COMMISSION STAFF WORKING PAPER IMPACT ASSESSMENT
Date: 2011-10-19
Institutions: European Commission
Subjects: exchange of information, international cooperation, investment project, project of common interest, single market, trans-European network, transmission network

EUROPEAN COMMISSION 

Brussels, 19.10.2011 
SEC(2011) 1229 final 

COMMISSION STAFF WORKING PAPER 

IMPACT ASSESSMENT 

Accompanying the document 

Proposal for a Regulation of the European Parliament and of the Council  

on a series of guidelines for trans-European telecommunications networks 

{COM(2011) 657 final} 
{SEC(2011) 1230 final} 

 
 
 
 
  
 
Lead DG: DG Information Society and Media 

Disclaimer: This report commits only the Commission's services involved in its preparation 
and does not prejudge the final form of any decision to be taken by the Commission.

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TABLE OF CONTENTS 

1. 

1.1. 

1.2. 

1.3. 

1.4. 

1.5. 

1.6. 

2. 

2.1. 

2.2. 

Policy Context, Procedural Issues and Consultation of Interested Parties................... 5 

Legal base, existing legislation and the Connecting Europe Facility .......................... 5 

CEF policy framework................................................................................................. 6 

Financing the future: developing a new policy using new means ............................... 7 

Consistency with other Union policies ........................................................................ 8 

Consultations and evaluations...................................................................................... 9 

Commission inter-service consultation and Impact Assessment Board process ....... 10 

Problem Definition..................................................................................................... 10 

High-speed internet and the services it supports: potential for growth and societal 
benefits are untapped.................................................................................................. 11 

Broadband networks – the need to stimulate investment in the infrastructures of the 
future .......................................................................................................................... 12 

2.2.1.  The investment challenge........................................................................................... 13 

2.2.2.  Market failures and the limitations of regulatory policy............................................ 14 

2.2.3.  Existing Member State and EU policies .................................................................... 16 

2.3. 

Digital service infrastructures: The Digital Single Market is still far from being 
reality.......................................................................................................................... 17 

2.3.1.  The elements of a digital service infrastructure ......................................................... 17 

2.3.2.  Public interest and market failures in digital service infrastructures ......................... 18 

2.3.3.  The cross-border policy challenge ............................................................................. 19 

2.4. 

Baseline scenario for broadband and digital services ................................................ 20 

2.4.1.  Sensitivity analysis..................................................................................................... 21 

2.5. 

Justification for EU action: subsidiarity and EU added value ................................... 22 

3. 

3.1. 

3.2. 

4. 

4.1. 

4.2. 

Objectives................................................................................................................... 23 

Overall objective ........................................................................................................ 23 

Operational objectives................................................................................................ 23 

Policy Options............................................................................................................ 24 

Remarks on the approach ........................................................................................... 24 

Option 1 – no policy change ...................................................................................... 24 

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4.3. 

Option 2 – broadband networks and digital service infrastructures in the trans-
European networks of infrastructure (CEF)............................................................... 25 

4.3.1.  Sub-option 2.1: Financing through grants.................................................................. 26 

4.3.2.  Sub-option 2.2: Financing through financial instruments.......................................... 27 

4.3.3.  Sub-option 2.3: Combined financing approach ......................................................... 28 

4.3.4.  Option 2 – synergies with Structural Funds............................................................... 28 

4.3.5.  Guiding principles...................................................................................................... 28 

5. 

5.1. 

5.2. 

Analysis of Impacts.................................................................................................... 28 

Impacts from the adoption of option 1: no policy change ......................................... 29 

Impacts from the adoption of option 2: broadband and digital service infrastructures 
in the trans-European networks of infrastructure (CEF)............................................ 30 

5.2.1.  General impacts stemming from option 2.................................................................. 30 

5.2.1.1.  Economic impacts ...................................................................................................... 31 

5.2.1.2.  Positive externalities .................................................................................................. 32 

5.2.1.3.  Social impacts ............................................................................................................ 33 

5.2.1.4.  Environmental impacts............................................................................................... 34 

5.2.1.5.  Sector specific impacts of digital service infrastructure ............................................ 35 

5.2.2.  Assessment of sub-options against the programme's objectives: effectiveness and 

efficiency.................................................................................................................... 36 

5.2.2.1.  Sub-option 1: Financing through grants..................................................................... 36 

5.2.2.2.  Sub-option 2: Financing through financial instruments............................................. 37 

5.2.2.3.  Sub-option 3: Combined financing approach ............................................................ 38 

6. 

7. 

Comparison of Options39 

Monitoring and Evaluation ........................................................................................ 41 

Annex 1 – Glossary .................................................................................................................. 42 

Annex 2 – What is a digital service infrastructure ................................................................... 45 

Annex 3 - Thematic areas and fast start priority digital service infrastructures ...................... 48 

Annex 4 – Broadband and its impacts: an overview................................................................ 56 

Annex 5 – Results from public consultations and evaluations................................................. 76 

7.1. 

7.2. 

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Main results of public consultations .......................................................................... 76 

Other studies and evaluation carried out.................................................................... 79 

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IMPACT ASSESSMENT REPORT 

1.  POLICY CONTEXT, PROCEDURAL ISSUES AND CONSULTATION OF INTERESTED PARTIES 

This is the Report of the impact assessment of the legislative proposal for the Regulation on 
guidelines  on  broadband  networks  and  digital  service  infrastructures  in  the  trans-European 
networks  of  infrastructure  (CEF)  for  the  post  2013  programming  period.  These  guidelines 
build on and update the former guidelines for trans-European Telecom networks from 1997, 
as amended in 20021. 

1.1. 

Legal base, existing legislation and the Connecting Europe Facility 

Articles  170-172  TFEU  provide  a  legal  context  for  the  EU  intervention  supporting  the 
establishment  and  development  of  trans-European  networks  in  the  areas  of  transport, 
telecommunications and energy infrastructures. Action by the Union shall aim at promoting 
the  interconnection  and  interoperability  of,  and  access  to,  national  networks,  taking  into 
account  in  particular  the  need  to  link  islands,  landlocked  and  peripheral  regions  with  the 
central  regions  of  the  Union.  To  this  end,  the  Union  shall  establish  a  series  of  guidelines 
covering  the  objectives,  priorities  and  broad  lines  of  measures  envisaged  in  the  sphere  of 
trans-European  networks;  these  guidelines  shall  identify  projects  of  common  interest.  The 
Union  may  support  these  projects  of  common  interest  supported  by  the  Member  States, 
particularly  through  feasibility  studies,  loans  guarantees  and,  in  the  field  of  transport,  also 
through the Cohesion Fund. Articles 169 and 173 TFEU are also of relevance since industrial 
policy and consumer issues are an integral part of the broadband networks and digital service 
infrastructures objectives.  

The proposed intervention will be pursuant to Article 172 TFEU. 

The Council Regulation 2236/95 of 18 September 1995 laid down the first general rules for 
the granting of Community financial aid in the field of trans-European networks for transport, 
telecommunications  and  energy  infrastructures.  The  1995  Council  Regulation  was  amended 
several  times  with  specific  Regulations  taking  into  account  the  developments  for  the  fields 
covered and their intrinsic characteristics, but also in order to refine the eligibility criteria and 
the  level  of  co-financing  according  to  the  type  of  projects.  The  Regulation  No  1159/2005 
amended the 1995 Regulation with specific modifications for the area of telecommunications. 
Specific  guidelines  for  the  trans-European  Telecom  networks  were  also  adopted  in  1997  by 
way of the Decision 1336/97/EC of the European Parliament and of the Council and amended 
by Decision 1376/2002/EC. It is necessary to replace the existing acts by the newly proposed 
guidelines  for  trans-European  telecommunications  networks  in  order  to  reflect  new  policy 
priorities, namely the use of EU funds to support the roll-out of broadband internet networks. 

The  proposed  guidelines  for  trans-European  telecommunications  networks  are  part  of  a 
legislative  package  for  a  Connecting  Europe  Facility  (CEF),  including  a  general  CEF 
Regulation  and  specific  guidelines  for  energy  and  transport  networks.  While  the  Regulation 
establishing  the  CEF  defines  the  conditions,  methods  and  procedures  for  providing  Union 
transport,  energy  and 
financial  aid 

trans-European  networks 

the  fields  of 

to 

in 

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DECISION  No  1336/97/EC  OF  THE  EUROPEAN  PARLIAMENT  AND  OF  THE  COUNCIL  of  17 
June  1997  on  a  series  of  guidelines  for  trans-European  telecommunications  networks.  Decision  No 
1376/2002/EC of the European Parliament and of the Council of 12 July 2002 amending Decision No 
1336/97/EC on a series of guidelines for trans-European telecommunications networks 

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telecommunication  infrastructures,  the  guidelines  proposed  here  lay  down  the  objectives, 
priorities and broad lines of measures envisaged for broadband networks and digital service 
infrastructures  in  the  field  of  telecommunications.  Similar  guidelines  are  proposed  for  the 
fields of transport and energy respectively. 

The current eTEN Guidelines have been proposed and adopted as a Decision of the European 
Parliament and of the Council which is specifically addressed to the Member States, rendering 
the Guidelines binding in their entirety for all the Member States. This reflected the scope of 
the  previous  guidelines,  which  did  not  cover  private  investments  in  telecommunications 
infrastructure and ensured consistency with the approach in transport and energy respectively. 
The present guidelines are addressed to broad categories of investors, including in particular 
telecom operators, utility companies, regional decision makers, including municipalities and 
partnerships. With more actors besides the Member States becoming involved in the planning, 
development and operation of projects of common interest in the field of telecommunications, 
it is important to ensure that the Guidelines be binding for all. The Commission has therefore 
chosen a Regulation as the legal instrument for this proposal. 

1.2. 

CEF policy framework 

In  its  Europe  2020  strategy,  the  European  Commission  has  recognised  the  need  to  act  in 
support of the digital society:2 "Europe is falling behind on high-speed internet, which affects 
its  ability  to  innovate,  including  in  rural  areas,  as  well  as  on  the  on-line  dissemination  of 
knowledge and on-line distribution of goods and services."  

One of the flagships for the Europe 2020 strategy is the Digital Agenda for Europe flagship 
initiative3,  which  aims  "to  deliver  sustainable  economic  and  social  benefits  from  a  Digital 
Single Market based on fast and ultra fast internet and interoperable applications". The DAE 
also outlines the following targets:  

•  broadband access for all by 2013;  

•  access for all to much higher internet speeds (30 Mbps or above) by 2020; and  

•  50% or more of European households subscribing to internet connections above 100 Mbps 

by 2020. 

Europe  2020  also  commits,  inter  alia,  to  facilitate  the  use  of  the  EU's  structural  funds  in 
pursuit of these goals with a view to overcome social, economic and territorial gaps with the 
provision of an open, affordable and good quality infrastructure to high speed internet across 
Europe. 

The  Commission  in  its  Communication  "European  Broadband:  investing  in  digitally 
driven  growth"4  concluded  that  the  critical  role  of  the  internet  means  that  the  benefits  for 
society  as  a  whole  appear  to  be  much  greater  than  the  private  incentives  to  invest  in  faster 
networks. Therefore, public support  for this  area is necessary, but should not  unduly distort 
competition.  The  Council  subsequently  invited  the  Commission  to  make  a  proposal,  in 

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COM (2010) 2020 
COM (2010) 245 
COM(2010) 472 

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cooperation with the EIB and in collaboration with the MS, to support broadband financing 
without prejudice to the current multi-annual financial framework. 

The European Parliament in its 8 June 2011 Resolution on "Investing in the future: a new 
Multiannual  Financial  Framework  (MFF)  for  a  competitive,  sustainable  and  inclusive 
Europe"5  stressed  the  importance  of  ensuring  the  rapid  execution  of  the  Union's  Digital 
Agenda and of continuing efforts towards reaching by 2020 the targets of making available to 
all EU citizens access to high-speed internet, also in less developed regions 

Finally,  in  its  Communication  "A  Budget  for  Europe  2020"  (hereinafter  the  MFF 
Communication),  adopted  on  29  June  2011,  the  Commission  proposed  to  establish  the 
Connecting Europe Facility, which is new in that it seeks to realise synergies across the fields 
of telecommunications, transport and energy.  

1.3. 

Financing the future: developing a new policy using new means 

The  Commission's  MFF  Communication  is  breaking  new  grounds  in  that  it  extends  the 
existing policy approach for Trans-European Networks to a new field, i.e. broadband internet. 
Apart  from  limited  amounts  of  financial  support  granted  under  the  Structural  Funds,  the 
Union has so far not given support to the development of broadband networks with European 
public  funds.  As  opposed  to  the  decentralised  management  system  used  in  the  Structural 
Funds, it is proposed to manage these funds and financial instruments centrally, for reasons of 
critical  mass  and  to  favour  the  cross-border  nature  of  the  investments.  A  new  set  of 
instruments have also been devised. 

As argued in the policy papers above, the Commission considers access to high-speed internet 
a  crucial  catalyst  for  smart,  sustainable  and  inclusive  growth.  Clearly,  investing  in  this 
infrastructure  is,  first  and  foremost,  the  remit  of  the  private  sector.  However,  the  problem 
definition  developed  in  this  document  (section  2)  argues  that  due  to  a  number  of 
imperfections in the market, such as long time horizons for return on investment and a lack of 
competitive  pressure  on  incumbent  telecoms  operators  as  well  as  the  cross-border  nature  of 
crucial digital services, the market is not making the necessary investments.  

The Commission aims to address this problem through a mix of proven instruments, i.e. grant 
funding,  and  innovative  financial  instruments  (the  term  “innovative”  is  used  to  differentiate 
them  from  grants).  Financial  instruments  can  provide  equity/risk  capital,  guarantees  to 
International  Financial  Intermediaries  (IFIs),  such  as  the  European  Investment  Bank,  that 
provide  lending  to  a  large  number  of  final  beneficiaries  who  have  difficulties  in  accessing 
finance (in this case infrastructure project companies) or through risk sharing with financial 
institutions. This creates a leverage effect, multiplying the volume of finance resulting from 
the EU intervention. Hence, financial instruments are not a substitute for private investment, 
but  indeed  a  way  to  stimulate  private  investment.  That  said,  financial  instruments  cannot 
replace  grant  funding  but  complement  it.  As  will  be  argued  below,  the  optimum  mix  of 
instruments will be determined by the financial viability of the projects proposed.  

As regards digital service infrastructures, most of the proposed action lines have come out of 
research and innovation activities, and have enjoyed Union support, on a small scale, for some 

5  

European Parliament resolution INI/2010/2211 

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time. Here the step change is in the proposed scaling up from pilot projects into Europe-wide 
deployment,  by  connecting  digital  public  infrastructures  offered  separately  (or  in  a 
"disconnected" manner) by a Member State or its regional and local authorities to a Europe-
wide network, thereby making them interoperable and enabling a true Digital Single Market. 

1.4. 

Consistency with other Union policies 

Reinforcing the Single Market   

The suggested CEF initiative aims to benefit several policy fields. First and foremost, work on 
the Digital Single Market is to be seen in the context of the Single Market Act6, which, for 
example,  addresses  the  need  for  interoperable  and  mutually  recognised  systems  of  e-
identification,  e-authentication  and  e-signatures.  These  are  essential  to  ensure  the  free 
movement in the Single Market and in particular cross-border access to online public services 
for  citizens  and  businesses.  Likewise,  effective  functioning  of  cross-border  public 
procurement  is  dependent  on  appropriate  interoperable  electronic  infrastructures.  Transport, 
energy and digital networks are seen as the backbone of the single market. Indeed, efficient 
infrastructures foster rapid free movement of people, goods and services and various types of 
energy  and  data  (with  the  allocation  of  a  sufficient  radio  spectrum)  at  a  reasonable  cost. 
Efficient  economic  integration  relies  on  the  integration  of  efficient  infrastructure  networks. 
Therefore, the development of those networks and of the digital single market have been also 
retained  as  part  of  the  "Twelve  levers  to  boost  growth  and  strengthen  confidence"  in  the 
Single Market Act. 

Synergies with Energy policy – smart grids  

Smart  grids  are  considered  essential  to  better  manage  energy  consumption.  They  allow  for 
decentralised energy production and delivery to improve conservation and energy efficiency, 
moving consumption from peak to off-peak hours, and maintaining a supply/demand balance 
in  energy  networks.  Having  households  and  enterprises  connected  to  communication 
networks is a pre-requisite for smart grids. The proposed guidelines foresee actions to support 
synergies  between  broadband  and  smart  energy  distribution  infrastructure  and  services 
deployment. 

Synergies between digital and transportation networks: Intelligent Transport Systems  

The  deployment  of  ICT  services  and  broadband  networks  is  an  essential  part  of  the 
development  of  Intelligent Transport Systems (ITS). The ITS systems will integrate sensors 
and broadband networks to collect and distribute key pieces of traffic information among cars, 
roadside  infrastructures  and  traffic  planners.  The  use  of  broadband  networks  will  allow 
providing  more  targeted  information  to  individual  commuters  and  has  a  particularly  strong 
potential in the areas of reducing traffic congestion, lowering fuel consumption and helping 
users avoid accidents.  

Synergies with environmental policies  

The  deployment  of  digital  infrastructures  will  contribute  to  the  development  of  energy 
efficient  low-carbon  economy  in  the  areas  including,  but  not  limited  to,  tele-working, 
eCommerce,  eGovernment.  In  addition,  the  above  mentioned  synergies  with  the  policies  in 
the  area  of  transport  and  energy  have  a  high  potential  for  contributing  to  the  reduction  of 

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 COM(2011) 206 final 

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carbon  emission.  Certain  minor  adverse  environmental  effects  in  the  construction  phase  of 
broadband  networks  (i.e.  digging  the  ditches  necessary  to  put  down  the  cables)  could  be 
possible. 

Beyond the above areas, other policy fields would be directly impacted as well, for example, 
the  healthcare  sector  stands  to  benefit  from  huge  savings  through  eHealth  and  telemedicine 
applications.  In  addition,  the  efficiency  and  quality  of  public  services  will  be  enhanced 
through cross-border online access to them. 

1.5. 

Consultations and evaluations 

The Commission has consulted extensively with the relevant stakeholder groups in the areas 
of  broadband  networks  and  digital  service  infrastructures.  In  this  it  became  clear  that  the 
entire  stakeholder  community  is  in  favour  of  the  proposed  activities.  This  section  will  only 
briefly discuss a few examples. A full overview of the consultations and evaluations carried 
out can be found in Annex 5 of this document. 

As  for  large  companies  and  broadband  networks,  in  March  2011  Vice-President  Kroes 
convened a "roundtable" of CEOs to request them to come forward with concrete proposals 
on  how  to  address  the  broadband  investment  challenge.  The  CEOs,  from  a  broad  range  of 
companies  and  stakeholders  with  an  interest  in  broadband  networks  (including  content 
providers,  equipment  makers,  investors  and  telecoms  operators  from  the  world's  leading 
companies  such  as  Nokia,  Alcatel  Lucent,  Google,  Ericsson,  News  Corp  etc7),  submitted  a 
paper  in  July  2011  summarising  their  common  position8.  As  far  as  financing  of  broadband 
networks  is  concerned,  a  clear  signal  in  support  of  the  CEF  was  sent:  "The  European 
Commission should provision public funding (incl. structural funds) to be used in risk sharing 
mechanisms between the EIB and the EC, for viable telecom infrastructure projects. It should 
also  expand  the  RSFF’s  investment  capacity  &  eligibility  to  broadband  investments".  This 
signals  that  the  telecom  sector  is  not  only  receptive  to  the  proposed  instruments  but  also 
acknowledges  its  importance  in  meeting  the  broadband  targets.  It  is  remarkable  in  that  the 
Roundtable  comprised  a  cross  section  of  senior  decision-makers  from  large  telecoms 
operators,  i.e.  the  main  private  sector  investors  that  might  be  crowded  out  by  the  proposed 
CEF  funding  for  broadband  network  projects.  As  regards  the  rising  demand  for  ultrafast 
internet,  the  CEOs  were  equally  clear:  "Internet  traffic  is  expected  to  be  multiplied  by  4 
between 2010 and 2015". 

As  for  SMEs  and  broadband  networks,  a  recent  public  consultation  on  Cloud  Computing 
revealed that "despite the great opportunities offered by web-based services, the reality is very 
different  for  small  businesses.  Almost  two  in  ten  small  businesses  cannot  access  even  basic 
broadband. And even those that can access basic broadband, the service received often does 
not meet the needs of the business – eighteen per cent say there are services they are unable 
to  use  via  their  existing  Current  Generation  Broadband.  (…)  Inadequate  connectivity  and 
speed is resulting in reduced productivity. An FSB (UK Federation of Small Businesses) study 
found  that  inadequate  broadband  speed  reduces  productivity  by  33  per  cent  for  small 
businesses."  

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For a complete list of participants see: 
http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/508&type=HTML 

http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/508&format=HTML&ag

ed=0&language=EN&guiLanguage=en 

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As regards digital service infrastructures, most of these activities have been developed by the 
Commission on a smaller scale for quite some time, e.g. through CIP pilots. Accordingly, the 
Commission services are in close touch with the respective stakeholder communities. As an 
example, the Comité des Sages for digitisation recently endorsed the approach by Europeana 
so far, and recommended continuing the effort.  9 In a respective public consultation 75% of 
the  participants  advocated  EU  funding  as  an  accelerator  for  digitisation  processes  across 
Europe. 

1.6. 

Commission inter-service consultation and Impact Assessment Board process 

The Impact Assessment inter-service steering group for this measure was consulted twice in 
July  2011  on  the  drafts  of  this  Impact  Assessment.  The  financial  meeting  took  place  on  28 
July  2011  and  the  minutes  from  this  meeting  are  included  in  an  annex  to  this  IA.  The 
consulted  DGs  included  MOVE  ENER  RTD,  SG,  ENV,  CLIMA,  MARE,  REGIO,  ECFIN, 
BUDG, COMP, ELARG, EMPL, ENTR, SJ, MARKT, as well as the EEAS. 

The  Impact  Assessment  Board  examined  a  draft  of  this  document  on  31  August  2011.  Its 
assessment  was  that  the  document  could  be  further  improved,  namely  with  regard  to  the 
intervention  logic  and  by  providing  further  detail  on  the  policy  options.  Subsequently,  this 
document was updated to current form, including more information on the baseline scenario, a 
reworked  problem  identification  chapter,  introducing  sup-options  to  the  option  "Broadband 
networks and digital service infrastructures in the trans-European networks of infrastructure", 
and re-defining the policy and objectives as well as updating the assessment of impacts. 

2.  PROBLEM DEFINITION 

The main problems for both broadband and digital services identified are listed in the box and 
will be developed in the chapter below: 

Summary of problems identified 

Problem 1a: High-speed internet is a key infra-structure for the 21st century, but Europe falls 
far short of the necessary investments, leaving potential for growth and societal 
benefits untapped. 

Problem 1b: There is little competitive pressure on incumbents to invest in modern broadband 
networks. Even where projects could be financially viable, alternative public and 
private  investors  (including  local  administrations  and  public  utilities)  are  held 
back by high capital costs (interest rates) and the lack of long-term funding. 

Problem  1c:  There  is  currently  no  adequate  strategy  to  publicly  support  the  rollout  of 
broadband networks in areas where there is no business case. Current levels of 
European  support  are  sub-critical  and  are  hampered  a  lack  of  planning  and 
absorption capacity at the regional level. 

9 http://ec.europa.eu/information_society/activities/digital_libraries/doc/refgroup/annexes/results_consult.pdf 

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Problem  2a:  The  private  sector  will  not  replace  public  investment  in  the  digital  services 
central  elements  (platforms,  generic  services  etc)  essential  to  ensure  trans-
European connectivity, access and interoperability. 

Problem 2b: Despite efforts on technical interoperability, on-line public services may stop at 

the border. 

2.1. 

High-speed internet and the services it supports: potential for growth and societal 
benefits are untapped. 

High-speed  broadband  is  a  crucial  infrastructure  of  the  21st  century.  The  internet,  and 
technologies  using  the  internet,  support  innovation,  economic  growth  and  improvements  in 
daily life for both citizens and businesses. Wider deployment and more effective use of digital 
technologies enable Europe to address its key challenges and provide Europeans with a better 
quality  of  life  through,  for  example,  better  health  care,  safer  and  more  efficient  transport 
solutions, cleaner environment, new media opportunities and easier access to public services 
and cultural content. 

Broadband networks are generating much of the innovation that is shaping user demand in the 
electronic  communications  markets  of  the  future.  These  investments  will  stimulate  new 
demand  for  content/services,  new  innovation,  which  will  in  turn  trigger  more/new  supply 
(virtuous cycle). Broadband networks will also be important for ICT progress which will in 
turn  bring  unique  and  radical  solutions  for  the  societal  challenges  ahead  in  areas  such  as 
health and demographic change, energy and resource efficiency, transport and congestion as 
well  as  climate  change  where  broadband  networks  can  offer  potential  for  speedier  green 
transformation,  among  others  by  facilitating  deployment  of  smart  energy  networks.  In 
addition, the availability of broadband networks will allow for more flexible ways of working. 
One example is self-employed who work virtually for firms that can increasingly source the 
best workers in cyberspace, while workers can maximise the return on their knowledge and 
experience. Increasingly, users will be able to generate content which will become a source of 
income,  especially  in  creative  industries  and  entertainment.  At  the  same  time,  reconciling 
work and family life will become more feasible and will provide a new impetus for including 
currently excluded groups. 

However,  the  digital  infrastructure  of  the  future  is  more  than  connecting  pipes  or  installing 
antennas.  In  the  digital  world  networked  services  are  an  infrastructure  on  their  own 
(regardless  of  the  physical  networks  they  are  channelled  through).  The  Europe  2020  has 
acknowledged  that:  "The  single  market  was  conceived  before  the  arrival  of  Internet,  before 
information and communication technologies became one of the main drivers of growth and 
before  services  became  such  a  dominant  part  of  the  European  economy.  The  emergence  of 
new services  (e.g. content  and media, health, smart  energy  metering)  shows  huge  potential, 
but  Europe  will  only  exploit  this  potential  if  it  overcomes  the  fragmentation  that  currently 
blocks the flow of on-line content and access for consumers and companies". Digital service 
infrastructures are the innovative, interoperable and cross-border services which address fields 
such  as  education  and  culture  (eg  Europeana  see  box  below),  eID  management  systems, 
eProcurement services, service infrastructure for PSI, cross-border eHealth services, security 
infrastructures, critical information infrastructures and safe internet service infrastructure.  

Example: Europeana 

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Europeana is the European digital library that provides a single entry to digital content held by 
public cultural institutions (Libraries, museums, archives,..). The digitisation and preservation 
of  this  content  is  done  by  the  public  sector  in  the  Member  States  with  public  support, 
sometime  in  partnership  with  the  private  sector.  The  EU  effort  in  the  CEF  will  enable  the 
aggregation  of  this  content  into  a  unique  platform  providing  ultimately  access  to  all  EU 
cultural  resources.  With  around  40  M€   investment  per  year  at  EU  level  in  the  last  4  years, 
Europeana  provides  access  today  to    more  than  19  million  cultural  objects  held  by  cultural 
institutions  in  the  27  Member  States.  Although  it  is  already  a  world  reference  for  digital 
cultural  material,  it  presents  still  a  small  part  of  European  cultural  material  held  by  public 
institutions.  

The effort needs to be pursued both at national level (digitisation and preservation) and at EU 
level (integration and aggregation) to ensure not only the widest access and diffusion of our 
culture to all citizens but also its re-use by European creators to develop innovative content 
material and services. It is the role of the public sector, as indicated in the "Comite des Sages 
report" of 2010 on digitisation, to maintain and make access to publicly held cultural content. 
This is essential to ensure that exploitation and reuse of this content is open to all EU creators 
and  creative  industries  (cultural  arts,  cinema  and  audiovisual,  education,  games,  design  and 
fashion,..)  and  not  only  to  a  limited  number  of  private  actors  that  would  monopolise  the 
exploitation  of  our  cultural  resources.  Creative  industries  represent  more  than  3.3  %  of  EU 
GDP and consist of a large number of small size companies for which publicly owned content 
represent a major creation resource.  

Both  components  of  the  proposed  CEF  interventions  for  telecommunications  infrastructures 
(broadband  networks  roll-out  and  deployment  of  digital  service  infrastructures)  are 
interconnected  and  mutually  reinforcing.  While  sufficient  broadband  capacity  is  the  key 
enabling  technology  not  only  for  web  growth,  but  also  for  research,  innovation  and  digital 
services, its business case – and hence the incentive for the private sector to invest - is heavily 
dependent  on  its  use.  Conversely,  both  the  design  and  take  up  of  new  broadband  enabled 
services and solutions relies on the availability, speed, reliability and resilience of the physical 
networks.  

However,  a  general  problem  is  externalities  i.e.  that  many  benefits  from  services  provided 
over  high-speed  internet,  such  as  tele-medicine  applications,  accrue  to  public  benefit  and 
cannot  be  captured  by  private  investors.  There  is  also  a  problem  of  suboptimal  resource 
allocation. Low penetration rates impede the development of value added bandwidth intensive 
services, and they reduce the overall impact that ICT related investments have on productivity 
and competitiveness of the EU economy as a whole. 

2.2. 

Broadband networks – the need to stimulate investment in the infrastructures of 
the future 

As mentioned above, broadband networks are a crucial infrastructure for Europe to get on a 
track for smart, sustainable and inclusive growth. However, about 7% of citizens are not at all 
connected to broadband internet – they live in "white spots"10. What is more, Europe's current 
internet  infrastructure  relies  on  old  networks  of  copper  cables.  Only  1-2%  of  citizens  are 
connected  to  ultra-fast  internet  via  fibre  networks  (compared  to  12%  in  Japan  and  15%  in 

10 

Reported in "Broadband coverage in Europe", available at: 
http://ec.europa.eu/information_society/eeurope/i2010/benchmarking/index_en.htm 

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South Korea). These modern networks can guarantee connections of 100 Mbps and more and, 
in  times  of  ever  increasing  internet  traffic  are  widely  regarded  as  the  infrastructure  of  the 
future. 

This  old  infrastructure  limits  the  potential  benefits  from  the  internet,  because  many  of  the 
services  offering  social  benefits  or  creating  value-added  require  large  bandwidth  capacities. 
This is why the Digital Agenda for Europe aims to achieve the objectives of broadband access 
for all by 2013, access for all to much higher internet speeds (30 Mbps or above) by 2020, and 
50% or more of European households subscribing to internet connections above 100 Mbps. 

Figure 1 – Bandwidth need of a selected sample of digital technologies and services 

eHealth: 
Remote 
Diagnostic 
Examination

Multiple 
application 
usage

eHealth: Virtual 
Care Unit

HD education 
fast downloads

HD 
telepresence

HDTV

100Mbps

25Mbps

8Mbps

s
t
n
e
m
e
r
i
u
q
e
r

i

h
t
d
w
d
n
a
b
m
a
e
r
t
s
n
w
o
D

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

2.2.1.  The investment challenge 

As evidenced in the most recent DAE scoreboard, Europe is currently not on track to achieve 
these ambitious targets. 11 

•  The EU coverage of high speed internet is well behind that of other competitors around 

the world 

•  The  DAE  scoreboard  also  indicates  that  the  EU  has  today  almost  the  lowest  number  of 
FTTH  lines  and  estimates  indicate  that  growth  in  the  adoption  of  this  technology  in  the 
EU will increase at lower speeds than in other countries.  

11  

http://ec.europa.eu/information_society/digital-agenda/scoreboard/docs/scoreboard.pdf 

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Figure 2 – FTTP: number of broadband access connections 

If  Europe  wants  to  achieve  its  ambitious  broadband  targets,  substantial  investment  will  be 
needed.  The  exact  amounts  needed  are  difficult  to  calculate  but  a  review  of  recent  studies 
indicates that between € 38bn a nd € 58bn would be needed to ach ieve the 30 Mbps coverage 
for all by 2020 (using a mix of VDSL and next generation wireless) and between € 181bn and 
€ 270bn to provide sufficient coverage so that  50% of households are on 100 Mbps services. 

Market analysts' estimates are that major telecommunications operators alone (and under the 
current investment environment) will invest not more than. €50bn by 2020 
in ultra-fast fibre 
access networks. This would leave an investment gap of up to €220bn. 

The problems with the roll-out of the broadband infrastructure touch primarily areas which do 
not have a high density of population, both in Cohesion and in non-cohesion Member States.  
The EIB has recently commissioned a study which demonstrates that most of the investment 
challenge is with large countries of the EU. For instance Germany, France, Italy and the UK 
account for approximately half of the total investment need. The EU-15 countries account for 
77% of the investment challenge and new Member States for the remaining 23%.1 

Problem 1a: High-speed internet is a key infra-structure for the 21st century, but Europe falls 
far short of the necessary investments, leaving potential for growth and societal 
benefits untapped. 

2.2.2.  Market failures and the limitations of regulatory policy 

The  shortcoming  in  private  investment  as  identified  above  can  be  attributed  to  a  number  of 
market failures: 

•  There is little competitive pressure on incumbent network operators, which are mainly 

ex-state monopolies.  

•  Limitations of regulatory approaches: Incumbent network operators have no interest to 
invest because regulation imposes open network access for (competitor) service providers. 
But open access is the essence of competition and without competition on a level playing 
field  services  are  expensive  and  only  few  customers  would  be  willing  to  pay  for  them. 
Since coverage is directly linked to penetration (and vice versa), the business case is weak 
in a vast range of areas except for those areas where not only population density is high 

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but also where people are educated and wealthy enough. The combination of these factors 
makes  the  business  case,  for  certain  areas,  very  difficult.  This  results  in  "islands  of 
connectivity"  and  very  large  areas  where  the  current  model  is  not  working.  Existing  (or 
planned) regulatory instruments can only partially address this issue. 

The regulatory context 

The EU regulatory framework aims at promoting efficient investment and innovation in new 
and  enhanced  infrastructure,  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.  

In  particular,  under  under  Article  16(4)  of  Directive  2002/21/EC  National  Regulatory 
Authorities  (NRAs)  are  developing  regulatory  responses  to  the  challenges  raised  by  the 
transition  from  copper  to  fibre-based  networks,  in  the  form  of  asymmetric  regulatory 
obligations  imposed  to  undertakings  enjoying  significant  market.  Member  States  may  also 
impose obligations of reciprocal sharing of facilities on undertakings operating an electronic 
communications network to overcome bottlenecks in the civil engineering infrastructure and 
terminating segments. 

In addition, the Commission has recently adopted a Recommendation on regulated access to 
Next  Generation  Access  Networks  with  the  view  to  provide  guidance  to  NRAs  in  order  to 
ensure  regulatory  consistency  across  the  EU  while  providing  more  legal  and  regulatory 
certainty for market players.12  

Finally,  Community  Guidelines  for  the  application  of  State  aid  rules  in  relation  to  rapid 
deployment of broadband networks13 designed to facilitate investments through summarising 
the Commission's policy in applying the State aid rules of the Treaty to measures that support 
the deployment of traditional broadband networks and the rapid roll-out of NGA networks.  

However, the Commission acknowledges that the funding gap can only partially be addressed 
through existing or planned regulatory instruments. 

•  Where there is a business case for investment, alternative public and private investors 
(including  local  administrations  and  public  utilities)  face  capital  constraints,  because 
banks  perceive  them  as  higher  risks,  thereby  charging  higher  interest.  Hence,  even 
potentially viable projects are not undertaken.  

•  Similarly, capital constraints are linked to long-term nature of infrastructure projects: 
Alternative investors are not able to obtain long-term loans – loan maturities do not reflect 
the specificities of infrastructure investment.  

Problem 1b: There is little competitive pressure on incumbents to invest in modern broadband 
networks. Even where projects could be financially viable, alternative public and 

12  
13  

 2010/572/EU 
 2009/C 235/04) 

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private  investors  (including  local  administrations  and  public  utilities)  are  held 
back by high capital costs (interest rates) and the lack of long-term funding. 

2.2.3.  Existing Member State and EU policies 

Both Member States and the EU have recognised that the benefits which the internet creates 
for society as a whole are much greater than private incentives to invest in faster networks. 
Public intervention is particularly needed in areas where the business case for investment is 
weak. These are mainly areas with low or medium levels of population density. 

Not least as a result of coordination work under the Digital Agenda for Europe, a number of 
Member  States  have  adopted  national  broadband  plans  but  few  have  fully  operational  plans 
for  next  generation  networks  with  concrete  implementing  measures  to  realise  their  targets, 
notably as regards the necessary funding. It appears that Member States have no solution to 
the investment gap and, as mentioned above, Member States have invited the Commission to 
make  a  proposal,  in  cooperation  with  the  EIB  and  in  collaboration  with  the  MS,  to  support 
broadband financing on the EU level. 

Certain  efforts  exist  on  the  EU  level  to  support  the  roll-out  of  broadband  networks,  mainly 
under the Structural Funds and the European Agricultural Fund for Rural Development as part 
of  the  recovery  plan:  In  the  2007-2013  financial  period  the  Structural  Funds  have  made  a 
modest but important contribution to investment in broadband infrastructure: 2.3bn, of which 
1.9bn in convergence regions but only 370M in competitiveness regions, although today both 
convergence and competitiveness regions face a similar challenge in terms of investment in 
high  speed  internet.  Under  the  European  Agricultural  Fund  for  Rural  Development,  ca. 
€1.02bn have been earmarked for broadband investment. 

Structural Funds and European Agricultural Fund for Rural Development support has so far 
exclusively  relied  on  grant  funding.  Although  available  in  principle,  financial  instruments 
have  not  been  used  to  finance  infrastructure,  which  has  limited  the  potential  impact  of  the 
funds. The management of Structural Funds is de-centralised, i.e. European funds are spent by 
national and regional authorities. 

There  are  severe  limitations  to  what  the  current  Structural  Funds  model  of  supporting 
broadband  networks  can  achieve:  The  2010  Strategic  Cohesion  Report14  highlighted  great 
difficulties  in  regional  capacity  to  plan,  manage  and  implement  broadband  projects.  Only 
18.1% of the available funds had been absorbed by March 2010 against an overall average for 
all  other  themes  of  27.2%.  Substantial  problems  of  absorption  exist  particular  in  Member 
States such as Romania, Bulgaria, Greece and Poland. 

Other  existing  EU  activities  supporting  the  rollout  of  broadband  networks  are  carried  out 
under the Risk Sharing Finance Facility (RSFF) and the EIB but the current levels of funding 
are sub-critical.  

Problem  1c  There  is  currently  no  coherent  strategy  to  publicly  support  the  rollout  of 
broadband networks in areas where there is no business case. Current levels of 
European  support  are  sub-critical  and  are  hampered  by  a  lack  of  planning  and 
absorption capacity at the regional level. 

14  

http://ec.europa.eu/regional_policy/policy/reporting/cs_reports_en.htm 

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See also annex 4 on broadband and its impacts for more information. 

2.3. 

Digital  service  infrastructures:  The  Digital  Single  Market  is  still  far  from  being 
reality 

As  mentioned  above,  digital  service  infrastructures  are  the  innovative,  interoperable  and 
cross-border  services  which  address  fields  such  as  education  and  culture,  eID  management 
systems, eProcurement services, service infrastructure for PSI, cross-border eHealth services, 
security  infrastructures,  critical  information  infrastructures  and  safe  internet  service 
infrastructure. 

In practice, the policy challenge on the European level is mainly to ensure the interoperability 
and cross-border availability of online service infrastructures developed by the public sector 
in  Member  States,  regions  and  localities.  Without  these  infrastructures,  the  Digital  Single 
Market will remain incomplete. 

Example: Public Sector Information 

The platform for open access to public sector information follows the same line as Europeana 
but addresses all publicly held information that can be made available for access and re-use. 
National  portals  providing  access  to  information  held  by  administrations  and  public 
organisations  are  being  developed  today  in  several  Member  States  and  the  trend  is 
acceleration to cover all of them. The trend is driven not only by transparency and democracy 
considerations but also and mainly by economic considerations given  the huge  potential for 
re-use of this content in new business opportunities. Examples are geographical information, 
statistics,  weather  data,  business  information,  archives  and  publicly  funded  research  data. 
Currently  the  potential  of  the  re-use  of  public  sector  data  in  new  information  products  and 
services  and  for  efficiency  gains  in  administrations  is  largely  untapped.  That  is  why  the 
Digital Agenda for Europe singled out the re-use of public sector information as one of the 
key areas for action.  

The EU effort will enable the creation of a single access point to data sets produced by public 
bodies  in  the  Member  States  at  national,  regional  or  local  level  and  by  the  European 
institutions (data.eu infrastructure). This can only be done only through EU funding in order 
to  support  the  harmonisation  and  the  interoperability  of  datasets  at  European  level  and  to 
provide  easy  access  to  these  sets  which  an  essential  condition  for    the  development  of  EU-
wide  innovative  applications  and  services.  Public  sector  information  is  a  public  good  that 
should available to all businesses at a marginal cost The overall economic gains from further 
opening up PSI by allowing easy access are estimated at around EUR 40 billion for the EU27, 
and aggregate economic impacts across the whole EU27 economy are estimated to be of the 
order of EUR 140 billion, showing clearly that there are large economic benefits from easier 
access to and greater use of PSI. 

2.3.1.  The elements of a digital service infrastructure 

A digital service infrastructure is mainly composed by three elements:  

a)  Core  platforms  are  the  central  element(s)  or  hub(s)  of  the  digital  service 
infrastructures  essential 
trans-European  connectivity,  access  and 
interoperability.  This  may  encompass  the  continuous  coordination,  operation, 
maintenance, enhancement and promotion of digital service infrastructures. This may 
also encompass physical equipment, such as servers, dedicated networks and software 
tools. Core service platforms are open to all Member States. 

to  ensure 

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b)  Generic  services  provide 

the  functionality  and  content  of  digital  service 
infrastructures, e.g. making public sector information open to online access. They may 
be interconnected through a core service platform.  

c)  Applications add value to the core service platforms and/or generic services. They are 
developed by the private or public sector, or both in partnership, also for the purpose 
of commercial exploitation. .  

The CEF will finance only the core platforms and the generic service levels. 

2.3.2.  Public interest and market failures in digital service infrastructures 

As far as financing is concerned, for public services the first two layers are often relying on 
investments  by  public  administrations  at  national  and  European  level,  while  the  third  may 
concern  new  business  models  eg.  take  up  of  the  public  eID  systems  in  eBusiness  or 
eCommerce  by  the  private  sector  as  well  as  cross-border  public  'services'  using  eID  e.g. 
university  registration.  In  areas  where  services  could  be  entirely  private  (eg.  smart  energy 
distribution), initial public investments might be needed for the first two layers to encourage 
private  actors  recover  sunk  costs  of  early  adopter  and  minimise  the  risks  of  engaging  into 
innovative business models (layer 3).  

The rationale for public (mainly: Member State) investment in digital service infrastructures 
is  based  on  the  public  good  created,  be  that  in  reducing  energy  consumption  through  smart 
grids,  in  making  transactions  more  trustworthy  through  electronic  identification,  or  through 
protecting children from harmful online content. 

Example: Safer Internet 

Children  across  the  EU  have  adopted  the  Internet  as  a  main  part  of  their  everyday  life  for 
discovering, studying, communicating or for simply playing. As the benefits of the Internet to 
our  kids  continue  to  grow,  so  are  also  some  important  risks.  These  include  exposure  to 
harmful  content,  grooming,  the  circulation  of  child  abuse  images  and  videos  as  well  as  the 
relatively  limited  availability  of  high  quality  content  specifically  targeting  children.  The 
infrastructure will provide support to create a better and safer internet for kids on line. 

The  services  are  of  public  interest  where  extended  EU  funding  is  likely  to  be  needed  to 
maintain  the  EU  level  cooperation  and  integration.  Industry,  including  online  content 
providers, may subscribe to maintaining some of the services (that support actions they have 
committed  to  under  the  self  regulation  –  e.g.  age  verification,  rating)  and  even  contribute 
under corporate responsibility goals to more general awareness services but there will still be 
a need for EU funding on top of the services and activities funded at national level by the MS. 

The  basic  infrastructures,  i.e.  funding  layers  1  and  2  of  digital  infrastructures  in  areas  of 
public services is often affected by a strong degree of market failures for several reasons:  

•  Economies  of  scale  and  scope:  The  lack  of  interoperable  public  services  impedes  the 
provision  of  cross-border  services  by  private  businesses.  This  is  especially  the  case  for 
markets that depend highly on ICT infrastructure such as the European energy market that 
needs European interoperability for the widespread deployment of smart metering systems 
based on broadband.  

• 

In  small  countries  they  risk  being  "sub-dimensional"  (lacking  sufficient  scale)  and  in 
large countries they risk engaging with fragmented solutions which are not interoperable 

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on  a  cross-border  basis  (and  often  on  a  cross-regions  basis)  and/or  lack  the  suitable 
incentives to be interoperable.  

•  Network  effects  can  be  associated  to  the  provision  of  European  cross-border  services 
such as eSignature or eInvoicing. The value of these services to economic operators will 
increase as more operators use them. 

Indeed, regarding layers 1 and 2, the Union has made, for example, good experiences with the 
pan-European  research  and  education  network  "Géant",  the  specific  governance  of  which 
minimises  the  sub-dimensional  risks  and  ensures  efficient  cross-border  interoperability. 
Moreover, a cost-sharing model sees the participation of Member States (represented by the 
National  Research  and  Education  Networks  "NRENs")  and  European  Commission, 
optimising  administration,  operation  and  procurements  trough  "DANTE",  the  European 
Research Networking Organisation15. 

Problem  2a:  The  private  sector  will  not  replace  public  investment  in  the  digital  services 
central  elements  (platforms,  generic  services  etc)  essential  to  ensure  trans-
European connectivity, access and interoperability. 

2.3.3.  The cross-border policy challenge  

Whereas  Member  States  can  be  expected  to  engage  in  the  modernisation  of  their  public 
services to realise efficiency gains and savings resulting from the use of digital technologies, 
they  have  currently  few  incentives  to  invest  in  the  interoperability  and  cross-border 
dimensions  of  such  digital  public  services,  even  in  areas  in  where  technical  viability  of  the 
interoperability  has  been  demonstrated.  The  resulting  fragmentation  of  systems  and  (often 
sub-optimal) solutions will be a major obstacle to the emergence of the digital single market, 
prevent the market expansion and growth of cross-border service and perpetuate transaction 
costs for pan-European companies.  

An additional challenge for pan-European public services is caused by the multilinguality of 
the  EU.  If  these  services  are  to  be  adopted  by  the  citizens  and  administrations  of  all  EU 
countries, the users must be served in their own languages. Yet the system needs to provide 
for real-time exchange of information, making the language barriers disappear. Each Member 
state primarily has an interest to support and promote its own language(s), therefore the pan-
European service infrastructure must provide the necessary incentives and facilities to make 
public service infrastructures multilingual. 

Indeed to reap the benefits of Single Market acquis as regards areas such as the provisions of 
the  Services  Directive,  eInvoicing,  eProcurement  wide  implementation  of  such  cross-border 
services are essential. In addition, the DAE announces that the ICT sector will lead the way 
on reporting its greenhouse gas emissions, set-up wide-scale pilot actions that give Europeans 
secure online access to their medical health data so that wherever they are, they can also give 
doctors access to their medical record. Effective cross-border solutions are necessary to fulfil 
these commitments.  

15  
DANTE (Delivery of Advanced Network Technology to Europe), limited liability company and a “Not 
for  Profit”  organisation  established  in  1993  in  Cambridge,  plans,  builds  and  operates  advanced  networks  for 
research and education. It is owned by European NRENs (national research and education networks), and works 
in partnership with them and in cooperation with the European Commission.  

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In summary, the current situation results in high transaction costs for European companies, in 
particular  SMEs  in  search  of  growth  opportunities  beyond  their  home  markets,  but  also  for 
increasingly  mobile  Europeans.  More  direct  impact  of  limited  inter-operability  of  public 
services  affects  in  particular  citizens  living  in  state  border  areas,  or  working,  studying  or 
seeking medical treatment cross-border. 

Problem 2b: Despite efforts on technical interoperability, on-line public services may stop at 

the border 

See also more information in annex on the digital service infrastructures. 

2.4. 

Baseline scenario for broadband and digital services 

Based on the above discussion, the baseline scenario for broadband networks can be assumed 
to be the following: 

•  The  revamped  regulatory  framework,  including  the  NGA  Recommendation,  cannot  be 
expected  to  sufficiently  improve  the  business  case  for  investment,  in  particular  outside 
densely populated areas.  

•  Alternative investors will continue to face capital constraints, with high interest rates and 

insufficient long term loans.  

•  A gap in private investment of up to € 220bn will remain.  

•  Public support for broadband will remain sub-critical and lacking impacts. Under the new 
financial  period  (2013-2020)  the  Structural  Funds  can  be  expected  to  continue  to  make 
support available, at least for convergence regions, but the problem lacking planning and 
absorption capacity will remain. Another important source of funding, the recovery plan 
financing,  ca.  €1.02bn  earmarked  for  broa dband  investment  under  the  European 
Agricultural  Fund  for  Rural  Development  as  part  of  the  recovery  plan,  would  be 
discontinued.  

•  Using  exclusively  grant  funding,  public  support  will  continue  to  leverage  only  limited 

private investment. 

The baseline scenario for digital service infrastructures can be assumed to be the following: 

•  As  mentioned  above,  many  of  the  digital  service  infrastructures  have  been  promoted  by 
the  Union  for  some  time,  e.g.  as  pilots  under  the  Competitiveness  and  Innovation 
Programme.  Although  most  of  these  digital  service  infrastructures  are  ready  for 
deployment, current circumstances would not allow for this deployment to happen. 

•  Federating sufficient common support from the Member States at the time of austerity is 
unlikely and the private sector will not replace public investment in central (and generic) 
service elements such as platforms or interoperable protocols. 

•  Many public online services would continue to stop at the border. This in turn would keep 

citizens from benefitting from public services across borders 

•  The  important  potential  for  business  models  which  rely  on  the  availability  of 

interoperable, European-wide digital infrastructures will remain untapped. 

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The  physical  infrastructures  (broadband  networks)  and  digital  service  infrastructures  are 
closely interlinked. Should the EU not be able to reach its targets for broadband penetration, 
this  would  slow  down  the  development  of  value  added  bandwidth  intensive  services,  and 
reduce  the  overall  impact  that  ICT  related  investments  have  on  productivity  and 
competitiveness of the EU economy as a whole. 

A study commissioned by the European Commission (Micus 2008), identifies three scenarios 
concerning the cumulative growth effect of broadband deployment, as is shown in the graph 
below.  However,  it  identifies  the  worst  case  scenario  as  the  most  realistic,  meaning  that 
Europe's broadband penetration levels as they are in 2010 no longer permit the economies to 
exploit the potential of broadband growth.  

Figure 3 - Broadband-related GDP growth (EU27) 2006-2015 (cumulative), source Micus 2008 

In  sum,  private  investment  in  broadband  would  thus  continue  to  be  insufficient  in  many 
regions due to lack of competitive pressure and high commercial risk. Equally, public online 
services can be expected to remain under-developed and not inter-operable across borders due 
to  fragmentation  of  sub-optimal  efforts  and  technical  solutions,  lack  of  critical  mass,  high 
costs for service providers and beneficiaries of services.  

2.4.1.  Sensitivity analysis 

Considering the high degree of uncertainty surrounding projections over a relatively long time 
horizon,  especially  for  such  complex  systems  as  digital  infrastructures  and  networks,  an 
evaluation  is  provided  below  for  the  possible  impact  of  external  factors  on  the  assumptions 
underlying the baseline scenario.  

First,  the  high  degree  of  uncertainty  regarding  budgetary  constraints  at  the  level  of  the 
Member  States  needs  to  be  taken  into  consideration.  The  development  of  hard  and  soft 
infrastructure,  being  costly,  very  much  depends  on  the  coherent  and  efficient  use  of  public 
and private resources available. Fiscal austerity and structural reforms in many EU countries 
will drive or have already driven public authorities to reassess their infrastructure investment 
programmes.  For  example,  "in  Portugal  and  Spain,  stopping  or  postponing  infrastructure 
projects  by  downscaling  investment  expenditures  is  one  of  the  most  important  contributions 
on the expenditure side. In Spain, a reduction of 0.5% of GDP is planned between 2011 and 
2013. In Portugal, cumulative savings on investments will amount to 1.2% of GDP by 2013. 

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In  Ireland  and  Slovenia,  infrastructure  spending  will  be  reduced,  respectively,  by  1.6%  of 
GDP from 2011-14 and 0.8% of GDP in 2010-13"16. 

Moreover,  access  to  financing  by  companies  and  infrastructure  projects  is  particularly 
challenging in the countries with relatively high sovereign risk and subsequent uncertainties 
as regards the economic/regulatory environment (cost of capital, reduction of agreed support 
under  existing  incentive  schemes,  scaling  down  of  public  investment  programmes,  taxation, 
impact  of  sovereign  rating  on  investor  behaviour,  etc).  Finally,  potential  future  liquidity 
shortages of financial institutions will have an impact on the availability of financing even for 
healthy corporations and projects. 

It is uncertain to which extent these aspects will impact the implementation of infrastructure 
projects (in general). It is however likely that this uncertainty will be reduced by the creation 
of  the  CEF  with  its  strengthened  and  more  targeted  financial  EU  contribution.  In  sum, 
although there are considerable uncertainties related to large scale EU infrastructure projects, 
the  CEF  would  to  a  certain  extent  counter-balance  these  and  consequently  reduce  risks 
perceived by investors, thus increasing their incentives to invest in infrastructure projects. 

2.5. 

Justification for EU action: subsidiarity and EU added value 

As mentioned above, the Commission will base its proposal for a Connecting Europe Facility 
on articles 170-172 TFEU: "Action by the Union shall aim at promoting the interconnection 
and interoperability of, and access to, national networks, taking into account in particular the 
need to link islands, landlocked and peripheral regions with the central regions of the Union 
(Art 170 TFEU)." Thus, the Union has the legal basis to act. 

In terms of subsidiarity and on the basis of the Treaty mandate, the proposal for a Regulation 
on guidelines will not change the general division of competencies between the EU and the 
Member States, but will rather aim at improving the effectiveness of both the EU and Member 
States action in achieving the Trans-European Networks policy objectives within this division 
of  competencies.  The  objectives  outlined  below  will  not  be  achieved  by  voluntary 
coordination  among  Member  States  alone  due  to  the  risk  of  duplication  of  efforts,  setting 
different standards, difficulties in targeting the projects generating most externalities and the 
transnational characteristics of the spillovers generated by ICT.  

As mentioned in the problem definition section, the economic and social benefits of network 
investment accrue not only to the investor but to society as a whole. Indeed, while the costs 
for infrastructure investment accrue locally, a considerable part of the benefits accrue across 
the  Single  Market  or,  indeed,  even  globally.  This  very  characteristic  argues  in  favour  of 
action at a higher level than simply the Member State.  

The  more  and  the  better  people  are  connected,  the  larger  is  the  market  for  eCommerce  and 
online services, including innovative, high value-added business models. Broadband networks 
are a basis for a more efficient organisation of the European economy as a whole, increasing 
productivity  and  reducing  transaction  costs,  both  within  Member  States  and  across  borders. 
These  benefits  will  be  reinforced  through  the  network  effects:  the  more  users  benefit  from 
high-speed broadband, the more visible and effective are the above impacts. 17 

16 OECD, Restoring public finances, 2011. 
17 Deloitte report "background support study to the DAE" 

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As  regards  broadband  networks  in  particular,  investment  in  modern  telecommunications 
infrastructures  needs to come, mainly, from the  private sector.  However, as seen above, the 
market  is  falling  short  of  the  necessary  investments,  and  traditional  policy  approaches  to 
infrastructure  investment  seem  to  be  unable  to  deliver  solutions.  That  is,  not  least,  because 
private  capital  markets  are  organised  globally,  and  investors  perceive  national  markets  in 
Europe  as  too  small,  and  bottom  up  diversification  as  costly.  As  a  solution,  EU-level 
intervention including the joint establishment of financial instruments such as loan guarantees 
or  equity  funds  supporting  pan-European  projects  can  provide  tools  for  attracting  private 
sector funds from both within and beyond the EU.  

As  regards  digital  service  infrastructures  in  particular,  there  is  a  clear  case  for  EU  added 
value  through  coordinating  and  connecting  Member  State  activities  across  borders,  thereby 
ensuring  interoperability  and  EU-wide  usability.  Indeed,  due  to  non-territoriality  of  digital 
service infrastructures, and often their inherently cross-border character such as for example 
in  case  of  seamless  cross-border  eGovernment  services,  relevant  objectives  of  Europe  2020 
and the DAE can only be achieved by a pan-European coordinated infrastructural approach. 
This  is  the  case  with  the  common  services  supporting  cross-border  and  cross-sectoral 
interaction between European public administrations defined and implemented under the ISA 
program  but  where  their  sustainability  remains  nevertheless  an  issue.  In  the  case  non-EU 
action, Member States action is prone to coordination failure, setting different standards and 
not  targeting  projects  which  generate  the  most  externalities.  The  current  situation  is  indeed 
marked  by  "national  islands"  even  in  sectors  prone  to  duplicability  or  transferability  of 
solutions  without  major  issues  of  culture  or  not-invented-here  syndromes  such  as  e-health 
applications. 

3.  OBJECTIVES  

3.1. 

Overall objective 

In  addition  to  addressing  the  Treaty  mandate  as  stated  above,  the  overall  objectives  of  the 
proposed  initiative  are  those  of  the  Europe  2020  strategy  and  its  Digital  Agenda  flagship 
initiative:  delivering  sustainable  economic  and  social  benefits  from  a  Digital  Single  Market 
based on fast and ultra fast internet and interoperable applications, with broadband access for 
all by 2013, access for all to much higher internet speeds (30 Mbps or above) by 2020, and 
50% or more of European households subscribing to internet connections above 100 Mbps18. 

3.2. 

Operational objectives 

In order to achieve the above, and reflecting the problems as defined in the previous chapter, 
the Union should aim at achieving achieve the following operational objectives: 

1.  Influence  the  market  dynamics  for  broadband  investment,  by  encouraging  both 
traditional and new investors to engage in broadband infrastructure roll-out and ensuring a 
level playing field among them.  

18 
50% or more of European households have subscriptions above 100Mbps. 

By  2020,  all  Europeans  should  have  access  to  internet  of  above  30  Megabits  per  second  (Mbps)  and 

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a)  In  areas  where  broadband  network  projects  are  potentially  financially  viable,  ensure 
that  investors,  including  alternative  public  and  private  investors,  have  access  to 
capital, at reasonable costs (interest rates) and with a sufficiently long time-horizon. 

b)  In areas where there is no business case, provide sufficient levels of public financial 

support for the roll-out of broadband networks. 

c)  Across  the  Union,  ensure  that  public  and  private  investors  develop  the  capacity  to 
conduct  broadband  infrastructure  projects,  by  providing  technical  assistance,  e.g.  for 
planning and mapping. 

d)  In  supporting  infrastructure  projects,  ensure  that  Union  funds  have  a  maximum 

mobilising (leveraging) effect on private and (other) public investment. 

2.  Facilitate  additional  effort  by  Member  States  needed  for  the  use  of  interoperable 
digital services in order to permit for these essential services to function in a cross-border 
manner and to unlock the digital content resources generating opportunities for business 
development. 

4.  POLICY OPTIONS 

4.1. 

Remarks on the approach 

The  options  appraised  in  this  section  are  presented  in  the  context  of  ensuring  the  necessary 
consistency with the Commission proposal for the MFF.  

The no policy change scenario will therefore be only briefly discussed under the next section 
as option 1. The present impact assessment will screen only option 2 on the inclusion of DG 
INFSO  specific  guidelines  for  the  implementation  of  the  broadband  networks  and  digital 
service infrastructures part of the CEF. Option 2 has been divided into three sub-options that 
present three different scenarios for the implementation of CEF. This is the only option that is 
fully consistent with the Budget for Europe 202019, as discussed in the SEC(2011) 868, and 
in part II of the COM(2011) 50 final.  

Note  that  option  1  includes  a  discussion  of  the  'no  change'  policy  option.  The  baseline  for 
option 2 will be the overall level of expenditure that has been already decided in the Budget 
for Europe 202020.  

4.2. 

Option 1 – no policy change  

This  option  corresponds  to  the  baseline  scenario  developed  under  2.4.  In  order  to  recall  the 
main points, no policy change would mean the following: 

For broadband: 

•  Mainly reliance on regulatory approaches to stimulate investment. 

•  Continuing capital constraints for alternative investors. 

19 

20 

All documents are accessible at 
http://ec.europa.eu/budget/biblio/documents/fin_fwk1420/fin_fwk1420_en.cfm  
All documents are accessible at 
http://ec.europa.eu/budget/biblio/documents/fin_fwk1420/fin_fwk1420_en.cfm  

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•  An investment gap of up to € 220bn. 

•  As  regards  public  support,  mainly  reliance  on  the  Structural  Funds,  with  the  persisting 

challenge of absorption capacity, and on grant funding.  

For  digital  service  infrastructures  the  baseline  scenario  would  mean  the  continued  limited 
support  through  project  pilots  (although  most  of  the  technological  solutions  have  reached 
maturity  and  are  ready  for  deployment)  and  policy  coordination  efforts,  whereby  Member 
States have no incentive to make existing solutions interoperable across borders.  

4.3. 

Option 2 – broadband networks and digital service infrastructures in the trans-

European networks of infrastructure (CEF) 

The infrastructure networks concerned by option 2 consist of (i) broadband networks covering 
a geographically diversified portfolio of projects which contribute to the objectives set out by 
the  DAE,  and  (ii)  the  development,  deployment  and  sustainability  of  inter-operable,  cross-
border digital service infrastructures: 

This  option  is  the  line  of  action  included  in  the  MFF  proposal  released  by  the  European 
Commission  on  29  June  2011,  creating  a  "Connecting  Europe  Facility"  to  finance 
infrastructure.  The  new  facility  will  "finance  infrastructure  projects  with  high  EU  added 
value, not only 'hard' infrastructure, but also 'soft and smart' infrastructure and governance 
structures to realise the transport "Core Network", the energy "priority corridors" as well as 
digital  infrastructure.  The  facility  would  target  projects  with  high  European  value  added, 
such as cross-border interconnections or the deployment of EU-wide systems, which must be 
implemented  by  2020.  Specific  mechanisms  would  ensure  that  expenditure  for  each  of  the 
sectors  would  be  ring-fenced,  while  preserving  the  necessary  flexibility  and  performance 
orientation.  At  the  same  time,  funding  would  continue  for  the  Comprehensive  Network 
through the Cohesion and Structural Funds (CSF), which would target projects of a national 
and/or regional interest. In order to maximise impact, appropriate provisions would ensure 
the combination of market based instruments and EU direct support, in order to encourage 
the  participation  of  specialised  infrastructure  investors.  The  Commission  would  remain 
responsible  for  the  overall  planning  and  project  selection,  with  the  support  of  an  executive 
agency, while project promoters would ensure physical implementation on the ground". 

The  joint  implementation  of  the  CEF  by  Commission  DGs  INFSO,  MOVE  and  ENER  will 
allow  for  flexibility  within  the  limits  established  by  the  Financial  Regulations  and  for  the 
implementation of synergies between different networks (joint use of civil works, synergies in 
case of smart grids and smart transport solutions).  

For  broadband  networks,  Union  financial  support  would  be  provided  to  individual 
companies,  special  purpose  vehicles  and  consortia  involving,  but  not  limited  to,  telecom 
companies  (incumbents,  alternatives),  equipment  suppliers,  other  utility  companies  (water, 
sewage, energy, transport), or construction companies which may find synergies in combined 
infrastructure  investment  and  which  may  invest  either  alone  or  in  partnership  with  regional 
and local authorities, including municipalities, who will most likely establish concessions for 
managing  wholesale  services  of  broadband  infrastructures.  Many  equipment  providers,  but 
also content providers and other players in the value chain can be expected to be interested in 
such an arrangement. 

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For digital service infrastructures, Union financial support would be provided to industry, 
public administrations (national, regional, local) and non-profit entities individual companies: 

• 

telecom  companies 

The  industry  at  large:  private  operators  such  as  ICT  hardware  and  software 
(incumbents,  alternatives),  equipment 
companies, 
suppliers,  utility  companies,  Social  Networking  Sites,  mobile  and  broadband 
operators,  device  manufacturers,  businesses  re-using  and  exploiting  open 
data/public  sector  information.  These  operators  may  find  synergies  in 
combined  or  selective  investments  in  infrastructure,  core,  generic  and 
application  services.  In  all  areas,  a  large  involvement  of  SMEs,  in  particular 
innovative SMEs in the ICT and creative industries sectors could be expected. 

•  Member  States,  regional  and  local  public  bodies,  and  EU  institutions  as  data 
providers  and  re-users.  In  the  particular  case  of  Safer  internet,  it  would  also 
involve the Ministries of Justice, Internal Affairs, Education, alongside NGOs. 

• 

Profit and non profit content providers and other players in the value chain can 
be  expected  to  be  interested  in  such  an  arrangement.  For  Europeana 
particularly, one of the major beneficiary would be the Europeana foundation 
(for developing and co-ordinating the central Europeana service) and national 
and  regional  content  providers  (cultural  institutions  such  as  museums  and 
libraries, and private content holders). 

Option  2  can  be  divided  into  three  main  sub-options,  in  relation  to  the  way  in  which  the 
guidelines  could  implement  financing  of  the  above  mentioned  digital  infrastructures  and 
services. The three sub-options can be enunciated as follows. 

4.3.1.  Sub-option 2.1: Financing through grants 

This sub-option entails that financial support for both broadband networks and digital service 
infrastructures  would  uniquely  take  place  through  grants.  The  operational  implementation 
would  mainly  be  outsourced  to  an  existing  executive  agency,  such  as  the  TEN  EA.  This 
agency  would  be  in  charge  of  launching  calls  for  proposals  aimed  at  selecting  potential 
beneficiaries. Overseeing activities would be carried out by the Commission, liaising with the 
relevant executive agency. 

Criteria for project selection would be: 

o  contribution  to  the  Europe  2020  objectives  of  fostering  smart,  sustainable  and 
inclusive  growth,  in  particular  by  achieving  the  policy  goals  of  the  Digital 
Agenda  for  Europe,  notably  by  creating  a  vibrant  digital  single  market  through 
more effective use of digital technologies; 

o  being based on mature technology ready for deployment, 

o  demonstrating clear European added value. 

Additional,  more  specific  selection  criteria  would  be  established  in  an  annual  and/or  multi-
annual work programme, as developed by the Commission with the assistance of a Member 
States Committee. 

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As far as indicative co-funding rates for grants targeting works; operation and maintenance 
are concerned, they would not exceed the following rates (disclaimer: these figures are given 
as indications and may change over the course of negotiations): 

o  actions in the field of broadband networks up to 50%;  

o  Core service platforms: up to100 % of the eligible cost;  

o  actions in the field of generic services up to 75 % of the eligible costs. 

Grant  funding  would  also  allow  for  the  Union  to  finance  support  actions  and  studies, 
including  infrastructure  mapping  and  technical  assistance,  in  order  to  help  the  absorption 
capacity on the ground. Such support actions should be funded at a relatively high rate, such 
as 75% of the eligible costs. 

For  broadband  networks,  grant  financing  would  target  project  proposals  by  one  or  several 
public  or  private  undertakings/bodies  or  international  organisations  having  received 
agreement from national authorities. 

4.3.2.  Sub-option 2.2: Financing through financial instruments 

Under this sub-option financial support to infrastructure projects would be given uniquely via 
financial  instruments.  The  Commission  would  work  closely  with  relevant  International 
Financial  Institutions  (IFIs),  e.g.  the  European  Investment  Bank.  IFIs  would  select  projects 
based  on  their  financial  viability  and  applying  established  practices  of  due  diligence.  This 
option would thus put in place a due diligence mechanism that would be tasked with assessing 
the viability of investment projects taking into consideration a number of variables including 
population density, and other socio-economic factors such as average income level, education, 
age  and  ICT  training.  The  combination  of  these  factors  and  the  situation  on  the  ground  in 
terms of broadband market will determine the most suitable set of investment models and the 
different contributions from private and public finances that will be required with a view to 
use, where possible, a variety of financial engineering tools. 

The following financial instruments could be used:  

o 

o 

capital  participations  for 
undertakings  with  a  priority 
infrastructures; 

investment  funds  or  comparable  financial 
for 

focus  on  providing 

risk  capital 

a  financial  contribution  to  the  provisioning  and  capital  allocation  for  loans 
and/or  guarantees  or  other  risk-sharing  instruments  issued  by  an  IFI  on  its 
own  resources  or  by  other  financial  intermediaries  including  with  a  public 
mission.  Such  risk-sharing  schemes  include  but  are  not  limited  to  project 
bonds, 

o 

other  specialised  financial  instruments, be  they  of  loan,  guarantees,  counter 
guarantees, risk capital and any other legal forms of instruments. 

The  guidelines  should  allow  the  Commission  to  fully  reap  the  benefits  from  the  market 
potential of main financial institutions. This sub-option is therefore entirely market driven. 

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4.3.3.  Sub-option 2.3: Combined financing approach 

The approach proposed under sub-option three would combine the two approaches presented 
above.  Accordingly,  the  governance  structure  would  combine  elements  of  both  sub-options 
presented  above.  The  decision  concerning  the  appropriate  blending  of  grants  and  financial 
instruments  would  be  included  in  the  annual  work  programmes,  in  line  with  the  policy  and 
sector  necessity.  Broadband  networks  might  require  a  different  financing  mix  than  digital 
service infrastructure. Furthermore, broadband network deployment in regions where projects 
are  potentially  financially  viable  would  rather  be  supported  via  innovative  financial 
instruments whereas in regions where the business case is weak, e.g. in rural regions, support 
would rather take the form of grant financing. 

The  three  sub-options  are  reviewed  for  the  financing  of  broadband  and  digital  service 
infrastructure in the impact section. 

4.3.4.  Option 2 – synergies with Structural Funds 

However,  the  governance  model  proposed  in  the  previous  section  for  broadband  networks 
deployment leaves room for synergies with the structural funds. For instance, local authorities 
could  be  part  of  the  consortia  financed  by  financial  instruments  and  still  benefit  from 
Structural Funds at a co-funding rate foreseen by the structural funds regulations. In addition, 
the  Cohesion  policy  could  continue  targeted  investment  in  cohesion  countries  and  rural 
regions in the form of grants. 

4.3.5.  Guiding principles 

In  the  EU  there  is  infrastructure  based  competition  with  telecom  incumbents,  new  entrants 
and  cable  companies  providing  broadband  access.  Regulatory  authorities  can  impose  access 
remedies, price regulation and functional separation on dominant operators. This means that 
also service providers can compete based on these regulated access services at the wholesale 
level.  Access  prices  and  conditions  take  due  account  of  investment  risks  and  promote  co-
investment and risk-sharing mechanisms.  

The CEF will of course be applied in full respect with principles of competition policies, in 
particular state aid rules. Indeed, an important argument in favour of an EU action in this field 
is preventing market partitioning and creation or maintenance of entry barriers. 

The  guiding  principles  for  the  functioning  of  the  Fund  will  be  correcting  market  and 
coordination failures, intervening only where an incentive effect is demonstrated and only to 
the  extent  necessary  to  trigger  market  participation.  The  Fund  will  indeed  function  as  a 
subsidiary  instrument  only  where  and  to  the  extent  to  which  the  market  does  not  offer 
satisfactory outcomes (in terms of availability of funding or volume thereof). To prevent the 
risk  of  crowding  out  private  financing  of  infrastructure,  and  thus  delivering  sub-optimal 
results in the longer term, these principles represent a crucial safeguard. 

5.  ANALYSIS OF IMPACTS  

This  chapter  presents  in  a  succinct  fashion  the  analysis  of  the  main  impacts  that  can  be 
envisaged from options 1 and 2. As far as the latter is concerned the impact assessment will 
firstly  concern  the  general  impacts  stemming  from  the  adoption  of  option  2  and  then  will 

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analyse  the  impacts  associated  with  each  of  the  three  sub-options  presented  in  chapter  4 
above.  

5.1. 

Impacts from the adoption of option 1: no policy change 

This section presents the main impacts that are likely to be generated by the continuation of 
the current policy framework. 

The option is not likely to influence the market dynamics for broadband investments. The 
main problem of fragmentation would remain untouched. Option 1 would entail not to invest 
in  broadband  networks  at  all,  with  the  exception  of  the  Structural  Funds.  No  financial 
instruments  would  be  foreseen  even  if  they  would  better  ensure  the  mobilisation  of  private 
and  public  capital  in  areas  where  broadband  networks  are  potentially  financially  viable,  but 
their cost of capital is too high or the payback time too long. A number of evaluation studies 
and reports provide useful insights on the strengths and weaknesses of current EU funding for 
infrastructure. In the area of ICT funding, the mid-term evaluation of the RSFF, completed in 
201021,  stressed  the  positive  impact  of  the  facility  in  expanding  private  financing  and 
considered it as a highly efficient and effective instrument. Less positive is the evaluation of 
the performance of Structural funds in supporting ICT measures. The 2010 Strategic Report 
on Cohesion policy22 highlighted a low absorption rate and pointed to a lack of administrative 
capacity  for  project  preparation  and  implementation,  compliance  with  state  aid  rules  and 
inadequate  assessment  of  possible  future  needs  as  problematic  aspects.  Thus  there  is  very 
little indication that this option would, on its own, be effective. 

Overcoming  these  problems would require the deployment of different rates of both  private 
and public investment depending on the presence of these obstacles on the ground. 

Under option 1, the market failure in the broadband market would not be addressed, or only 
very partially and in an uncoordinated manner e.g. through structural funds. There would be 
lower  penetration  rates  which  would  produce  a  number  of  effects  such  as  lengthen  the 
investment  payback  time  in  infrastructures,  slow  down  the  development  of  value  added 
bandwidth intensive services, and reduce the overall impact that ICT related investments have 
on productivity and competitiveness of the EU economy as a whole. 

Numerous EU regions have no broadband or high-speed broadband coverage. According 
to the 2009 IDATE survey some 7% of the EU territory had no broadband coverage at the end 
of  2008.  The  situation  has  since  probably  not  improved  significantly  due  to  substantial 
general decrease of investment activity in 2009 and 2010. Green-field investment justifies the 
roll-out of high-speed broadband networks to these white areas, as the roll-out cost difference 
compared to basic broadband networks capital expenditure is rather negligible.  

Current network capacities cannot meet the demand for new content. Bandwidth demand from 
current  applications  alone,  such  as  high-definition  video,  is  projected  to  quickly  saturate 
current broadband networks capacity if no substantial upgrades are implemented. Broadband 
demand  is  not  limited  to  high-definition  video  delivery;  as  we  have  noted,  many  new 
innovative  content,  applications  and  services  (e.g.  for  creative  and  cultural  industries,  high-

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Available at http://ec.europa.eu/research/evaluations/index_en.cfm?pg=rsff 
COM(2010)110 of 31.03.2010. Available at 
http://ec.europa.eu/regional_policy/policy/reporting/cs_reports_en.htm 

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definition  tele-presence,  cloud  computing,  telemedicine  and  remote  surgery,  e-learning  and 
virtual campuses) would need expanded bandwidth to operate efficiently. 

Under this option, private investment in broadband would continue to be insufficient in 
many regions due to lack of competitive pressure and high commercial risk. Equally, public 
online  services  can  be  expected  to  remain  under-developed  and  not  inter-operable  across 
borders  due  to  fragmentation  of  sub-optimal  efforts  and  technical  solutions,  lack  of  critical 
mass, high costs for service providers and beneficiaries of services.  

Hence,  this  option  would  not  contribute  to  attaining  the  Digital  Single  Market,  and  many 
Europeans would continue to miss out on digital opportunities.  

In terms of facilitating additional effort by Member States for the deployment and use of 
interoperable  cross-border  digital  services,  option  1  would  entail  the  continuation  of  the 
current CIP ICT PSP programme. The programme would therefore be unable to build on the 
experience gathered during the pilot phase of a number of initiatives and would not be able to 
deploy the pilots. This would hinder the implementation of services in the core layer of digital 
service  infrastructure  and  therefore  would  prevent  reaching  the  critical  mass  needed  for  the 
take  up  of  applications  built  on  the  core  layer  (digital  services  layers  are  described  in  the 
problem definition section).  

Moreover, the potential offered by content-based services would be put in jeopardy if the EU 
fails  to  improve  radically  the  level  of  trust  and  security  of  the  relevant  infrastructures, 
products and services. Today even very limited disturbances to the Internet and web services 
generate shock-waves through the society as a whole. Only a collective effort at EU level can 
help us improve the safety of content on the web. 

Finally, when considering both policy options but notably option 1, the cost of non-Europe 
has to be considered as well. An estimate by Copenhagen Economics23 situates the cost of 
non-completing  the European digital single  market,  in the region  of  4.1%  of  GDP  by  2020. 
But also on an individual level, the cost of not facilitating investments in digital services and 
broadband  can  be  important.  As  an  example  from  only  one  country,  the  UK  offline 
households  are  missing  out  on  savings  of  above  600  €  (£560)  per  year  only  from  shopping 
and paying bills online. 

5.2. 

Impacts  from  the  adoption  of  option  2:  broadband  and  digital  service 
infrastructures in the trans-European networks of infrastructure (CEF) 

5.2.1.  General impacts stemming from option 2 

The  broadband  and  digital  service  infrastructures  in  the  trans-European  networks  of 
infrastructure  (CEF)  will  assist  in  achieving  the  DAE  targets  on  broadband  coverage, 
utilization and speed. This will in turn assist Europe in coming out of the economic/financial 
crisis  better  equipped  and  in  better  structural  shape,  when  compared  to  entering  the  crisis. 
Europe has been structurally trailing behind the US, in particular in the context of knowledge 
economy.  The  number  of  digital  jobs  that  can  benefit  from  the  availability  of  broadband 
networks within Europe's largest companies for instance is much smaller compared to the US 
and more than four fifths of Europe's digital jobs are in companies founded before 1950. The 
availability of broadband, and in particular high-speed infrastructure, can help Europe reduce 

23 

The Economic Impact of a European Digital Single Market, 2010 

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the digital gap. In addition, as this is considered as a vehicle for development of innovative 
digital services, with focus on increasing the added value of products and services, it would 
indirectly improve the competitiveness of companies in the European economy. 

Broadband  networks  would  also  have  an  impact  on  improving  the  efficiency  of  public 
services.  The  public  sector  holds  enormous  amounts  of  knowledge  that  needs  to  be  more 
easily  accessible.  The  use  of  E-government  procedures  has  demonstrated  an  ability  to 
generate  savings  for  European  companies  through  the  reduction  of  administrative  burdens. 
Other examples include, E-solutions, such as standardised and shared registration systems and 
data  bases,  e-portals  to  provide  access  to  public  services,  digitalisation  of  financial 
management and tax administration, which all offer significant scope for efficiency savings. 

This is why the impacts from the deployment of broadband networks cannot be disentangled 
from the impacts of endowing the EU with pan-European digital service infrastructures. The 
impacts analysed below thus also pertain to the digital services infrastructures. 

The  following  sections  will  present  some  of  the  main  economic,  social  and  environmental 
impacts  that  could  descend  from  the  implementation  of  the  CEF.  A  comprehensive  list  of 
impacts, divided by thematic area is included in annex. 

5.2.1.1.  Economic impacts 

The preliminary results of a quantitative analysis being conducted by the OECD suggest that 
the  expansion  of  broadband  positively  affects  labour  productivity.  For  OECD  countries, 
raising  broadband  penetration  rates  by  1  percentage  point  in  2009  (e.g.  24.3%  instead  of 
23.3%)  results  in  a  labour  productivity  growth  rate  that  is  higher  by  0.02  percentage  point. 
Broadband penetration rates higher  by 5 percentage points translate into a rise in the labour 
productivity  growth  rate  of  0.07  percentage  points.  A  ten  per  cent  higher  broadband 
penetration in any year is correlated with a 1.5 per cent increase in labour productivity over 
the following five years24 i.e. the effects of broadband penetration on  productivity are more 
than proportional.  

According  to  estimates  of  a  leading  consultancy25  a  10%  increase  in  broadband  household 
penetration delivers a boost to a country’s GDP that ranges from 0.1 percent to 1.4 percent. 
In addition, an OECD study26 suggest that governments can achieve a ten year return on fully 
funding a national, point to point, open access FTTH network. 

Digital service infrastructure can also generate large economic impacts.A 2010 KPMG study 
estimated  that  the  cadastre's  online  access  and  digital  certifications  provision  was  saving 
Spanish tax-payers at least 157 million euro a year (against cadastral budget of 118 million for 
the same year). Another cost-benefit-analysis conducted by RSO and Cap Gemini for showed 
the Cadastre’s electronic office was saving the tax payer about 7,758 million euro.27  

24 

25 
26 

27 

Roman  Friedrich,  Karim  Sabbagh,  Bahjat  El-Darwiche,  and  Milind  Singh  (2009):  Digital  Highways. 
The Role of Government in 21st Century Infrastructure. Booz & Company. 
Mobile Broadband for the Masses, McKinsey & Company, 2009 
OECD  (2010),  OECD  Information  Technology  Outlook  2010,  OECD  Publishing.  Available  at   
http://dx.doi.org/10.1787/it_outlook-2010-en  Accessed 17th May 2011 
Pricing of Public Sector Information Study, Deloitte, July 2011, forthcoming 

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In the sub-area of environmental impact assessment study states that this market was worth 
EUR 1 billion per year in 2009, with improved access to information saving up to EUR 200 
million per year; including sub-national assessments could increase values by a factor of 10.28  

In  the  geospatial  sector,  benefits  could  be  increased  by  some  10-40%,  depending  on  the 
estimation  method,  by  improving  access  and  data  standards.  Better  policies  in  the  area  of 
geospatial  applications  in  local  government  could  help  the  productivity  gains  from 
applications  almost  double  over  the  next  5  years.  Large  markets  are  also  estimated  in 
financial, energy and construction sectors.29 

Better  access  and  re-use  of  Public  Sector  Information  through  the  creation  of  a  European 
digital hub may have a relevant economic impact. In the United Kingdom welfare gains to the 
whole  economy  of  easier  access  were  estimated  to  be  worth  at  the  upper  end  EUR  5.1-6.7 
billion per year, with middle range estimates of EUR 1.8-2.25 billion. Although the UK PSI 
access  and  licensing  system  remains  somewhat  different  from  other  EU27  countries,  UK 
estimates  of  the  positive  impacts  of  removing  barriers  to  access  are  likely  to  be  a  realistic 
proxy across the EU27, due to the general nature of disincentives to use, lack of information, 
poor  interoperability  etc.  that  have  stifled  easy  use  of  PSI.  At  a  different  level  there  are 
quantifiable  benefits  in  time  saved  in  work  and  leisure  activities  from  making  information 
flows simpler and more efficient.30  

5.2.1.2.  Positive externalities 

Positive externalities are benefits that do not accrue to only a single economic actor, but spill 
over to society as a whole – thus making the social returns to capital investment higher than 
initial outlays31. The following main categories of positive externalities of common European 
action  in  broadband  networks  and  digital  service  infrastructures  deployment  would  emerge 
both  at  regional  /  MS  level  where  the  project  is  located  and  at  the  EU  level.  Note  that 
synergies  from  digital  service  infrastructures  are  embedded  in  these  categories  and  are 
referred to below:  

a. The Innovation Diffusion Externality. New and more innovative services emerge that 
would benefit a growing number of users, thus ultimately improving the overall quality of 
life.  From  the  infrastructure  side,  broadband  coverage  and  penetration  rates  correlate 
positively  with  the  “e-Readiness”,  or  the  capacity  of  consumers,  businesses  and 
governments to reap the full benefits of the Information Society.32 As an example on the 
importance  of  infrastructure,  the  Irish  Management  Institute  (IMI),  together  with  the 
National  Irish  Bank,  noted  in  a  survey  from  2008  that  the  strategic  importance  of 
broadband availability moved up twelve positions in the ranking from 18th to 6th place in 
only three years. 

28 
29 
30 
31 
32 

Pricing of Public Sector Information Study, Deloitte, July 2011, forthcoming  
Op.cit. Graham Vickery, July 2011 
Pricing of Public Sector Information Study, Deloitte, July 2011, forthcoming  
Deloitte report "background support study to the DAE" 
A positive correlation is evident with the “2009 e-Readiness Rankings” compiled by The Economist’s 
Intelligence Unit (EIU) 

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b. The Economic Efficiency Externality. Transaction costs are reduced; which makes it 
easier to conduct online business and attract foreign investments to certain locations33, the 
effect of this can spill over to other geographical areas. Broadband development is already 
supporting a wide and increasing  number  of  dedicated business, government  and  leisure 
applications and services. Bringing broadband to new areas means expanding the market 
for e-Commerce (which is a European one): more consumers would be able to purchase 
on-line,  including  across  border,  thus  enlarging  the  market  base,  and  to  access  public 
services on-line.  

c. The Comparative Advantage Externality. As a General Purpose Technology enabler, 
broadband  diffusion  positively  affects  productivity  (a  ten  per  cent  higher  broadband 
penetration  in  any  year  is  correlated  with  a  1.5  per  cent  increase  in  labour  productivity 
over the following five years34), capital accumulation, and ultimately, GDP growth. This 
mechanism of transmission is not limited only to the region where broadband is deployed.  

d.  Network  Externality.  The  more  users  that  benefit  from  high-speed  broadband,  the 
more visible and effective are the above impacts. The benefits of broadband extend across 
many  different  social  groups 
in  many  different  ways,  reinforcing  each  other. 
Technological  progress  e.g.  in  remote  care,  which  directly  lowers  health  care  costs, 
postpones  or  eliminates  the  need  for  institutionalised  care,  and  makes  it  possible  to 
increase  workforce  participation  from  home.  As  an  example,  the  Scottish  West  Lothian 
council independent living programme has succeeded in ensuring that elderly couples with 
severe impairments can stay in their own homes. They have thus saved the public budget 
£84,000 on an annual basis. 

5.2.1.3.  Social impacts 

The  European  Commission  estimates  that  broadband  can  contribute  to  net  creation  of  over 
100,000 jobs per year, which can as a structural phenomenon in turn affect the jobs of more 
than  1  million  people  each  year35.  In  terms  of  direct  job  creation,  only  in  Germany,  the 
construction  of  broadband  networks  construction  would  create  almost  a  million  jobs 
(968,000) over the ten years up to 2020. In France, according to PMP36, the construction of 
FTTH  network  would  generate  some  365.000  man-year  employments,  which  translates  into 
some €20 billion of added value. If extrapolated  to an EU-scale, this could amount to some 
2.770.000 man-year employments and €152 billion of added value to the EU economy. 

In  terms  of  indirect  job  creation,  a  study  on  broadband  impacts  in  France  conducted  by 
CdDC37,  reveals  that  the  number  of  newly  established  companies  in  regions  that  enjoyed 
public support in broadband investment, grew by 52.5% more in sectors largely depended on 
ICT and by 8.1% more in non-ICT sectors, between 2002 and 2007, compared to the growth 
in regions not enjoying such support. As shown by the same study, broadband, which in this 

33 

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37 

In October 2008, the IMI, together with the National Irish Bank, published the results of its tenth survey 
of multinational companies located in Ireland. Compared to three years ago, the strategic importance of 
broadband availability moved up twelve positions in the ranking from 18th to 6th. 
Roman  Friedrich,  Karim  Sabbagh,  Bahjat  El-Darwiche,  and  Milind  Singh  (2009):  Digital  Highways. 
The Role of Government in 21st Century Infrastructure. Booz & Company. 
The Impact of Broadband on Growth and Productivity, Micus, for the EC, 2008 
Rapport d’étude de l’impact d’une accélération du déploiement du FTTH en France, PMP, for CdDC, 2010 
Caisse des Dépôts et Consignations, Évaluation de l’impact territorial des RIP,  2010 

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particular  case  benefited  from  public  investment,  had  a  strong  entrepreneurial  effect,  as  it 
accelerated  the  take-up  of  entrepreneurship  by  54%  compared  to  regions  without  such  a 
comprehensive broadband coverage.  

Further  social  (and  environmental)  impacts  can  affect  depopulated  rural  areas  through  the 
development of tele-working,  eCommerce or smart  metering.  In  rural areas the value added 
from people going online to profit from e.g. eGovernment, education and culture, eInclusion 
and eHealth services is even higher than in urban areas. This also argues for a high EU added 
value  in  creating  synergies  between  broadband  networks  and  digital  service  infrastructures. 
Indeed,  savings  derived  from  the  possibility  of  using  broadband  for  information  sharing 
among  public  services  (eAdministration)  are  up  to  four  times  higher  than  savings  at  the 
interfaces between public administration and users.  

In  the  area  of  trans-European  access  to  cultural  resources  a  digital  service  infrastructure 
providing an easy-to-use, single access to European cultural content online would provide the 
necessary critical mass and turn Europe's cultural resources into a lasting asset for the digital 
economy.  Coupled  with  a  dedicated  rights  infrastructure,  it  would  serve  as  a  hub  for  the 
creative  industries,  nurture  creativity,  contribute  to  education,  and  spur  innovation  and 
entrepreneurship.  This  potential  was  underlined  by  the  recent  report  'The  New  Renaissance' 
by the 'Comité des Sages on bringing Europe's cultural heritage online'. It is also shown by the 
recent 'hack for Europe' contest, developing applications based on Europeana content. 

The  initiative  would  have  indirect  positive  impact  on  the  Fundamental  Rights.  It  would 
indirectly contribute to the achievement of certain rights in the area of Solidarity, namely the 
right to health care through the activities in the area of eHealth (Article 35) and the right to 
environmental  protection  (Article  37)  through  overall  positive  environmental  impact  of  the 
initiative.  

5.2.1.4.  Environmental impacts 

Broadband-enabled smart grid services and devices could result in over €850 billion in gross 
energy savings.  This approach is expected to reduce end-use energy consumption in the USA 
in  2020  by  roughly  23  per  cent  of  projected  demand,  potentially  abating  1.1  gigaton  of 
greenhouse gases annually (Davidson, Santorelli and Kamber, 2009).  

A  Smart  Grid  combined  with  broadband  networks  can  contribute  to  sustainability  by 
facilitating the reduction of CO2 emissions, enabling the integration of large scale renewables 
and  increasing  energy  efficiency  in  the  power  sector.  It  supports  competitiveness  and  open 
and efficient markets by increasing market participation through the aggregation of distributed 
prosumers  (consumers  also  able  to  produce  power)  and  through  the  strengthening  of 
interregional markets.38  

Creating  “smart  buildings”  tied  to  the  local  power  grid  would  enable  utility  companies  to 
reduce  the  level  of  (wasted)  reserve  power  held,  leading  to  “lower  prices  and  less  price 
volatility”39  The United States are already reaping the benefits of this. In California 33 per 
cent of all electricity consumed in the State is by commercial buildings – about US$10 billion 
per  year  (€7.09  billion  in  Ju ly  2008).    The  goal  of  the  High-Performance  Commercial 

38 http://ses.jrc.ec.europa.eu/index.php?option=com_content&view=article&id=93&Itemid=137 
39 (US Department of Energy, 2002; quoted in Baller Herbst Law Group, 2008) 

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Buildings  Project  (HPCBS),  launched  in  2000,  is  to  cut  energy  use  by  70  per  cent  in  new 
buildings  and  save  50  per  cent  in  retrofits  of  older  buildings  using  broadband  connections 
combined with other technologies. (The Baller Herbst Law Group, 2008). 

5.2.1.5.  Sector specific impacts of digital service infrastructure 

The effects of investing in broadband networks and digital service infrastructures are not only 
confined  to  the  macro-economic  level  but  also  to  economic  and  social  (thematic)  areas  and 
sectors.  The box below provides, in a nutshell the main impacts that broadband  networks  and 
digital  service  infrastructures  will  spill  over  related  sectors.  These  are  developed  in  detail  in 
annex40. Where no data about Europe were available, data and insights from US studies are used. 
These  should  be  interpreted  with  caution  due  to  existing  US-EU  differences,  e.g.  in 
transport/commuting patterns. 

Box: sectoral impacts from broadband networks and digital service infrastructures investments 
(US and EU) 

Rural areas 

Broadband is a key location factor for businesses 

Broadband and services make it easier for rural businesses to grow and improves quality of 
life. 

Broadband prevents de-population of rural areas. 

Education and Skills 

4.5 per cent increase in educational attainment;  

Education  is  enhanced  by  providing  students  and  teachers  with  access  to  a  vast  array  of 
resources;   

Several educational services already require internet speeds in excess of 100Mpbs . 

Health and care  

The  net  total  benefit  from  telemonitoring  is  in  the  order  of  €27.89  bill ion,  this  equates  to 
0.299 per cent of EU GDP for an average implementation cost of €1.11 billion per year  

Reductions in hospitalisations due to tele-health were greater in remote areas (with a 50 per 
cent decrease in bed-days) compared to urban areas (29 per cent reduction in bed-days)  

Employment and economy  

40 Note that whilst the categories provide a comprehensive overview of potential benefits (implicitly including 
eHealth,  eLearning,  smart  grids  and  enhanced  transport  systems  within  environmental  benefits  and 
online gaming within wellbeing benefits) it does not capture explicitly cross-cutting initiatives (such as 
eGovernment, eCommerce, ePayment and SEPA) or technologies such as cloud computing and Web2.0 
which will enhance the volume of uploaded user created content.   

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There is about a 15 per cent productivity boost from broadband. 

FTTP can boost the US economy by at least €312 b illion, this equates to 2.9 per cent of GDP  

Environment, energy and transport 

Broadband-enabled smart grid services and devices could result in over €850 billion in gross 
energy savings.  This approach is expected to reduce end-use energy consumption in the USA 
in  2020  by  roughly  23  per  cent  of  projected  demand,  potentially  abating  1.1  gigaton  of 
greenhouse gases annually.  

One (temporary) negative environmental aspect would be construction works in urban areas 
and in natural areas (Natura 2000 sites). 

5.2.2. 
effectiveness and efficiency  

Assessment  of  sub-options  against 

the  programme's  objectives: 

5.2.2.1.  Sub-option 1: Financing through grants 

Sub-option  1  is  based  on  the  provision  of  grants  for  achieving  the  objectives  of  the 
Connecting Europe facility on the area of telecommunications. With regard to the objective of 
influencing  the  market  dynamics  for  broadband,  grants  are  likely  to  be  only  partially 
efficient  and  effective.  In  terms  of  efficiency  the  co-financing  ratio  needed  by  broadband 
networks is going to be high in relative (around 50%) and absolute terms, given the expected 
average size of the  projects  to  be  financed. Hence, a significant  amount  of resources would 
have to be mobilised to reach a modest impact on the estimated 220-270 billion Euros needed 
to  reach  the  DAE  targets.  This  would  not  trigger  any  leverage  effect  and  would  de  facto 
overlap with the action of the Structural Funds. The amount of money provided by the CEF 
would  not  be  sufficient  in  this  case  to  generate  a  critical  mass  and  demand  would  remain 
latent. Only some "islands of connectivity" would be endowed with broadband. 

In  areas  where  there  is  no  business  case,  grants  can  be  effective  but  given  the  amount 
proposed in the MAFF proposal, grants alone are not likely to reach a critical investment mass 
in  the  EU.  Without  critical  mass,  network  effects  and  positive  externalities  engendered  by 
them would not be perceivable. Grants can be effective in supporting and providing technical 
assistance,  but  are  not  the  best  tool  to  mobilise  private  investment  (while  may  have  some 
leverage effect on public investor, although in the current economic downturn this is not to be 
taken for granted). 

However,  grants  are  an  effective  mechanism  to  facilitate  efforts  by  Member  States  to 
deploy cross-border digital services. In this case grants would serve as a pivot investment 
that  grants  EU  co-financing  towards  infrastructure  that  Member  states  alone  would  not 
develop.  Co-funding  rates,  as  mentioned  in  chapter  4,  for  digital  service  infrastructure  are 
typically  high,  up  to  100%  for  the  core  service  platforms  that  i.a.  support  cross-border  and 
interoperable services since  there are no "natural" Member State owners of these platforms. 
For  the  higher  level  generic  services  where  the  private  sector  can  be  assumed  to  be  more 
present  a  co-funding  rate  of  75%  will  apply.    Grants  are  thus  an  efficient  financing 
mechanism  for  this  set  of  projects  as  private  investors  have  only  a  limited  interest  in  the 
deployment of this type of infrastructure. 

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Nevertheless, this grant only sub-option is likely to achieve only partially the overall objective 
of delivering sustainable economic and social benefits from a Digital Single Market based on 
fast and ultra fast internet and interoperable applications 

5.2.2.2.  Sub-option 2: Financing through financial instruments 

Sub-option  2  envisages  the  commitment  of  budgetary  appropriation  exclusively  through 
financial instruments. The set of financial instruments foreseen has been described in chapter 
4  above.  The  objective  of  influencing  the  market  dynamics  for  broadband  investment 
would  be  mostly  achieved  by  financial  instruments.  Clearly  the  proposed  resources  in  the 
CEF (9.2 Bn. €) are not sufficient to fill the ga ps between the overall investment needs and 
the actual spending plans (based on our current understanding of the situation). In areas where 
broadband  networks  projects  are  potentially  financially  viable,  financial  instruments  would 
act  as  an  enabler  of  investment  by  public  and  private  investors,  lowering  de  facto  their 
Weighted Average Cost of Capital (WACC) and shortening their payback time.  

Using financial instruments would also foster efficiency through the higher leverage they can 
ensure.  Leverage  effects  take  place  via  co-investment  and  co-financing  structures  through 
financial  instruments,  where  one  €  of  EU  budget  invested  in  a  field  affected  by  a  market 
failure has a strong multiplying effect on the total finance provided to final beneficiaries. In 
principle, leverage is not about simply co-investing with other investors, but rather attracting 
investment from other investors who would not invested without EU support. Based on RSFF 
and project bonds estimations, 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  in broadband networks depending on the financing needs and the risk profiles of 
the underlying investments.  

Although financing broadband networks only through financial instruments would boost the 
leverage generated by the EU contribution, it may not be ideal from the equity point of view. 
Without  any  grants,  projects  in  sub-urban  areas,  which  are  inherently  more  bankable  would 
always be preferred –other things being equal- to projects in rural areas. 

Hence, using financial instruments alone would be less effective in areas where the business 
case is limited. In these so-called "white areas" private investors are not likely to invest due to 
low rate of return and high fixed costs generated by low population density. If the business 
case  is  so  weak,  co-investment  and  co-financing  through  financial  instruments  (which  have 
typically  a  much  lower  co-financing  rate  than  grants)  becomes  irrelevant.  Also,  financial 
instruments  would  probably  struggle  in  mobilising  a  significant  leverage  effect  technical 
assistance, planning, mapping and other support activities which are typically co-financed by 
grants. 

Finally, financial instruments are unlikely to be an effective mechanism to facilitate efforts 
by  Member  States  to  deploy  cross-border  digital  services.  The  experience  from  the  CIP 
has  shown  than  in  this  field  is  already  difficult  to  have  the  Member  States  engaged  in  the 
process. Private investors are expect to invest in the application layer, but they are not likely 
to  commit  to  invest  in  the  core  layer  of  digital  service  infrastructure,  as  this  architecture 
cannot be commercially exploited.  

This  financial  instrument  only  sub-option  is  therefore  likely  to  achieve  only  partially  the 
overall objective of delivering sustainable economic and social benefits from a Digital Single 
Market based on fast and ultra fast internet and interoperable applications. 

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5.2.2.3.  Sub-option 3: Combined financing approach 

Sub-option  3  provides  for  a  combined  financial  approach  that  would  help  reaching  the 
objectives  presented  in  chapter  3,  striking  a  good  balance  between  grants  and  financial 
instruments. Although no formal earmarking for grants and financial instruments is advisable 
at  this  stage,  potentially  this  sub-option  implies  that  the  main  effort  of  investment  relies  on 
financial instruments, leaving the remainder for grants. In this scenario, grants and financial 
instruments would combine not only vertically (both funding schemes would be available for 
broadband networks and digital service infrastructures) but also horizontally, within a project. 
The  right  mix  of  funding  schemes  will  be  identified  at  work  programme  level.  The 
governance  for  grants  will  be  in  line  with  the  new  financial  Regulation  as  above,  the 
governance for financial instruments will be in line with the conditions to be decided for risk-
sharing  and  equity  platforms  for  innovative  financial  instruments  (forthcoming  proposal  of 
the Commission). 

The  potential  of  influencing  the  market  dynamics  for  broadband  investment  would  be 
fully achieved under this sub-option. In the field of broadband the bulk of funding would be 
allocated through financial instruments, so that the market potential is exploited to the full and 
that  the  wider  range  of  actors  as  possible  is  involved  in  the  consortia  to  be  funded.  The 
solution would be effective as public and private actors would get access to capital at lower 
cost and would have sufficient long-time horizon for their investment. No crowing out would 
therefore take place.  

This  sub-option  takes  into  account  that  in  a  considerable  number  of  cases  there  would  be  a 
mixture of support as projects are likely to involve areas which are closely to be economically 
viable  with  areas  that  are  less  attractive  to  the  market.  Hence  a  combination  of  instruments 
and funds would be required.  In convergence regions, the grant would be provided by SF and 
CEF  would  provide  financial  engineering.    In  competitiveness  regions,  CEF  could  provide 
both type of assistance with a combination of financial instruments and grants depending on 
geographic and socio-economic situation.  Should SF provide grants also for competitiveness 
regions, then CEF would proportionally limit its support (up to and not above the limit of EU 
support for those regions). 

In  this  respect,  under  this  sub-option  there  is  clear  synergy  between  the  CEF  and  the 
Structural Funds both in terms of grants, financial engineering and support for streamlining 
project implementation that has so far prevented absorption of EU funds both in the cohesion 
and rural development domains. 

Efficiency would prevail in areas where financial viability exists or almost existing, as a small 
EU investment would be leveraged as described in sub-option 2 above. Moreover, this sub-
option would complement financial instruments with grants in areas where the business case 
is  not  strong  enough.  This  would  guarantee  –  through  specific  calls  for  "white  areas"  -that 
investment takes place also in rural and less populated areas. Finally other calls for proposals 
would be organised for support and technical assistance activities, mainly through grants. 

As  far  as  the  objective  of  facilitating  efforts  by  Member  States  to  deploy  cross-border 
digital  services  is  concerned,  this  approach  would  allow  the  Commission  to  be  flexible 
towards financial instruments, without the risk of crowding out private investors from digital 
service  infrastructure.  On  the  other  hand  it  would  ensure  the  disbursal  of  grants  at  high 
funding rates for the top layers (core services). 

EN 

38 

   EN 

 
This  sub-option  which  combines  the  focus  of  grants  and  the  leverage  effect  of  financial 
instruments is therefore likely to fully achieve the overall objective of delivering sustainable 
economic and social benefits from a Digital Single Market based on fast and ultra fast internet 
and interoperable applications. 

6.  COMPARISON OF OPTIONS 

The  following  efficiency  and  effectiveness  table  provides  a  graphic  comparison  of  the  two 
options  and  the  three  sub-options  presented  in  section  4  against  the  objectives  described  in 
section 3. The table summarises the line of reasoning and the impacts presented in section 5. 

EN 

39 

   EN 

 
 
 
Option  1  no 
policy 
change 

Option 2 CEF 

Sub-option 1 
grants 

Sub-option 2 
financial 
instruments 

Sub-option 3 
combined 
approach 

Overall objective 

0 

+ 

+ 

++ 

Objectives 

Delivering  sustainable  economic  and 
social  benefits  from  a  Digital  Single 
Market  based  on  fast  and  ultra  fast 
internet  and  interoperable  applications, 
with  broadband  access  for  all  by  2013, 
access  for  all  to  much  higher  internet 
speeds (30 Mbps or above) by 2020, and 
50%  or  more  of  European  households 
subscribing 
internet  connections 
to 
above 100 Mbps. 

Specific  objective  1:  Influence  the  market  dynamics  for  broadband  investment,  by  encouraging  both  traditional 
and new investors to engage in broadband infrastructure roll-out and ensuring a level playing field among them.  

are  potentially 

1a  In  areas  where  broadband  network 
financially 
projects 
viable,  ensure  that  investors,  including 
alternative  public  and  private  investors, 
have  access  to  capital,  at  reasonable 
rates)  and  with  a 
costs 
sufficiently long time-horizon. 

(interest 

1b  In  areas  where  the  business  case  is 
weak, provide sufficient levels of public 
financial  support  for  the  roll-out  of 
broadband networks 

investors  develop 

1c  Across  the  Union,  ensure  that  public 
the 
and  private 
capacity 
broadband 
to 
infrastructure  projects,  by  providing 
technical  assistance,  e.g.  for  planning 
and mapping 

conduct 

1d  In  supporting  infrastructure  projects, 
ensure 
funds  have  a 
maximum  mobilising  (leveraging)  effect 
on private and (other) public investment. 

that  Union 

0  

(N/A) 

0 

0 

0 

+ 

++ 

++ 

++ 

+ 

- 

+ 

0 

++ 

+ 

++ 

++ 

Specific  Objective  2:  facilitate  additional  effort  by  Member  States  needed  for  the  use  of  interoperable  cross-
border  digital  services  and  unlock  the  digital  content  resources  generating  opportunities  for  business 
development. 

Facilitate  additional  effort  by  Member 
States needed for the use of interoperable 
cross-border  digital  services  and  unlock 
the  digital  content  resources  generating 
opportunities for business development. 

0 

++ 

- 

++ 

EN 

40 

   EN 

 
 
Conclusion: option 2 with sub-option 3 (combined financing) is more suitable to meeting the 
DAE and the Europe 2020 targets in the field of ICT than option 1. 

7.  MONITORING AND EVALUATION  

The  Commission  and  other  implementing  bodies,  such  as  EIB,  EBRD  and  the  TEN-T  EA, 
will continuously monitor the impact of CEF investment in broadband (as well as in transport 
and  in  energy)  in  line  with  the  indicators  proposed  in  the  CEF  general  Regulation.  The 
indicators will cover areas such as (non-exhaustive list): 

•  Supply: Broadband access (to be checked against the DAE targets of access to 30 Mbs 
for all citizens by 2020 and access to 100 Mbs for at least 50% of citizens by 2020) 

•  Demand: Broadband uptake (to be checked against the DAE target of 50% of citizens 

having subscriptions for 100 Mbs by 2020) 

•  General  monitoring  indicators  for  investment  programmes  such  as  uptake  of  funds, 

time to grant etc 

•  proportion of grants vs. Innovative financial instruments 

Starting  from  the  entry  into  force  of  the  Regulation  and  after  consultation  of  the  relevant 
Committee(s),  the  Commission  will  regularly  publish  a  progress  report  on  CEF  broadband 
networks and digital service infrastructures investment, which will be submitted the European 
Parliament, the Council, the European Economic and Social Committee and the Committee of 
the Regions.  

The  guidelines  as  such  will  not  be  evaluated  but  the  scope  of  these  will  be  assessed  in  the 
framework of the final assessment of the Digital Agenda for Europe. The guidelines will also 
be regularly monitored and updated as the need arises, this will supervised through the work 
in the relevant committees. 

In addition to continuous monitoring by the Commission and other implementing bodies, an 
independent  evaluation  of  general  CEF  framework  shall  be  carried  out  at  mid-term,  taking 
into consideration the timing and advancement of programming as well as ex-post, a certain 
number  of  years  after  the  end  of  the  programming  period.  The  evaluations  will  assess  the 
intervention's relevance, efficiency, effectiveness, and preliminary impact. Specific emphasis 
shall be put on issues of governance and the appropriateness of implementation mechanisms. 

EN 

41 

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ANNEX 1 – GLOSSARY 

CCTV 

CEF 

CERT 

CIP 

CSF 

DAE 

EBRD 

ECTA 

EISAS 

EIB 

ENISA 

epSOS 

ESOA 

EUTC 

FP6 

FP7 

FTTH 

FTTP 

FTTS 

Close Circuit TV 

Connecting Europe Facility 

Computer 
Response Teams 

Emergency 

Competitiveness 
Innovation Programme 

and 

Cohesion 
Funds 

and 

Structural 

Digital Agenda for Europe 

Bank 

European 
Reconstruction 
Development 

for 
and 

European 
Association 

Telecoms 

European 
Sharing and Alert System 

Information 

European Investment Bank 

European  Network 
and 
Information Security Agency 

Smart  Open  Services 
European Patients 

for 

European  satellite  operators' 
association 

European  Utilities  Telecom 
Council 

Framework Programme 6 

Framework Programme 7 

Fibre To The Home 

Fibre To The Premises 

Fibre To The Subscriber 

EN 

42 

   EN 

 
ICT 

ICT PSP 

IMI 

MEPSIR 

META-
NET 

MFF 

NGA 

OECD 

PSI 

R&D&I 

PEPPOL 

RSFF 

SCADA 

SEPA 

SPOCS 

SSRN 

STORK 

TEN-T 

Information 
Communication Technology 

and 

and 
Information 
Communication  Technology 
Policy Support Programme 

Irish Management Institute 

Measuring  European  Public 
Sector. 
Information 
Resources 

Multilingual 
Technology Alliance 

Europe 

Multi-Annual 
Framework 

Financial 

Next Generation Access 

Organization  for  Economic 
and 
Cooperation 
Development 

Public Sector Information 

Research,  Development  and 
Innovation 

Pan-European 
Procurement On-line 

Public 

Risk Sharing Finance Facility 

Supervisory Control and Data 
Acquisition 

Single  European  Payments 
Area 

Simple Procedures Online for 
Cross-border Services 

Social 
Network 

Science  Research 

Secure 
boRders linKed 

idenTity 

acrOss 

Trans-European 

Transport 

EN 

43 

   EN 

 
EA 

TFEU 

VOD 

Network Executive Agency 

Treaty for the Functioning of 
the European Union 

Video on Demand 

EN 

44 

   EN 

 
ANNEX 2 – WHAT IS A DIGITAL SERVICE INFRASTRUCTURE 
In the area of public services the first two layers are often relying on investments by public 
administrations at national and European level, while the third concerns new business models 
spanning  from  those  (eg.  uptake  of  eID  systems  in  eBusiness  or  eCommerce  by  the  private 
sector). The layers are the following: 

1)  the  core  service  platforms  (networks,  interoperable  relays,  communication  protocols, 
specifications that permit to carry our transactions and servers);  

2)  the  generic  services  layer  (to  enable  functionality  and  carry  forward  instructions  which 
may be specific to the application domain (e.g. health, public procurement, etc.);  

3) the applications (mainly developed, depending on the application domain, by the private 
or  public  sector,  or  both  in  partnership,  using  core  service  and  value  added  service 
infrastructures)  

European Digital Infrastructures

L3

L2

L1

Applications

Generic services

Core service platforms

MS

EU

MS

EU
MS
EU

Digital 
Infrastructures

Funding / Investments

In areas where services could be entirely private (eg. smart grids), initial public investments 
might be needed for the first two layers to encourage private actors recover sunk costs of early 
adopter and minimise the risks of engaging into innovative business models (layer 3). 

Funding layers 1 and 2 of digital infrastructures in areas of public services is often affected by 
a strong degree of market failures. The incapability of markets to fund those layers is due to 
two reasons: 

The areas to be funded relate to public service delivery (hence not commercial by definition 

as a start); 

In small countries they risk being "sub-dimensional" (lacking sufficient scale);  

In large countries they risk engaging with fragmented solutions which are not interoperable on 
a cross-border basis (and often on a national basis) and/or lack the suitable incentives to be 
so. 

Investments  in  layer  3  also  reflect  initial  market  failures  as  the  "development  costs"  are 
perceived  as  sunk  by  business  entities  engaging  in  the  delivery  of  those  services,  return  on 
investments  are  uncertain  or  pay-back  times  too  long  increasing  the  financial  exposure  of 
business willing to provide innovative value-added networked  services. 

What kind of digital services 

EN 

45 

   EN 

 
 
The digital service infrastructures, as decided in the MFF, and their areas of application are 
the following: 

(a)  Trans-European high-speed backbone connections for public administrations  

Support  to  a  public  trans-European  backbone  service  infrastructure  that  will 
provide  very  high  speed  and  highly  reliable  connectivity  between  public 
institutions  in  areas  such  as  public  administration,  culture,  education  and 
health.  

(b)  Cross-border delivery of eGovernment services 

Support  to  standardised,  cross-border,  and  user-friendly  interaction  platforms, 
which  will  generate  efficiency  gains both  throughout  the  economy  and  in  the 
public sector and will contribute to the Single Market. 

(c) 

 Cross-border eHealth services  

Support to actions making the use of modern information and communication 
technologies  in  the  field  of  health  and  in  related  fields  to  meet  needs  of 
citizens,  patients,  healthcare  professionals,  healthcare  providers  and  policy 
makers. 

(d)  Multilingual access to online services 

Support to enabling any business in the EU to offer online services in its own 
language that will be seamlessly accessible and usable in any EU language  

(e)  Enabling access to digital resources of European heritage 

Support to digitalization of large collections of European cultural resources and 
fostering their re-use by third parties.  

(f)  Access to public sector information- data.eu 

Support to achieving full access for re-use to all disclosable  information held 
by the public sector in the EU by 2020.  

(g)  Safer Internet service infrastructure 

Support to centres handling requests and alerts across Europe with the aim to 
dramatically reduce the time to take down illegal content from the internet. 

(h)  Smart Energy Services 

Support to the use of modern information and communication technologies in 
the  field  of  smart  energy  services  to  meet  the  needs  of  citizens  (who  can  be 
producers  as  well  as  consumers  of  energy),  energy  providers  and  public 
authorities. 

What kind of investment is needed and what role for the EU 

EN 

46 

   EN 

 
important 
The  deployment  of  European  digital  service 
investments,  the  major  part  of  which  is  to  be  done  by  the  Member  States.  However,  EU 
investments are needed to: 

infrastructures  will  require 

Ensure cross-border and cross-sectoral availability, access and use of services; 

Provide the essential core and generic layers for services to be run on a cross-border basis in 

support of the digital internal market; 

Provide the initial funding of innovative networked services with a European dimension and 

impact; 

Enable businesses to capitalise on the size of an EU-wide internal digital market. 

There is  therefore an  opportunity within the  next MFF to  provide support  to  deployment of 
these digital service infrastructures in areas of public interest. 

The EU support would co-finance the development, implementation, maintenance, operation 
and evolution of core digital service infrastructures and their generic service layers.  

- 

- 

It will ensure that conditions for interoperability and standardisation are met.  

It would bring piloted and tested solutions to a state of operational maturity. 

- 
It  would  identify  and  resolve  interoperability  bottlenecks  and  language  barriers 
with  a  cross-border  dimension  (e.g.  the  deployment  of  cross-border  health  records 
exchanges  platforms;  e-identification  and  e-authentication,  eProcurement  platforms, 
etc).  

- 
It would seek guarantees that the connecting links (physical and service interface) 
of cross-border services are established and that Member States administration would 
invest in them.  

- 
It  would  establish  common  frameworks  endeavouring  to  ensure  interoperability 
and would bring already piloted and tested solutions to a state of operational maturity.  

In the end, it would ensure that key digital infrastructures for cross border public 

- 
services are deployed for real-life use. 

Lack  of  EU  support  to  the  implementation  of  digital  service  infrastructures  means  that 
common technical specifications, pilot and test versions of these infrastructures already built 
up  by  past  and  current  programmes  would  probably  cease  to  exist.  It  would  also  be  more 
difficult to achieve pan-European interoperability and multilinguality without incentives, and 
there  is  a  risk  that  Member  States  would  seek  individual  solutions,  falling  back  to  a 
fragmented  approach.  Any  European  cross  border  service  solutions  in  support  of  the  digital 
internal market would need EU support, in addition to national financial investments. 

EN 

47 

   EN 

 
ANNEX  3  -  THEMATIC  AREAS  AND  FAST  START  PRIORITY  DIGITAL  SERVICE 
INFRASTRUCTURES 

The digital service infrastructures, as decided in the MFF, and their areas of application are 
the following: 

(a)  Trans-European high-speed backbone connections for public administrations  

Support  to  a  public  trans-European  backbone  service  infrastructure  that  will 
provide  very  high  speed  and  highly  reliable  connectivity  between  public 
institutions  in  areas  such  as  public  administration,  culture,  education  and 
health.  

(a)  Cross-border delivery of eGovernment services 

Support  to  standardised,  cross-border,  and  user-friendly  interaction  platforms, 
which  will  generate  efficiency  gains both  throughout  the  economy  and  in  the 
public sector and will contribute to the Single Market. 

(b) 

 Cross-border eHealth services  

Support to actions making the use of modern information and communication 
technologies  in  the  field  of  health  and  in  related  fields  to  meet  needs  of 
citizens,  patients,  healthcare  professionals,  healthcare  providers  and  policy 
makers. 

(c)  Multilingual access to online services 

Support to enabling any business in the EU to offer online services in its own 
language that will be seamlessly accessible and usable in any EU language  

(d)  Enabling access to digital resources of European heritage 

Support to digitalization of large collections of European cultural resources and 
fostering  their  re-use  by  third  parties,  in  full  respect  of  copyright  and  related 
rights.  

(e)  Access to public sector information- data.eu 

Support to achieving full access for re-use to all disclosable  information held 
by the public sector in the EU by 2020.  

(f) 

Safer Internet service infrastructure 

Support to centres handling requests and alerts across Europe with the aim to 
dramatically reduce the time to take down illegal content from the internet. 

(g)  Smart Energy Services 

Support to the use of modern information and communication technologies in 
the  field  of  smart  energy  services  to  meet  the  needs  of  citizens  (who  can  be 

EN 

48 

   EN 

 
producers  as  well  as  consumers  of  energy),  energy  providers  and  public 
authorities. 

All  of  these  services  will  not  be  established  without  a  dedicated  large  scale  funding  as 
Member States do not immediately find the incentives to invest in interoperable solutions for 
pan-European service integration. Investments in cross-border interoperability will also have a 
positive  knock-on  effect  at  local  level  as  Member  States  will  replicate  the  model  in 
deployment service interoperability with regions and municipalities. 

The list is not exhaustive and will be expanded to include further projects. These projects will 
be identified at a later stage in collaboration with the Member States.  

Public trans-European backbone ("Mid mile") very high speed network 

Trans-European  Digital  infrastructure  should  be  developed  to  guarantee  a  digital  continuum 
between  citizens  and  the  public  services  of  European  value  thought  unlimited,  integrated, 
controlled and secure European backbone. 

This  service  will  be  based  on  a  very  high  speed  network  covering  all  Member  States  (and 
potentially beyond in neighbouring countries) connecting public institutions in areas such as 
public administrations, culture, education or health. The network will interconnect institutions 
either  through  the  regional/national  networks  or  directly.  In  particular  it  will  provide  the 
connectivity services for the higher-level European services previously listed. More generally, 
it will provide the backbone on which clouds for trans-European public services can be built. 

This service will draw on the experiences made with the existent STesta network  

In this way demand will be aggregated, therefore reducing costs and reaching critical mass in 
service provisioning much more quickly. 

Interoperable online authentication schemes and eID management systems  

The large-scale CIP Information and Communication Technology Policy Support Programme 
(ICT  PSP)  pilot  STORK41  aims  at  making  the  cross-border  use  of  electronic  identification 
possible, allowing citizens and businesses to use the eID technology of their home country to 
access eGovernment services in any Member State they live in or travel to. 

STORK  has  a  decentralized  architecture  based  on  technology  nodes  -  PEPS  (Pan  European 
Proxy  Service)  -  in  the  participating  countries.  The  PEPS  communicate  among  themselves 
using  the  Internet  as  communication  carrier.  The  aim  is  to  make  it  easier  for  citizens  and 
businesses to use their eID for online transactions in the public and private sector. 

Implementation  of  cross-border  STORK  solutions  would  be  built  on  the  STORK  technical 
platform  and  implement  the  common  specifications.  Implementing  cross  border  STORK 
solutions would mean a large step forwards towards 'Digital Living' for EU citizens and a key 
building block and enabler for other cross-border services. It also allows for service delivery 
tailored  to  the  specific  needs  of  a  person  as  it  allows  for  secure  transmission  of  personal 
information (e.g. age above 18 years) under the control of the online user. 

41  

http://www.eid-stork.eu 

EN 

49 

   EN 

 
 
                                                 
Interoperable cross border eProcurement services 

The large-scale CIP ICT PSP pilot PEPPOL42  aims to make it easier for companies to bid for 
public sector contracts anywhere in the EU in a simpler and more efficient way;  

Implementing  cross  border  PEPPOL  solutions  would  mean  implementing  the  various 
technical building blocks, such as eSignatures, virtual company dossier (VCD), eCatalogues, 
eOrdering,  eInvoicing  and  architecture  development.  The  aim  is  to  make  electronic 
communication  between  enterprises  and  government  bodies  possible  throughout  the  EU  for 
all procurement processes.  

Implementing  the  cross-border  PEPPOL  solution  will  enable  EU-wide  interoperable  public 
eProcurement.  PEPPOL  implementation  will  allow  any  company  in  the  EU  to  respond  to 
European public tenders from any Member State covering as well pre-award and post-award 
electronic procurement activities. 

Interoperable  cross-border  electronic  procedures  for  setting  up  a  business  in  another 
European country (in the context of the Services Directive) 

The  large-scale  CIP  ICT  PSP  pilot  Simple  Procedures  Online  for  Cross-border  Services 
(SPOCS)43  aims  to  provide  seamless  cross-border  electronic  procedures  for  setting  up  a 
business  in  another  European  country  in  the  context  of  the  Services  Directive,  making  the 
'Points of Single Contact' easier to use across borders. 

Implementation of SPOCS will remove the administrative barriers that European businesses 
face when offering their services abroad. It will contribute to the competitiveness of European 
businesses  and  particularly  SMEs  by  enabling  all  businesses  to  benefit  from  available, 
efficient and interoperable electronic procedures.  

Implementing cross-border SPOCS solutions would mean building on existing efforts of other 
large  scale  pilots  (i.e.  STORK  solutions  for  eID  and  PEPPOL  solutions  for  signature 
authentication), but also, via additional technical solutions, enhancing the cross-border use of 
eDocuments, eDelivery and content syndication.  

SPOCS contributes to the development of high performing  next generation Points  of Single 
Contact  through  the  availability  of  seamless  electronic  procedures.  The  aim  is  to  make  it 
easier for service providers willing to offer professional services outside their home country to 
deal with all necessary administrative procedures electronically through the Points of Single 
Contact. 

Cross border eHealth services 

The  large-scale  CIP  ICT  PSP  pilot  epSOS  aims  at  making  it  easier  for  people  to  receive 
medical assistance anywhere in the EU by removing linguistic, administrative  and  technical 
barriers;  

42 
43  

www.peppol.eu. 
http://www.eu-spocs.eu/ 

EN 

50 

   EN 

 
 
                                                 
Implementing  Smart  Open  Services  for  European  Patients  (epSOS)  solutions  on  a  pan-
European  scale  would  mean  building  on  existing  efforts  and  would  strengthen  the  political 
momentum. Eleven additional countries have joined epSOS Consortium in its second phase; 
the  eHealth  Governance  Initiative  of  state  secretaries  which  provides  political  support  has 
been  launched;  Member  States  are  committed  to  follow  up  on  the  Council  Conclusions  on 
eHealth;  in  addition  the  Directive  on  patient  rights  for  cross  border  care  has  been  recently 
adopted, and a specific article (14) calls for MS cooperation in eHealth in the areas covered 
by epSOS.  

Scaling up epSOS services to a pan-European infrastructure would also aim to: i) support and 
achieve  eHealth  interoperability,  ii)  support  cross-border  deployment  of  telemedicine 
services, iii) contribute to  implement mechanism article 14 of the Directive on patient's rights 
for  cross  border  healthcare  on  eHealth  by    adopting  common  sets  of  rule  for  health  records 
semantics  and  procedures;  iv)  ensuring  seamless  connection  between  e-Identification 
platforms and services (as from STORK) and epSOS services. 

Data.eu – Service infrastructure for PSI 

The  central  objective  of  the  DAE  is  to  chart  a course  to  maximise  the  social  and  economic 
potential of ICT, including through enhanced access to digital content to spur innovation and 
economic growth.  

Public data is an increasingly important source of input for markets of online content. Open 
data  re-use  spurs  growth  of  innovative  commercial  and  non-commercial  services  and 
products. All studies show relatively rapid growth in PSI-related markets, no matter whether 
they  are  more  or  less  open.  Growth  rates  are  estimated  variously  in  the  range  of  6-11%. 
Estimates  of  the  gains  from  the  removal  of  current  barriers  to  access  and  improving  the 
underlying  infrastructure  are  more  scattered  but  they  too  are  positive. Recently,  an  in-depth 
survey across the EU27 presented a picture of generally dynamic growth in the geographical 
information,  meteorological  information  and  legal  information  sectors  through  2008. 
Although  care  needs  to  be  taken  with  these  estimates  as  they  come  from  a  wide  range  of 
sources  using  different  methodologies,  overall  economic  gains  from  further  opening  up  PSI 
by  allowing  easy  access  at  marginal  cost  can  bring  gains  of  around  EUR 40  billion  for  the 
EU27, and aggregate economic impacts across the whole EU27 economy are estimated to be 
of the order of EUR 140 billion, showing clearly that there are large economic benefits from 
easier access to and greater use of PSI.  

The legal framework obliging public bodies to open up data resources has been put in place 
and will be improved. What is needed for the cross-border potential to be realized is a solid 
infrastructure  consisting  of  data  platforms  within  Member  States  and  a  single  European 
aggregate access point.  

The  full  potential  of  open  data  is  dependent  on  a  concerted  effort  to  establish  standardised, 
interoperable  solutions  for  data  publication  and  access.  To  this  day,  national  infrastructures 
are only starting to develop and a full EU support is required to ensure their coherence and to 
provide a pan-European aggregating infrastructure.  

By providing exactly the type of solution enabling data discoverability and interoperability for 
re-use  and  creation  of  commercial  and  non-commercial  added-value  services  and  products 
across Europe, the data.eu initiative will address a key issue for innovation and growth. 

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Europeana, the European digital library, archive and museum 

The DAE aims to promote wider access to knowledge, cultural diversity and creative content 
as well as to promote the digitisation and dissemination of cultural works in Europe. In line 
with  the  DAE,  the  aim  of  the  Commission  initiative  is  to  make  knowledge  resources  from 
Europe's cultural institutions easily accessible to all for work, study and leisure, and to turn 
these  resources  into  a  lasting  asset  for  the  digital  economy.  The  report  of  the  'Comité  des 
Sages' further underlines the potential of this area for innovation and job creation. 

Given  the  nature  of  the  cultural  content  as  Europe's  common  good,  the  preservation  and 
dissemination  of  which  requires  a  common  approach,  the  scope  of  the  initiative  cannot  be 
limited to a national or regional level. Intervention at EU-level will protect Europe's culture as 
an invaluable asset, ensure that this inheritance can remain a living asset over time and that it 
can be passed on and shared as widely as possible without distinction or barrier. Activities on 
an  EU-wide  scale  will  ensure  higher  visibility  of  national  cultural  treasures  and  national 
institutions  while  creating  a  common  ground  for  the  developments  which  go  beyond  the 
national borders. 

Further  expected  spin-off  effects  are  the  reduction  of  differences  in  the  rights  status  of 
digitised  materials,  adoption  of  best  practices  in  digitisation  and  preservation  of  digitised 
content, unification of markets in the content sector, encouragement of innovation and private 
business involvement by raising the commercial interest of aggregated content. 

The digitisation of their assets will help Europe’s cultural institutions to continue carrying out 
their mission of giving access to and preserving our heritage in the digital environment. It will 
also  give  an  important  input  to  the  creative  industries,  which  account  for  3,3%  of  EU  GDP 
and 3% of employment.44 These industries are faced with a digital transition that is shaking up 
traditional models, transforming value chains and calling for new business models. Digitising 
and  providing  wider  access  to  cultural  resources,  in  full  respect  of  copyright  and  related 
rights, is an essential condition for the further development of Europe’s cultural and creative 
capacities and of its industrial presence in this field. 

Safer Internet service infrastructure 

Internet provides children with new opportunities; however, it also raises a number of risks to 
children and allows an array of ways to distribute online child abuse material.  

To increase the trust of citizens, including parents and children, as part of pillar 3 of the DAE 
"Trust  and  security",  the  development  of  broadband-for-all  must  be  accompanied  by  a 
coordinated and consistent set of instruments to keep children safe online and remove illegal 
content, in particular child abuse images.  

Building  on  the  results  of  the  Safer  Internet  programme  and  in  particular  on  the  existing 
cooperation infrastructure, the initiative will scale up activities of European services to keep 
children safe online around three objectives: 

-  Provide  access  to  high  quality  content  online  for  all  children,  by  supporting 

interoperability between information systems of white lists. 

44 

EU Competitiveness report 2010 

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-  Empower  and  protect  children  through  interoperable  information  systems  and  web 
services  to  report  abuse  to  the  appropriate  agency,  online  service  supporting  the 
verification  of  minimum  age  in  online  environments,  and  associated  exchange  of 
expertise. 

-  Fight  against  child  abuse  material,  with  eservices  that  enable  hotlines  (web  based 
reporting points) to share more efficiently across Europe reports of child abuse images on 
the  internet,  and  service  oriented  infrastructure  to  make  available  and  interoperable 
technical tools are available to law enforcement agencies. 

Infrastructure for multilingual access to services   

One of the obstacles holding back the creation of a pan-European digital service infrastructure 
is the inability of current solutions to address Europe's wide diversity of languages. In order 
roll  out  over  the  entire  EU,  the  digital  service  infrastructure  must  address  citizens  and 
administrations  in  the  national  and  local  languages.  It  should  enable  information  exchange 
and full functionality across language barriers. This will mainly need to be achieved by means 
of  automation  (e.g.  machine  translation,  automatic  text  analysis,  summarization  or 
classification)  because  the  instant  and  urgent  processing  needs  of  online  systems  cannot 
otherwise  be  served.  Automation  in  all  EU  languages  requires  a  comprehensive  base  of 
language resources and tools. To date, such a base does not exist, except for a few languages 
and for a few use domains.  

The  impacts  and  benefits  of  a  truly  multilingual  service  infrastructure  are  obvious.  Firstly, 
addressing the language barriers will help European industry, especially SMEs, outgrow their 
national markets. Secondly, the deployment of language tools and the structural reinforcement 
of the underlying language infrastructures will increase the choice and offer of attractive and 
valuable  content  and  services  in  all  languages  which  can  significantly  contribute  to  making 
every European truly digital. Thirdly, tackling language barriers is a critical success factor for 
cross-border  public  services  and  cross-border  access  to  PSI  as  well  as  creative  and  cultural 
content.. Failure to provide multilingual digital services would leave the digital single market 
and  digital  public  services  divided  and  fragmented.  Implementing  these  services  in  English 
only would entirely exclude about half of EU's citizens, in some member states a much larger 
majority. An effective multilingual service infrastructure, on the other hand, will ensure a full 
coverage  of  EU's  territory  and,  in  addition,  open  new  global  markets,  especially  in  areas 
where European languages are spoken (e.g. USA, Canada, Latin America).  

The  infrastructure  for  multilingual  access  to  services  will  facilitate  and  ensure  the  wide 
deployment of language technologies and automated tools for cross-border access to content 
and  services  by  building  and  maintaining  the  necessary  linguistic  infrastructures.  This  is 
particularly  important  for  countries  whose  languages  are  currently  poorly  covered  by 
language  technology  tools  because  of  a  lack  of  market  incentives  or  by  a  lack  of  public 
funding 

Critical Information Infrastructures, including aspects of interdependencies 

This would include support to: 

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-  Establishment  and  operation  of  a  network  of  well  functioning  National/Governmental 
Computer  Emergency  Response  Teams  (CERTs),  by  supporting  adoption  of  baseline 
requirements, CERTs drills etc45; 

-  The development of a European Information Sharing and Alert System (EISAS) targeting 
in  particular  citizens  and  SMEs,  to  be  built  as  a  network  of  national  level  capabilities 
covering all of Europe; 

-  Pan-European  and  International  cyber  incident  management  exercises  (with  focus  on 
contingency,  mitigation,  mutual  assistance  and  recovery  strategies  and  measures)  with  a 
view  also  to  enhance  the  security  and  resilience  of  underpinning  communication 
networks; 

-  The  development  of  innovative  services  and  tools  (like  CERTs  for  Supervisory  Control 
and  Data  Acquisition  (SCADA)  or  smart-grids)  to  manage  cross-domain  security 
interdependencies. 

The  importance  of  protecting  Critical  Information  Infrastructures  (CIIs46),  by  granting  their 
security and resilience, has been acknowledged by the Commission in the CIIP action plan47 
of 2009 and, in continuity with this, by the DAE48, which announced measures focusing on, 
among  others,  preparedness,  prevention  and  response.  In  this  respect,  the  role  of  national 
capabilities in preventing, detecting and responding to cyber attacks and cyber disruptions, is 
to  be  leveraged  and  developed  by  means  of  a  European  integrated  approach,  which  would 
benefit  from  the  efforts  of  all  actors  involved  (the  Commission,  the  Member  States  and/or 
industry),  with  the  support  of  the  European  Network  and  Information  Security  Agency 
(ENISA). 

Smart grids deployment.  

Investments  in  large-scale  projects  for  demand/supply  balancing  using  smart  grid  solutions 
for  high  and  medium  voltage  electricity  grids  in  large  cross-border  regions  with  significant 
variable  electricity  generation.  The  deployment  of  "Smart  Energy'  networks  to  increase  the 
efficiency,  flexibility,  safety,  reliability  and  quality  of  the  European  electricity  and  gas 
systems and networks to facilitate the transition to a more sustainable energy system. These 
address  the  transformation  of  current  electricity  grids  into  resilient  and  interactive  service 
networks,  controlling  the  real  time  flows  and  removing  the  obstacles  to  the  large-scale 
deployment and effective integration of renewable energy sources and distributed generation. 
The objective for gas networks is to demonstrate more intelligent and efficient processes and 
systems  for  gas  transport  and  distribution,  including  the  effective  integration  of  renewable 
energy sources and the use of biogas in the existing networks. 

Horizontal priorities as mentioned in the MFF 

45  
46  
47  

48  

Often also referred to as Computer Security Incident Response Teams (CSIRTs) 
A definition of CIIs was proposed in COM(2005) 576 final 
COM (2009) 149 final of 30 March 2009 on Critical Information Infrastructure Protection “Protecting  
Europe from large scale cyber-attacks and disruptions: enhancing preparedness, security and resilience.  
COM (2010) 245 final/2 of 26 August 2010, A Digital Agenda for Europe 

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Innovative  Management  &  Services.  Technical  assistance  measures  including  project  and 
investment planning and feasibility studies, in support of investment measures and financial 
instruments. For example, mapping of pan-European broadband networks will develop an on-
going  detailed  physical  surveying  and  documentation  of  relevant  sites,  analysis  of  rights  of 
way, assessments of potential for upgrading existing facilities, etc. 

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ANNEX 4 – BROADBAND AND ITS IMPACTS: AN OVERVIEW 

Introduction 

The  present  annex  was  developed  as  part  of  an  ongoing  study  by  Deloitte  and  Tech4i2  on 
behalf  of  the  European  Commission  (SMART  2011/0024).  The  annex  is  divided  into  six 
sections.  The next section provides an overview of the key impacts of high speed broadband 
that can be found in the annex.  The second section provides a brief overview of key sources 
of  literature  reviewed.    The  third  section  provides  an  overview  of  the  impact  of  high  speed 
broadband  structured  into  ten  benefits  categories.    The  fourth  section  examines  the  current 
and potential future need for broadband connectivity in excess of 30Mbps.  The final section 
provides  an  overview  of  the  econometric  literature  that  has  investigated  (using  input  output 
analysis  or  regression  analysis)  the  impact  of  broadband  and  high  speed  broadband 
investment.   

Key Impacts 

More  than  270  studies  have  been  reviewed  in  creating  this  broadband  impact  report. 
Studies  primarily  suggest  four  major  areas  of  benefit  from  the  deployment  of  high  speed 
broadband: 

Education and Skills  

•  4.5 per cent increase in educational attainment;  

•  Education  is  enhanced  by  providing  students  and  teachers  with  access  to  a  vast 

array of resources;   

•  Several  educational  services  already  require  internet  speeds  in  excess  of 

100Mpbs. 

Health and care  

•  The  net  total  benefit  from  telemonitoring  is  in  the  order  of  €27.89  billion,  this 
equates to 0.299 per cent of EU GDP for an average implementation cost of €1.11 
billion per year; 

•  Reductions  in  hospitalisations  due  to  tele-health  were  greater  in  remote  areas 
(with  a  50  per  cent  decrease  in  bed-days)  compared  to  urban  areas  (29  per  cent 
reduction in bed-days). 

Employment and economy  

•  There is about a 15 per cent productivity boost from broadband; 

•  FTTP can boost the US economy by at least €312 billion, this equates to 2.9 per 

cent of GDP. 

Energy and transport 

•  Broadband-enabled  smart  grid  services  and  devices  could  result  in  over  €850 
billion  in  gross  energy  savings.    This  approach  is  expected  to  reduce  end-use 

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energy  consumption  in  the  USA  in  2020  by  roughly  23  per  cent  of  projected 
demand, potentially abating 1.1 gigatons of greenhouse gases annually.  

Macro-economic meta-analysis 

Meta-analysis of several studies estimated that high speed broadband deployment investment 
of  €270 billion will create about 3.99  million jobs in EU27 Member States. 

Meta-analysis  of  several  European  studies  estimated  that  the  average  level  of  GDP  growth 
arising from broadband investment is 7.03 per cent, this would equate to an increase in EU27 
GDP of €862.47 billion. 

Meta-analysis  of  several  US  studies  estimated  that  the  average  level  of  GDP  growth  across 
the  US  studies  is  3.47  per  cent,  this  would  equate  to  an  increase  in  EU27  GDP  of  €425.71 
billion arising from high speed broadband investment.   

An OECD study49 suggest that governments can achieve a ten year return on fully funding a 
national, point to point, open access FTTH network. 

High speed broadband and its applications 

Viewed  separately,  very  few  of  the  areas  or  applications  examined  in  this  report  require 
bandwidth  above  30Mbps.    However,  utilisation  of  a  small  number  of  applications  by 
households and businesses will already exceed this bandwidth requirement. 

It  is  probable  that  developers  of  bandwidth  hungry  applications  have  been  restrained  in 
developing applications since high speed bandwidths have not been deployed sufficiently to 
enable  mass-market  utilisation  of  their  innovations.  The  recent  introduction  of  video 
conferencing  style  facilities  for  Facebook  and  Google+,  requiring  up  to  8Mbps,  and  the 
development  of  bandwidth  hungry  high-definition  telepresence  applications  (requiring  over 
24 Mbps) are perhaps examples of the way that developers are starting to utilise the growing 
bandwidth provided to an increasing number of  users. 

It is likely that bandwidth hungry applications will develop more rapidly in the future as the 
growing  numbers  of  potential  (high  bandwidth  enabled)  users  starts  to  provide  developers 
with a growing market and thus enhanced economic case for development.  

Literature overview 

More  than  200  academic  papers  and  reports  have  been  reviewed  in  preparing  this  annex.    In 
addition  54  hard  copy  documents and  15  digital  documents  provided  by  the  Commission  have 
also  been  reviewed.  It  is  important  to  note  that  the  literature  on  the  impact  of  high  speed 
broadband is relatively poorly developed.   

Only  22  (11  per  cent)  of  the  papers  reviewed  investigate  high  speed  broadband.    High  speed 
broadband  deployment  is  relatively  recent  and  impact  studies  are  sparse.    Studies  largely 
examine the impact of internet connectivity and applications and services that are provided 

49 

OECD  (2010),  OECD  Information  Technology  Outlook  2010,  OECD  Publishing.  Available  at 
http://dx.doi.org/10.1787/it_outlook-2010-en  Accessed 17th May 2011 

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using broadband; rather than examining the connectivity requirements in Mbps and other 
technical  details.  The  focus is on the  services that are provided (and their impact) not on the 
underlying  broadband  networks.  Econometric  studies  are  amongst  the  small  number  of  studies 
that focus on the nature of the infrastructure.  To address this deficiency in each of the ten sections 
examining  impacts  details  about  bandwidth  requirements  and  the  significance  of  different 

bandwidths have been provided. 

It is important to note that achievement of 
high speed deployment goals will also lead 
to  the  deployment  of  broadband  in  many 
areas  where  broadband  is  not  currently 
available  or  is  currently  of  very  low 
quality.    For  example  the  2010  iDATE 
report50  notes  that  fixed  broadband  has  a 
24.8  per  cent  penetration  rate  (24.8 
subscribers  per  100  inhabitants  –  125.8 
million  fixed  broadband  subscribers  in 
EU27  States).    This  level  of  (inhabitant) 
adoption  is  similar  to  the  55.8  per  cent 

household  broadband  adoption  found  by  a 
recent EIB study51 . 

The  EIB  study  highlighted  that  average  DSL 
coverage  in  Europe  (EU-27  +  2)  was  94.4  per 
cent.  This  European  average  figure  masks  the 
fact that DSL coverage in rural areas was only 
80  per  cent.    In  addition,  Europe  has  relatively 
low  levels  of  deployment  of  infrastructure 
capable  of  meting  the  higher  2020  bandwidth 
targets  (i.e.  50%  or  more  of  EU  households 
subscribe to Internet access above 100 Mbps by 
2020).  Investment to achieve DAE targets will 
bring basic broadband to many households that 
are not currently covered by broadband (Target 1 Basic Broadband for all by 2013), particularly 
in rural areas. 

Broadband benefits overview 

This  section  provides  an  overview  of  benefits  arising  from  high  speed  broadband  in  ten 
categories52. 

It  is  important  to  point  out  that  whilst  the  ten  categories  provide  a  comprehensive overview  of 
potential  benefits  (implicitly  including  eHealth,  eLearning,  smart  grids  and  enhanced  transport 

50 
51 

52 

IDATE. 2010.  Broadband coverage in Europe; 2010 Survey.  DG INFSO 80106 B 
Koutroumpis,  P.  2010.  An  assessment  on  the  total  investment  requirement  to  reach  the  Digital  Agenda 
broadband targets: Study prepared for the EIB PJ/INCO/ICT Division 
The  categorisation  was  developed  by  Tech4i2  in  collaboration  with  the  UK  Digital  Inclusion  Team 
(http://www.esd.org.uk/esdtoolkit/Documents.ashx?doc=ESD03338g&agency=573) 
the 
benefits arising from broadband deployment and digital inclusion. 

to  capture 

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systems within environmental benefits and online gaming within wellbeing benefits) it does not 
capture explicitly  cross-cutting initiatives (such as eGovernment, eCommerce, ePayment and 
Single  European  Payments  Area  (SEPA))  or  technologies  such  as  cloud  computing  and 
Web2.0  which  will  enhance  the  volume  of  uploaded  user  created  content.    These,  together 
with a consideration of CIP ICT PSP pilots, are therefore included in relevant sections throughout 
the ten categories.  

Community and cohesion: Broadband benefits 

Dickes et al (2009) in a report about rural communities in the USA state “overall, it appears 
that  access  and  diffusion  of  high  quality,  high  speed  broadband  networks  is  a  critical 
economic and community development tool for all communities in the twenty-first century”.  
They  go  on  to  point  out  that  when  considering  rural  areas  as  communities  the  role  of 
broadband  in  supporting  and  enhancing  economic  development  can  be  seen  as  essential 
“without  access  to  high-speed,  high-bandwidth  internet  service,  rural  communities  already 
suffering from the economic effects of industrial restructuring and the current economic crisis 
may continue to find their communities increasingly less competitive”. 

Headline community broadband benefits can be described as: 

Improved access in rural areas 

•  Broadband benefits rural areas in two key ways.  First, broadband telecommunications 
has become a key location factor for businesses, almost as important as sewer, water, 
telephone, and electricity service.  Second, broadband doesn’t just make it easier for 
rural businesses to grow, it improves the quality of life in rural communities, making it 
easier for smaller locales to attract and retain residents (Hedlund, 2007).  

•  The tenth survey of multinational companies located in Ireland found that, compared 
to three years earlier, the strategic importance of broadband availability had moved up 
12 places in the ranking, from 18th to 6th (behind wage inflation, price inflation, skills 
and availability of workforce) (IMI, 2008) 

Improved communication benefiting communities 

•  The Digital Impact Group (2010) report that 80 per cent of broadband users reported 
using the Internet to get local or community news.  At the local level, a total of 78 per 
cent of broadband users surveyed cited “keeping up with the news in my community” 
as very important or somewhat important. 

•  A  JRC  Study  on  Smart  Grid  projects  in  Europe  (2011)  points  out  that  Smart  Grid 
projects and investments are not uniformly distributed across Europe.53 Most of them 
are  located  in  EU15  countries,  while  EU12  Member  States  still  lag  behind.  The 
uneven distribution of projects and the different pace, at which Smart Grids are being 
deployed  across  Europe,  could  make  trade  and  cooperation  across  national  borders 
more difficult and jeopardize the timely achievement of the EU energy policy goals.  

Development of social networks 

53  

http://ses.jrc.ec.europa.eu/index.php?option=com_content&view=article&id=93&Itemid=137 

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•  The recent emergence of online social networking, with groups such as Facebook and 
Twitter, provides users with a forum to connect with friends, colleagues, and family 
(Crandall and Singer, 2010). 

•  The  Baller  Herbst  Law  Group  (2008)  report  a  study  by  Datamonitor,  “social 
networks” revenues are expected to grow nearly four fold from €387 million in 2008 
to €1.52 billion in 2012. 

Several high speed broadband initiatives (such as Nuenen in the Netherlands) have used their 
enhanced bandwidth to support community TV initiatives.  Communities that are not part of 
these  initiatives  have  also  developed  community  TV  projects  independently.    Bandwidth 
requirements for TV vary depending upon compression techniques used.  Users of the BBC 
iPlayer  and  Skyplayer  applications  recommend  at  least  2Mbps  connections  to  view 
programmes54.  HD TV requires between 8 and 5 Mbps to deliver crisp video to consumer’s 
televisions.55 

Crime and public safety: Broadband benefits 

The  impact  of  broadband  in  improving  public  safety  and  addressing  crime  is  mentioned  in 
only a small number of studies, though in many reports it is part of a generic expectation that 
broadband will improve government services.  The role of broadband in improving the ability 
of the police and other agencies to respond to emergencies, including natural disasters, is seen 
as a benefit arising broadband. 

Headline crime and public safety benefits include: 

A contribution to the general improvement in public services 

•  Dabson  and  Keller  (2008)  note  that  a  rapidly  growing  area  of  broadband  use  is  for 
government  services  and  public  safety.    Advocates  for  “eGovernment”  identify  its 
potential  to  increase  transparency,  improve  customer  service,  update  and  streamline 
bureaucratic management practices and cut costs. 

Improvement in disaster and emergency response 

•  A number of studies cite the significance of broadband in helping to improve disaster 

response (Digital Impact Group, 2010). 

Improved outcomes through video communications and CCTV 

•  The  improved  use  of  video  transmission  is  seen  as  helping  a  number  of  aspects  of 
crime and community safety.  For example, it can act as a deterrent to burglaries on 
businesses,  (Scottish  Government,  2011)  or  improve  court  functioning  by  enabling 
input to proceedings from remote locations (Barr, 2010). 

Improved tackling of specific incidents 

54 

55 

http://www.sky.com/helpcentre/tv/sky-go/about-sky-go/technical-and-device-specifications/sky-go-
recommended-broadband-speeds/, accessed 15th July 2011 
http://gigaom.com/2008/08/12/why-we-need-fat-pipes-the-top-5-bandwidth-hungry-apps/ 

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•  The Digital Impact Group (2010) note benefits from greater connectivity, for example 
between health centres and utility providers.  This can make for more resilient systems 
and more accurate responses to threats such as infectious outbreaks, bioterrorism and 
attacks to the energy grid. 

Crime oriented video applications, such as the use of video transmissions for CCTV and also 
allowing witnesses to use video appearances in court, do not consume significant bandwidth. 
However,  the  higher  quality  images  or  the  transmission  of  several  images  simultaneously, 
such as multiple CCTV feeds to a remote recording location (essentially a cloud computing 
situation)  is  more  easily  facilitated  using  high-speed  broadband  access.    Two  IP  cameras 
using MPEG-4 video compression, with a screen resolution of 640 X 480 pixels at 7.5 frames 
per  second  require  approximately  650Kbps  upload  bandwidth56.    More  cameras  or  higher 
quality  images  will  require  commensurately  more  bandwidth.  The  Scottish  Government 
report  (2011)  notes  the  importance  of  higher  speeds  to  allow  improved  CCTV  functions  to 
take advantage of cloud computing. 

Education and Skills: broadband benefits 

Education  and  skills  development  is  the  first  of  the  three  major  areas  that  many 
commentators57 suggest will make the greatest use and derive the largest benefits from high 
speed broadband deployment.  The other two areas are health and economy. 

The  relatively  large  number  of  initiatives  that  provide  high-speed  broadband  deployment  to 
educational establishments supports the importance of high speed broadband.  For example in 
New  Zealand  approximately  €112  million  is  being  earmarked  specifically  for  improving 
schools’ access.  Korea has completed a Fiber to the subscriber (FTTS) program, connecting 
all 11,414 schools with at least 10 Mbps. 

Headline education and skills benefits include: 

Education as investment in human capital, with economic benefits 

•  Productivity  within  education  itself  can  be  enhanced  through  broadband  -  eLearning 
courses are considered 50 per cent less expensive than traditional face-to-face courses.  
Blended learning is 20 per cent less expensive than equivalent face-to-face seminars, 
but is more efficient than e-learning (Fornefeld et al., 2008) 

•  Children with internet access have been found to have higher standardized test scores, 

graduation rates, and earning potential (Digital Impact Group, 2010). 

Increased employment in education 

• 

In  the  USA  the  estimated  effect  of  a  five  per  cent  increase  in  capital  spending  from 
second  generation  broadband  deployment  would  be  an  increase  of  $4.3  billion  (€3.5 
billion  in  July  2010)  in  GDP  and  43,871  jobs  in  education  services  (Crandall  and 
Singer, 2010). 

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http://www.cctvcamerapros.com/IP-Camera-Internet-Connection-Speed-s/323.htm  
Liebenau, J., Atkinson, R. Kärrberg, P., Castro, D. and Ezell, S. 2009. The UK’s Digital Road to Recovery. 
LSE  Enterprise  Ltd.  &  the  Information  Technology  and  Innovation  Foundation.    Available  at   
http://www.itsa.org/itsa/files/pdf/digitalrecovery.pdf   Accessed on 10th July 2011 

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Increased availability of education 

•  One  advantage  of  broadband  is  that  education  can  be  made  more  widely  available 
through the internet.  One aspect is in rural areas, Mulas et al. (2009) report that rural 
residents can also access college-level distance learning courses and degrees that may 
not be offered at local institutions. 

•  Broadband  can  facilitate  distance-learning  opportunities  through  teleconferencing. 
This  has  potential  benefits  for  rural  communities  that  may  lack  access  to  top-flight 
education  resources.    There  are  several  examples  of  distance  tutoring  programs 
internationally (Crandall and Singer, 2010). 

Improved education services 

•  4.5 per cent increase in educational attainment (PriceWaterhouseCoopers, 2009) 

•  Education is enhanced by providing students and teachers with access to a vast array 
of resources.  Text-based materials, photos and images, videos, animations, interactive 
lessons,  data-manipulation  tools,  oral  history  collections,  music,  and  educational 
gaming  programs  are  just  a  few  of  the  valuable  benefits  (The  Baller  Herbst  Law 
Group, 2008). 

•  The  development  of  online  resources  such  as  eBooks,  Google  Scholar,  and  Social 
Science  Research  Network  (SSRN)  provide  academic  institutions  with  access  to  fast 
and reliable research (Crandall and Singer, 2010). 

There  have  been  some  dissenting  views  about  the  value  of  high-speed  broadband  in 
education. Kenny and Kenny (2011) do not question the principle but assert that the average 
secondary school in the UK already had internet access at 19.2 Mbps and this was sufficient 
to  meet  needs.  An  alternative  view  is  put  forward  by  the  Communications  Workers  of 
America (2010) who list several educational services that require internet speeds of between 
100mpbs  to  1gbps.  The  Baller  Herbst  Law  Group  (2008)  also  highlight  the  need  for  high-
interactive,  real-time  educational 
to  enable  meaningful 
speed  broadband 
experiences using uncompressed high definition video streams. 

two-way, 

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Employment and economy: broadband benefits 

There are a large number of studies that conclude that broadband and high-speed broadband 
has a significant and positive impact on economic growth (as measured through GDP).   Some 
of this growth is created by investment in the infrastructure and works undertaken to deploy 
broadband,  multiplier  values  have  been  applied  to  estimate  the  impact  that  this  investment 
will  have  throughout  an  economy.    Further  details  of  these  and  an  estimate  of  potential 
impacts in Europe are provided in section 6. 

Several studies suggest that productivity of employees is increased by ICT and broadband, but 
not all studies find this.   Some studies find that innovation, associated with broadband and 
high speed broadband may have a more significant affect.    

Headline employment and economy benefits include:- 

Increased economic output 

•  A recent report by Pike Research (http://www.pikeresearch.com/research/smart-grids-
in-europe)  forecasts  that  during  the  period  from  2010  to  2020,  cumulative  European 
investment  in  Smart  Grid  technologies  will  reach  €56.5  billion,  with  transmission 
counting  for  37%  of  the  total  amount.  The  report  also  suggests  that  by  2020  almost 
240 million smart meters will have been deployed in Europe.  

•  The  annual  average  investment  by  broadband  service  providers  in  the  USA  over  the 
next six years (2010-15) is predicted to be $30.4 billion (€24.7 billion in July 2010) in 
all broadband technologies, which corresponds to over 509,000 jobs created (Crandall 
and Singer, 2010) 

•  According to the International Energy Agency (IEA), Europe requires investments of 
€1.5  trillion  over  2007-2030  to  renew  the  elect rical  system  from  generation  to 
transmission  and  distribution.  This  figure  includes  investments  for  Smart  Grid 
implementation and for maintaining and expanding the current electricity system. 

•  FTTP can boost the US economy by at least $440 billion (€312 bi llion in July 2009, 
this equates to 2.9 per cent of GDP58).  Greater utilisation of peer to peer applications 
with 100 mbps symmetrical capability can provide a further increase.  There is about a 
15 per cent productivity boost from broadband. (Next Big Future, 2009). 

•  Consumers receive more than $30 billion (€21.2 8 billion in July 2009) of net benefits 
(consumer  surplus)  from  the  use  of  fixed  line  broadband  at  home.  Dutz  et  al  (2009) 
also estimate, based on 2009 survey data, that the benefits of an increase in broadband 
speed from 100 times the typical historical speed of dial-up internet service to 1,000 
times  dial-up  are  in  the  order  of  $6  billion  (€4.26  billion  in  July  2009)  per  year  for 
existing home broadband users (Dutz et al, 2009) 

•  Looking at a panel of OECD countries in 1996-2007, Czernich et al (2009) found that 
a  ten  percentage-point  increase  in  broadband  penetration  raised  annual  per-capita 
growth by 0.9 to 1.5 percentage points. 

Increased productivity 

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•  Broadband has contributed a very significant proportion — perhaps ten to 20 per cent 

— of productivity growth in some OECD countries (LECG Ltd, 2009)  

•  ACIL  Tasman  (2004)  looking  at  the  impact  of  broadband  in  Victoria  (Australia) 
conclude that their projections show how the financial, insurance and business service 
sectors  are  expected  to  experience  the  fastest  and  greatest  productivity  gains  from 
broadband  use.  Agriculture  and  forestry  and  fishing  sectors  are  expected  to  gain  the 
least from direct productivity gains. 

Increased employment 

•  Data  from  1999  to  2006  revealed  that  communities  with  new  access  to  broadband 
experienced 6.4 per cent higher employment growth on average than before they had 
broadband (Milano, 2010).   

•  The  internet  is  a  catalyst  for  generating  jobs.    Among  4,800  small  and  midsize 
enterprises surveyed, broadband access and technology created 2.6 jobs for each lost 
to technology-related efficiencies (McKinsey, 2011). 

•  Kolko  (2010)  looked  at  broadband  availability  and  economic  activity  throughout  the 
USA between 1999 and 2006 and concluded that the boost to employment growth was 
5.0 per cent (statistically significant). 

Building or maintaining the infrastructure for broadband 

•  The  Internet  in  the  USA  employs  1.2  million  people  directly  in  jobs  that  build  or 
maintain the infrastructure, facilitate its use, or conduct advertising and commerce on 
that infrastructure (Hamilton Consultants (2009).  This represents 0.86 per cent of total 
US employment59  

In  general  economic  and  employment  benefits  are  identified  as  increasing  through  the 
increased  take  up  of  broadband  rather  than  particular  advantages  of  high  speed  broadband.  
For example cloud computing require speeds of up to 2 Mbps and 10 milliseconds of latency, 
and increased bandwidth will become more necessary as enterprises begin to store and save 
more data in the cloud60.  A survey of firms in Scotland found that 58 per cent of businesses 
perceive  that  reliable,  high-speed  broadband  is  very  important  to  the  operation  of  their 
business (Scottish Government, 2011).   

High Definition TelePresence applications provide high-definition 1080p video, spatial audio, 
and  a  setup  designed  to  link  two  physically  separated  rooms  so  they  resemble  a  single 
conference  room  even  though  the  two  rooms  may  be  on  opposite  sides  of  the  world.    The 
application is a deluxe version of video conferencing aimed at businesses, it requires at least 
requires  24  Mbps  and  about  a  50  millisecond  latency  to  recreate  the  feeling  of  sitting  in  a 
room speaking with people61. 

Environment and transport: broadband benefits 

Few studies identify the particular benefits for the environment of high speed broadband.  The 
primary  benefits  identified  were  greater  use  of  telecommuting,  smart  grids  and  smart 

59 
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 US Bureau of Labor Statistics. 2011. Total US employment in May 2011 139.334 million 
 http://gigaom.com/2008/08/12/why-we-need-fat-pipes-the-top-5-bandwidth-hungry-apps/  
 http://gigaom.com/2008/08/12/why-we-need-fat-pipes-the-top-5-bandwidth-hungry-apps/ 

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buildings. Telecommuting could benefit from enhanced deployment of high speed broadband.  
Enhanced  high  speed  deployment  could  enable  greater  use  of  higher  quality  video-
conferencing.  High speed broadband could also enable more efficient use of cloud computing 
and transfer of large documents and files.  

Enhancements to logistics were quoted in some studies.  However, these rely rather more on 
enabling wireless internet connectivity with lorries or trucks than enhanced utilisation of fixed 
broadband networks. It is doubtful that the provision of high speed broadband would improve 
logistics significantly compared to standard broadband. 

Headline employment and economy benefits include:- 

Reduction in greenhouse gas emission  

•  Enhanced adoption and use of broadband could achieve a net reduction of one billion 
tons62 of greenhouse gas over 10 years in the US.  If converted into energy saved this 
would constitute 11 per cent of annual U.S. oil imports (Fuhr and Pociask, 2007) 

•  Robust use of a smart grid may save between 60 million and 480 million US tons of 

carbon emissions per year (Davidson, Santorelli and Kamber, 2009). 

Reduced travel  

•  2006 estimate - 28 million Americans telecommuted at least once a month.  Predicted 

to rise to nearly 100 million by 2010 (Crandall and Singer, 2010) 

•  Telecommuting will reduce greenhouse gas emissions in the US by 248 million tons 
due to less driving, 28 million tons due to reduced office construction, and 312 million 
tons because of energy saved by businesses. (Davidson, Santorelli and Kamber, 2009) 

•  Broadband and on-board computers in lorries  will  allow  logistics managers to better 
coordinate  and  utilise  trucks  and  enhance  loads  carried.    This  will  boost  capacity 
utilization by 3.3 per cent, saving US$16 billion (€10.14 billion in July 2008) annually 
in the US$500 billion (€307 billion in July  2008) trucking industry. (The Baller Herbst 
Law Group, 2008). 

Reduced energy use 

•  Broadband-enabled  smart  grid  services  and  devices  could  result  in  over  US$1.2 
trillion (€850 billion in July  2009) in gross energy savings.  This approach is expected 
to reduce end-use energy consumption in the USA in 2020 by roughly 23 per cent of 
projected demand, potentially abating 1.1 US gigatons of greenhouse gases annually. 
(Davidson, Santorelli and Kamber, 2009) 
ICT and energy policy goals - A Smart Grid can contribute to sustainability by 
facilitating the reduction of CO2 emissions, enabling the integration of largescale 
renewables and increasing energy efficiency in the power sector. It supports 
competitiveness and open and efficient markets by increasing market participation 
through the aggregation of distributed prosumers (consumers also able to produce 
power) and through the strengthening of interregional markets.63  

• 

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 One US ton is approximately 907kg, so 1billion US tons would represent just over 900 billion kg. 
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•  Creating “smart buildings” tied to the local power grid will enable utility companies to 
reduce the level of (wasted) reserve power held, leading to “lower prices and less price 
volatility”  (US  Department  of  Energy,  2002;  quoted  in  Baller  Herbst  Law  Group, 
2008) 

• 

In  California  33  per  cent  of  all  electricity  consumed  in  the  State  is  by  commercial 
buildings – about US$10 billion per year (€7.09  billion in July 2008).  The goal of the 
High-Performance  Commercial  Buildings  Project  (HPCBS),  launched  in  2000,  is  to 
cut  energy  use  by  70  per  cent  in  new  buildings  and  save  50  per  cent  in  retrofits  of 
older buildings using broadband connections combined with other technologies. (The 
Baller Herbst Law Group, 2008). 

Many  of  the  above  studies  identify  how  broadband  deployment  can  contribute  to  the  2020 
climate and energy targets:-   

•  Reduction in EU greenhouse gas emissions of at least 20 per cent below 1990 levels 

•  20 per cent of EU energy consumption to come from renewable resources 

•  20  per  cent  reduction  in  primary  energy  use  compared  with  projected  levels,  to  be 

achieved by improving energy efficiency. 

As Timmers64 identified at the ManagEnergy Annual conference broadband can contribute to 
the achievement of targets in two ways.  Firstly, by bringing direct efficiency gains through 
measuring,  monitoring,  intelligent  management  and  control.    Secondly,  through  driving 
behavioural  change  by  providing  reliable  data,  identifying  energy  consumption  (how  much, 
where),  enabling  comparative  analysis  (identify  common  inefficiencies,  best  practices  and 
opportunities). 

Most smart grid and smart building applications require wireless connectivity in some form, 
and several studies note the need for more broadband spectrum for utilities.  An IEEE Smart 
Grid  project65  estimated  that  data  rates  of  ‘40  Kbps  to  1  Mbps’  were  required.    High  speed 
broadband  appears  to  offer  few  additional  benefits  to  these  initiatives  (viewed  in  isolation) 
due to the relatively low bandwidth requirements. 

Equality and inclusion: broadband benefits 

This category of benefits relate to activities, which address inequalities, empower ‘voiceless’, 
isolated individuals and communities, and tackle exclusion. 

Few studies directly identified the impact of high speed broadband on equality and inclusion.  
Most  reports  identified  that  high  speed  broadband  could  facilitate  the  development  of 
applications or services that would tackle exclusion. Rural areas were, in most cases, expected 
to  benefit  most  from  the  introduction  of  broadband,  not  least  because  in  some  rural  areas 
internet access is very poor or non-existent thus depriving inhabitants of these rural areas of 
benefits that people in other areas often take for granted. 

64  Timmers  P.  2011.  ICT  contributing  to  the  development  of  a  more  efficient  Europe.  EUSEW,  “Local  and 

65 

regional action for sustainable energy”. Brussels.  13 April. 
IEEE  P802.15  Working  Group  for  Wireless  Personal  Area  Networks  (WPANs)  (2009)  Preliminary 
Proposal for Smart Utility Networks aka Smart Grid Communications 

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Headline equality and inclusion benefits include:- 

Tackling exclusion 

• 

In  their  Local  Broadband  Plan,  Suffolk  recognise  the  ability  to  use  broadband  in 
caring for the elderly by using telecare to enable the elderly to stay in their homes for 
longer  while  receiving  the  help  and  care  that  they  need  online  and  improving  their 
quality of life. Social care customers will receive a personalised budget and high speed 
broadband  will  enable  them  to  use  their  budget  to  maximum  effect  by  sharing 
information or booking services and equipment online (Suffolk development agency, 
2011) 

•  Assessment  of  the  benefits  of  the  Broadband  Wales  Programme  suggested  that 
individuals  could  be  more  included  within  new  personal,  employment  and  social 
networks (Atkins, 2006) 

•  One  of  the  wider  social  benefits  of  FTTH  coverage  is  the  promotion  of  community 

links and an enhanced sense of belonging to a community (Plum, 2008) 

Empowering ‘voiceless’, isolated individuals 

•  As  early  broadband  adopters  exploit  new  opportunities  to  have  their  voices  heard, 
improving  access  for  only  a  particular  group  may  in  fact  undermine  democracy  by 
creating inequalities of access to crucial communication services (Plum, 2008) 

Empowering rural areas 

•  Targeting  key  rural  centres  in  the  West  Midlands  will  develop  rural  broadband 

networks and maximise the opportunity for economic growth (Ecotech, 2010) 

In  general  equality  and  inclusion  benefits  are  identified  as  increasing  through  the  increased 
take  up  or  access  to  the  internet  rather  than  particular  advantages  of  high  speed  broadband.  
The Baller Herbst Law Group (2008) identify that remote server services for telecommuting 
are an application that could require speeds of up to 100Mbps.  Improved video conferencing 
is seen as an advantage particularly in relation to video-conferencing with consequent reduced 
travel, particularly for those living in rural areas.   

The  key  equality  and  inclusion  issue  highlighted  in  the  studies  reviewed  relates  more  to 
equality of broadband access, than to any particular advantages from high-speed broadband.  
Several studies voice fears about rural areas being ‘left behind’ and potentially disadvantaged 
by  not  having  broadband  or  high-speed  broadband  access  at  the  same  speeds  as  other 
locations. 

Finance and income: broadband benefits 

This  category  of  benefits  complements  the  economy  and  employment  section  (4.4).    This 
previous  section,  which  contained  a  large  number  of  reports,  focused  on  wider  economic 
benefits.  This section will focus on financial savings, mainly for the individual or household, 
which can arise from broadband connectivity.   

The  impact  of  broadband  on  pay  through  economic  development  can  arise  in  a  number  of 
ways, for example – increased pay in an existing job, the acquisition of more skills leading to 

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higher  pay,  or  more  income  through  more  opportunities  or  profit  from  running  a  small 
business. 

Headline finance and income benefits include:- 

Average Pay 

•  Direct jobs related to the “building and manufacture of broadband networks” pay 42 
per  cent  more  than  the  average  for  manufacturing  jobs  in  other  sectors  (Columbia 
Telecommunication Corporation, 2009) 

•  Between  1998  and  2002  communities  in  which  mass-market  broadband  became 
available  by  December  1999  experienced  more  rapid  growth  in  employment,  the 
number of businesses overall and businesses in IT-intensive sectors.  But the data did 
not demonstrate statistically significant impacts on wages (Lehr et al, 2005) 

• 

If the 1.6 million children who live in families which do not use the internet got online 
at  home,  their  educational  improvement  could  boost  their  total  lifetime  earnings  by 
over £10 billion (€11.68 billion in Ju ly 2009) (PriceWaterhouseCoopers, 2009) 

Household Income 

•  Strategic Economic Solutions (2007) examined the potential of the economic impact 
of a metropolitan broadband network for the city of Cape Town.  They estimate that 
the project will contribute to indirect household income, and by 2026/27 it is expected 
that the project will have cumulatively added over R106bn (€11.1 billion in July 2007) 
to indirect household income. 

Impact of lack of broadband access  

•  The Digital Impact Group (2010) conclude that each of the over 40 million digitally 
excluded households in a US study they were undertaking may have a current cost in 
the order of over US$2.5 billion (€2.04 billion in July 2010) 

•  UK  households  offline  are  missing  out  on  savings  of  £560  per  year  (€654  in  July 

2009) from shopping and paying bills online. 

Dutz et al. (2009) estimate that the increase in benefits of an improvement in broadband speed 
from  5  to  50  Mbps  would  equate  to  US$5.8  billion  (€4.11  billion  in   July  2009)  for  U.S. 
households.  However,  the  study  was  relatively  unclear  about  how  access  to  high  speed 
broadband would deliver these benefits. 

None  of  the  studies  investigating  finance  and  income  provide  robust  details  of  how  high-
speed broadband will lead enhanced financial and income benefits.  It is unlikely high-speed 
broadband will have a significant impact in this area. 

Health and care: broadband benefits 

The  impact  of  broadband  in  improving  health  and  care  is  mentioned  in  a  large  number  of 
studies.  Indeed, this is one of the top three areas where broadband is perceived as having the 
greatest impact.  Benefits can be seen in a number of ways.  The Digital Impact Group (2010) 
looks at telemedicine, online health education, electronic health records and chronic disease 
management.    Fornefeld  et  al  (2008)  in  Europe  look  at  benefits  from  electronic  health 
insurance  cards,  secure  messaging  systems  between  health  providers,  and  electronic  patient 

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records.    Telemedicine  is  defined  as  the  delivery  of  health  care  by  a  physician  to  a  patient 
using some type of interactive video technology when distance separates the two. Telehealth 
is a broader form of telemedicine that includes additional technologies, other types of health 
providers and distance education using both interactive and asynchronous platforms. 

Headline health and care benefits include:- 

Save consumers money 

•  Litan  (2008)  estimates  the  net  total  benefit  from  telemonitoring  is  in  the  order  of 
US$44 billion per year (€27.89 billion in July  2008, this equates to 0.299 per cent of 
GDP10) for an average implementation cost of US$1.75 billion per year (€1.11 billion 
in July 2008) 

•  Connected  Nation  (2008)  report  that  if  every  US  state  were  to  develop  initiatives 
similar  to  ConnectKentucky,  the  United  States  could  expect  to  gain  US$662  million 
(€420 million in July 2008) saved per year in re duced healthcare costs. This equates to 
0.0045 per cent of GDP66).   

Save consumers time and travel 

•  83 per cent of parents of children with special health care needs report driving more 
than an hour to see a specialist (California Broadband Task Force quoted in the Baller 
Herbst  Law  Group,  2008).    If  telemedicine  can  allow  families  to  be  treated  in  local 
clinics then their time and money will be saved. 

•  Monitoring conditions virtually by phone and the internet allows people to stay in their 
homes  and  avoid  expending  time  and  money  on  travel.    The  Digital  Impact  Group 
(2010)  report  that  one  Veteran  Affairs  telehealth  program  was  found  to  reduce  bed 
days of care by 25 per cent and hospital admissions by 19 per cent. 

•  The  introduction  of  tele-consulting  in  rural  Queensland  saved  Aus$125  (€79  in  July 
2007) per visit avoided as opposed to sending patients to the nearest city (Nooriafshar 
and Maraseni, 2007)  

•  Reductions in hospitalisations due to tele-health were greater in remote areas (with a 
50 per cent decrease in bed-days) compared to urban areas (a 29 per cent reduction in 
bed-days) (Darkins et al, 2008) 

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Improve outcomes and treatment 

•  Access  Economics  (2010)  report  a  study  that  showed  a  weekly  tele-nurse  visit  to 
patients with congestive heart failure resulted in 84 per cent lower readmission rates 
and also had significantly fewer emergency visits.  

•  Tele-health  home  monitoring  of  patients  with  dementia  improved  their  medication 
compliance rates to 81 per cent against 66 per cent in the control group (Smith et al 
(2007) 

Increased employment 

•  Kolko  (2010)  looking  at  whether  broadband  boosts  local  economic  development 
examines  broadband  and  industry  employment  growth,  1999–2006.  7.4  per  cent  of 
employment growth in health care and social assistance is associated with an increase 
in broadband availability. 

The Baller Herbst Law Group (2008) report that a crucial part of effective telehealth services 
is the transmission of high-definition medical images.  Under the FCC’s former definition of 
“broadband” (200 kbps), it would take nearly a full day to download a 10 minute diagnostic 
video  clip.    With  a  symmetric  100  Mbps  broadband  connection,  it  would  only  take  three 
minutes to transmit the video clip. 

Health care and the development of telehealth and telemonitoring, particularly those elements 
requiring  real-time  uncompressed  video  or  HD  video  connectivity,  appear  to  require  high-
speed broadband of 10 Mbps or more.   

Housing: broadband benefits 

Only  a  handful  of  studies  refer  to  the  impact  of  broadband  on  housing  issues.    The  most 
significant studies include research on the impact on housing by looking at communities that 
were among the early adopters of mass-market broadband. 

Headline housing benefits were thought to be:- 

Impact on the environment of broadband from home 

•  The use of broadband at home increases the ability to work from home and so reduces 
travel and associated CO2 emissions.  For example a 2006 estimate suggests that 28 
million Americans telecommuted at least once a month (this equates to 12.2 per cent 
of the working population67).  This was predicted to rise to nearly 100 million by 2010 
(Crandall and Singer, 2010).   

•  Each internet telecommuter saves about 3,500 kilowatt hours a year (Dutz, Orszag and 

Willig, 2009). 

Economic benefits of broadband facilitated homeworking 

•  Broadband,  allowing  work  from  home,  resulted  in  an  increase  in  productivity  of  20 

per cent (Zhen-Wei Qiang, Rossotto and Kimura, 2009). 

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 US working population in 2006 was 228.8 million Bureau of Labor Statistics 

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•  Homeworkers took on average a quarter of the number of days sick leave a year (three 
days)  than  their  office  attending  counterparts  (twelve  days  -  Zhen-Wei  Qiang, 
Rossotto and Kimura, 2009). 

Impact on the community of broadband from home 

•  Using broadband at home individuals can acquire skills and develop social networks 
through  broadband-enabled  web  applications.    These  can  facilitate  peer-to-peer 
communities  and  their  integration with the economy (quoted in Zhen-Wei  Qiang, C. 
Z., Rossotto, C. M., and Kimura, K., 2009). 

In general benefits are identified as increasing through the greater take up of broadband rather 
than particular advantages of high speed broadband.  However improved video conferencing 
is seen as an advantage particularly in relation to reduced travel between home and work.  

Wellbeing: broadband benefits 

This category of benefit relates to activities, which focus on people’s social wellbeing. This 
includes  “The  Need  for  Being”,  for  meaning, purpose and fulfilment in life e.g. support for 
purposeful  activities  and  ‘quality  of  life  activities’  such  as  hobbies  and  interests.  It  also 
focuses on the “Need for Relating” and the need for social interaction with family, friends and 
others.  These  activities  often  fundamentally  relate  to  ‘happiness’.  High-speed  broadband 
provides  many  opportunities  for  HD  and  UHD  video  applications.    Wellbeing  benefits  can 
obviously arise from some of the preceding benefits (a return to full health or possession of a 
job  are  known  to  improve  wellbeing),  this  section  therefore  highlights  on  those  that  focus 
specifically on wellbeing. 

Headline wellbeing benefits include:- 

Time Saving 

•  A  key  benefit  from  broadband  is  the  opportunity  to  save  time.    A  prime  example  is 
increased teleworking reducing the amount of time spent on commuting.  Connected 
Nation (2008) estimate that in the US US$35.2 billion (€22.31 billi on in July 2008) in 
value could be attributed to 3.8 billion hours saved per year by accessing broadband at 
home (if every state were to develop initiatives similar to ConnectKentucky). 

Improvement to home / work life balance 

•  The  benefits  from  telecommuting  resulting  from  broadband  are  not  just  the  time 
resulting from the elimination of the commute to work.  Fuhr and Pociask (2007) note 
that  telecommuting  allows  workers  to  find  more  time  savings  by  reorganizing  their 
lives to take advantage of low congestion periods.  To give one example - quality of 
life can increase as workers use a less crowded health club saving time. 

The  preceding  benefits  largely  focus  on  time  saving.    Faster  broadband  will  probably  mean 
that online tasks can be completed more quickly.  However, if the user still sits in front of a 
computer  and  simply  does  ‘more  of  the  same’  it  is  questionable  whether  there  is  any  net 
benefit.   

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Bandwidth requirements for social networking applications that facilitate social interaction and thus 
enhanced wellbeing are relatively limited.  VOIP applications such as Skype use between 100kbps 
(for a single call) to 1.5Mbps for HD video calling68.  Skype recommends 8Mbps download speeds 
for group video calling with seven or more people.  The recent development of single and multiple 
person  VOIP  applications  by  Facebook69  and  Google+70  suggest  that  the  previously  limited 
bandwidths required by these applications will expand in the future. 

Broadband requirements: An aggregate view 

The  preceding  sections  have  examined  benefits  and  broadband  and  high  speed  broadband 
bandwidth  requirements  in  ten  different  areas.    In  isolation  very  few  of  the  areas  or 
applications require bandwidth above 30Mbps.   

It  is  probable  that  developers  of  bandwidth  hungry  applications  have  been  restrained  in 
developing applications since high speed bandwidths have not been deployed sufficiently to 
enable mass-market utilisation of their applications.  A chicken and egg conundrum probably 
exists.    However,  it  is  possible  that  wider  utilisation  of  bandwidth  hungry  high-definition 
telepresence  type  applications  could  reach  the  mass  market  if  sufficient  users  possessed  the 
required  bandwidth  (over  24  Mbps).  The  recent  introduction  of  video  conferencing  style 
facilities for Facebook and Google+, requiring up to 8Mbps, is perhaps an example of the way 
that developers are utilising the growing bandwidth provided to many users. 

Tucker  (2010)  notes  that  a  number  of  high-definition,  and  perhaps  3D,  video  signals  in  a 
single house, together with some on-line gaming and some telecommuting could easily make 
large  inroads  into  a  high-speed  100  Mb/s  broadband  connection.    Add  to  this  the  data 
requirements  of  new  on-line  services  such  as  on-line  health  monitoring,  energy  monitoring 
and home security and there will be pressure on the network to deliver even more than 100 
Mb/s to the home. 

While  Tucker’s  observation  is  perhaps  a  little  exaggerated  in  terms  of  total  bandwidth 
requirements.    It  is  already  evident  that  bandwidth  requirements  for  households  and businesses 
could already relatively easily exceed 30 Mbps with existing applications.  A household viewing 
two  HD  TV  programmes  (2  x  8MBps)  while  taking  part  in  two  multiple  user  Google+  online 
conversations (2 x 8MBps) would need more than 30Mbps.  Businesses using 4 good resolution 
CCTV cameras (5.3 Mbps), with six staff connected to cloud computing applications (12Mbps) 
with an HD Telepresence application (24 Mbps) would require a broadband connection with in 
excess of 40Mpbs bandwidth.  It is likely that bandwidth hungry applications will develop more 
rapidly  in  the  future  as  the  numbers  of  potential  users  starts  to  provide  developers  with  an 
enhanced economic case for development.  

High speed broadband impact: Rates of return, job creation and GDP growth 

An interesting study by Shearman (2011) analyses the impact of superfast broadband access 
with a major UK train infrastructure investment.  The rail investment has a cost-benefit-ratio 

68 

69 
70 

https://support.skype.com/en/faq/FA1417/How-much-bandwidth-does-Skype-
need?frompage=search&q=bandwidth+consumption&fromSearchFirstPage=false, Accessed 15th July 
http://www.facebook.com/videocalling, accessed 15th July 2011 
 http://www.google.com/support/forum/p/chat/thread?tid=2d4123ffb5499d0f&hl=en, accessed 15h July 2011 

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of about £2 for every £1 spent.  In contrast broadband investment in broadband produces £20 
of benefit for every £1 spent in deployment. 

In  a  study  for  the  OECD  Enck  and  Reynolds71  suggest  that  governments  can  achieve  a  ten 
year return on fully funding a national, point to point, open access FTTH network. 

Many  studies  have  used  econometric  analysis,  usually  input/output  methods  and  regression 
techniques, to estimate the impacts of broadband deployment.  An initial analysis of studies 
has been undertaken to investigate the impact of high speed broadband deployment. 

These  studies  have  examined  the  effect  of  expenditure  on  broadband  deployment  in  three 
different  areas.    Firstly,  direct  employment  created  by  network  construction.    Secondly, 
indirect  employment  generated  by  businesses  selling  to  those  that  are  directly  involved  in 
network  construction.    Finally,  induced  or  additional  employment  induced  by  household 
spending  based  on  the  income  earned  from  the  direct  and  indirect  effects  (induced  impacts 
were omitted due to the low number of studies including this element). 

A  review  of  four  European  studies72  examined  the  direct  and  indirect  jobs  created  by 
broadband  investment.    Three  multipliers  (high,  average  and  low)  were  derived  from  the 
studies for each of the two job methods of job creation (direct and indirect).  The table below 
shows  the  average  values  for  direct  and  indirect  jobs  created  by  the  total  estimated 
expenditure for high speed broadband deployment in the 27 EU Member States.  In total it is 
estimated  that  a  high  speed  broadband  deployment  investment  of  around  €270  billion  will 
create 3.9 million jobs, see Table 1.  

European  and  US  studies  also  investigated  the  impact  of  broadband  expenditure  on  GDP.  
There  is  a  relatively  high  level  of  convergence  among  the  European  studies  in  terms  of 
estimates  for  GDP  growth,  with  the  three  studies  providing  values  ranging  between  6.6  per 
cent and 7.3 per cent.  The average level of GDP growth across the three studies is 7.03 per 
cent,  this  would  equate  to  an  increase  in  GDP  of  €862.47  billion  arising  from  high  speed 
broadband investment73.  It must be noted that more detailed forensic research is required to 
disaggregate  the  component  elements  of  studies  that  examined  GDP  to  examine  the  precise 
ways  in  which  the  cumulative  benefits  of  first  generation  broadband  and  second  generation 
high speed broadband are handled. 

71 

 Enck, J. and T. Reynolds (2009), “Network Developments in Support of Innovation and User Needs”, 
OECD Digital Economy Papers, No. 164, OECD Publishing. http://dx.doi.org/10.1787/5kml8rfvtbf6-en 

72 
Katz,  R.L.  and  Suter,  S.  (2009a).  Estimating  the  economic  impact  of  the  broadband  stimulus  plan. 
Columbia  Institute  for  Tele-Information Working  Paper;  Katz,  R.L.,  Zenhäusern,  P. and  Suter,  S.  (2008).  An 
evaluation  of  socio-economic  impact  of  a  fiber  network  in  Switzerland,  mimeo,  Polynomics  and  Telecom 
Advisory  Services,  LLC;    Katz,  R.L.,  Waterlaus,  S.,  Zenhäusern,  P.  and  Suter,  S.  (2009b).  The  Impact  of 
Broadband  on  Jobs  and  The  German  Economy.  Columbia  Institute  for  Tele-Information  Working  Paper;  
Liebenau, J., Atkinson, R., Kärrberg,P. Castro, D. and Ezell, S. (2009). The UK's Digital Road to recovery. LSE 
Enterprise Ltd. & The Information Technology and Innovation Foundation. 
73 

in  2010  –  Eurostat 
European  GDP 
http://epp.eurostat.ec.europa.eu/tgm/refreshTableAction.do?tab=table&plugin=1&init=1&pcode=tec00
001&language=en 

(PPS  Euros  at  market  prices) 

€12,268.4  billion 

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Table  1  Expenditure  and  employment  estimates  from  €270  billion  high  speed  broadband 
investment 

State 

(%) 

Direct job 
creation 

Indirect job 
creation 

Total jobs 
created 

Austria 

Belgium 

Bulgaria 

Cyprus 

1,91% 

39,085 

37,001 

76,086 

2,24% 

45,954 

43,503 

89,457 

1,51% 

31,014 

29,360 

60,374 

0,12% 

2,477 

2,345 

4,822 

Czech Rep. 

1,99% 

40,796 

38,620 

79,416 

Denmark 

1,35% 

27,591 

26,119 

53,710 

Estonia 

Finland 

France 

0,28% 

5,701 

5,397 

11,099 

1,33% 

27,172 

25,723 

52,895 

13,56% 

277,839 

263,021 

540,861 

Germany  

19,24% 

394,357 

373,324 

767,681 

Greece 

2,01% 

41,157 

38,962 

80,119 

Hungary 

2,02% 

41,500 

39,286 

80,786 

Ireland 

Italy 

Latvia 

0,88% 

18,013 

17,052 

35,065 

11,90% 

243,931 

230,921 

474,852 

0,44% 

8,979 

8,500 

17,480 

Lithuania 

0,74% 

15,075 

14,271 

29,347 

Luxembourg 

0,11% 

2,285 

Malta 

0,05% 

1,017 

2,163 

962 

4,448 

1,979 

Netherlands 

3,27% 

66,945 

63,374 

130,319 

Poland 

6,91% 

141,675 

134,119 

275,795 

Portugal 

2,00% 

40,918 

38,736 

79,654 

Romania 

3,83% 

78,455 

74,270 

152,725 

Slovakia 

1,03% 

21,122 

19,996 

41,118 

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Slovenia 

0,41% 

8,476 

8,024 

16,500 

Spain 

7,26% 

148,766 

140,832 

289,598 

Sweden 

2,18% 

44,611 

42,232 

86,843 

UK 

Total 

11,45% 

234,729 

222,210 

456,939 

100,00% 

2,049,640 

1,940,326 

3,989,966 

Note that this is the highest level of estimated investment needs, ranging otherwise from 
181-270 BL€. Also note that it is  expected that the partition (as percentage of total) will 
remain  essentially  the  same  for  the  Member  States  regardless  of  absolute  expenditure 
figures. 

US  studies  also  suggest  a  relatively  high  level  of  convergence  in  terms  of  GDP  growth, 
ranging between 3.26 per cent and 3.8 per cent.  The average level of GDP growth across the 
US studies is 3.47 per cent, this would equate to an increase in GDP of €425.71 billion arising 
from high speed broadband investment. 

Thus  European  studies  would  suggest  a  3.16  fold  ‘return’  on  the  estimated  270  billion 
investment  in  high  speed  broadband.    The  lower  levels  of  growth  in  the  US  studies  would 
suggest  a  more  modest  1.56  ‘return’  on  the  broadband  investment.  These  levels  are 
considerably lower than the 20 fold return predicted by Shearman (2011). 

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ANNEX 5 – RESULTS FROM PUBLIC CONSULTATIONS AND EVALUATIONS 

7.1. 

Main results of public consultations 

Numerous  consultations  with  Member  States,  industry  and  social  stakeholders  have  been 
carried  out  for  initiatives  in  the  field  of  broadband  networks,  digital  service  infrastructures 
and their financing aspects. In the particular field of broadband rollout, the consultations can 
be summarized as follows: 

• 

In  March  2011  Vice-President  Kroes  convened  a  "roundtable"  of  CEOs  to  request  them  to 
come forward with concrete proposals on how to address the broadband investment challenge. 
The CEOs, from a broad range of companies and stakeholders with an interest in broadband 
networks  (including  content  providers,  equipment  makers,  investors  and  telecoms  operators 
from the world's leading companies such as Nokia, Alcatel Lucent, Google, Ericsson, News 
Corp etc74), submitted a paper in July 2011 summarising their common position75. As far as 
financing of broadband networks is concerned, a clear signal in support of the CEF was sent: 
"The  European  Commission  should  provision  public  funding  (incl.  structural  funds)  to  be 
used  in  risk  sharing  mechanisms  between  the  EIB  and  the  EC,  for  viable  telecom 
infrastructure projects. It should also expand the RSFF’s investment capacity & eligibility to 
broadband investments". As regards the rising demand for ultrafast internet, the CEOs were 
equally clear: "Internet traffic is expected to be multiplied by 4 between 2010 and 2015". 

•  The first Digital Agenda Assembly took place in Brussels on 16th and 17th June 2011. There 
were two workshops dedicated to the rollout of broadband, several more on digital services. 
Altogether, the Digital Agenda Assembly was attended by more than 1,000 participants. The 
workshops  on  broadband  networks  organised  under  the  umbrella  of  the  Digital  Agenda 
Assembly highlighted that the existing telecom investment model is unsuitable to bring about 
the rollout of affordable, high-quality broadband networks. 

•  The public consultation on the Europe 2020 project bond initiative, ran from 28 February to 2 
May 2010, complemented by bilateral meetings organised between the Commission and EIB 
with financial institutions and a workshop organised by the Commission with Member States 
on  23  March.  The  consultation  on  project  bonds  highlighted  a  positive  verdict  overall 
concerning the importance of using the EU budget including financial instruments, to leverage 
investment e.g. for broadband networks. Nevertheless the stakeholders mentioned that it may 
be  necessary  to  introduce  new  ways  of  thinking  about  financing  investment,  which  has 
traditionally been financed on a corporate balance sheet.  

• 

In March ECFIN and the EIB organized a series of bilaterals with key financial institutions. 
The meetings confirmed that the EIB's involvement in financing of broadband rollout would 
be crucial for investors to secure the investment grade (BBB+, A-), also a liquidity may be of 
a concern to investors some Member States. The financial sector foresees initial investments 
in PPPs. 

74 

75

For a complete list of participants see: 
http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/508&type=HTML 

http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/11/508&format=HTML&ag

ed=0&language=EN&guiLanguage=en 

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•  With aim to support the Commission preparations vis-à-vis meeting DAE broadband targets 
and to test the viability of the financing proposal, INFSO organised a workshop with Member 
States  on  23  March.  The  workshop  focused  in  particular  on  developing  national  broadband 
plans and facilitating broadband investment.  

• 

In February, BEREC, a body of European regulators published a comprehensive paper on the 
NGA,  including  on  country  per  country  basis,  which  provides  an  up  to  date  picture  of  the 
NGA roll-out plans in the different Member States.  

•  Recent  Parliament's  draft  report  on  the  future  Multi-annual  Financial  Framework  (MFF) 
recognises  the  importance  of  using  the  budget  to  leverage  investment  in  broadband  (i.e.  the 
financial  crisis  has  made  private  investors  more  reluctant  to  finance  EU  projects  and  has 
revealed the need to rebuild sufficient confidence to allow major investment projects to attract 
the support they need; hence the Parliament stresses that the support of the EU budget will be 
needed  to  attract  and  mobilise  private  funds  towards  projects  of  EU  interest,  especially  for 
those projects not considered commercially viable, and therefore welcomes the Europe 2020 
Project  Bond  Initiative,  as  a  risk-sharing  mechanism  with  the  European  Investment  Bank 
(EIB),  that  provides  capped  support  from  the  EU  budget  to  companies  issuing  bonds  to 
finance  large-scale  projects  and  infrastructure  schemes)  and  emphasises  the  need  to  for  a 
budget supporting Europe 2020 objectives (i.e. the Parliament stresses that the Europe 2020 
strategy can only be credible if it is adequately funded; calls for the next MFF to reflect the 
ambitions of the Europe 2020 strategy and demands the Commission and the Member States 
to  produce  a  credible  funding  framework  ensuring,  in  particular,  adequate  funding  for  its 
flagship initiatives; argues, in this respect, that tasks, resources, and responsibilities must be 
clearly defined and well orchestrated between the Union and its Member States; calls on the 
Commission  to  clarify  the  budgetary  dimension  of  the  flagship  initiatives  as  these  priority 
action plans cut across all policies funded through the EU budget). 

•  With  the  support  of  the  EU,  the  European  Utilities  Telecom  Council  (EUTC)  is  managing, 
since  January  2009,  ICT4SMARTDG  an  open  virtual  forum  where  stakeholders  in  the 
telecommunications services sector meet with stakeholders within the local distributed power 
generation  sector,  the  manufacturers  of  local  renewable  sources  and  the  distribution  system 
operators.  The  objective  is  to  create  consensus  on  how  to  implement  smart  grids  from  the 
technical, financial and regulatory points of view.   

•  Finally,  the  Commission  (DG  INFSO)  is  currently  managing  an  expert  group  on  synergy 
between electricity utilities and telecom operators. The aim of the group is to bring together 
these  two  sectors  in  order  to  identify  synergies  at  infrastructure  and  services  level  for  the 
deployment of Smart Grids.  The main conclusion of a recent (27 May 2011) workshop was 
that  significant  and  sustained  capital  investment  is  required  and  that  opportunities  to  use 
existing  infrastructure  exist,  and  collaboration  in  the  development  and  operation  of  new 
systems can be beneficial for both.   

•  Following  the  adoption  of  the  MFF  communication,  preliminary  contacts  have  also  been 
taken  with  key  stakeholders  as  European  Telecoms  Association  (ECTA),  European  satellite 
operators'  association  (ESOA)  or  Fibre  To  The  Home  (FTTH)  Council  to  explore  the 
possibilities  for  an  infrastructure  fund  for  broadband  networks  and  digital  service 
infrastructures. Their first reactions have all been positive. 

In  all  these  consultations,  the  importance  of  using  the  EU  budget  to  leverage  investment  in 
broadband was acknowledged. In particular: 

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•  Stakeholders widely hold the view that the root causes for a lack of broadband investment is 
twofold:  A  lack  of  investment  from  incumbents  and  a  lack  of  demand,  due  to  the  so  far 
limited number of public and private services requiring ultrafast internet. 

•  Echoing  the  CEOs  position  paper,  however,  stakeholders  expect  the  demand  to  increase, 
mainly  due  to  the  current  explosion  of  traffic  from  videos  over  the  internet  (IPTV76).  In 
particular Portugal Telecom noted that IPTV services brought an added value to the network, 
tackling market demand issues and delivering positive effects on its economic performance. 
Some  stakeholders  suggested  actions  to  stimulate  demand,  including  copy  right  issues, 
eGovernment and digital literacy. 

•  Stakeholders  do  consider  that  public  authorities  should  explore  alternative  investments, 

including guarantees for loans. 

•  Finally, stakeholders think that there are huge risks in failing to roll out broadband, such as 
depopulation,  delocalisation  of  businesses,  political  stagnation,  entrenched  social/economic 
problems, reduced attractiveness for economic investment and reduced competitiveness. 

As  far  as  digital  service  infrastructures  are  concerned  consultations  have  taken  place  for 
Europeana multilingual services and Safer Internet, while sustainability studies are currently 
ongoing  for  projects  such  as  Secure  idenTity  acrOss  boRders  linKed  (STORK)  (eID),  Pan-
European  Public  Procurement  On-line  (PEPPOL)  and  digital  libraries.  All  these  studies 
include consultation and interviews with relevant stakeholders. The viewpoints gathered from 
the consultations can be summarised as follows: 

• 

In  2009  the  Commission  held  an  online  consultation  on,  amongst  other  things,  funding  of 
Europeana.  Respondents  underlined  that  the  cost  for  digitisation  paid  for  by  the  Member 
States is many times larger than the cost for maintaining the central Europeana operation and 
also emphasise the investments Member States are making to set up national aggregators for 
cultural heritage material feeding into Europeana and to preserve the digital resources77. The 
Comité  des  Sages  on  bringing  Europe's  cultural  heritage  online78  conducted  a  public 
consultation79  as  part  of  their  work.  97%  of  all  respondents  were  of  the  opinion  that 
digitisation  of  Europe's  cultural  heritage  should  be  funded  predominantly,  if  not  solely, 
through public funding. 72% of all respondents were of the opinion that the Europeana central 
service should  be financed through European funding.  While  a  vast  majority  of participants 
(65  %)  considered  that  cultural  institutions  should  be  responsible  for  the  long-term 
preservation of Europe's cultural heritage, 75% of the participants advocated EU funding as 
an accelerator for digitisation processes across Europe. In the coming years, Europeana will 
need  to  further  develop  its  collections  and  provide  additional  services  that  allow  creative 
industries to use Europeana content for innovative applications and services.  

•  Consultation  of  stakeholders  done  as  part  of  the  mid-term  evaluation  of  the  Safer  Internet 
programme  2009-2013  concluded  that  the  current  focus  of  the  programme  is  appropriate. 
European funding remains crucial for the projects to exist, while local operations and physical 
presence in the Member States remain of vital importance. Future challenges to be addressed 
include better and wider networking between all stakeholders, also beyond the EU (especially 

76 
77http://ec.europa.eu/information_society/activities/digital_libraries/doc/consultations/results_online_consult_de

Internet Protocol Television 

c_09.pdf 

78 http://ec.europa.eu/information_society/activities/digital_libraries/doc/refgroup/final_report_cds.pdf 
79 http://ec.europa.eu/information_society/activities/digital_libraries/doc/refgroup/annexes/results_consult.pdf 

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in Russia and South-Eastern Europe); further development of links with key industry actors, 
international  organizations,  content  providers  and  technology  producers;  closer  cooperation 
between EC programmes, especially at the operational level. 

•  The  Vision  2020  paper80  of  the  Multilingual  Europe  Technology  Alliance  (META-NET) 
concludes  that  language  barriers  remain  a  major  obstacle  to  the  digital  single  market  in  the 
EU. The majority of eCommerce consumers are reluctant to buy online in another language, 
yet  over  80%  of  eCommerce  sites  exist  in  a  single  language  only81.  The  DAE  scoreboard 
201182 states that while 40% of EU citizens buy online, only 9% buy online across borders. A 
Eurobarometer study83 showed that 90% of Internet users prefer to have websites in their own 
language,  and  that  less  than  half  of  EU  citizens  is  able  to  use  English  websites.  There  is  a 
growing  need  for  a  multilingual  digital  service  infrastructure  that  allows  Internet  users  to 
access all services (whether public or private) and content in their preferred language. Failure 
to do so would lead to an "online exclusion" of the majority of EU citizens. 

•  The Commission has conducted the following studies to assess the different aspects of the PSI 
re-use  market,  including  its  economic  valuation:  Measuring  European  Public  Sector. 
Information Resources (MEPSIR), Study on Exclusive Agreements, Economic Indicators and 
Case Studies on PSI pricing models, Study on pricing models for PSI, Study on market value 
of PSI, Study on re-use of cultural material. Key findings of the studies are available in Annex 
3.  Further  data  has  been  gathered  through  networking,  cooperation,  coordination  and 
awareness raising activities with Member States and stakeholders. The Epsi platform provides 
wide-ranging PSI data across the EU.84 

The European Parliament in a draft report on the future MFF, recognized the importance of 
using  the  budget  to  leverage  investment  in  broadband.  This  is  due  mainly  to  the  financial 
crisis  which  has  made  private  investors  more  reluctant  to  finance  EU  projects  and  has 
revealed the need to rebuild sufficient confidence to allow major investment projects to attract 
the support they need. Indeed, the Parliament stresses that the support of the EU budget will 
be needed to attract and mobilise private funds towards projects of EU interest, especially for 
those projects not considered commercially viable. 

7.2. 

Other studies and evaluation carried out 

The CEF for broadband networksand digital service infrastructuresis a new intervention, i.e. 
that  there  is  no  comprehensive  ex-post  evaluation  available.  Nevertheless,  the  conclusions 
from relevant reports and evaluations are as follows: 

•  For  the  use  of  the  financial  instruments,  the  Mid-Term  Evaluation  of  the  Risk-Sharing 
Finance  Facility  -  a  facility  for  Research,  Development  and  Innovation  (R&D&I)  including 
for  SME  jointly  financed  by  the  Commission  and  the  EIB  -  was  completed  by  a  group  of 
independent  experts  in  July  2010.  It  concluded  that  the  use  of  Financial  Instruments  in 
addition to grants as "having dramatically expanded the financing" of research and innovation 
efforts. Although infrastructure investment is a different kind of expenditure than R&D&I, the 

80 
81 
82 
83 
84 

 http://www.meta-net.eu/vision/index_html/reports/meta-net-vision-paper.pdf  
 http://ec.europa.eu/consumers/strategy/docs/EC_e-commerce_Final_Report_201009_en.pdf 
 http://ec.europa.eu/information_society/digital-agenda/scoreboard/docs/scoreboard.pdf  
 http://ec.europa.eu/public_opinion/flash/fl_313_en.pdf  
http://www.epsiplatform.eu/ 

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Commission can draw valuable lessons from the positive experiences with the Risk-Sharing 
Financial Facility.85 

•  The McKinsey Global Institute report on Big data86 shows the potential of big data, of which 
re-use  of  data  generated  in  the  public  sector  PSI)  is  a  significant  component.  According  to 
McKinsey,  big  data  could  create  some  250  BEUR  in  value,  including  both  efficiency  gains 
and a reduction in the gap between actual and potential collection of tax revenues. 

•  A 2011 study of the value of the PSI market in the EU87 estimates the narrowly defined EU27 
direct PSI-related market to be of the order of EUR 32 billion with a relatively rapid growth in 
the  range  of  6-11%.  Overall  economic  gains from  further  opening  up  PSI  by  allowing  easy 
access  can  bring  gains  of  around  EUR 40  billion  for  the  EU27,  and  aggregate  direct  and 
indirect economic impacts across the whole EU27 economy are estimated to be of the order of 
EUR 140 billion,  showing  clearly  that  there  are  large  benefits  from  easier  access  to  and 
greater  use  of  PSI.  Economic  valuations  also  demonstrate  that  the  direct  market  associated 
with the use of PSI is less important than related spillovers and new uses in a wide variety of 
goods and services industries, and future innovations associated with easier access to PSI can 
be  expected  to  add  further  economic  and  social  benefits  to  the  EU27  economy.88  Although 
currently the EU PSI directive requires such data to be made openly available, in reality this 
data  is  generally  inaccessible,  hard  to  find  or in  a  format  that  is  not  appropriate  for  ease  of 
reuse.  Indeed,  the  current  obstacles  to  data  access  can  be  best  addressed  by  creating  a  pan-
European portal for public sector data and creating a technical and institutional infrastructure 
which allows the data to flow freely across borders, and to be found and re-used easily (the 
data.eu initiative is operating in this context). There has recently been a very fast world-wide 
growth  of  data  markets,  i.e.  companies  (typically  startups)  that  aggregate  data  from  various 
sources  and  offer  access  to  them  as  a  service89.  Software  giants  such  as  Microsoft90  and 
Amazon91 have already connected the opportunities coming from the reuse of data with their 
cloud computing operations.  

• 

In  the  context  of  Framework  Programme  7  (FP7),  the  Commission  has  issued  a  call  for 
proposals,  ICT-2011-SME-DCL,  to  support  work  in  the  development  of  data  markets  and 
language resources and received an overwhelming response (more than 250 proposals mostly 
involving  Small  and  Medium  Enterprises).  These  responses  all  support  the  expectation  of 
robust  innovation  and  economic  development  to  follow  the  development  of  a  data  standard 
compliant, technologically advanced and richly populated European data infrastructure.  
•  The Trans European Networks programme evaluation concerned the 2001-2006 period.92  The 
programme  supported  deployment  of  trans-European  e-services  in  the  public  interest  and 
covered the following themes: eGovernment, eHealth, eInclusion, eLearning, and services for 
SMEs. The evaluation indicated that the programme made considerable progress in involving 

85  

In the period from 2013 onwards, an 'extended-RSFF' Financial instrument will be used to support, if 
possible , the Research and Innovation dimension of projects funded through FP8/Horizon 2020 grants. 

86 http://www.mckinsey.com/mgi/publications/big_data/index.asp 
87  

Review of recent studies on PSI re-use and related market developments, Graham Vickery, Information 
Economics, Paris, July 2011, forthcoming 
Op.cit. Graham Vickery, July 2011 
In Europe alone we have http://beta.kasabi.com ; http://www.duedil.com;https://www.innomis.com; 
http://www.floapps.com ; http://thedatatank.com ; http://datamarket.com; http://timetric.com; 
http://www.amee.com; http://ckan.net; http://www.data-publica.com; http://opencorporates.com 
https://datamarket.azure.com/ 
http://aws.amazon.com/publicdatasets/ 
http://ec.europa.eu/dgs/information_society/evaluation/studies/s2006_02/index_en.htm 

88 
89  

90  
91  
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stakeholders from New Member States, SMEs and public bodies. It was concluded, that their 
participation strongly favoured the further deployment and uptake of project outputs at a pan-
European level and the competitive health of markets for these and related services. 

•  The final evaluation93 of the Safer Internet Plus Programme (2005-2008) concluded that the 
programme  contributed  to  achieving  a  safer  Internet  through  a  range  of  interventions  and 
produced  a  significant  impact  and  influence.  The  programme  has  managed  to  successfully 
ensure  that  the  themes  and  actions  are  relevant  to  the  dynamic  social  and  technological 
environment within which it operates.  

• 

In a public consultation on a Green Paper on expanding the use of eProcurement in the EU in 
2010  94,  85%  of  respondents  expressed  themselves  in  favour  of  EU  action  to  reduce  cross-
border  barriers  to  eProcurement,  particularly  when  it  comes  to  mutual  recognition  of 
identification,  standardisation  of  key  interoperability  requirements,  convergence  of  core 
requirements for e-procurement systems and ICT solutions for proof of eligibility.  

•  The  report  on  the  final  evaluation  of  the  eContentplus  programme  found  that  Europeana 
contributed to creating better conditions for accessing, using, re-using and exploiting digital 
material.  

•  The Interim Evaluation of the Ambient-Assisted Living Joint Programme95 concluded that the 
market for ICT for the elderly is very fragmented. In order to scale up successful solutions, 
with  the  aim  of  improving  quality  of  life  and  saving  care  costs,  what  is  needed  is  systems 
integration  of  services  and  technology.  Technology  deployment  clearly  relies  on  the 
availability  of  appropriate  infrastructures,  both  physically  (broadband  availability)  and  in 
terms of cross-boarder public and private services. 

•  The  Deloitte  study  on  sustainability  of  eID  finalised  in  June  2011  that  proposes  a  roadmap 
with  specific  configurations  and  key  actions  to  be  undertaken  for  three  scenarios  of  eID 
uptake.  

•  The 2010 Strategic report on Cohesion policy96 reveals a slow absorption of Cohesion funds 

on ICT measures and particularly for those action supporting broadband networks.  

•  The  Second  Interim  Evaluation  of  the  FP7  reported  that  the  strong  push  for  innovation 
implemented in FP7 reflects the evolution in European policy thinking and the effects of the 
technology  and  market  trends  in  the  global  ICT  sector.  It  applies  a  mix  of  technology  push 
and  solution  (market)  pull  to  foster  R&D  excellence  and  innovation,  focusing  on  the 
development  of  emerging  technologies  and  taking  into  due  account  the  areas  of  European 
technology and industry strengths. Participants appreciated the more pronounced focus on the 
exploration  of  new  technology  paths  (compared  to  Framework  Programme  6  (FP6))  and 
stressed the relevance of such exploratory actions to be undertaken at European level.  

•  EUKidsOnline  pan-European  survey97  carried  out  by  LSE  in  2010  on  25.000  children  and 
their parents shows that children in Europe are on average starting to use the Internet at the 

http://ec.europa.eu/information_society/activities/sip/docs/prog_evaluation/report_sip_en_2005_2008.pdf 

93 
94 http://ec.europa.eu/internal_market/publicprocurement/e-procurement/consultations/index_en.htm 
95 

Unlocking  Innovation  in  Ageing  Well.  Interim  Evaluation  of  the  Ambient  Assisted  Living  Joint 
Programme, December 2010. 
http://ec.europa.eu/regional_policy/policy/reporting/cs_reports_en.htm 
http://www2.lse.ac.uk/media@lse/research/EUKidsOnline/EUKidsII%20(2009-
11)/EUKidsOnlineIIReports/D4FullFindings.pdf 

96 
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age of 7 but only one in three 9-12 year olds feel that there are enough "good things for kids" 
of their age online, The study also shows that one in eight children have upsetting experiences 
online  and  they  still  lack  skills  and  confidence  using  Internet.  One  out  of  three  youngsters 
now connects via their mobile phones or other portable devices. 

In  conclusion,  the  evaluations  and  consultations  show  that  interventions  in  the  area  of 
broadband  networks  and  digital  service  infrastructures  have  been  and  will  beneficial  to 
Europe  as  a  whole.  The  interventions  have  been  enhanced  by  the  lessons  learned  from  the 
previous  programmes  and  have  the  potential  to  produce  stronger  impacts  and  considerable 
European  added  value.  Nevertheless,  as  the  evaluations  and  certain  comments  show,  there 
have been some difficulties in harnessing the whole potential, for example in absorption of the 
structural funds. 

EN 

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