COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS European Broadband: investing in digitally driven growth
Date: 2010-09-20
Institutions: European Commission
Subjects: EU action, communications systems, telecommunications, trans-European network, transmission network

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EUROPEAN COMMISSION 

Brussels, 20.9.2010 
COM(2010) 472 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

European Broadband: investing in digitally driven growth 

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TABLE OF CONTENTS 

1. 

2. 

3. 

4. 

Introduction: the broadband targets ............................................................................. 3 

Technology and market developments in broadband................................................... 4 

Achieving the broadband targets.................................................................................. 6 

Main actions ............................................................................................................... 10 

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1. 

INTRODUCTION: THE BROADBAND TARGET 

By 2020, all Europeans should have access to internet of above 30 Megabits per 
second  (Mbps)  and  50%  or  more  of  European  households  have  subscriptions 
above 100Mbps. 

This target is  from the Digital  Agenda for Europe1, a  flagship initiative of the Europe 2020 
strategy2 for a smart, sustainable and inclusive economy. The Digital Agenda also restated the 
objective  endorsed  by  the  European  Council  to  bring  basic  broadband  to  all  Europeans  by 
2013. To reach these ambitious objectives it is necessary to develop a comprehensive policy, 
based on a mix of technologies, and to carefully monitor progress over time3. 

The target for fast and ultra-fast internet access was chosen because of the central role it will 
play in economic recovery and in providing a platform to support innovation throughout the 
economy,  as  electricity  and  transport  did  in  the  past.  The  roll-out  of  ultra-fast  open  and 
competitive  networks  will  stimulate  a  virtuous  cycle  in  the  development  of  the  digital 
economy,  allowing  new  bandwidth-hungry  services  to  take  off  and  fuelling  growing  citizen 
demand, which in turn will stimulate further demand for bandwidth. 

World demand for bandwidth has been growing at roughly 50-60 % per year4, driven by the 
extension  of  internet  use,  from  simple  email  and  text  files  (in  the  era  of  56  Kbps  dial-up 
internet)  to  internet  surfing  (with  the  advent  of  always-on  broadband)  and  then  increased 
integration  of  graphical  and  audiovisual  content  on  websites  (supported  by  the  current 
generation of ADSL, which offers download speeds of 2 Mbps or more and uploads of 256 
Kbps). 

Not only download speeds are important in that context, but higher symmetry (much higher 
upload  speeds)  and  lower  latency  may  be  required  for  innovative  services  and  applications. 
There are already examples of services that depend on such connections: smart electrical grids 
that require low latency and can cut consumer expenditure and lower generating costs; real-
time cloud computing services that require symmetrical upload and download speeds and can 
be  used  by  small  businesses  to  lower  their  costs;  and  intensive  e-health  services  offered  to 
remote  hospitals  and  patients.  Moreover,  the  OECD  has  recently  concluded  that  the  cost 
savings in just four sectors of the economy (transport, health, electricity and education) would 
justify the construction of a national fibre-to-the-home network5. 

Thus, smart, sustainable and inclusive growth as envisaged by the Europe 2020 strategy will 
very much depend on the efficient and effective use of the internet, and internet access speed 
will be a key factor in achieving this. Internet access is provided by — generally private — 
network  operators  under  a  competitive  regulatory  framework  and  driven  by  commercial 
interests.  Yet  because  of  the  critical  role  of  the  internet,  the  benefits  for  society  as  a  whole 
appear to be much greater than the private incentives to invest in faster networks. Stimulating 

1 
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A Digital Agenda for Europe - COM(2010) 245. 
EUROPE 2020, A strategy for smart, sustainable and inclusive growth - COM(2010) 2020. 
For instance, it could be expected that, to be on-track for the 100Mbps target, in 2015 around 15% of 
European households should have subscriptions with such speeds. 
See: Network developments in support of innovation and user needs, OECD, 2009.  
Network developments in support of innovation and user needs, OECD, 2009. 

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investment in fast internet access beyond the current market-driven development, taking into 
account the recent economic downturn, is the key to achieving the broadband target. 

Investment  in  new  open  and  competitive  networks  should  be  supported  by  the  actions  of 
national  and  local  authorities  in  lowering  costs.  The  Commission  has  already  assisted  such 
actions through the adoption last year of its Guidelines on the application of state aid rules6. 
These  lay  down  the  conditions  for  public  financial  support  on  non-market  terms  for 
broadband and high-speed broadband deployment in areas where commercial investments are 
unlikely to take place in the foreseeable future. The main objective of this Communication is 
to  further  assist  the  actions  of  national  and  local  authorities.  It  is  presented  as  a  broadband 
package with the two other broadband commitments made by the Commission in the Digital 
Agenda  action  on  fast  and ultra fast  internet. These are the Next Generation Access  (NGA) 
Recommendation  to  provide  regulatory  guidance  to  national  regulators  and  the  Radio 
Spectrum Policy Programme  to  improve the coordination  and  management  of  spectrum  and 
hence facilitate, among other things, the growth of wireless broadband. 

The following section reviews technological and market developments to provide the context 
for where Europe is now. Section 3 takes each of the four proposals made to Member States 
in  the  Digital  Agenda  and  outlines  how  these  will  be  supported  at  European  level.  Finally, 
section 4 outlines some of the main follow-up actions. 

2. 

TECHNOLOGY AND MARKET DEVELOPMENTS IN BROADBAND 

Currently,  broadband  is  predominantly  delivered  to  home  users  through  copper  (e.g. 
telephone)  or  coaxial  (e.g.  cable  TV)  networks  and/or  wireless  access  networks  such  as  3G 
mobile  communications  or  fixed  wireless  access.  There  are  about  124  million  fixed  and  25 
million  mobile  broadband  subscriber  lines  in  the  EU7,  which  is  one  of  the  world  leaders  in 
first-generation broadband deployment. Speeds on offer vary widely, but typically download 
speeds are in excess of 2 Mbps and upload speeds are above 256 Kbps. Speeds are increasing, 
and  the  chart  below  illustrates  the  functionality  of  different  broadband  speeds  and  likely 
future applications. 

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Community  Guidelines  for  the  Application  of  State  Aid  Rules  in  relation  to  rapid  deployment  of 
Broadband Networks (OJ C 235, 30.9.2009). 
Europe’s Digital Competitiveness Report - SEC(2010) 627. Mobile ‘lines’= dedicated data cards + usb-
keys + dongles. 

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eHealth: 
Remote 
Diagnostic 
Examination

Multiple 
application 
usage

eHealth: Virtual 
Care Unit

HD education 
fast downloads

HD 
telepresence

HDTV

100Mbps

25Mbps

8Mbps

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i
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2Mbps

VoIP

Standard 
def TV 
MPEG4

P2P file-
sharing

Standard 
def TV 
MPEG2

Fast
internet 
browsing

Online 
radio

Source: Analysis based on Broadband Stakeholder Group
Market-led  upgrades  of  fixed  internet  access  to  higher  speeds  are  underway.  Collectively, 
these  are  referred  to  as  NGA  networks8.  However,  developments  are  uneven  both  between 
Member States and among regions within them.  

Cable networks – that serve about 73 million EU households – are being gradually upgraded 
to higher speeds through deployment of DOCSIS39 and extension of their backhaul networks. 
Cable  competition  gives  incentives  to  copper  network  operators  to  invest  in  VDSL  –  a 
technology which exploits the existing copper telephone infrastructure - and in optical fibre to 
the  home  (FTTH).  Both  FTTH  and  DOCSIS3  can  meet  the  broadband  target  with  speeds 
above  100  Mbps.  More  open  FTTH  architectures  also  enhance  infrastructure  based 
competition  among  ISPs,  on  the  basis  of  unbundling  and  gradual  deployment  of  alternative 
infrastructures, thereby driving the development of new services and applications. 

Outside  areas  where  they  face  infrastructure  competition,  operators  have  been  reluctant  to 
move  beyond  their  established  ADSL  business.  Most  operators  do  not  see  a  convincing 
business case for a large scale network upgrade to FTTH, also considering that there are not, 
as yet, enough attractive services available that would make customers pay a premium price. 
The  NGA  Recommendation  and  the  application  of  the  new  regulatory  framework  will  be 
crucial  in  this  respect,  as  they  will  provide  regulatory  certainty,  promoting  investment  and 
competition.  

Next-generation  terrestrial  wireless  services  can  offer  transfer  rates  of  over  30  Mbps  and 
therefore  meet  the  broadband  coverage  target.10  They  are  particularly  important  in  regions 
with  difficult  terrain  where  wired  access  is  impractical.  Wireless  connections  via  satellite 
could also play a role in these regions, but further technological development will be needed 
if satellite is to contribute to universal coverage at the target speed of 30 Mbps by 2020.  

To  achieve  the  ambitious  broadband  target,  substantial  investment  will  be  needed.  The 
amounts needed are difficult to calculate but a review of recent studies indicates that between 

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10 

See [URL] for a summary of the main technologies. 
Data Over Cable Service Interface Specification 
It  should  however  be  noted  that  bandwidth  provided  to  individual  wireless  users  will  depend  on  the 
number of cells serving a given area and the number of users of the service at a given moment, 

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€ 38bn and € 58bn would be needed to achieve the 30 Mbps coverage for all by 2020 (using a 
mix  of  VDSL  and  next  generation  wireless)  and  between  € 181bn  and  € 268bn  to  provide 
sufficient coverage so that 50% of households are on 100 Mbps services11. 

With  growing  internet  traffic  and  rising  bandwidth  demands,  more  efficient  management  of 
network resources is increasingly seen as important to the provision of high-speed broadband. 
A debate has started on the impact of traffic management on the open decentralised character 
of  the  public  internet  which  is  central  to  its  capacity  to  allow  users  to  access  and  distribute 
information, run applications and enjoy services of their choice. The importance of preserving 
these  features  is  reflected  in  the  amendments  introduced  by  the  2009  reform  to  the  EU 
regulatory framework for e-communications12. A public consultation on the open internet and 
net  neutrality  launched  by  the  Commission13  on  30  June  2010  seeks  to  explore  techniques 
used  by  operators  to  manage  data  flows  over  their  networks,  and  the  potential  impact  these 
may  have  on  internet  users’  experience.  An  outcome  that  preserves  the  open  and  neutral 
character  of  the  public  internet  and  avoids  unwarranted  discrimination,  while  allowing 
operators to maximise the efficiency of their networks and to develop new business models 
and  enhanced  commercial  service  offerings,  should  help  encourage  continued  investment  in 
high-capacity  broadband  infrastructure.  The  Commission  will  report  later  this  year  on  the 
outcome  of  this  public  consultation.  The  Commission  will  also  monitor  further  the 
functioning  of  the  market  from  a  consumer  perspective  (retail  prices,  choice  problems, 
complaints, etc.) 

3. 

ACHIEVING THE BROADBAND TARGET 

Against  these  developments,  an  EU  broadband  policy  should  promote  concrete  measures 
which could (i) foster investment by, for example, reducing investment costs and (ii) enhance 
infrastructure competition, taking into account that the competitive threat of alternative public 
and  private  investors  (including  local  administrations  and  public  utilities)  would  incentivise 
investments in NGA by incumbent operators. Such actions should be coordinated both at EU 
and  national  level.  This  is  why  the  Commission  will  work  with  Member  States  to  generate 
effective national broadband plans. 

National Broadband Plans 

All Member States have a broadband strategy14 but few have fully operational plans for ultra-
high speed networks with concrete implementing measures to realise their targets, notably as 
regards  the  necessary  funding.  The  broadband  target  will  only  be  achieved  if  all  Member 
States  commit  to  it  and  set  out  an  operational  plan  defining  national  targets.  As  part  of  the 
governance  of  the  Digital  Agenda,  the  Commission  will  work  with  Member  States  to 
coordinate  the  establishment  of  national  targets  and  will  encourage  peer-review  processes 
among  Member  States  in  order  to  accelerate  the  transfer  of  best  practice  between  policy 
makers. This work  will be  supported by an action-oriented broadband platform with a wide 
range of stakeholders. 

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Differences are mainly due to varying distributions of household density and the mix of technologies. 
The sources are Plum/Cave – Broadband Stakeholder Group, JP Morgan and Analysis Mason (UK).  
Article  8(3)(b)  and  8(4)(g)  of  Directive  2002/21/EC  (Framework  Directive)  amended  by  Directive 
2009/140/EC. 
http://ec.europa.eu/information_society/policy/ecomm/library/public_consult/net_neutrality/ 
index_en.htm 
See [URL] for a summary of Member State broadband plans. 

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Member  State  plans  should  comprise  a  balanced  set  of  policy  actions  to  incentivise  and 
supplement  private-sector  action  using  the  common  framework  resulting  from  a  consistent 
and  thorough  implementation  of  the  recently  revised  EU  regulatory  framework  for  e-
communications  and  the  State  aid  Broadband  Guidelines  recently  adopted  by  the 
Commission.  Private  investment  should  be  encouraged  by  appropriate  coordination  of 
planning and rules for sharing physical infrastructure and by targeted financing measures to 
reduce risk and promote new open infrastructures. Wireless infrastructure will play a key role 
in achieving the broadband coverage target in most Member States. Plans should take a long-
term  and  balanced  view  of  the  costs  and  benefits  of  spectrum  allocation  and  licensing 
agreements, in particular, the net positive effects of early investment and roll-out. The plans 
should also give clear guidance on the uptake of EU broadband funds and EIB instruments in 
eligible regions. 

To  support  the  planning  process,  the  Commission  will  strengthen  the  monitoring  of  NGA 
deployment.  This  will  utilise  a  revised  form  of  existing  instruments  such  as  the 
Implementation  and Digital Competitiveness  Reports and a new Digital Agenda Scoreboard 
will  detail  performance  indicators  to  enable  individual  Member  States  to  monitor  and 
compare  broadband  plans.  The  Scoreboard  will  be  assisted  by  a  new  web-based  tool  to 
disseminate statistics and research reports on the broadband economy. 

Promoting investment and reducing investment costs 

A number of regulatory and financing measures can be adopted at national and local level to 
promote investment and reduce investment costs.  

It  is  estimated  that  around  80%  of  the  costs  of  deploying  new  fixed  infrastructure  are  civil 
engineering  costs  which  can  be  significantly  reduced  through  a  proper  coordination  by 
national  and  local  authorities,  using  town  planning  rules  and  remedies  mandating  access  to 
passive  infrastructures15.  Wireless  infrastructure  costs  can  similarly  be  reduced  by  such 
measures. Possible cost-cutting measures include: 

•  Making the installation of new passive infrastructures and in-building wiring a requirement 

for planning authorisations. 

•  Encouraging  local  authorities  and  regulators  to  make  use  of  their  powers  to  require  the 
disclosure  of  the  existence  and  condition  of  local  access  infrastructures  from  operators16 
with the aim of stimulating competition. In particular, national regulators should use their 
powers  under  Directive  2002/21/EC  to  obtain  all  relevant  information  on  the  location, 
capacity  and  availability  of  ducts  and  other  local  loop  facilities,  to  provide  alternative 
operators  with  the  possibility  to  deploy  their  fibre  networks  at  the  same  time  as 
incumbents, sharing the costs of civil engineering works.  

•  Co-ordinating civil works (such as digging of the public domain, construction of ducts) to 

enable and streamline the deployment of network elements.  

•  Provision of general powers for the acquisition of rights of way by streamlining laws and 
regulations concerning civil works, town planning, environment, public health and general 

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16 

See amendments to Directive 2002/21/EC, Article 12 (OJ L 337, 18.12.2009). 
In  accordance  with  Article  12(4)  of  the  revised  Framework  Directive  and  Article  9(4)  of  the  Access 
Directive. 

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administration to simplify and accelerate procedures e.g. for granting rights of way or mast 
planning, if necessary by establishing a one-stop-shop for these purposes. 

•  Planning  authorities  could  also  reduce  the  investment  cost  for  the  roll-out  of  wireless 
broadband, by removing administrative obstacles (e.g. difficulties in obtaining permissions 
for new base stations or in renewing contracts for existing ones). 

Moreover,  national  or  local  authorities  can  support  broadband  deployment  through  direct 
public investment or public financing in line with State aid rules. Public financing could help 
make  high-speed  networks  feasible  where  costs  would  otherwise  be  unmanageable.  Such 
public funding should be targeted so as to alleviate barriers to private investment.  

•  Public authorities may decide to undertake, at their expense, civil works in order to enable 
and accelerate the deployment by the operators concerned of their own network elements. 
If  such  works  are,  in  principle,  open  to  all  potential  users  and  not  just  electronic 
communications  operators,  and  thereby  create  the  necessary  pre-conditions  for  the 
deployment by utility operators of their own infrastructure without discriminating in favour 
of  a  given  sector  or  a  company,  they  do  not  constitute  State  aid  and  do  not  have  to  be 
notified to the Commission17. 

•  Public authorities could build or finance sector specific infrastructure in line with the State 
aid  Broadband  Guidelines,  allowing  fair  and  non-discriminatory  access  to  broadband 
operators,  thereby  triggering  the  take-off  of  competitive  service  provision  in  areas  that 
would otherwise be uneconomic to serve.  

•  Local  authorities  should  also  consider  using  fibre  core  networks  that  have  been  or  are 
being  constructed  to  link  up  public  entities  (schools,  libraries,  clinics)  in  order  to  bring 
high-speed  connections  to  unserved  communities18.  Where  appropriate,  Member  States 
should consider setting up broadband funds at national level on which local authorities can 
call for the construction of such passive infrastructures. 

•  In  order  to  speed  up  the  use  of  State  aid  for  broadband,  Member  States  are  strongly 
encouraged  to  notify  national  framework  schemes  and  thereby  avoiding  multiple 
notifications of individual projects. 

The  Commission  will  undertake  a  review  of  existing  cost  reduction  practices  and  report  in 
2012.  As  actions  are  undertaken  predominantly  at  local  level,  the  Commission  will  develop 
and  improve  mechanisms  to  enable  local  actors  to  obtain  relevant  information  to  reduce 
investment costs. The Commission would support the use of the EU Regional Funds to create 
and maintain the mapping of infrastructures at local and regional level. 

The Commission will also assist Member States by cooperating with the recently established 
Body  of  European  Regulators  for  Electronic  Communications  (BEREC).  As  part  of  its 
activities, BEREC should include measures to support broadband development as a priority in 
its  2011  work  programme.  At  EU  level,  the  Commission  has  sought  to  create  the  right 
investment  climate  and  to  set  attractive  incentives  for  the  deployment  of  new  open  and 
competitive  networks  by  means  of  a  Recommendation  for  regulated  access  to  NGA.  The 

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See State aid Guidelines, paragraph 61, op cit footnote 6. 
This has been done successfully in the UK (cf. www.nynet.co.uk and   
http://wales.gov.uk/topics/businessand economy/broadbandandict/). 

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NGA  Recommendation,  adopted  in  association  with  this  Communication,  gives  guidance  to 
national regulators, with a view to enhancing regulatory certainty and promoting investment 
and innovation in the market for broadband services taking due account of the risks incurred 
by  all  investing  undertakings  and  the  need  to  maintain  effective  competition,  which  is  an 
important  driver  of  investment  over  time.  Significant  efforts  by  the  competent  national 
authorities will also be needed to ensure the rapid and effective implementation of the Radio 
Spectrum Policy Programme which will foster the deployment of wireless broadband. 

Promoting wireless broadband 

The highest growth rate in the EU broadband market is in mobile broadband, where take-up 
more than doubled in the last year. Wireless technologies are therefore increasingly important 
in meeting the need for broadband communications services. 

Spectrum has been designated for electronic communication services, technically optimised in 
particular for wireless broadband access through several Commission Decisions, but in many 
Member States substantial parts of this spectrum are still subject to restrictions on assignment 
or parts of it have not been assigned at all. 

As  demand  for  wireless  services  increases,  the  key  priority  will  be  to  make  effectively 
available  to  users  those  frequencies  that  have  already  been  earmarked  through  harmonised 
allocations,  including  radio  spectrum  to  be  released  from  the  digital  dividend  and  from  the 
reutilisation of frequencies hitherto reserved for second-generation (GSM) services. Secondly, 
sufficient and appropriate spectrum for both the coverage and the capacity needs of wireless 
broadband technologies should be designated and made available to achieve the target set for 
2020. Broadband development can be further enhanced by pro-competitive measures such as 
the  introduction  of  spectrum  trading  and  measures  to  prevent  potential  distortions  when 
existing licences are modified. 

The Commission is proposing coordinated action to achieve these objectives in its first draft 
multi-annual  Radio  Spectrum  Policy  Programme,  submitted  for  adoption  by  the  European 
Parliament  and  Council.  However,  individual  Member  States  could  help  achieve  the 
broadband coverage target rapidly if they immediately adopted policies to: 

•  Make available sufficiently large bands of spectrum19;  

•  Award rights of use quickly;  

•  Increase flexibility and competition;  

•  Allow secondary trading to adapt to market developments. 

Increasingly mobile operators point to major difficulties to extend their infrastructure to meet 
the increasing demand, in particular as to base stations, because of increased planning burden 
and  uncertainties,  and  non-harmonised  and  unpredictable  safety  requirements.  The 

19 

It  is  essential  for  designated  spectrum  to  be  made  available  effectively;  this  must  be  done  both  by 
opening  new  spectrum  (such  as  2.6 GHz  as  well  as  800 MHz)  and  by  liberalising  the  use  of  existing 
spectrum  (e.g.  the  900/1800  MHz  band  —  see  the  revised  GSM  Directive  and  the  900/1800  MHz 
Decision). 

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Commission will pursue this issue with Member States to ensure rational and non-distortive 
national regulations in this regard. 

Reinforce and rationalise the use of the Structural and Rural Development Funds 

The European Union supports the construction of broadband infrastructure and internet take-
up through both  rural development and structural funds, and has clarified the  application of 
state aid rules on use of public funds for broadband deployment.  

infrastructure 

In the 2007-2013 programming period, a total of €2.3bn  of Structural Funds was allocated to 
broadband 
information  society  services. 
Expenditure figures for the Structural Funds show relatively slow absorption of funds targeted 
on broadband projects. In this period, €
 418m had been committed by September 2009, which 
represents  18%  of  planned  expenditure.  By  the  same  date,  the  average  committed  for  all 
measures was 27% 20. 

investments;  and 

 12.9bn 

to 

In  the  same  programming  period,  € 1.02bn  was  added  to  the  Fund  for  Rural  Development 
(EAFRD) and of this, € 360m was  programmed on broadband projects. 

To help expand the usage of Structural and Rural Development funds, both for broadband and 
other information society services, the Commission will: 

•  Publish,  in  2011,  guidance  on  broadband  investment  for  local  and  regional  authorities  to 

encourage the full absorption of EU funds. 

•  Engage more closely with regions, in view of helping them to reinforce their capacity to 
absorb funds. In 2011, within the European network for Rural Development, stakeholders 
will be invited to an EU-wide event on good practice in ICT implementation in regions and 
rural areas and make recommendations for further actions to meet the broadband target.  

•  Further,  guidance  will  be  provided  on  the  use  of  funds  from  public-private  partnerships 
(PPPs)  and  other  financial  instruments  such  as  matching  funds  complementing  the 
Operational Programmes of the European Structural Funds. Structural Funds can be used 
within  public  private  partnerships,  provided  EU  principles  in  relation  to  procurement  for 
PPPs of this kind are followed. 

•  Relaunch and extend the European Broadband Portal21 to provide a multilingual platform 
for  the  exchange  of  material  on  the  implementation  of  broadband  projects  and  to  offer 
additional  guidance  on  issues  such  as  the  state  aid  rules  and  implementation  of  the 
regulatory framework. 

Develop broadband finance instruments 

Many  investment  proposals,  in  particular  those  involving  infrastructure  sharing  by  private 
sector  operators  or  resulting  from  public-private  co-operation,  are  perceived  by  potential 
investors  as  higher  risk  transactions  and  therefore  more  likely  to  fail  to  attract  private 

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A Strategic Report of March 2010- COM(2010) 110 - on the implementation of the programmes 2007-
2013  includes  an  assessment  of  broadband  implementation  and  a  forthcoming  Communication, 
Regional Policy contributing to smart growth in Europe 2020, will give recommendations to Managing 
Authorities. A breakdown of broadband expenditure is available at [URL]. 
http://www.broadband-europe.eu/Pages/Home.aspx 

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€
                                                 
financing.  This  may  be  because  they  have  a  longer  pay  back  period  or  simply  because  the 
promoters are too small and inexperienced to attract the interest of large financial institutions. 
Difficult liquidity conditions and uncertain economic prospects also limit the risk appetite of 
private financiers and, in effect, raise the costs of financing. 

The  European  Investment  Bank  (EIB)  is  already  lending  an  average  of  € 2bn  each  year  to 
economically viable broadband projects. In the case of higher risk  transactions,  risk-sharing 
instruments,  such  as  the  Risk  Sharing  Finance  Facility,  developed  by  the  EIB  and  the 
Commission are now being put to use. EIB involvement is planned to increase as the Bank re-
focuses  its  lending  strategy  on  the  Europe  2020  priorities.  Further,  the  benefits  of  EIB 
involvement  in  a  project  usually  exceed  the  Bank's  direct  capital  contribution  which  has  a 
'catalytic effect' on the banking sector and potential promoters and thus attracts further interest 
in broadband.  

Local and regional authorities are increasingly exploring alternative financing arrangements, 
including  public-private  partnerships  (PPP),  for  financing  broadband  infrastructure.  These 
solutions  aim  to  optimize  synergies  from  combining  public  and  private  sector  financial 
resources as well as their respective competencies in regulation and in risk based investments. 
To support such PPPs, the EU and the EIB will make proposals by spring 2011 on ways to 
mobilise the know-how of the European PPP Expertise Centre (EPEC), an EIB TA/advisory 
instrument  co-financed  by  the  EIB  and  the  EU  Budget,  as  well  as  to  channel  existing  and 
future  technical  assistance  funds  of  the  Member  States  and  the  EU  Budget,  to  project 
preparation.  Furthermore, promoters will  also benefit  from  the  EIB’s  detailed  knowledge  of 
the sector’s technological basis and its business models as well as its expertise in structuring 
complex multi-party financial transactions for a rapidly changing environment. 

In  the  context  of  the  preparation  of  EU  programmes  under  the  next Multi-Annual  Financial 
Framework  and  the  role  of  the  EIB  thereunder,  the  Commission  and  the  EIB  will  also,  by 
spring  2011,  set  out  concrete  proposals  for  financing  instruments  to  complement  existing 
means of the financing of broadband infrastructure. Such instruments, which could be of debt, 
guarantee or equity type or a combination thereof, should match to the needs of investment 
projects  in  terms  of  flexibility,  maturity  and  risk.  They  will  benefit  from  the  lower  cost  of 
funds  stemming  from  the  EIB's  AAA  rating  and  non-profit  status,  as  well  as  potentially 
drawing from the budgetary resources of the Union. The instruments will also be designed to 
serve as conduits for funds earmarked by Member States22 and by private sector investors for 
financing the roll out of broadband infrastructure.  

To  unlock  the  financing  for  the  higher-risk  infrastructure  projects,  such  instruments  would 
require dedicated financial resources to be provided by an EU contribution. To illustrate the 
potential impact, a financial contribution 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 
depending on the financing needs and the risk profiles of the underlying investments. 

Until  such  an  instrument  is  in  place,  the  EIB  will  use  available  resources  to  develop  and 
finance pilot projects and innovative funding schemes in duly justified cases. Moreover, the 
Commission  and  the  EIB  will  investigate  whether  experience  from  other  joint  financial 
instruments (such as RSFF, LGTT or the Marguerite Fund) could be used for the benefit of 
broadband financing.  

22 

Member States' fund are to be used in line with the Community Guidelines for the Application of State 
Aid Rules in Relation to Rapid Deployment of Broadband Networks. 

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4. 

MAIN ACTIONS  

The Commission will: 

•  In  2011:  make  a  proposal,  in  cooperation  with  the  EIB,  for  broadband  financing;  issue 
guidance for local and regional authorities on the use of EU funds for broadband project 
design  and  preparation;  and  adopt  investment  guidelines  on  broadband  for  local  and 
regional authorities to facilitate full absorption of EU funds. 

•  By 2012: complete a review of cost reduction practices. 

•  By end 2013: reinforce and rationalise the use of funding of high-speed broadband through 
EU instruments under the current financial framework (e.g. ERDF, ERDP, EAFRD, TEN, 
CIP).  

The Commission also calls upon Member States to:  

•  Implement rapidly the NGA Recommendation and anticipate key aspects of the European 

Radio Spectrum Policy Programme, 

•  Set  national  broadband  targets  and  adopt  operational  plans  that  are  in  line  with  the 

European broadband target; the Commission will review the national plans in 2011, 

•  Take national actions to reduce broadband investment costs. 

•   

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