Proposal for a Regulation of the European Parliament and of the Council amending Council Regulation (EC) No 2236/95/EC laying down general rules for the granting of Community financial aid in the field of trans-European networks
Date: 2003-04-29
Institutions: European Commission
Subjects: EU financing, EU programme, electronic government, telecommunications, trans-European network, transmission network

EN

COMMISSION OF THE EUROPEAN COMMUNITIES

Brussels, 29.4.2003
COM(2003) 220 final

2003/0086 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Council Regulation (EC) No 2236/95/EC laying down general rules for the
granting of Community financial aid in the field of trans-European networks

(presented by the Commission)

eeEEuurrooppee
22000055

 
EXPLANATORY MEMORANDUM

Increase of the maximum Community contribution for eTEN telecommunications
service deployment projects

1.

ETEN AT THE HEART OF THE EEUROPE ACTION PLAN 2005

eEurope is an essential element of the Lisbon strategy to make the European Union
the most competitive and dynamic knowledge based economy in the world by 2010.
The eEurope Action Plan 20051 aims to stimulate services, applications and content,
covering  e-government,  e-health,  e-learning  and  e-business.  It  also  addresses  the
underlying  broadband  infrastructure  and  security  matters.  It  is  in  promoting  the
deployment of the services explicitly covered by the eEurope Action Plan  2005
that a re-oriented eTEN program will be principally active.

The eEurope Action Plan 2005 was endorsed by the European Council in Seville in
June 2002 and set the common framework for the actions supported by the relevant
programmes;  specifically  eTEN2, 
the
Commission  to  prepare  proposals  to  amend  the  acts  governing  these
programmes  to  re-orientate  them  to  the  objectives  and  actions  of  the  eEurope
Action Plan 2005. 

IDA3  and  eContent. 

It  committed 

The telecom council of December 2002 welcomed the intention of the Commission
to ensure that allocated Community funds contribute to achieving the objectives
of the eEurope Action Plan.

eTEN has been re-oriented to become a key implementing tool for eEurope 2005: its
main  focus  will  therefore  be  the  practical  realisation  of  eEurope  general  interest
services objectives. This global reorientation towards eEurope 2005 and the specific
need to ensure that funds contribute to meeting objectives find practical expression in
this proposal by the Commission to raise the funding ceiling for projects  from
10% to 30%.

2.

BACKGROUND

eTEN is one of the Trans-European Networks, enshrined in the EC Treaty4 with an
objective  to  enable  the  citizens  of  the  Union,  economic  operators  and  regional  and
local  communities  to  derive  the  full  benefit  of  the  internal  market.  All  TEN
programmes  are  subject  to  full  respect  of  competition  rules  in  order  to  avoid  all
market distortions susceptible of being caused by the contributions.

1

2

3

4

COM(2002) 263
eTEN was formerly called TEN Telecom.
Interchange of Data between Administrations.
Art. 154.

2

                                                
In  order  to  encourage  private  investments  in  telecommunications  networks,
uncertainty for investors must be reduced by measures following two approaches:

(cid:1) 

(cid:1) 

on the supply side, by creating an investment friendly legal framework,

and by taking actions that stimulate demand.

eTEN is contributing to the second approach by concentrating on the deployment of
services  that  make  use  of  an  underlying  infrastructure,  with  a  focus  on  using
broadband and secure networks:

(cid:1)  As  early  as  1999,  the  TEN  Telecom  programme  had  begun  a  process  of  re-
infrastructure  side  and
less  emphasis  on 

orientation  by  placing 
concentrating more on telecommunications based services. 

the 

(cid:1) 

The revised  Annex  1  to  the  eTEN  Programme  Guidelines5  (adopted  in  2002)
completed  the  process  and  strongly  aligns  eTEN  with  the  goals  of  eEurope
2005, by focussing on services of public interest. It establishes eTEN as one of
the main instruments in realising the ambitions of eEurope 2005 which might
be  summarised as  accelerating  the  roll-out  of  applications  and  services  for  e-
government, e-health, e-inclusion and e-learning.

3.

FUNDING REGIME: CURRENT SHORTCOMINGS AND SOLUTION ENVISAGED

Council  Regulation  (EC)  2236/95  lays  down  general  rules  for  the  granting  of
Community  financial  aid  in  the  field  of  trans-European  networks.  The  regulation
limits  the  total  amount  of  Community  aid  to  a  maximum  of  10%  of  the  total
investment cost6.

Unfortunately, experience shows that this funding percentage is clearly insufficient
to stimulate the deployment of services:

(cid:1) 

(cid:1) 

In spite of the efforts made to date the current eTEN project portfolio is very
unbalanced  in  the  proportion  of  market  validation  (or  study)  projects  versus
the  number  of  market  deployment  projects  (approx.  95%  vs.  5%).  It  is  the
Commission’s  ambition  by  the  end  of  2004  if  not  to  completely  reverse  this
trend, to at least rebalance to approx. 50% validation vs. 50% implementation.

eTEN  has  supported  or  is  currently  supporting  validation  study  projects  in
areas crucial to the success of eEurope 2005: 

(cid:1) 

In  the  area  of  eGovernment,  projects  include  investigation  of  Europe-
wide information services for regional economic indicators, best practice
in  new  electronic  services  offered  by  municipalities  to  citizens  and
SMEs, and digital signature deployment in municipal services. 

5

6

Decision No 1376/2002/EC of the European Parliament and the Council of 12 July 2002, OJ L 200,
30.7.2002, p. 1.
It permits studies related to projects to be funded at 50% of the total cost of the study.

3

                                                
(cid:1) 

(cid:1) 

(cid:1) 

In  eHealth,  examples  include  tele-radiology  networks,  trans-European
use  of  health  smartcards,  and  a  Europe-wide  service  for  transplant
organisations. 

In  eInclusion  services  for  home  care  and  a  comprehensive  portal  to
provide  information  and  transactions  in  the  context  of  travel  and  sports
events for people with special needs are being investigated. 

In the  field of eLearning and  access  to  culture,  the  European  Computer
Driving License is supported, and several services to make access to the
arts in rural areas easier by electronic services are being investigated.

(cid:1) 

The  support  by  eTEN  has  made  the  study  and  validation  of  these  services
possible.  Unfortunately,  however,  due  to  the  low  level  of  financial  support,
deployment  has  so  far  taken  place  only  to  a  very  limited  extent.  This  is
essentially  because  projects  for  the  deployment  of  trans-European  services  of
public  interest  deployment  are  confronted  with  important  financial  obstacles.
Principal among these we include: 

(cid:1) 

(cid:1) 

(cid:1) 

(cid:1) 

(cid:1) 

The  need  to  adapt  to  environments  of  multiple  languages,  multiple
cultures, multiple legal systems and multiple administrations,

The  limitations  of  the  budgets  of  public  entities  on  local,  regional  and
national level,

The  difficulties  to  obtain  private  capital  for  investments  in  the
telecommunications services, especially in smaller markets,

The complexity of the innovative applications and services,

The  additional  overhead  necessary  for  the  management  of  a  trans-
European consortium 

(cid:1)  A study7 carried out in 2000 in the course of the intermediate evaluation of the
programme  found  that  for  at  least  40%  of  the  projects  a  potential  for
deployment exists. However, the current maximum level of support is too low
to work as a true incentive to continue to this phase.

It  is  therefore  proposed  by  the  Commission  to  raise  the  funding  ceiling  for  eTEN
projects from 10% to 30%. 

This  increase  shall  only  apply  to  projects  for  the  deployment  of  services  and
applications. It is expected that this amendment will change the focus of the projects
to  spending  two  thirds  of  their  budget  in  the  deployment  phase.  This  will  lead  to
more tangible impact generated by the programme budget, and will be fully executed
within  the  already  agreed  budget.  No  overall  increase  in  funding  is  foreseen  for
the  program:  there  shall  obviously  therefore  be  fewer  but  more  focused  and
higher impact projects in the future.

7

Intermediate Evaluation of the TEN-Telecom Action, Final Report, Nov. 2001.

4

                                                
In  short  a  program  with  higher  overall  visibility  and  greater,  measurable  impact
should result from the proposed change.

4.

ADDITIONAL CONSIDERATIONS

4.1.

Experience and consistency

Experience in the funding of comparable service deployment pilots – for example in
the  5th  Framework  Programme’s  IST  “Deployment”  or  “Take-up”  projects
shows  that  a  funding  ceiling  in  the  30%-40%  is  necessary  to  stimulate  the
participation  of  genuine  sector  actors  –  the  key  to  long  term  success.  The  IST
Thematic Priority of  the  6th  FP  is  focussing  more  on  long-term  research  areas,  and
demonstration and exploitation activities exist in the 6th FP only as integral parts of
larger  integrated  projects.  The  re-oriented  eTEN  programme  becomes  a  natural
complement to these actions, by supporting the Europeanisation of smaller, localised
or very focused telecommunications based services of public interest..

This approach is consistent with the recent evolution of Commission program policy
in  general  (witness  “Integrated  Projects”  and  “Strategic  Objectives”  in  the  IST
Thematic Priority of the 6th Framework Program) which focuses essentially on more
effective  use  of  Community  funds.  It  also  respects  the  spirit  of  the  new  financial
regulation where ex post program “impact” evaluation has become systematic. 

Hand in hand with focus and impact, the change proposed will also promote critical
mass not only in consortium composition (where it is essential to attract deployment
actors) but also in the size of projects which must be such  so  as  to offer  a  realistic
prospect of sustainable market viability after the expiry of the funding period.

4.2.

eTEN and Enlargement

The integration of the accession countries into the European information society will
be facilitated by the replication and proliferation of good practices engendered by the
accelerated  deployment  and  localisation  of  real,  market-validated  services  and
applications. Correctly focused Community aid will not only encourage entities from
the  new  member  states  to  start  such  projects,  but  it  will  also  stimulate  from  the
current  member  states  to  share  their  experience  and  good  practices  with  the  new
entrants.  Through  this  process  take-up  of  advanced  public  services  will  be
accelerated and the modernisation of administrative structures stimulated.

eTEN  will  play  an  important  role  in  supporting  this  roll-out  of  services  and
applications. The programme has to ensure that successful validation of services
and applications is followed through by their deployment.

4.3.

eTEN and Peripheral Regions

the
The  European  Regional  Development  Fund 
establishment  and  development  of  trans-European  networks  …  taking  into  account
the  need  to  link  to  the  central  regions  of  the  Community  regions  suffering  from  a

(ERDF)  contributes  “to 

5

structural handicap because of their insular, landlocked or peripheral status8". A re-
focused eTEN programme will particularly focus on the deployment of the services
on  telecommunications  infrastructures  in  these  regions  which  “helps  to  increase
the  economic  potential,  development,  structural  adjustment  and  creation  or
maintenance of sustainable jobs in those regions (Objective 1)” 

4.4.

Conclusions

Given  the  key  role  that  eTEN  must  play  if  eEurope  2005  objectives  are  to  be
achieved,  it  is  imperative  that  the  lead  that  has  been  given  in  other  policy  areas
towards more focused and results oriented programs be followed in re-orienting the
eTEN  program.  Closely  intertwined  with  focus  and  results  is  the  need  to  achieve
“critical  mass”  both  in  terms  of  attracting  the  proper  profile  of  project  participants
(and particular the “service deployers”) but also the correct size of project to ensure
genuine market impact potential.

The re-orientation that has taken place in terms of actual program content must now
be  complimented  with  an  impact  oriented  overhaul  of  the  financing  structure.  This
overhaul will result in:

(cid:1) 

(cid:1) 

no change to the overall eTEN financial envelope; 

The  financing  of  fewer,  more  highly  visible,  better  focused,  higher  impact
projects  that  are  selected  for  their  real  market  potential  and  supported  at  the
level of 30% for service deployment activities. 

This financing structure overhaul is justified by:

(cid:1) 

(cid:1) 

(cid:1) 

(cid:1) 

(cid:1) 

The positioning of eTEN at the heart of eEurope service deployment activities.
Experience both from within eTEN and from comparable programs shows that
telecommunications services can not be successfully stimulated to deployment
without  financial  support  in  the  region  of  30%-40%.  This  difficulty  is  only
exacerbated where the services must be trans-European.

Analysis of on-going eTEN projects shows a large, latent exploitation potential
– not realisable at current financing rates.

Successful  stimulation  of  service  deployment  projects  will  be  critically
dependent on  focus and critical mass  considerations  –  both  favourised  by  the
suggested financing change. 

As  the  IST  Thematic  Priority  of  the  6th  FP  concentrates  more  on  long-term
research  areas,  the  re-oriented  eTEN  is  a  natural  complement  supporting
activities for the Europeanisation of smaller, localised or very focused services.

The  benefits  that  will  accrue  to  both  the  accession  process  and  regional
development  from  successful  eTEN  funded  telecommunications  services
deployment.

8

Regulation  (EC)  No  1783/1999  of  the  European  Parliament  and  the  Council  of  12  July  1999  on  the
European Regional Development Fund , Article 2.

6

                                                
2003/0086 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Council Regulation (EC) No 2236/95/EC laying down general rules for the
granting of Community financial aid in the field of trans-European networks

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community, and in particular the first
paragraph of Article 156 thereof,

Having regard to the proposal from the Commission1,

Having regard to the opinion of the European Economic and Social Committee2,

Having regard to the opinion of the Committee of the Regions3,

Acting in accordance with the procedure laid down in Article 251 of the Treaty,

Whereas:

(1)

(2)

(3)

Regulation  (EC)  No  2236/95/EC4  provides  inter  alia  for  the  co-financing  of  studies
related to projects of common interest for an amount which may normally not exceed
50%  of  the  total  cost,  while  the  maximum  contribution  to  projects  in  the  area  of
telecommunications may not exceed 10% of the total investment cost.

Decision 1336/97/EC on a series of guidelines for trans-European telecommunications
networks5  identifies  projects  of  common  interest.  Experience  in  implementing  that
Decision has shown that fewer than one project in twenty involves the deployment of a
service, the remainder being deployment-related studies. As a result the direct impact
of aid granted for trans-European telecommunications networks is limited.

trans-European  service  based  on  electronic  data
The  cost  of  deploying  a 
communications networks is significantly greater than the cost of a comparable service
in  a  single  Member  State  because  of  barriers  of  language,  culture,  legislation  and
administration.

(4)

The cost of a preparatory study for a service in the sector of telecommunications has
been  found  to  be  a  high  proportion  of  the  total  investment  required  to  deploy  the

1

2

3

4

5

OJ C , , p. .
OJ C , , p. .
OJ C , , p. .
OJ L 228 of 23.9.1995, p. 1. Regulation as last amended by Regulation No 1655/99/EC of the European
Parliament and of the Council of 19 July 1999 (OJ L 197, 29.7.1999, p. 1).
OJ L 183 of 11.7.1997, p. 12. Decision modified by Decision No 1376/2002 of the European Parliament
and the Council of 12 July 2002 (OJ L 200, 30.7.2002, p. 1).

7

                                                
service,  and  in  consequence  the  maximum  contribution  allowable  under  Regulation
(EC)  No  2236/95  is  applied  to  such  studies,  precluding  the  grant  of  aid  to  the
deployment  of  services.  In  consequence,  grant  of  aid  under  this  regulation  has  had
little direct effect in stimulating the deployment of services.

(5)

Community aid should be granted in preference to projects which aim to stimulate the
deployment of services and thus make the greatest contribution to the development of
the information society. It is necessary therefore to increase the maximum contribution
in proportion  to the actual costs arising from  the  trans-European  nature  of  a  service.
An  increase  in  the  Community  contribution  should  however  be  applied  only  to
services of public interest which must overcome the barriers of language, culture and
legislation and administration.

HAVE ADOPTED THIS REGULATION:

Article 1

Regulation (EC) No 2236/95 is hereby amended as follows: 

In Article 5(3) the following subparagraph is added:

"In  the  case  of  projects  of  common  interest  identified  in  Annex  I  to  Decision
1336/97/EC6, the total amount of Community aid granted under this regulation may
reach 30% of the total investment cost.”

This Regulation shall enter into force on the twentieth day following that of its publication in
the Official Journal of the European Union.

Article 2

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels, 

For the European Parliament
The President

For the Council
The President

6

OJ L 183, 11.7.1997, p. 12. Decision modified by Decision No 1376/2002 of the European Parliament
and the Council of 12 July 2002 (OJ L 200 of 30.7.2002, p. 1).

8

                                                
FINANCIAL STATEMENT

1.

TITLE OF OPERATION

Trans-European Telecommunications Networks (eTEN).

Revision  of  the  TENs  financial  regulation  to  increase  the  maximum  level  of
Community  aid  to  projects  in  the  telecommunications  sector  to  30%  of  the  total
investment  cost  (Decision  No  1336/97/EC,  as  amended  by  Decision  No
1376/2002/EC).

2.

BUDGET HEADING(S) INVOLVED

B5-720

3.

LEGAL BASIS

Council Regulation (EC) No 2236/95 as amended by Regulation (EC) No 1655/1999

4.

4.1

DESCRIPTION OF OPERATION

General objective

The general objective of this action is to grant Community contribution to projects of
common interest in the field of trans-European telecommunications networks.

The purpose of the proposed amendment to the regulation is  to  raise the maximum
level of aid which may be granted to a project from the present limit of 10% to 30%
of the total investment in the project.

4.2

Period covered and arrangements for renewal

Article 18 of the Regulation (Budgetary resources) establishes a financial framework
for the period 2000 to 2006. Article 19 of the Regulation (Revision clause) requires
the  Commission  to  submit  proposals  for  the  continuation  or  amendment  of  the
regulation before the end of 2006.

5.

CLASSIFICATION OF EXPENDITURE OR REVENUE

DNO/CD

6.

TYPE OF EXPENDITURE OR REVENUE

– 

Co-financing  of  studies  related  to  projects,  the  Community  contribution  not
exceeding 50% of the total cost of the study.

9

– 

– 

– 

– 

Subsidy  for  joint  financing  with  other  sources  in  the  public  and/or  private
sector of projects, where the Community contribution may be up to 30% of the
total investment cost under the terms of this proposal.

Interest subsidy.

Contribution towards fees for guarantees for loans.

There is no provision for reimbursement of the Community contribution in the
case of successful projects.

7.

7.1

FINANCIAL IMPACT

Method  of  calculating  total  cost  of  operation  (relation  between  individual  and
total costs)

The  costs  will  be  related  directly  to  the  feasibility  or  deployment  phase  of  the
projects, that are part of the action. These projects are in line with the Decision No
1336/97/EC  of  the  European  Parliament  and  of  the  Council  on  the  guidelines  for
trans-European  telecommunications  networks  (OJ  L  183,  11.7.1997,  p.12),  as
amended  by  Decision  No  1376/2002/EC,  and  will  focus  in  particular  on  the
development of new telecommunications services and applications.

7.2

Itemised breakdown of cost

This action does not result in any additional costs beyond those already foreseen in
the  2000-2006  financial  perspective.  A  breakdown  of  commitments  and  related
disbursements is included in 7.4 below pour memoire.

7.3

Operational  expenditure  for  studies,  experts  etc.  included  in  Part  B  of  the
budget

No additional expenditure is foreseen as a result of this action.

10

7.4

Schedule of commitment and payment appropriations

2003

2004

2005

2006

2007

EUR million 

Total

2008
and
subs.
yrs

Commitment appropriations

 39

 39

 40

 40

Payment appropriations

2003
2004
2005
2006
2007
2008 and subs. yrs

11,5

16
11,5

11,5

16
11,5

Total

39

39

12

16
12

40

12

28

40

8.

FRAUD PREVENTION MEASURES

 158

11,5
11,5
28
39,5
27,5
40

158

The use of appropriations will be subject to financial control measures and efficient
monitoring and evaluation:

– 

– 

– 

– 

At the project level, the Commission technical service in charge  monitors  the
technical progress of the project. This is done with the information provided on
a regular basis by the Monitoring Report issued by the project which contains
the  achievements  to  date,  the  issues  addressed  and  the  course  of  action
undertaken by the project to perform according to the contract;

In  particular,  annual  reviews  will  take  place  during  the  execution  of  these
actions to ensure that the results achieved are in accordance with the objectives
identified  in  the  Technical  Annex  of  the  contracts.  The  annual  review  of  the
projects  may  be  performed  with  the  assistance  of  independent  technical
experts.  These  experts  will  review  the  results  of  each  project  and  will
recommend the required measures should the technical achievement not be in
line with the contracts commitments;

The Commission services of DG INFSO responsible for the action will ensure
that  proper  monitoring  and  control  is  implemented.  Control  will  be  exercised
by  the  Commission  services  responsible  for  the  implementation  of  these
preliminary actions, assisted by independent experts when necessary;

In  addition,  internal  audits  or  external  audits  may  be  carried  out  by  the
Commission  services  or  the  Court  of  Auditors  in  accordance  with  the  Treaty
establishing the European Community.

11

 
 
 
 
 
 
 
 
9.

9.1

ELEMENTS OF COST-EFFECTIVENESS ANALYSIS

Specific and quantified objectives; target population

The action has the aim of encouraging projects which roll out services (deployment
projects),  in  place  of  the  feasibility  study  projects  which  have  dominated  the
programme  in  its  previous  form  as  TEN-Telecom.  The  target  population  is  bodies
which  provide  telecommunications  based  services  in  the  public  interest  in  the
Member States.

The short term aim is to double the proportion of deployment projects with a longer
term objective of balance between feasibility studies and deployment projects.

9.2

Grounds for the operation

– 

– 

– 

– 

trans-European 

telecommunications  networks, 

The 
already
established  in  some  Member  States,  still  differ  considerably  in  their  actual
implementation,  thus  fragmenting  the  whole  possibility  of  exploring  the
benefits of the internal market for the European industries and citizens. Major
lacks are in the construction of a full interoperable end-to-end environment for
telematic  services  and  on  investment  conditions  for  the  development  of  new
telematic applications.

although 

In the adopted guidelines for the trans-European telecommunications networks,
the  purpose  is  to  stimulate  investment  in  the  launch  of  new  multimedia
applications and generic services in the areas of public interest and to support
the strategic development of global networks which will deliver such services.
eTEN aims at sustaining the efforts of the private and public sectors to broaden
the  markets,  reduce  the  gap  between  information  haves  and  have-nots,  and
create the conditions of better access to and use of information.

In this context at the European level, the actions herein contained are intended
to promote the access, usage, interconnection and interoperability of the trans-
European  telecommunications  networks  and  services  for  the  accession
countries  of  eastern  and  central  Europe.  They  are  intended  to  provide  the
opportunity  for  relevant  market  sectors  (users,  network  operators,  telecom
manufacturers,  service  providers,  etc.)  to  work  together  with  counterparts  in
the Member States on specific and economically viable projects with common
objectives.

The reason for increasing the maximum level of contribution is that the current
limit makes it impossible to support services where a study has shown that they
are viable and in the public interest, but where it is not possible to launch them
due to short term financial obstacles.

9.3

Monitoring and evaluation of the operation

The  implementation  of  the  operation  is  regularly  monitored  by  the  Commission
services in charge and by the Committee established according to Decision 1336/97,
Art. 8.

Evaluation of the operation will be executed according to Decision 1336/97, Art. 14. 

12

Before  31  January  2005, 
the
implementation  of  this  Decision  during  the  period  July  2000  to  June  2004,  to  the
European  Parliament,  the  Council,  the  Economic  and  Social  Committee  and  the
Committee of the Regions.

the  Commission  shall  submit  a  report  on 

The  report  shall  contain  an  evaluation  of  the  results  achieved  with  Community
support  in  the  various  project  fields  in  relation  to  the  overall  objectives  and  shall
contain  an  assessment  of  the  social  and  societal  impact  of  the  introduction  of  the
applications after they are deployed.

10.

ADMINISTRATIVE EXPENDITURE (SECTION III, PART A OF THE BUDGET)

10.1

Effect on the number of posts

There  is  no  impact  on  the  number  of  posts  required  to  implement  the  eTEN
programme.

10.2

Overall financial impact of additional human resources

No additional human resources are required.

10.3

Increase in other administrative expenditure as a result of the operation

None.

13