Opinion of the European Economic and Social Committee on the Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions — Bridging the Broadband Gap COM(2006) 129 final
Date: 2006-09-13
Institutions: European Economic and Social Committee
Subjects: Internet, economic growth, employment policy, information society, information technology, less-favoured region, new technology, telecommunications, transmission network

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The

trans-European transport network has been
4.5.3
declared a key element in the relaunched Lisbon strategy for
competitiveness and employment in Europe. Only two out of
the 30 priority projects are, however, inland waterway priority
axes, nr. 18. Rhine/Meuse-Main-Danube inland waterway axis
and nr. 30. Inland waterway Seine-Scheldt.

the EU budget

Following the adoption of

4.5.4
the
period 2007-2013, the allocations proposed by the European
Commission for the TEN-Ts have been considerably reduced.
With a view to avoiding jeopardising the planned co-financing
of designated inland waterway projects, the EESC calls upon the
EU Member States concerned to make a start, without delay, on
carrying out the activities defined in the TEN-Ts.

for

The EESC also calls upon the European Commission to
4.5.5
follow the examples set
railway projects by
appointing a coordinator for the two inland waterway projects;
the person appointed should be able to play both a coordinating
and stimulating role.

in respect of

Brussels, 14 September 2006.

The EESC awaits

the process
4.5.6
announced by the Commission in connection with infrastruc-
ture charging.

the publication of

4.6 Modernisation of the organisational structure

4.6.1
One of the main outcomes of recent investigations in
the sector, set out in the report of the European Framework for
Inland Navigation (EFIN) entitled ‘A new institutional framework
for [the] European Inland Navigation’ and in the Prospects for
Inland Navigation in an Enlarged Europe (PINE) report commis-
sioned by the European Commission, proved that the impact of
inland waterway transport at political level is comparably low
and its strategic policy management is insufficient. Therefore the
EESC recently took the initiative to draw up an own initiative
opinion on The Institutional framework for inland waterway
transport in Europe. For the sake of brevity, reference is made
here to this opinion.

The President

of the European Economic and Social Committee

Anne-Marie SIGMUND

Opinion of the European Economic and Social Committee on the Communication from the
the European Economic and Social
Commission to the Council,

the European Parliament,

Committee and the Committee of the Regions — Bridging the Broadband Gap

COM(2006) 129 final

(2006/C 318/36)

On 5 April 2006, the Commission decided to consult the European Economic and Social Committee, under
Article 262 of the Treaty establishing the European Community, on the abovementioned proposal.

The Section for Transport, Energy, Infrastructure and the Information Society, which was responsible for
preparing the Committee's work on the subject, adopted its opinion on 4 September 2006. The rapporteur
was Mr McDonogh.

At its 429th plenary session, held on 13 and 14 September 2006 (meeting of 13 September 2006), the
European Economic and Social Committee adopted the following opinion by 193 votes to one, with four
abstentions.

1. Introduction

ambition, and it doesn't include enough concrete recommenda-
tions to demonstrate a serious commitment
to closing the
broadband gap.

The Committee is pleased that the critical problem of a
1.1
broadening in the digital divide between the developed and less-
developed areas of the European Union is being addressed in a
coordinated approach by the Commissioners for Information
Society and Media, Competition, Regional Policy and Agri-
culture and Rural Development.

However,

the Commission's Communication — COM
1.2
(2006) 129 ‘Bridging the Broadband Gap’ — lacks sufficient

(1) Digital Divide Forum Report: Broadband Access and Public Support in

Under-served areas, Brussels 15 July 2005.

The Digital Divide Forum (DDF) report (1) presented an
1.3
analysis of the territorial broadband digital divide in Europe

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identified possible EU initiatives to bridge the gap.
and it
Considering the seriousness of the problem identified by the
DDF, and taking account of the retarding effect on economic
and social development caused by the broadband gap,
the
Commission should be taking more aggressive steps to deal
with the problem of the growing digital divide.

National broadband strategies of member states should
2.5
be reviewed for specific actions to close the broadband gap by
2010. The strategies should be benchmarked against best prac-
tice.

1.4
The Committee welcomes the Riga ministerial declaration
on e-Inclusion of 11 June 2006 (2), which commits member
states to significantly reduce regional disparities in Internet
access across the EU by increasing broadband coverage in
under-served locations, and to halve the gap in Internet usage
by 2010 for groups at risk of exclusion. The Commission now
needs to give force to this declaration with policy initiatives and
recommendations that will quickly close the digital divide.

2.6
The Commission should put-in-place an effective broad-
band planning and management process throughout the EU to
future-proof the delivery of this essential infrastructure at local
level. The process would integrate all National Broadband Strate-
gies and local plans into a European-wide operational plan for
the delivery of broadband across the Union. This process would
pay particular attention to the delivery of broadband to rural
and disadvantaged areas to close the digital divide.

In this opinion, the Committee wants to emphasise areas of
specific concern and to recommend further actions.

2. Recommendations

The Committee believes that because of

2.1
the growing
importance of broadband service to economic and social devel-
opment, broadband connectivity should be included within the
scope of the universal service definition (3) as the service of
significant public interest.

2.2
The Commission should take whatever measures possible
to ensure that Member States rigorously enforce the regulatory
framework for electronic communications (4).

2.3
The Commission should consider special measures and
sanctions to accelerate the process of effective Local Loop
Unbundling LLU in Member States. Delays and technical
obstructions to the implementation of effective LLU is a major
obstacle to the introduction of much needed competition for
service provision, especially broadband connectivity.

2.4 Member States should be encouraged by the Commission
to assert their national interests to retain or recover influence
over core telecommunications
infrastructure — trunk-level
transmission and switching networks. Government influence is
necessary to ensure the development and use of this strategic
asset
like
for the achievement of national policy objectives:
closing the broadband gap.

(2) Ministerial Declaration, Riga 11 June 2006, IP/06/769.
(3) COM(2005) 203, and EP and Council Directive 2002/22/EC on
universal service and user's rights relating to electronic communica-
tions networks and services.

(4) Directive 2002/21/EC on a common regulatory framework; Directive
2002/19/EC on access and interconnection; and Directive 2002/77/EC
on competition in the markets for electronic communications services.

The Commission should consider how member states
2.7
could provide
to telecommunications
incentives
companies (5) to make infrastructure investments in underdeve-
loped regions; namely by means of strong fiscal incentives for
public-private-partnerships (PPP).

financial

2.8
The Commission should explore the mechanisms by
which municipal and local government authorities can play a
more proactive role in the provision of broadband services and
the stimulation of demand for broadband in their regions. These
authorities should be fully included in the development and
execution of the National Broadband Strategies, as mentioned in
2.6 above. In addition, other mechanisms should be explored —
for example, perhaps these authorities might become commer-
cial participants in PPP initiatives; or perhaps member states
might impose broadband cabling or service provision regula-
tions for all new housing developments.

2.9
To facilitate the exchange of technical and commercial
the Commission
knowledge between SMEs across the EU,
should launch a web site about world-wide developments in
broadband technology and services. It is believed that a knowl-
edge network like this would stimulate more entrepreneurial
activity around the provision of broadband connectivity and
services.

To bring clarity to the reality of broadband availability
2.10
in Europe,
the Commission should stipulate the minimum
acceptable effective download speed for a connection to be
called broadband. This would facilitate proper benchmarking of
the territorial divide in broadband access across the Union.

(5) ‘Telecommunications companies’ includes every company that offers
two-way telecommunications services, including fixed-line and mobile
phone companies, and cable television companies providing such
services.

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Structural Funds and Rural Development Funds should
2.11
be used for targeted public information campaigns to stimulate
market demand for broadband, especially in rural areas and
among specific consumer groups where take-up of the tech-
nology is a problem. This will have the dual effect of educating
the technology, and it will also
potential consumers about
increase the market pressure on suppliers to deliver the broad-
band services needed.

Broadband enables new ICT applications and enhances
3.2
the capacity of existing ones. It stimulates economic growth
through the creation of new services and the opening up of
new investment and jobs opportunities. But broadband also
enhances the productivity of many existing processes, leading to
better wages and better returns on investment. Governments at
all levels have recognised the impact that broadband may have
on everyday lives and are committed to ensuring that its bene-
fits are made available to all (8).

2.12
The Commission should emphasise support for R&D
efforts into finding broadband technologies for effective solu-
tions to the problem of providing high speed broadband
connectivity in areas not served by adequate telecommunica-
tions infrastructure.

2.13
Policy makers should issue consumer protection guide-
lines on broadband services which simplify the terminology and
explain the service offerings and benefits in clear language. This
would make it easier for consumers to make good buying deci-
sions.

2.14
band in their school to include them in the information age.

Every secondary-level school child should have broad-

2.15
The Commission should support initiatives across the
EU to introduce school children, older citizens, and socially
disadvantaged citizens, to the use of broadband technology (e.g.
Web-based learning, video conferencing, on-line public services,
etc.).

The Commission should ensure that all future statistics
2.16
relating to the provision of broadband services and the measure-
ment of the digital divide and the broadband-gap, should be
collected and prepared in accordance with the recent Commis-
sion Regulation concerning Community statistics on the infor-
mation society (6).

3. Background

3.1
On 20 March, 2006 the Commission adopted its
communication ‘Bridging the Broadband Gap’. This Communica-
tion focuses on the territorial divide regarding broadband access.
It aims to make governments and institutions at all levels aware
of the importance of this divide and of the concerns about the
lack of adequate broadband services in the less developed areas
of the Union. The Communication implements one of the prio-
rities of the i2010 initiative — a European Initiative for growth
and employment (7).

(6) Commission Regulation (EC) No 1031/2006 of 4 July 2006 imple-
menting Regulation (EC) No 808/2004 of the European Parliament
and of the Council concerning Community statistics on the informa-
tion society.

(7) COM(2005) 229 ‘i2010 — A European Information Society for

Growth and Employment’.

Securing long term sustainability of remote and rural
3.3
areas requires a strategic approach to the development of the
information society. The availability of broadband services is
one critical element in assisting local communities in attracting
healthcare,
businesses,
It provides a
improving education and government services.
critical link to information.

tele-work,

providing

enabling

in

3.4
Demand for residential broadband services in the EU has
been growing fast. The number of broadband access lines has
almost doubled in the past two years. In October 2005 there
were about 53 million connections in the EU25, corresponding
to a penetration rate of 11.5 % in terms of population and to
roughly 20 % of households. These developments have been
mainly market driven and enhanced by increases in competi-
tion.

3.5
Despite the general increase in broadband connectivity,
access in more remote and rural regions is limited because of
high costs due to low density of population and remoteness.

3.6
The Communications stresses that the European Union
must step up its efforts to encourage take-up of broadband
services and stimulate further deployment, in particular in the
less developed areas of the Union. The scope for public inter-
vention in under-served areas was emphasised in eEurope
2005 (9), which highlighted the role that Structural Funds can
play in bringing broadband to disadvantaged regions.

3.7
The Communication emphasises the critical role of local/
regional authorities in the development of broadband in their
areas. They are best placed to plan a broadband project that
takes into account local needs and technological requirements.
National broadband strategies need to be strengthened to
involve and reflect local needs.

(8) COM(2004) 369 ‘Connecting Europe at High Speed: National Broad-

band Strategies’, COM(2004) 369.

(9) COM(2002) 263 ‘Europe 2005: An Information Society for All’.

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The Communication identifies number of policy instru-
3.8
ments available to governments at EU level to close the broad-
band gap:

access) is poor in many cases — with download speeds well
below 512kbps in both urban and rural regions, and that most
of the broadband density is in the urban areas with only 8 % of
households in the rural areas connected.

(i) Implementation of the regulatory framework for electronic

communications.

(ii) Public funding.

(iii) EU funding: Structural Funds and Rural Development Fund.

(iv) Demand aggregation and procurement.

(v) Fostering the creation of modern public services.

In summary, this Communication invites all

3.9
levels of
government in the European Union to be more active in using
the available instruments and technologies to close the growing
digital divide. Member States are invited to update their existing
National Broadband Strategies to provide additional guidance to
all stakeholders. Their documents may well define targets in
terms of coverage as well as take-up, on the basis of an active
partnership with regional authorities, and exploiting synergies
between alternative sources of
funding (national, Structural
Funds, Rural Development Fund). National broadband strategies
should also set clear targets for the connectivity of schools,
public administrations and health centres.

4. Comments

4.1 Specific comments

4.1.3
Rural communities are particularly vulnerable to the
rapid macroeconomic shifts that are taking place; unless these
communities get parity of access to broadband connectivity they
face inevitable decline.
In the knowledge-economy countries,
regions, cities and towns are competing to attract and grow
information-intensive businesses that will
increase their pros-
perity, and broadband infrastructure is a key enabler.

Reasonable access, in the home and at work, to high
4.1.4
speed broadband Internet access should be a ‘right’ for every EU
citizen, and we reject the Commission's assertion that ‘… Broad-
band has not yet become necessary for normal participation in
society, such that a lack of access implies social exclusion’. The
the inclusion of broadband
Commission should reconsider
within the scope of the universal service definition at the earliest
opportunity.

4.1.5
Also the Commission should stipulate the minimum
acceptable effective download speed for a connection to be
called broadband internet connection. This is necessary to
ensure that the infrastructure and service standards are good
enough to support the delivery of emerging Internet services. A
direction like this from the Commission would clarify the real
situation in Europe regarding the provision of broadband
connectivity — today we have inflated connection statistics
because the quality of broadband service provided to end-custo-
mers is too low to be truly considered broadband — and it
would also put appropriate pressure on service companies to
provide genuine broadband to their customers.

The universal availability of high speed broadband
4.1.1
connectivity is essential to the economic and social development
of every region in the EU — urban and rural. This is especially
true in the global, knowledge-based economy that now drives
so much development. Knowledge-based businesses will grow
where the skills and infrastructure exist to support them. Low-
cost, world-class broadband infrastructure is a fundamental
component of a vibrant 21st Century economy. And an
increasing amount of advanced services in health, education and
social services will depend on broadband availability. Without
such availability the citizens of disadvantaged communities will
be further discriminated against.

4.2 Technology barriers to broadband connectivity

4.2.1
Although broadband can be provided on a variety of
platforms, limitations with some existing technologies are inhi-
biting the provision of connectivity to many rural locations.

4.1.2
In contrast with the United States and some Asian
countries, most European countries have been too slow to
provide broadband to their citizens. Even the modest penetra-
tion figure quoted in the Communication for broadband
connectivity of 20 % of households in the EU25 by October
2005 masks the fact that the quality of connectivity (speed of

4.2.2
The high-speed transmission capacity of cable televi-
sion systems can provide an excellent carrier for broadband
services. Unfortunately, many rural areas do not have cable tele-
vision systems, and even when cable TV is available the systems
often need an expensive upgrade to be able to provide broad-
band.

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Digital

Subscriber

the dominant
Line
4.2.3
subscriber broadband technology in much of Europe, and
variants of DSL can provide very high bandwidth at low cost.
However there are a number of limitations:

(DSL)

is

— Implementation of DSL requires upgrading of

the local
exchanges to which customers are connected. Operators are
often reluctant to make the investment needed because they
have higher return investment opportunities elsewhere in
their business. So, the customers don't get broadband.

Satellite and proprietary wireless technologies have
4.2.6
been used to provide broadband service in areas where the
public telecommunications infrastructure is unable to support
the provision of broadband connectivity. However, cost and
technology problems limit the usefulness of these technologies
to bridge the broadband gap. R&D is progressing in a number
of areas to find low-cost, high-bandwidth wireless technologies
that will provide effective broadband connectivity. Policy makers
should proactively support
these developments, and should
address the problems of radio spectrum availability to make
these solutions viable.

— Most implementations of DSL can only support customers
located within 3-5km of the DSL-equipped exchange. Custo-
mers further away cannot get broadband using DSL.

4.2.7
Innovation in the provision of broadband services to
everyone could be further stimulated by the development of a
knowledge network among SMEs across Europe on state-of-the-
art technology for broadband. The creation of the knowledge
network would be facilitated by a web site that collates and
disseminates the information.

— DSL uses the existing copper cable infrastructure in the local
network to provide broadband service; however, often this
cable is old and needs to be upgraded for DSL to work prop-
erly. Operators can be reluctant to invest in this upgrade. So,
even when the local exchange is broadband equipped and
the customer is less than 5km from the exchange, the local
loop copper cable into the home or business may be of no
use for DSL broadband provision.

4.2.4
Legacy backbone infrastructure can be an obstacle to
the provision of high-speed broadband services, especially in
areas of low population density. For example, in the 1980s and
1990s many countries used digital microwave technology to
provide their
telecommunications backbone networks. This
radio technology was effective in providing high quality digital
telephony and low-speed data services to many rural locations.
However, numerous implementations of digital microwave tech-
nology have left a legacy of backbone infrastructure that is
unsuitable for providing the high speed Internet services now
defining broadband connectivity — Internet video services. In
the case of Ireland it is estimated that up to 50 % of exchanges
nationally (those in rural locations), serving about 15 % of tele-
communications customers, are fed off this digital radio back-
bone and will never be able to get high speed broadband using
the existing national telecommunications infrastructure. Solving
this legacy problem by serving rural areas with a fibre backbone
is extremely expensive and could not be justified on a purely
commercial basis; the government would have to subsidise the
network up-grade.

4.2.5
The Commission should give special consideration to
how the expensive problem of upgrading existing infrastructure
(backbone trunk circuits, exchanges and local loop) to provide
high-speed broadband services could be supported at national
incentives and/or
and EU levels — perhaps through fiscal
public-private-partnerships.

4.3 Problems with the supply of broadband

4.3.1 With the emergence of high-bandwidth networks and
(IP) networking technology, network costs
Internet Protocol
have plummeted and the flexibility to offer customised services
is almost unlimited. In countries like Italy, France, Spain and the
UK, telecom companies have implemented all-IP based networks
yielding massive savings in network operating costs. The lower
costs of building new IP networks, and deregulation, have
weakened the power of dominant service providers, and there
has been a huge increase in telecom companies offering retail
services.

This technology shift has changed the business model
4.3.2
for telecommunication companies;
the new model separates
network ownership from end-customer service delivery. In effi-
cient, developed markets, the emerging model divides telecom
companies into wholesale companies and retail companies, with
multiple wholesale service providers competing to sell band-
width to the myriad of retail service providers. This reflects the
new technologies, cost-dynamics and regulatory frameworks
that are changing the business of
telecommunications from
being network-centric to service-centric. However, in the less-
developed and less efficient markets telecommunications service
provision is still controlled by dominant service providers who
have no incentive to separate their wholesale and retail busi-
nesses and allow real competition to emerge. Such separation
will only happen if policy makers encourage separation through
appropriate competition policy measures.

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for

industry,

In Europe 25 years ago most of the telecommunica-
4.3.3
tions infrastructure was owned by national governments, and
these assets were developed for the common good. Since that
time there has been progressive privatisation of the telecommu-
nications industry in the EU, which has been mostly a positive
customers and society. However,
experience
commercially-driven telecommunications companies do not
have social, health, education or even economic development
objectives — profit maximisation, efficient asset management
and the growth of their own business is their focus. Now, where
we have a deficiency in the network facilities necessary for the
provision of broadband services to underdeveloped regions, the
commercially focused telecommunication providers do not have
any incentive to invest in this socially-essential
infrastructure.
Where possible, governments should retain strong influence
over the provision and maintenance of national telecommunica-
tions infrastructure, balancing the high-returns to be earned
from infrastructure investment in areas with high population
density with the much less financially attractive investment
required in underdeveloped regions.

The roll-out of broadband around Europe, especially to
4.3.4
underdeveloped areas, has been hampered by widespread
market
failure. Uncompetitive conditions for potential new
service providers still exist in many markets, with dominant
infrastructure providers delaying Local Loop Unbundling (LLU)
for as long as they can, and restrictive practices inhibiting access
to national backbone networks. Also, where broadband provi-
sion has been non-existent or poor, there is often insufficient
investment incentive for the exiting infrastructure providers.

over the service packages on offer by suppliers. Efforts should
be made to simplify terminology and explain services and bene-
fits in easy-to-understand language.

Public information campaigns could be used to stimu-
4.4.4
late market demand for broadband, where take-up of the tech-
nology is a problem. This will have the dual effect of educating
potential consumers about
the technology, and it will also
increase the market pressure on suppliers to deliver the broad-
band services needed.

4.5 Broadband vision for a connected Europe

Broadband connectivity is an essential utility in our
4.5.1
information age. The need for faster, cheaper and ubiquitous
broadband services is growing exponentially as the knowledge
economy develops and the richness of the Internet experience
grows.

4.5.2
By 2010 we will need universal broadband service in
Europe with sufficient bandwidth to support a true multimedia
experience for all users; then business and society can take giant
steps in the Information Society.

The Commission can bring this vision to life by
4.5.3
defining it in meaningful technical and commercial criteria, and
by promoting policies that overcome the obstacles in our way.

4.4 Problems with the demand for broadband

4.4.1
The problem of latent demand for broadband services,
and especially the differential between the take-up of available
services in developed areas with the much lower adoption rates
in less-developed areas, has many contributory causes: socio-
economic; low quality of available connectivity; poor competi-
tion; high costs; and lack of knowledge about the benefits of the
technology or how to use it.

4.4.2
Policy makers and governments can have a major
impact on the demand side for broadband, and the Committee
welcomes the Commission's recommendations that the use of
fiscal incentives for subscribers be explored in Member States to
lower the real cost of adopting broadband, and that govern-
ments
should prioritise the development of online public
services, and the provision of connectivity for public administra-
tions, schools and health centres to educate users to the benefits
of broadband and drive demand.

Consumer demand for broadband is adversely affected
4.4.3
by lack of clarity around broadband terminology, and confusion

4.6 The need for government planning and action

4.6.1
Competitive broadband providers want to see an orga-
nised market demand: a market where the customers know
what services they want and how much they want to pay, and a
market where the demand is aggregated into an attractive
service proposition for a new supplier. Organised demand
would help real competition to grow. And it would help service
providers to see the benefits of providing service to the less
developed regions of the Union. The Committee welcomes the
Commission's initiative to launch a web site that will facilitate
the aggregation of demand and facilitate supply.

4.6.2
For every region, the EU needs a coherent, integrated
the development of broadband infrastructure and
plan for
broadband services. The National Broadband Strategies must be
augmented by detailed plans for local provision of broadband
services in all areas. And the Committee agrees with the
Commission that Local Government must own and drive these
detailed plans. Such a plan would include a detailed map of the
complete broadband infrastructure in the region, and a detailed
(down to street level) view of how the desired infrastructure
should evolve — what, when and how. The plan would also
to be
specify the minimum range of broadband services
provided for different user-groups and different locales.

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The quickening pace of telecommunications technology
4.6.3
innovation and the increasingly dynamic nature of the telecom-
munications industry, means that
the Commission and the
governments of Member States, will have to manage a contin-
uous process of ensuring that every area of the EU is served
with the best, most cost-effective broadband infrastructure avail-
able.

4.6.4
Local government and municipal authorities can play
an important role in promoting the provision of broadband
connectivity in their regions — by leading public-private-part-
nership initiatives and by implementing regulations that require
property developers to include telecommunications infrastruc-
ture for broadband in their schemes.

Brussels, 13 September 2006.

It is notable that certain member states have done a
4.6.5
better job than others at addressing the digital divide and have
included specific actions in their national broadband strategies
to close the territorial broadband gap (10).

4.6.6
Through policy on National Broadband Strategies, the
Commission can coordinate and stimulate coherent action on
the development of broadband by national governments across
the Union. This policy should be further developed to ensure
that governments follow best practice in developing their plans,
so that a comprehensive plan is developed for the EU that will
close the broadband digital divide by 2010.

The President

of the European Economic and Social Committee

Anne-Marie Sigmund

(10) The new broadband plan (September 2004) from Comité Interminis-
tériel pour l'Aménagement Du Territoire (CIADT), France, is a good
example of a comprehensive strategy.