have examined benefits and broadband and high speed broadband 
bandwidth requirements in ten different areas.   In isolation very few of the areas or 
applications require ba ndwidth above 30Mbps.   
It is probable that developers  of bandwidth hungry applicatio ns have been restrained in 
developing applications since hi gh speed bandwidths have not been deployed sufficiently to 
enable mass-market utilisation of their appl ications.  A chicken and egg conundrum probably 
exists.  However, it is possible that wider utilisation of bandwidth hungry high-definition 
telepresence type applications could reach th e mass market if sufficient users possessed the 
required bandwidth (over 24 Mbps). The recen t introduction of video conferencing style 
facilities for Facebook and Google+ , requiring up to 8Mbps, is perh aps an example of the way 
that developers are utilising the grow ing bandwidth provided to many users. 
Tucker (2010) notes that a number of high-de finition, and perhaps 3D , video signals in a 
single house, together with some on-line gaming and some telecommuting could easily make large inroads into a high-speed  100 Mb/s broadband connecti on.  Add to this the data 
requirements of new on-line services such as on-line health monitoring, energy monitoring 
and home security and there will be pressure on the network to deliver even more than 100 
Mb/s to the home. 
While Tucker’s observation is  perhaps a little ex aggerated in terms of total bandwidth 
requirements.  It is al ready evident that bandwid th requirements for hous eholds and businesses 
could already relatively easily exceed 30 Mbps with existing appl ications.  A hou sehold viewing 
two HD TV programmes (2 x 8MBps)  while taking part in two multiple user Go ogle+ online 
conversations (2 x 8MBps) woul d need more than 30Mbps.  Busi nesses using 4 good resolution 
CCTV cameras (5.3 Mbps), with six staff connec ted to cloud computing applications (12Mbps) 
with an HD Telepresence application (24 Mbps) would require a broadban d connection with in 
excess of 40Mpbs bandwidth .  It is likely that bandwidth hungr y applications will develop more 
rapidly in the future as  the numbers of potentia l users starts to provid e developers with an 
enhanced economic case  for development.  
High speed broadband impact: Rates of return, job creation and GDP growth
 
An interesting study by Shearman (2011) analyses  the impact of superfast broadband access 
with a major UK train infrastructure investment.  The rail investment has a cost-benefit-ratio 
                                                 
68 https://support.skype.com/en/faq/FA1417/How-much-bandwidth-does-Skype-
need?frompage=search&q=b andwidth+consumption&from SearchFirstPage=false , Accessed 15th July 
69 http://www.facebook.com/videocalling , accessed 15th July 2011 
70  http://www.google.com/support/forum/p/chat/thread?tid=2d4123ffb5499d0f&hl=en , accessed 15h July 2011 
 
EN 73   EN of about £2 for every £1 spent.  In contrast  broadband investment in broadband produces £20 
of benefit for every £1 spent in deployment. 
In a study for the OECD Enck and Reynolds71 suggest that governme nts can achieve a ten 
year return on fully funding a national, point to point, open access FTTH network. 
Many studies have used econometric analysis, usually input/output me thods and regression 
techniques, to estimate the impacts of broadband deployment.  An initial analysis of studies 
has been undertaken to i nvestigate the impact of hi gh speed broadband deployment. 
These studies have examined the effect of expenditure on broadba nd deployment in three 
different areas.  Firstly, direct  employment  created by network construction.  Secondly, 
indirect  employment  generated by businesses selling to those that are directly involved in 
network construction.  Finally , induced  or additional employment  induced by household 
spending based on the income earned from the di rect and indirect effects (induced impacts 
were omitted due to the low number of studies including this element). 
A review of four European studies72 examined the direct and indirect jobs created by 
broadband investment.  Three multipliers (high,  average and low) were derived from the 
studies for each of the two job methods of job creation (direct and indire ct).  The table below 
shows the average values for direct and indirect jobs created by the total estimated expenditure for high speed broadband deployment in  the 27 EU Member States.  In total it is 
estimated that a high speed broadband deployment investment  of around €270 billion will 
create 3.9 million jobs, see Table 1.  
European and US studies also investigated the impact of broadband expenditure on GDP.  
There is a relatively high level of convergen ce among the European studies in terms of 
estimates for GDP growth, with the three st udies providing values ranging between 6.6 per 
cent and 7.3 per cent.  The average level of GDP growth across the th ree studies is 7.03 per 
cent, this would equate to an increase in GDP of €862.47 billion arising from high speed 
broadband investment
73.  It must be noted that more detailed forensic research is required to 
disaggregate the component elements of studies  that examined GDP to examine the precise 
ways in which the cumulative benefits of first generation broadband and second generation 
high speed broadband are handled. 
 
                                                 
71  Enck, J. and T. Reynolds (2009), “Network Developments in Support of Innovation and User Needs”, 
OECD Digital Economy Papers, No. 164, OECD Publishing. http://dx.doi.org/10.1787/5kml8rfvtbf6-en 
72 Katz, R.L. and Suter, S. (2009a). Estimating the economic impact of the broadband stimulus plan. 
Columbia Institute for Tele-Information Working Paper;  Katz, R.L., Zenhäusern, P. and Suter, S. (2008). An 
evaluation of socio-economic impact of a fiber network in Switzerland, mimeo, Polynomics and Telecom 
Advisory Services, LLC;  Katz, R.L., Waterlaus, S., Zenhäusern, P. and Suter, S. (2009b). The Impact of 
Broadband on Jobs and The German Economy. Columbia Institute for Tele-Information Working Paper;  Liebenau, J., Atkinson, R., Kärrberg,P. Castro, D. and Ezell, S. (2009). The UK's Digital Road to recovery. LSE 
Enterprise Ltd. & The Information Technology and Innovation Foundation.
 
73 European GDP (PPS Euros at market prices) €12,268.4 billion in 2010 – Eurostat 
http://epp.eurostat.ec.europa.eu/tgm/refreshTableA ction.do?tab=table&plugin=1&init=1&pcode=tec00
001&language=en 
 
EN 74   EN Table 1 Expenditure and employment estima tes from €270 billion high speed broadband 
investment 
State (%) Direct job 
creation Indirect job 
creation Total jobs 
created 
Austria 1,91% 39,085 37,001 76,086 
Belgium 2,24% 45,954 43,503 89,457 Bulgaria 1,51% 31,014 29,360 60,374 Cyprus 0,12% 2,477 2,345 4,822 Czech Rep. 1,99% 40,796 38,620 79,416 Denmark 1,35% 27,591 26,119 53,710 Estonia 0,28% 5,701 5,397 11,099 Finland 1,33% 27,172 25,723 52,895 France 13,56% 277,839 263,021 540,861 Germany  19,24% 394,357 373,324 767,681 Greece 2,01% 41,157 38,962 80,119 Hungary 2,02% 41,500 39,286 80,786 Ireland 0,88% 18,013 17,052 35,065 Italy 11,90% 243,931 230,921 474,852 
Latvia 0,44% 8,979 8,500 17,480 
Lithuania 0,74% 15,075 14,271 29,347 Luxembourg 0,11% 2,285 2,163 4,448 Malta 0,05% 1,017 962 1,979 Netherlands 3,27% 66,945 63,374 130,319 Poland 6,91% 141,675 134,119 275,795 Portugal 2,00% 40,918 38,736 79,654 Romania 3,83% 78,455 74,270 152,725 Slovakia 1,03% 21,122 19,996 41,118 
 
EN 75   EN Slovenia 0,41% 8,476 8,024 16,500 
Spain 7,26% 148,766 140,832 289,598 Sweden 2,18% 44,611 42,232 86,843 UK 11,45% 234,729 222,210 456,939 
Total 100,00% 2,049,640 1,940,326 3,989,966 
Note that this is the highest level of estima ted investment needs, ranging otherwise from 
181-270 BL€. Also note that it is expected that the partition (a s percentage of total) will 
remain essentially the same for the Member St ates regardless of absolute expenditure 
figures.  
US studies also suggest a relatively high leve l of convergence in terms of GDP growth, 
ranging between 3.26 per cent and 3.8 per cent.  The average leve l of GDP growth across the 
US studies is 3.47 per cent, this would equate to an increase in GDP of €425.71 billion arising 
from high speed broadband investment. 
Thus European studies would suggest a 3.16 fold ‘return’ on the estimated 270 billion 
investment in high speed broadband.  The lower levels of growth in the US studies would 
suggest a more modest 1.56 ‘return’ on the broadband investment. These levels are 
considerably lower than the 20 fold  return predicted by Shearman (2011). 
 
EN 76   EN ANNEX 5 – RESULTS FROM PUBLIC CONSULTATIONS AND EVALUATIONS  
 
7.1. Main results of public consultations 
Numerous consultations with Member States, industry and social stakeholders have been 
carried out for initiatives in the field of br oadband networks, digital service infrastructures 
and their financing aspects. In the particular field of broadband rollout , the consultations can 
be summarized as follows: 
• In March 2011 Vice-President Kroes convened a "roundtable" of CEOs to request them to 
come forward with concrete proposals on how to  address the broadband i nvestment challenge. 
The CEOs, from a broad range of companies and stakeholders with an interest in broadband 
networks (including content pr oviders, equipment makers, inve stors and telecoms operators 
from the world's leading companies such as Nokia, Alcatel Lucent, Google, Ericsson, News 
Corp etc74), submitted a paper in July 2011 summarising their common position75. As far as 
financing of broadband networks  is concerned, a cl ear signal in support of  the CEF was sent: 
"The European Commission should provision public funding (incl. structural funds) to be 
used in risk sharing mechanisms between  the EIB and the EC, for viable telecom 
infrastructure projects. It should also expand the RSFF’s investment capac ity & eligibility to 
broadband investments ". As regards the rising demand for ultrafast internet, the CEOs were 
equally clear: "Internet tra ffic is expected to be multiplied by 4 between 2010 and 2015". 
• The first Digital Agenda Assembly took place in  Brussels on 16th and 17th June 2011. There 
were two workshops dedicated to the rollout of broadband, several more  on digital services. 
Altogether, the Digital Agenda Assembly was attended by more than 1,000 participants. The 
workshops on broadband networks  organised under the umbrella  of the Digital Agenda 
Assembly highlighted that the existing telecom investment model is unsuitable to bring about 
the rollout of affordable, hi gh-quality broadband networks. 
• The public consultation on the Eu rope 2020 project bond initiative , ran from 28 February to 2 
May 2010, complemented by bilateral meetings organised between th e Commission and EIB 
with financial institutions and a workshop or ganised by the Commission with Member States 
on 23 March. The consultation on project bonds  highlighted a positive verdict overall 
concerning the importance of using the EU budget including financial instruments, to leverage 
investment e.g. for broadband networks. Neverthe less the stakeholders mentioned that it may 
be necessary to introduce new ways of th inking about financing investment, which has 
traditionally been financed on a corporate balance sheet.  
• In March ECFIN and the EIB organized a series of bilaterals with key financial institutions. 
The meetings confirmed that the EIB's involve ment in financing of broadband rollout would 
be crucial for investors to secu re the investment grade (BBB+, A -), also a liquidity may be of 
a concern to investors some Member States. The financial sector foresees initial investments 
in PPPs. 
                                                 
74 For a complete list of participants see: 
 http://europa.eu/rapid/pressReleasesActio n.do?reference=MEMO/11/508&type=HTML  
75
 http://europa.eu/rapid/pressReleasesAction. do?reference=MEMO/11/ 508&format=HTML&ag
ed=0&language=EN&guiLanguage=en 
 
EN 77   EN • With aim to support the Commission preparatio ns vis-à-vis meeting DAE broadband targets 
and to test the viability of the financing proposal, INFSO orga nised a workshop with Member 
States on 23 March. The workshop focused in particular on developi ng national broadband 
plans and facilitating broadband investment.  
• In February, BEREC, a body of European regu lators published a comprehensive paper on the 
NGA, including on country per country basis, wh ich provides an up to date picture of the 
NGA roll-out plans in the di fferent Member States.  
• Recent Parliament's draft report on the fu ture Multi-annual Financial Framework (MFF) 
recognises the importance of usin g the budget to leverage invest ment in broadband (i.e. the 
financial crisis has made priv ate investors more reluctant to  finance EU projects and has 
revealed the need to rebuild sufficient confidence  to allow major investment projects to attract 
the support they need; hence the Parliament stre sses that the support of the EU budget will be 
needed to attract and mobilise private funds towa rds projects of EU interest, especially for 
those projects not considered commercially vi able, and therefore welc omes the Europe 2020 
Project Bond Initiative, as a risk-sharing mechanism with the European Investment Bank 
(EIB), that provides capped support from the EU budget to companies issuing bonds to 
finance large-scale projects and infrastructure  schemes) and emphasises the need to for a 
budget supporting Europe 2020 objectiv es (i.e. the Parliament st resses that the Europe 2020 
strategy can only be credible if it is adequately funded; calls for the next MFF to reflect the 
ambitions of the Europe 2020 strategy and de mands the Commission and the Member States 
to produce a credible funding framework ensuri ng, in particular, adequate funding for its 
flagship initiatives; argues, in this respect, that tasks, resour ces, and responsibilities must be 
clearly defined and well orchestrated between the Union and its Member States; calls on the 
Commission to clarify the budgetary dimension of the flagship initiatives as these priority 
action plans cut across all policie s funded through the EU budget). 
• With the support of the EU, the European Ut ilities Telecom Council (E UTC) is managing, 
since January 2009, ICT4SMARTDG an open vi rtual forum where stakeholders in the 
telecommunications services sector meet with st akeholders within the local distributed power 
generation sector, the manufactur ers of local renewable sources and the distribution system 
operators. The objective is to create consen sus on how to implement smart grids from the 
technical, financial and regul atory points of view.   
• Finally, the Commission (DG INFSO) is currently managing an expert group on synergy 
between electricity utilities and telecom operators. The aim of th e group is to bring together 
these two sectors in order to identify synergie s at infrastructure and services level for the 
deployment of Smart Grids.  The main conc lusion of a recent (27 May 2011) workshop was 
that significant and sustained capital investment is required and that opportunities to use 
existing infrastructure exist, and collaborati on in the development and operation of new 
systems can be beneficial for both.   
• Following the adoption of the MFF communicati on, preliminary contacts have also been 
taken with key stakeholders as European Tele coms Association (ECTA), European satellite 
operators' association (ESOA) or Fibre To  The Home (FTTH) Council to explore the 
possibilities for an infrastructure fund fo r broadband networks and digital service 
infrastructures. Their first reactions have all been positive. 
In all these consultations, the importance of us ing the EU budget to leverage investment in 
broadband was acknowledged. In particular: 
 
EN 78   EN • Stakeholders widely hold the view that the r oot causes for a lack of broadband investment is 
twofold: A lack of investment from incumben ts and a lack of demand, due to the so far 
limited number of public and private serv ices requiring ultrafast internet. 
• Echoing the CEOs position paper, however, stak eholders expect the demand to increase, 
mainly due to the current explosion of tr affic from videos over the internet (IPTV76). In 
particular Portugal Telecom noted that IPTV serv ices brought an added value to the network, 
tackling market demand issues and delivering positive effects on its economic performance. 
Some stakeholders suggested actions to stimulate demand, including copy right issues, 
eGovernment and digital literacy. 
• Stakeholders do consider that public authorities should expl ore alternative investments, 
including guarantees for loans. 
• Finally, stakeholders think that  there are huge risks in failing to roll out broadband, such as 
depopulation, delocalisation of bus inesses, political stagnation, entrenched social/economic 
problems, reduced attractiveness for economic  investment and reduced competitiveness. 
As far as digital service infrastructures are concerned consultations have taken place for 
Europeana multilingual services and Safer Internet , while sustainability studies are currently 
ongoing for projects such as Secure idenTity  acrOss boRders linKed (STORK) (eID), Pan-
European Public Procurement On-line (PEPPOL) and digital libraries. All these studies include consultation and interviews with releva nt stakeholders. The vi ewpoints gathered from 
the consultations can be summarised as follows: 
• In 2009 the Commission held an online consul tation on, amongst othe r things, funding of 
Europeana. Respondents underlined that the co st for digitisation paid for by the Member 
States is many times larger than the cost fo r maintaining the central Europeana operation and 
also emphasise the investments Member States are making to set up national aggregators for 
cultural heritage material feeding into Europeana and to preserve the digital resources
77. The 
Comité des Sages  on bringing Europe's cultural heritage online78 conducted a public 
consultation79 as part of their work. 97% of all respondents were of the opinion that 
digitisation of Europe's cultu ral heritage should be funded predominantly, if not solely, 
through public funding. 72% of all respondents were of the opi nion that the Europeana central 
service should be financed through European f unding. While a vast major ity of participants 
(65 %) considered th at cultural institutions should be  responsible for the long-term 
preservation of Europe's cultural heritage, 75%  of the participants advocated EU funding as 
an accelerator for digitisation processes across Europe. In the coming years, Europeana will 
need to further develop its collections and pr ovide additional services that allow creative 
industries to use Europeana content for innovative appl ications and services.  
• Consultation of stakeholders done as part of the mid-term evaluation of the Safer Internet 
programme 2009-2013 concluded that the current focus of the programme is appropriate. 
European funding remains crucial for the projects to exist, while local operations and physical 
presence in the Member States remain of vita l importance. Future chal lenges to be addressed 
include better and wider networki ng between all stakeholders, al so beyond the EU (especially 
                                                 
76 Internet Protocol Television 
77http://ec.europa.eu/information_society/activities/digita l_libraries/doc/consultations/results_online_consult_de
c_09.pdf 
78 http://ec.europa.eu/information_society/activities/di gital_libraries/doc/refgr oup/final_report_cds.pdf 
79 http://ec.europa.eu/information_society/activities/dig ital_libraries/doc/refgroup/annexes/results_consult.pdf 
 
EN 79   EN in Russia and South-Eastern Eur ope); further development of li nks with key industry actors, 
international organizations, c ontent providers and technology producers; closer cooperation 
between EC programmes, especia lly at the operational level. 
• The Vision 2020 paper80 of the Multilingual Europe Technology Alliance (META-NET) 
concludes that language barriers remain a majo r obstacle to the digital single market in the 
EU. The majority of eCommerce consumers ar e reluctant to buy onlin e in another language, 
yet over 80% of eCommerce sites exist in a single language only81. The DAE scoreboard 
201182 states that while 40% of  EU citizens buy online, only 9% buy online across borders. A 
Eurobarometer study83 showed that 90% of Internet users pr efer to have websites in their own 
language, and that less than half  of EU citizens is able to us e English websites. There is a 
growing need for a multilingual di gital service infrastr ucture that allows Internet users to 
access all services (whether  public or private) and content in  their preferred language. Failure 
to do so would lead to an "online exclus ion" of the majority of EU citizens. 
• The Commission has conducted the following studies to assess the different aspects of the PSI 
re-use market, including its economic valuation: Measuri ng European Public Sector. 
Information Resources (MEPSIR), Study on Exclus ive Agreements, Economic Indicators and 
Case Studies on PSI pricing models, Study on pr icing models for PSI, Study on market value 
of PSI, Study on re-use of cultural material. Key findings of the studies are available in Annex 
3. Further data has been gathered thr ough networking, coopera tion, coordination and 
awareness raising activities with  Member States and stakeholde rs. The Epsi platform provides 
wide-ranging PSI data across the EU.84 
The European Parliament in a draft report on the future MFF, recognized the importance of 
using the budget to leverage i nvestment in broadband. This is due mainly to the financial 
crisis which has made private investors more  reluctant to finance EU projects and has 
revealed the need to rebuild sufficient confidence  to allow major investment projects to attract 
the support they need. Indeed, the Parliament st resses that the support of the EU budget will 
be needed to attract and mobilise private funds towards projects of EU interest, especially for 
those projects not considered commercially viable. 
7.2. Other studies and evaluation carried out 
The CEF for broadband networksan d digital service infrastructu resis a new intervention, i.e. 
that there is no comprehensive ex-post evalua tion available. Nevertheless, the conclusions 
from relevant reports and ev aluations are as follows: 
• For the use of the financial instruments, the Mid-Term Evaluation of the Risk-Sharing 
Finance Facility - a facility for Researc h, Development and Innovation (R&D&I) including 
for SME jointly financed by the Commission and the EIB - was completed by a group of 
independent experts in July 2010. It conclude d that the use of Financial Instruments in 
addition to grants as "having dr amatically expanded the financi ng" of research and innovation 
efforts. Although infrastructure investment is a different kind of expenditure than R&D&I, the 
                                                 
80  http://www.meta-net.eu/vision/index_ht ml/reports/meta-net-vision-paper.pdf   
81  http://ec.europa.eu/consumers/strategy/docs/EC_e-commerce_Final_Report_201009_en.pdf 
82  http://ec.europa.eu/information_society/dig ital-agenda/scoreboard/docs/scoreboard.pdf   
83  http://ec.europa.eu/public_opinion/flash/fl_313_en.pdf   
84 http://www.epsiplatform.eu/ 
 
EN 80   EN Commission can draw valuable lessons from th e positive experiences with the Risk-Sharing 
Financial Facility.85 
• The McKinsey Global Institute report on Big data86 shows the potential of big data, of which 
re-use of data generated in the public sector  PSI) is a significant component. According to 
McKinsey, big data could crea te some 250 BEUR in value, including both efficiency gains 
and a reduction in the gap between actual and potential collecti on of tax revenues. 
• A 2011 study of the value of the PSI market in the EU87 estimates the narrowly defined EU27 
direct PSI-related market to be of the order of  EUR 32 billion with a relatively rapid growth in 
the range of 6-11%. Overall economic gains from further opening up PSI by allowing easy 
access can bring gains of ar ound EUR 40 billion for the EU27, and aggregate direct and 
indirect economic impacts across the whole EU27 economy are estima ted to be of the order of 
EUR 140 billion, showing clearly that there are large benefits from easier access to and 
greater use of PSI. Economic valu ations also demonstrate that the direct market associated 
with the use of PSI is less important than relate d spillovers and new uses  in a wide variety of 
goods and services industries, and future innovations associated with easier access to PSI can 
be expected to add further economic and social benefits to the EU27 economy.88 Although 
currently the EU PSI directive requires such data to be made openly available, in reality this 
data is generally inaccessible, hard to find or in a format that is not appropriate for ease of 
reuse. Indeed, the current obstacles to data access can be best addressed by creating a pan-
European portal for public sector data and crea ting a technical and institutional infrastructure 
which allows the data to flow freely across bor ders, and to be found and re-used easily (the 
data.eu initiative is operating in this context). Th ere has recently been a very fast world-wide 
growth of data markets, i.e. companies (typical ly startups) that aggregate data from various 
sources and offer access to them as a service89. Software giants such as Microsoft90 and 
Amazon91 have already connected the opportunities coming from the reuse of data with their 
cloud computing operations.  
• In the context of Framewor k Programme 7 (FP7), the Commission has issued a call for 
proposals, ICT-2011-SME-DCL, to support work in the development of data markets and 
language resources and received an overwhelmi ng response (more than 250 proposals mostly 
involving Small and Medium Enterprises). Thes e responses all support the expectation of 
robust innovation and economic development to follow the development of a data standard 
compliant, technologically advanced and richly populated European da ta infrastructure.  
• The Trans European Networks programme  evaluation concerned the 2001-2006 period.92  The 
programme supported deployment of trans-Europ ean e-services in the public interest and 
covered the following themes: eGovernment, eH ealth, eInclusion, eLearning, and services for 
SMEs. The evaluation indicated th at the programme made consid erable progress in involving 
                                                 
85  In the period from 2013 onwards, an 'extended-RS FF' Financial instrument will be used to support, if 
possible , the Research and Innovation dimension of projects funded through FP8/Horizon 2020 grants. 
86 http://www.mckinsey.com/mgi/publications/big_data/index.asp 
87  Review of recent studies on PSI re-use and rela ted market developments, Graham Vickery, Information 
Economics, Paris, July 2011, forthcoming 
88 Op.cit. Graham Vickery, July 2011 
89  In Europe alone we have http://beta.kasabi.com  ; http://www.duedil.com ;https://www.innomis.com ; 
http://www.floapps.com  ; http://thedatatank.com  ; http://datamarket.com ; http://timetric.com ; 
http://www.amee.com ; http://ckan.net ; http://www.data-publica.com ; http://opencorporates.com 
90  https://datamarket.azure.com/ 
91  http://aws.amazon.com/publicdatasets/ 
92 http://ec.europa.eu/dgs/information_society/evaluation/studies/s2006_02/index_en.htm 
 
EN 81   EN stakeholders from New Member States, SMEs a nd public bodies. It was concluded, that their 
participation strongly favoured the further deploy ment and uptake of project outputs at a pan-
European level and the competitive health of markets for these and related services. 
• The final evaluation93 of the Safer Internet Plus Progr amme (2005-2008) concluded that the 
programme contributed to achievi ng a safer Internet through a range of interventions and 
produced a significant impact and influence. Th e programme has manage d to successfully 
ensure that the themes and actions are rele vant to the dynamic so cial and technological 
environment within which it operates.  
• In a public consultation on a Green  Paper on expanding the use of eProcurement in the EU in 
2010 94, 85% of respondents expressed themselves  in favour of EU ac tion to reduce cross-
border barriers to eProcurement, particular ly when it comes to mutual recognition of 
identification, standardisation of key inter operability requirements, convergence of core 
requirements for e-procurement systems and ICT solutions for proof of eligibility.  
• The report on the final evaluation of the eC ontentplus programme found that Europeana 
contributed to creating better conditions for accessing, using, re -using and exploiting digital 
material.  
• The Interim Evaluation of the Ambi ent-Assisted Living Joint Programme95 concluded that the 
market for ICT for the elderly is very fragment ed. In order to scale up successful solutions, 
with the aim of improving quality of life and saving care costs, what is needed is systems 
integration of services and technology. T echnology deployment clearly relies on the 
availability of appropriate in frastructures, both physically (b roadband availability) and in 
terms of cross-boarder public and private services. 
• The Deloitte study on sustainability of eID fi nalised in June 2011 that proposes a roadmap 
with specific configurations and key actions to be undertaken for three scenarios of eID 
uptake.  
• The 2010 Strategic report  on Cohesion policy96 reveals a slow absorp tion of Cohesion funds 
on ICT measures and particularly for t hose action supporting broadband networks.  
• The Second Interim Evaluation of the FP7 re ported that the strong push for innovation 
implemented in FP7 reflects the evolution in Eu ropean policy thinking and the effects of the 
technology and market trends in the global IC T sector. It applies a mix of technology push 
and solution (market) pull to foster R& D excellence and innovation, focusing on the 
development of emerging technologies and taki ng into due account the areas of European 
technology and industry strengths . Participants appreciated th e more pronounced focus on the 
exploration of new technology paths (compa red to Framework Programme 6 (FP6)) and 
stressed the relevance of such exploratory act ions to be undertaken at European level.  
• EUKidsOnline pan-European survey97 carried out by LSE in 2010 on 25.000 children and 
their parents shows that children in Europe are on average starti ng to use the Internet at the 
                                                 
93 http://ec.europa.eu/information_society/activities/sip/docs/prog_evaluation/report_sip_en_2005_2008.pdf 
94 http://ec.europa.eu/internal_market/publicprocur ement/e-procurement/consultations/index_en.htm  
95 Unlocking Innovation in Ageing Well. Interim Evaluation of the Ambient Assisted Living Joint 
Programme, December 2010. 
96 http://ec.europa.eu/regional_policy/policy/reporting/cs_reports_en.htm 
97 http://www2.lse.ac.uk/media@lse/res earch/EUKidsOnline/EUKidsII%20(2009-
11)/EUKidsOnlineIIReports/D4FullFindings.pdf 
 
 
EN 82   EN age of 7 but only one in three 9-12 year olds feel that there are enough "good things for kids" 
of their age online, The study al so shows that one in eight ch ildren have upsetting experiences 
online and they still lack skills and confiden ce using Internet. One out of three youngsters 
now connects via their mobile phone s or other portable devices. 
In conclusion, the evaluations and consultations  show that interventions in the area of 
broadband networks and digital service infrastr uctures have been and will beneficial to 
Europe as a whole. The interventions have be en enhanced by the lessons learned from the 
previous programmes and have the potential to  produce stronger impacts and considerable 
European added value. Neverthe less, as the evaluations and certain comments show, there 
have been some difficulties in harnessing the whole potential, for example in absorption of the structural funds.