COMMISSION STAFF WORKING DOCUMENT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Connectivity for a Competitive Digital Single Market - Towards a European Gigabit Society
Date: 2016-09-14
Institutions: Directorate-General for Communications Networks, Content and Technology, European Commission
Subjects: Internet, competitiveness, innovation, regulation of telecommunications, single market, trans-European network, transmission network

EN 

   EN 

   EUROPEAN COMMISSION  Brussels, 14.9.2016  SWD(2016) 300 final   COMMISSION STAFF WORKING DOCUMENT Accompanying the document COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS Connectivity for a Competitive Digital Single Market - Towards a European Gigabit Society {COM(2016) 587 final}  
 
 
Table of Contents 

1.  Introduction 

1.1  Growing demand for connectivity 

1.2  The user's perspectives 

2.  State of play 

2.1  Current state of connectivity in Europe 

2.2  A growing need for connectivity 

2.3  Baseline analysis: from today to 2020 and beyond 

2.4  The gap between bandwidth demand and network capacity deployed 

3.  Cost and benefits of very high capacity connectivity 

3.1  Costing the networks for a Gigabit Society 

3.1.1  Costing the gap and the financial endowment of current initiatives 

3.1.2  The trajectory of private infrastructure investments 

3.2  The importance of defining objectives for broadband 

4.  Strategic objectives for 2025 

4.1  The importance of setting realistic political guiding objectives 

4.2  Leveraging mutually reinforcing objectives and existing infrastructures 

4.3  Benefits of the strategic objectives for 2025 

4 

4 

5 

7 

7 

14 

19 

21 

26 

26 

26 

30 

30 

35 

35 

36 

36 

4.3.1  Gigabit connectivity for all main socio-economic drivers such as schools, transport hubs and 

main providers of public services as well as digitally intensive enterprises 

36 

4.3.2  High performance 5G connectivity: by 2020 a fully-fledged commercial service in at least one 

major city in each of the 28 Member States and by 2025 uninterrupted 5G coverage of all urban 

areas and major terrestrial transport paths 

38 

4.3.3  All European households, rural or urban, to have access to Internet connectivity offering a 
39 

download speed of at least 100 Mbps, upgradable to Gigabit speed. 

4.4  The need to prioritise investments 

Annex: Technological developments 

I.  Which technology? 

II.  What will technology deliver 

III.  Copper based technologies 

IV.  Optical fibre – a new generation of networks 

41 

43 

44 

45 

48 

2 

 
 
 
 
a. 

b. 

Fibre-to-the-Business 

Fibre-to-the-Home 

c.  Outlook for the 2025 horizon 

d. 

Investing in FTTH 

e.  Will fibre-based technologies be able to meet growing demand? 

V.  Wireless technological developments 

49 

49 

50 

50 

51 

52 

3 

 
 
 
 
  
 
 
1.  Introduction 

This  Staff  Working  Document  accompanies  the  Communication  "Connectivity  for  a 
Competitive Digital Single Market – Towards a European Gigabit Society". The purpose of 
this document is to provide the background information which underpins the Commission's 
choice  of  new  proposed  long  term  strategic  objectives  for  2025  to  focus  on  Europe's 
connectivity needs beyond 2020.  

1.1  Growing demand for connectivity 

The creation of a connected Digital Single Market is one of the top priorities of the European 
Commission.  One  of  the  three  pillars  of  the  European  Commission's  Digital  Single  Market 
Strategy of May 2015 aims to create the right environment and conditions for the deployment 
of  very  high-capacity  networks.  Both  the  European  Parliament1  and  the  European  Council2 
have recently emphasized the need for more Internet connectivity.  

The  prerequisite  to  achieve  a  fully  functional  Digital  Single  Market  is  to  ensure  access  to 
ubiquitous,  very  high-capacity  fixed  and  mobile  infrastructures.  The  increase  in  data 
consumption  and  usages  (see  section  2.2)  and  the  process  of  aggregation  and  convergence 
between wireless and fixed networks will require the provision of very high-capacity (VHC) 
networks3 ever closer to the end-user.  

This  is  particularly  relevant  in  view  of  Europe's  competitive  position  in  the  Global  Digital 
Economy.  Gigabit  connectivity  is  already  a  reality  in  countries  such  as  Japan  and  South 
Korea,  and  is  translating  into  increasing  usage  of  video  and  high  bandwidth  applications. 
Bandwidth usage in Korea has historically been considerably higher than in Europe. It now 
also  seems  that  Japan,  which  initially  had  limited  bandwidth  usage  despite  high  fibre 
coverage,  is  starting  to  take  off  and  would  overtake  Europe  according  to  forecasts  from 
IDATE4.  In  mid-2015,  VHC  networks  represented  around  70%  of  total  fixed  broadband  in 
Japan and South Korea. Comparing the dynamics of investment into high capacity networks 
it can be concluded that South Korea and Japan have already entered into the Gigabit era, and 
China  and  Russia  are  also  pursuing  network  rollout  at  a  similar  level  of  ambition.  In 
comparison,  by  mid-2015,  in  the  EU  NGA  networks  represented  9%  of  the  total  fixed 
broadband subscriptions and e.g. Fibre to the Premises (FTTP) coverage was 20.8%, although 
in  some  Member  States,  such  as  Estonia,  Portugal,  Spain  and  Sweden,  deployment  was 
taking place at a much more significant scale.  

1 European Parliament Resolution of 19 January 2016 on Towards a Digital Single Market Act (2015/2147(INI))  
2 Conclusions of the European Council meeting of 28 June 2016 (EUCO 26/16). 
3 "Very high-capacity network" means an electronic communications network which either consists wholly of optical fibre 
elements at least up to the distribution point at the serving location or which is capable of delivering under usual peak-time 
conditions  similar  network  performance  in  terms  of  available  down-  and  uplink  bandwidth,  resilience,  error-related 
parameters, and latency and its variation. Network performance can be considered similar regardless of whether the end-
user  experience  varies  due  to  the  inherently  different  characteristics  of  the  medium  by  which  the  network  ultimately 
connects with the network termination point. 

4  See  Study  on  "Regulatory,  in  particular  access,  regimes  for  network  investment  models  in  Europe",  by  WIK  Consult, 

Deloitte and IDATE; SMART 2015/0002. 

4 

 
 
 
 
 
                                                            
Figure 1: VHC coverage in the European Union, June 2015 

When considering the growing capacity needs in terms of network infrastructures, there is a 
need to take into account how new devices are enabling the development of new applications 
(e.g.  smartphones)  and  affecting  customer  bandwidth  requirements  (e.g.  larger  screens  and 
higher resolution). In addition,  a single connection/subscription often serves simultaneously 
multiple  users,  in  particular  for  households  with  children,  SMEs  and  organisations  like 
schools and libraries, further increasing the need to ensure speed and quality of experience.  
The widespread adoption of cloud services5, the number of connected devices (IoT) and the 
booming  Machine-to-Machine  (M2M)  industry6  is  also  contributing  to  further  increase  the 
traffic load on communications networks, including mobile networks7. 

In  particular  the  growing  use  of  smartphones  and  tablets  increases  the  traffic  per  wireless 
access point (Wi-Fi and/or 4G/LTE base stations) and will require increasingly smaller cells 
to  deliver  the  planned  5G  connectivity  performance.  The  volume  of  data  that  will  transit 
through  future  5G  small  cells  will  reach  several  gigabits  per  second  (Gbps)  and  be  further 
aggregated into multi-Gbps traffic streams.  

This  requires  appropriate  high  capacity  backhaul  communications,  which  will  mostly  be 
fibre-based links, making 5G a complement but not a replacement to fixed VHC networks in 
areas  with  such  a  dense  concentration  of  connected  devices  and  users.  In  addition, 
developments in  5G are likely  to lead to  massively  improved fixed wireless (as  opposed  to 
cellular wireless) solutions. 

1.2  The user's perspectives 
The results8 of the public consultation launched last year by the European Commission on the 
need for Internet speed and quality beyond 2020 show the perception of respondents – mostly 
individual and business users – that important improvement in connectivity features is needed 

5  Communication  from  the  Commission  on  a  European  Cloud  Initiative-Building  a  competitive  data  and  knowledge 
economy in Europe, COM(2016) 178 final. 
6  Communication  from  the  Commission  on  Digitising  European  Industry.  Reaping  the  full  benefits  of  a  Digital  Single 
Market COM(2016) 180 final. 
7 Commission Staff Working Document Europe's Digital Progress Report 2016, SWD(2016) 187 final. 
8  Full  synopsis  of  the  results  available  at  https://ec.europa.eu/digital-single-market/en/news/full-synopsis-report-public-

consultation-needs-internet-speed-and-quality-beyond-2020 

5 

 
 
 
 
 
 
                                                            
 
for the future. The public consultation was addressed to all types of users in all sectors. Some 
1550 respondents from across Europe contributed to the public consultation, of which around 
85% as individuals and 15% as (public or private) organisations. In particular, the results of 
the public consultation show the following main trends: 

  Good  connectivity  is  seen  as  a  necessary  condition  to  achieve  the  Digital  Single 
Market, for citizens, for the industry, for businesses (whatever their size and sector of 
the  economy),  for  schools,  for  research  and  innovation  centres,  as  well  as  –  more 
generally - for competitiveness, jobs and growth. Inadequate connectivity is considered as 
a risk or a high risk for around three quarters of the respondents – affecting in particular 
employment,  cohesion,  education  and  learning,  research  and  data  driven  activities, 
consumer welfare, and accessibility. 

  While respondents pointed to download speed as the most important feature of fixed 
connectivity today, other connectivity features will gain significant importance in the 
future - notably upload speed, reliability and uninterrupted access. 

  Contributors have a low trust that future connectivity would spontaneously emerge at 
a  level  of  quality  and  speed  that  would  fulfil  their  needs:  more  than  half  declared 
themselves sceptical.  

  Among  the  respondents  who  are  pessimistic  or  very  pessimistic  about  the  fulfilment  of 
their  future  fixed  and/or  mobile  connectivity  needs  in  2025,  close  to  90%  think  that 
measures by public authorities are needed to promote investment in and take-up of 
connectivity  networks  and  services  in  line  with  (or  even  beyond)  identified  future 
needs. 

The results of a representative Eurobarometer survey9, carried out in the 28 Member States of 
the European Union between 17 and 26 October 2015, confirm that when subscribing to an 
Internet connection, respondents are increasingly likely to consider quality criteria. They are 
important  criteria  for  70%  of  customers,  which  makes  them  the  second  most  important.  In 
terms of trend, quality criteria are those that gained most in importance compared with 2014: 
e.g. +7 points for maximum download or upload speed, +6 points for maximum  amount of 
data downloaded or uploaded.  

Figure 2 summarises the main trends as far as households' Internet access is concerned. 

9  27,822  EU  citizens  from  different  social  and  demographic  categories  interviewed  face-to-face  at  home  in  their  native 
language 

6 

 
 
 
                                                            
Figure 2: Percentage of households with fixed and/or mobile Internet access in EU 

Base: All respondents (n = 27822)  

These trends underline the growing needs for Internet connectivity for all the sectors of the 
European  economy  and  show  that  expanding  individual  usage  aggregates  into  quickly 
growing demand for VHC fixed and mobile broadband infrastructures that can underpin the 
Digital  Single  Market.  When  considering  these  trends  in  Europe,  it  should  further  be 
emphasised  that  future  needs  should  in  particular  take  into  account  current  practices  of 
today's  "digital  natives"  (below  25  years  old)  since  they  will  increasingly  influence 
mainstream  data  consumption  patterns  as  this  generation  grows  in  demographic  terms  and 
becomes part of tomorrow's workforce.  

In  addition,  the  availability  of  higher  capacity  connectivity  networks  in  itself  drives  the 
development  of  innovative  and  value-adding  services:  failing  such  favourable  conditions, 
providers  have  to  adapt  their  services  or  launch  them  elsewhere.  Updating  and  enhancing 
existing network infrastructures to meet this anticipated growing demand for higher capacity 
will however require significant additional investments.  

2.  State of play  

2.1  Current state of connectivity in Europe 
Today virtually all EU citizens have access to basic broadband networks10 (97% have access 
to fixed broadband connections according to the DESI index 201611) and increasing numbers 

10 At a download speed of at least 2Mbps at end-user level. 

7 

 
 
 
 
 
 
 
                                                            
of  citizens  and  businesses  have  access  to  networks  allowing  at  least  30  Mbps  download 
speed: 70.9% have general coverage at Next Generation Access (NGA) connectivity level12 
in the EU, according to DESI 2016.  

However,  only  some  countries,  such  as  Malta,  Lithuania,  Belgium  and  the  Netherlands, 
already enjoy nearly comprehensive coverage of NGA networks; in most of those cases, this 
is  probably  due  to  the  competitive  impulse  provided  by  cable  networks,  which  can  be 
upgraded at relatively low cost to NGA levels of connectivity13. Elsewhere, NGA coverage 
has  been  slow  to  develop  –  notably in  countries  that  lacked  extensive  cable  in  their  legacy 
networks (Italy or Greece being examples).  

However, the roll-out of NGA networks has improved significantly since the DAE objectives 
were  adopted in  2010. As shown in  Figure 3, some  Member States  in particular  have  been 
able to leap frog others in increasing network capacity.  

Figure 3: 30Mbps and more (NGA) coverage of households per Member State (2011 vs 2015) 

11  The  Digital  Economy  and  Society  Index  (DESI)  is  a  composite  index  developed  by  the  European  Commission  (DG 
CNECT) to assess the development of EU countries towards a digital economy and society. It aggregates a set of relevant 
indicators  structured  around  5  dimensions: Connectivity,  Human  Capital,  Use  of  Internet,  Integration  of  Digital 
Technology and Digital Public Services. For more information about the DESI please refer to  http://ec.europa.eu/digital-
agenda/en/digital-agenda-scoreboard  

12  NGA  broadband  coverage/availability  (as  a  %  of  households)  with  Next  Generation  Access  including  the  following 
technologies:  FTTH,  FTTB,  Cable  DOCSIS  3.0,  VDSL  and  other  superfast  broadband  allowing  at  least  30  Mbps 
download). 

13  Several  studies  highlight  the  role  played  by  cable  networks  in  stimulating  NGA  deployments  including  SMART 
2015/0002, WIK-Consult (2015) for Ofcom ‘Competition and Investment: analysing the drivers of superfast broadband’, 
and the EP (2013) study ‘Entertainment X.0 to boost broadband deployment’. 

8 

0%10%20%30%40%50%60%70%80%90%100%MTBENLLTLUDKPTLVUKATEECYDEIESIHUESSEFICZBGROSKPLHRFRITELNGA broadband coverage (as a % of households)20112015 
 
 
 
 
                                                                                                                                                                                         
Yet there are still substantial differences between Member States14 in terms of take-up of high 
speed (NGA) broadband subscriptions.  

Figure 4: fast broadband (at least 30 Mbps) household penetration, July 2015. 

In addition, the connectivity challenge in rural areas remains acute, with patchy basic NGA 
coverage exemplified by 28% fixed line coverage and 36% mobile 4G household coverage 
(both coverages being partially overlapping). 

Figure 5: NGA broadband coverage in EU 

Basic NGA broadband coverage in the EU 

Total

Rural

100%

80%

60%

40%

20%

0%

End 2010

End 2011

End 2012

End 2013

End 2014

Mid 2015

Source: IHS and VVA 

A  key  development  driving  the  increase  of  network  capacity  is  that  legacy  telephone  and 
cable  (coaxial)  networks,  including  the  copper  ‘local  loops’,  are  in  the  process  of  being 
upgraded to improve their broadband performance. 

In many countries, including the UK or Germany, a large part of the NGA coverage beyond 
the cable footprint has been achieved through only partial upgrades of the legacy copper loop 
(FTTC), rather than through full VHC upgrades (e.g. FTTH/B). As investigated in the Study, 

14  For  instance  according  to  the  Digital  Economy  and  Society  Index,  updated  in  July  2015,  22  %  of  European  homes 
subscribed to broadband access of at least 30 Mbps but this represented only 1% of households in Hungary and 60% in 
Belgium. Similarly, subscriptions to broadband access of at least 100 Mbps reached on average 11% in the EU, but less 
than  1%  in  Croatia,  Cyprus,  Greece,  and  Italy  (where  networks  capable  of  such  speeds  are  largely  absent)  while  it 
exceeded 40% in Latvia, Romania and Sweden. 

9 

 
 
 
 
 
                                                            
"Regulatory,  in  particular  access  regimes  for  network  investment  models  in  Europe"15,  the 
former  approach  is  most  unlikely to  be  sufficient  to  cope with  data consumption  under  the 
most ambitious scenario forecast.  As a result, the current state of broadband connectivity in 
Europe  and  the  actual  trends  in  its  modernisation  will  not  fulfil  the  growing  needs  for 
Internet speed and quality beyond 2020. 

Figure  6:  Projections  of  NGA  penetration  by  technology  2015  –  2025  (%  of  households, 
EU28) 

Despite  some  technological  progress16,  today  not  all  NGA  networks  can  deliver  100 Mbps. 
This  remains  an  important  challenge  for  the  achievement  of  the  2020  DAE  objective  for 
100 Mbps  subscriptions  of  one  European  household  in  two:  it  will  require  both  a  wide 
availability and affordable offers to increase demand for connectivity of at least 100 Mbps by 
2020.  

15  See  Study  by  WIK-IDATE-Deloitte;"Regulatory,  in  particular  Access  regimes  for  network  investment  and  business 

models in Europe"; SMART 2015/0002. 

16 In July 2010, only 0.5% of lines in the EU had average speeds at or above 100 Mbps. By mid-2015, an estimated 11% of 

fixed broadband subscriptions in the EU were able to provide at least 100 Mbps. 

10 

 
 
 
 
                                                            
Figure 7: Fixed broadband subscriptions in EU by speed 

Take-up projections of NGA in a 5-10 year timeframe vary, and show significant differences 
across countries and connectivity parameters. 

For  example,  based  on  announcements  from  operators,  Government  subsidy  initiatives  and 
trends in demand, IDATE has projected that overall NGA take-up will surpass the 50% mark 
by  2020  in  the  EU  on  average.  However,  it  is  notable  that  a  high  proportion  of  take-up  is 
projected  to  be  on  the  basis  of  FTTC  technologies  which  may  not  in  all  cases  meet  the 
100Mbit/s  quality  of  service  objective.  When  such  technologies  are  excluded  from  the 
calculations, take-up is projected to be around 45% of households in 2020, falling short of the 
DAE  objective.  Besides,  gaps  between  countries  are  expected  to  persist,  with  a  significant 
proportion  of  countries  expected  to  lag  behind  the  DAE  take-up  objective,  even  if  all 
technologies are considered. 
As far as FTTH/B is concerned, projections by experts17 suggest that only 20% of households 
would be subscribing to an FTTH offer by 2020 leading to a take-up of 31% by 2025. Due to 
different levels in the projected coverage of FTTH, take-up is also expected to vary widely by 
country,  with  high  take-up  in  several  Eastern  European  countries  as  well  as  in  Portugal, 
Sweden, Spain and to a lesser extent France, contrasting with low take-up in several countries 
including the UK, Germany, Italy and Poland (See Figure 8). 

17 See Study WIK-IDATE-Deloitte: "Regulatory, in particular access regime" ; SMART 2015/0002 

11 

 
 
 
 
                                                            
 
Figure 8: Projections for FTTH/B penetration by country (% of total households, 2015-2025) 
IDATE 

Projections by 2019 from other sources such as Heavy Reading18 (see Figure 9), also suggest 
low take-up levels in the UK, Italy, Poland and Germany. 

Figure 9: Projections for household take-up of FTTH/B in December 2019 (Heavy Reading) 

18 http://www.ftthcouncil.eu/documents/Webinars/2015/Webinar_14April2015.pdf 

12 

 
 
 
 
 
                                                            
Closer analysis of the developments reveals a trend that, as business and household services 
and  applications  depending  on  high  quality  connection  are  becoming  more  popular, 
subscriptions to 100 Mbps or more are growing sharply, albeit from a low base. Especially 
pronounced in the Member States which already have the highest 100 Mbps subscription rate, 
this suggests both important emulation effects on demand and increasing supply of attractive 
services  which  exploit  such  higher  capacity  connectivity  –  the  so-called  next  generation 
applications.  Figure  10  shows  how  dramatically  the  take-up  rate  of  connections  offering  at 
least 100 Mbps is progressing in countries where VHC networks are widely available.  

Figure  10:  Increase  in  subscriptions  offering  at  least  100  Mbps  connectivity  in  EU  and  in 
selected countries (fixed broadband) 

Fixed broadband subscriptions to at least 
100 Mbps at EU level 

12%

10%

8%

6%

4%

2%

0%

0
1
-
l
u
J

1
1
-
n
a
J

1
1
-
l
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J

2
1
-
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J

2
1
-
l
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3
1
-
n
a
J

3
1
-
l
u
J

4
1
-
n
a
J

4
1
-
l
u
J

5
1
-
n
a
J

5
1
-
l
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Source: Communications Committee 

50%

45%

40%

35%

30%

25%

20%

15%

10%

5%

0%

LV

RO

SE

0
1
-
l
u
J

1
1
-
n
a
J

1
1
-
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2
1
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2
1
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3
1
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3
1
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4
1
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4
1
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J

5
1
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5
1
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Concerning  mobile  connectivity,  the  deployment  of  4G  has  continued  to  increase  sharply 
after a very slow start in many Member States and is now available from at least one operator 
to 86% of homes; however, some Member States lag significantly behind this average, and 
even  in  the  better-served  countries,  away  from  population  centres  mobile  data  coverage 
continues to be subject to very significant gaps, including along major transport routes. 

13 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Figure 11: LTE household coverage by at least one operator in EU countries 

Source: IHS and VVA 

In addition, connectivity in Europe is still overwhelmingly asymmetric, while uplink speeds 
are increasingly important for services such as cloud computing.  

2.2  A growing need for connectivity 

The number of Internet users, devices and applications continues to grow and will generate 
more and more traffic over the core networks, creating greater need for connectivity.  
Mobile data traffic in Western Europe is expected to grow six fold from 2015 to 202019. The 
European  Parliament  report  "Reforming  EU  telecoms  rules  to  create  a  Digital  Union" 
(2016)20 points out a "tremendous expected increase of mobile data traffic in Europe - from 
0.98 Exabytes per month in 2015 to 7.23 Exabytes per month" by 2020.  

In addition, these high levels of anticipated mobile data traffic are still expected to fall well 
below projected traffic to fixed locations, given that already in 2012 the cellular mobile data 
traffic was identified as "only the tip of a much larger iceberg"  if one takes account of the 
data used via Wi-Fi access points21.According to Cisco, the overall IP traffic is expected to 
grow to 194 Exabytes per month by 2020, up from 72.5 Exabytes per month in 2015, i.e. a 
compound annual growth rate (CAGR) of 22 percent22.  

19 Commission Staff Working Document Europe's Digital Progress Report 2016, SWD(2016) 187 final. 
20  ISBN: 978-92-823-8882-2 
21 Study on Impact of traffic off-loading and related technological trends on the demand for wireless broadband spectrum 

(SMART 2012/0015). 

22  Source:  CISCO  VNI  index,  see:  http://www.cisco.com/c/en/us/solutions/service-provider/visual-networking-index-

vni/index.html 

14 

 
 
 
 
 
                                                            
Figure 12: IP Traffic volumes 2015-2020 

Source: Cisco VNI Global IP Traffic Forecast, 2015–2020 

IP  traffic  growth  is  explained  by  the  increase  in  the  number  of  users  but  also  by  the 
substantial growth of IP traffic per capita over the past decade. Globally, monthly IP traffic is 
expected to reach 25 GB per capita by 2020, up from 10 GB per capita in 201523.  

Business Internet traffic is estimated to grow 2.6-fold from 2015 to 2020, a compound annual 
growth  rate  of  21%  and,  in  2020,  it  will  reach  27.9  Exabytes  per  month.  In  particular,  as 
businesses and consumers exchange their data with the cloud, this will also lead to a modified 
demand pattern for upload traffic. Hence, while most of the traffic will still be in download, 
demand  for  upload  will  increase,  as  well  as  the  need  for  lower  latency  (i.e.  higher 
responsiveness) for applications such as cloud computing, connected driving and e-health.  

This capacity demand is fuelled by the desire of users to enjoy better quality online services 
including  online  video  and  cloud  applications,  as  well  as  enabling  multi-screen  viewing, 
which is becoming increasingly prevalent in European households. Projections by Deloitte24 
see  very  high  capacity  connections  as  a  requirement  to  meet  the  aggregate  demand  from 
dozens of connected devices in a home. This is becoming the norm in European households 
where several users consume bandwidth from several devices at once. Deloitte further notes 
that  “demand  for  connectivity  has  evolved  symbiotically:  as  faster  speeds  have  become 
available,  the  range  of  applications  supported  has  increased  and  the  viable  number  of 
devices per person has steadily risen.” 

23 Cisco, The Zettabyte Era: Trends and Analysis, June 2016. 
24 Deloitte Technology, Media and Telecommunications Predictions 2016. 

15 

 
 
 
 
                                                            
Figure 13: Europe IP Traffic and Service Adoption Drivers 

Source: Cisco VNI Global IP Traffic forecast 2014-2019 – Europe includes Western Europe + CEE, excluding Russia 

These trends increase the demand for capacity and other quality of service characteristics of 
digital networks. There is an emerging consensus among industry players and investors that 
in the medium and long run, fixed and mobile networks converge: for instance, it is expected 
that 5G connectivity providers will rely on (nearly) ubiquitous VHC network infrastructures 
coming very close to users' premises (i.e. to the building, to the small cell), to support their 
business.  

As mentioned above, this booming global traffic is the product of the increase in connected 
activity at the level of individual users (both the growing number of end users and, to an ever 
greater  extent,  the  increase  in  data  traffic  per  end  user).  Globally,  the  average  number  of 
devices  and  connections  per  household  and  Business  place  is  also  growing  due  to  M2M 
applications, such as smart meters, video surveillance, healthcare monitoring, transportation, 
and  package  or  asset  tracking.  By  2020,  M2M  connections  will  represent  46 percent  of  the 
total devices and connections, according to Cisco.  

Figure 14: Traffic evolution by the type of devices 2015-2020 

Source: Cisco VNI Global IP Traffic Forecast, 2015–2020 

16 

 
 
 
 
 
 
New  and  innovative  (so-called  "next-generation")  applications  requiring  low  latency,  high 
Internet access speed - often bi-directional - and other improved connectivity parameters are 
emerging and will reinforce the demand for better connectivity.  

Figure 15: Applications' bandwidth and latency requirements 

Next generation TV is likely to be a significant driver of bandwidth demand for households 
in the coming years. However, it is not the only driver. Bandwidth may also increasingly be 
needed and used for business purposes, both in business premises and in the home office. For 
a  complete  picture  therefore,  it  is  helpful  to  take  into  account  a  range  of  applications  (in 
addition to TV) and to understand how bandwidth requirements may vary for different types 
of users including businesses. 

17 

 
 
 
 
 
Table 1: Application categories with their capacity and quality requirements 2025 

Source:  WIK-IDATE-Deloitte;  Regulatory,  in  particular  access,  regimes  for  network  investment  models  in 

Europe, SMART 2015/0002 

Further examples of current applications with particular quality requirements are presented in 
table 2. 

Table 2: Quality requirements of applications 

y
t
i
s
n
e
D
s
n
o
i
t
c
e
n
n
o
C
h
g
i
H

d
e
e
p
S
d
a
o
l
n
w
o
D
h
g
i
H

y
t
i
r
u
c
e
S
h
g
i
H

y
t
i
c
a
p
a
C
h
g
i
H

y
t
i
l
i
b
a
i
l
e
R
h
g
i
H

y
t
i
u
q
i
b
U
h
g
i
H

d
e
e
p
S
d
a
o
l
p
U
h
g
i
H

e
t
a
r

a
t
a
d

k
a
e
P
h
g
i
H

y
c
n
e
t
a
L
w
o
L

y
r
t
e
m
m
y
S

r
e
t
t
i
J
w
o
L

s
s
o
L

t
e
k
c
a
P
w
o
L

s
n
o
i
t
a
c
i
l
p
p
a

e
m

i
t
-
l
a
e
r

Video, 3D video, UHD screens 

Education / e-Learning 

IoT & M2M 

Audio / Music 

Gaming 

e-Commerce 

IP Telephony 

HD telepresence 

18 

 
 
 
 
 
  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
e-Banking  

Health Services 

Self-driving car 

Security / CCTV 

e-Government 

l
a
c
i
t
i
r
c

n
o
i
s
s
i
m

s
n
o
i
t
a
c
i
l
p
p
a

Industry automation 

Augmented Reality 

  Smart City 
s
n
o
i
t
a
c
i
n
u
m
m
o
c

Big Data 

Work and play in the cloud 

e
v
i
s
s
a
m

s
n
o
i
t
a
c
i
l
p
p
a

c
i
s
a
b

Gigabytes in a second 

Email 

Social Networking 

Smart Home / Building 

Location-Based Services 

Videoconferencing 

Browsing 

Source: European Commission  

2.3  Baseline analysis: from today to 2020 and beyond 

In  terms  of  supply  of  NGA  in  commercially  viable  areas,  forecasts  from  IDATE  based  on 
market  intelligence  (see  Figure  16)  suggest  that  upgrades  to  NGA  and  VHC  networks  will 
continue, but at a relatively gradual pace. The reasons are notably uncertainties in the market 
regarding the rate of pick-up (demand in subscriptions), the materialization of new services 
and  applications,  the  durability  of  intermediate  technical  solutions  based  on  legacy  copper 
infrastructures,  arguably  underpinned  by  strategic  profit-maximizing  considerations  which 
can  favour  delaying  such  a  transition  at  the  operator  level,  even  at  the  cost  of  beneficial 
externalities for society as a whole.  

19 

 
 
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
Figure 16: - Projected take-up of NGA by technology (to 2025) 

Source:  WIK-IDATE-Deloitte;  Regulatory,  in  particular  access,  regimes  for  network  investment  models  in 
Europe SMART 2015/0002 

IDATE  projections  above  suggest  that  by  2020,  even  under  very  optimistic  assumptions 
(assuming FTTC/VDSL delivers 100Mbit/s in practice25), around 16 countries may miss the 
DAE objective of 50% households taking up at least a 100 Mbps connection, and within the 
16 affected countries the objective may be missed by around 25m households. In reality other 
advanced  hybrid  copper-based  solutions  may  deliver  the  required  speed  provided  the  local 
loop  is  sufficiently  short26.  Countries  with  limited  competition  between  legacy  networks 
(copper  lines  /  coaxial  cables),  such  as  Italy  and  Greece,  are  included  amongst  those 
considered likely to miss the objectives (though there has been a fairly recent spurt in activity 
in  Italy),  while  incountries  which  have  been  characterised  by  strong  FTTC  coverage  could 
fail  to  meet  objectives  under  the  stricter  assumption  that  FTTC  technologies  may  not  in  all 
cases meet the 100Mbit/s objective27.  

This pace of development may be sufficient to meet the needs of some users, but is likely to 
limit the potential for more demanding users, including small business and home office users 
and may not be sufficient to enable Europe to fully benefit from a connected economy and 
society. As explained in more detail in Chapter I of the Study "Support for the preparation of 
the  impact  assessment  accompanying  the  review  of  the  regulatory  framework  for  e-
communications",  SMART  2015/0005,  the  demand  for  data  is  booming  and  the  scenarios 
considered are mostly rather conservative. 

Rural NGA deployments vary across the EU and within Member-States, as shown in various 
case  studies.  If  the  current  varying  practices  remain,  the  current  status  of  uneven  rural 
deployment is likely to persist, resulting in patchy access in rural communities to broadband 
capable of reaping the benefits from the social and economic integration that digitisation may 

25 If FTTC/VDSL is excluded (as this technology is less likely than the other technologies considered to be offered at speeds 
of  100Mbps  and  above),  then  only  between  42%  and  45%  of  all  households  in  Europe  would  subscribe  to  100  Mbps-
capable networks in 2020. 

26 See figure 26 in Technological developments' Annex. 
27 For additional deployment forecasts see, SMART 2015/0002. 

20 

 
 
 
 
                                                            
bring.  This  process  is  likely  to  have  repercussions  on  public  finances,  especially  if 
accompanied  by  ageing  population.  Challenge  areas  could  in  theory  be  addressed  through 
public subsidies, but these are by no means sufficient. 

2.4  The gap between bandwidth demand and network capacity deployed 

In Asia, affordable very high capacity (Gigabit) connectivity has already been available as a 
consumer  service  in  Japan28,  Singapore  and  Korea  for  some  years.  In  2014,  Korea’s  SK 
Telecom  announced  trials  of  10  Gbps29  and  the  Korean  National  Broadband  Plan  (Ultra 
Broadband Convergence Network30), already launched a 1 Gbps objective in 2010. 

In the US, very high capacity (Gigabit) connectivity is also available to households and small 
businesses,  notably  in  the  cities  served  by  Google  Fibre,31  and  recent  reports  suggest  that 
AT&T  is  responding  to  the  competitive  challenge  with  more  widespread  urban  Gigabit 
deployments of its own32

.  

28  KDDI  launches  Gbps  service  2008  http://www.japantoday.com/category/technology/view/kddi-to-launch-1gbps-fiber-

optic-service-in-oct 

29  SK  Telecom  showcases  10Gbps  service  http://www.businesskorea.co.kr/english/news/ict/6789-100x-faster-internet-sk-

broadband-offer-10-gbps-internet 

30UNESCAP 

http://www.unescap.org/sites/default/files/4.1%20Korean%20Broadband%20Policies%20and%20Recommendations.pdf 

31 https://fiber.google.com/cities/kansascity/plans/ 
32 See for example http://www.latinpost.com/articles/101338/20151210/google-fiber-vs-att-gigapower-likely-to-win-gigabit-

race-thanks-to-google.htm 

21 

 
 
 
 
 
 
                                                            
Figure 17: Percentage of FTTB connections on total subscriptions (OECD) 

Figure 17 illustrates the state of transition from copper to fibre inside and outside of the EU. 
In  the  European  Union,  some  Member  States,  such  as  Latvia,  Sweden  or  Estonia  already 
compare well with Japan on a range of NGA metrics (although Swedish fixed rural coverage 
remains relatively limited),.   

Several other EU countries, including Portugal, Spain, France, Romania, which benefit from 
an  expanding  FTTH/B  footprint,  albeit  at  different  pace  of  deployment,  may  become 
Europe’s  leading  countries  for  VHC  connectivity  in  the  years  to  come33.  However,  large 
European  countries  which  have  so  far  been  experiencing  limited  or  incremental  NGA 
deployment may lag behind European and global leaders on VHC broadband.  

Although the picture does not take into account the effect of cable subscriptions, it gives an 
idea  of  the  different  pace  of  this  transition.  Furthermore,  rural  NGA  coverage  has  been 
increasing slowly  in several countries  such as Germany, France, Italy, Austria and Finland, 
increasing the risk of a growing urban and rural digital divide as can be seen in Figure 18. 

33  See  the  Study  "Support  for  the  preparation  of  the  impact  assessment  accompanying  the  review  of  the  regulatory 

framework for e-communications", SMART 2015/0005 and, Study SMART 2015/0002 

22 

0%10%20%30%40%50%60%70%80%ColombiaLatviaOECDGreeceBelgiumIrelandGermanyAustriaFinlandFranceChilePolandItalyCanadaAustraliaNew ZealandMexicoUnited StatesLuxembourgNetherlandsSwitzerlandCzech RepublicHungarySpainTurkeyDenmarkSloveniaPortugalIcelandSlovak RepublicNorwayEstoniaSwedenKoreaJapanPercentage of fibre connections in total broadband subscriptions,June 2015 
 
 
 
 
 
                                                            
Figure 18: – Next generation access (FTTP34, VDSL and DOCSIS 3.0 cable) coverage, June 
2015 

Source: IHS and VVA - Digital Scoreboard – Connectivity section35 

The size of the gap between gradually upgraded network infrastructures and the exponentially 
growing  usage  depends  on  several  factors,  such  as  (1)  whether  future  demand  can  be  met 
through  incremental  upgrades  of  existing  copper  and  coaxial  (cable)  networks  or  only 
through FTTH/B; and (2) the extent to which future wireless technologies (5G) will be able 
to rely on fixed networks for backhaul and other data transmission needs.  

The size of Europe’s bandwidth challenge can be seen most vividly by comparing where we 
are  today  with  what  would  be  needed  to  benefit  from  all  aspects  of  a  connected  society  in 
2025. For instance, Prof. Brett Frischmann observed that current demand expressed by end-
users  may  fail  to  reflect  the  innovation  potential  in  the  market,  which  could  be  unlocked 
through more performant infrastructure36.  

According to the Samknows Survey,  average  download speeds achieved in  Europe in  2014 
were  24Mbit/s.37  If investment in  NGA technologies continues  at its current  levels, IDATE 
has projected that average download speeds would reach around 185Mbps by 2025,38 while 
upload speeds would reach around 84Mbps. Based on trends in video and cloud usage under 
the ‘status quo’, IDATE has also estimated that bandwidth use in the EU may expand from 
62GB  per  line  per  month  in  2025  to  303GB  per  line.39  This  may  seem  a  significant 
improvement  for  households  used  to  experiencing  restricted  bandwidths,40  but  may  not  be 
enough  to  enable  home  and  business  users  to  benefit  from  future  technological  and  service 
innovations. 

34 FTTP – fibre to the premises – includes fibre to the home and fibre to the building projects. The term premises includes 

residential houses, as well as apartment houses. See annex for further reference on the technologies.. 

35 Source: https://ec.europa.eu/digital-single-market/en/download-scoreboard-reports  
36 See the Expert Panel conducted under SMART 2015/005 –Annex 13 for more details. 
37 Page 115 Samknows for EC Oct 2014 Quality of Broadband Services in the EU. 
38 In the context of SMART 2015/0002, IDATE/WIK/Deloitte forecast a likely uptake of NGA by technology to 2025 and 
based speeds and speed growth per technology on the basis of Samknows data. According to Akamai speed measurements, 
average speeds have been increasing by 16% per annum across a range of geographies. Extending this projection would 
result in speeds of around 150 Mbps in 2025. 

39 See Study SMART 2015/0002 
40  Many  Internet  users  are  already  experiencing  challenges  with  the  bandwidth  they  have  available.  Almost  four  in  ten 
respondents to the Eurobarometer survey of 2014 noted that they had experienced difficulties accessing online content or 
applications as a result of insufficient speed of download capacities. 

23 

 
 
 
 
 
                                                            
If  bandwidth  needs  are  calculated  on  the  basis  of  what  might  be  required  to  run  certain 
applications, a case study of the German market providing a forecast for 2025 suggests that 
an  average  user  might  require  150-500Mbit/s  downstream  with  more  than  100Mbit/s  up, 
while high-end users including those running small or home offices might require 1Gbit/s in 
download  and  more  than  600  Mbps  in  upload  (see  SMART  2015/0005).  This  bandwidth 
would  be  used  not  only  for  multi-screen  ultra  HD  video,  but  also  for  applications  such  as 
cloud and e-health as well as for teleworking and small business needs.  

Figure 19: - Model of market potential – Germany 2025 

As shown in Figure 19, data rates required by the most demanding users could reach 1 Gbps 
or  more on  the downstream link by 2025, while  a significant  proportion of households  and 
offices  could  demand  download  speeds  of  500-1000Mbit/s  and  300-600Mbit/s  upstream  by 
2025.  This  scenario  therefore  sets  the  upper  bounds  for  potential  users  (including  many 
business  users)  demands  in  the  medium  term,  while  it  is  worth  noting  that  even  a  less 
ambitious  scenario  will  need  the  VHC  rollout  to  reach  far  deeper  into  most  of  the  present 
networks.  In  addition,  it  has  to  be  assumed  that  middle-  and  larger  sized  enterprises  in  the 
digital economy will have much greater simultaneous up- and download needs. 

There is evidence suggesting that in the telecom sector demand responds to supply, and that 
limited download and upload speeds may limit the types of usage and applications that might 
otherwise emerge.  

  Data  from  the  UK  regulator  Ofcom  for  example  suggests  that  download  bandwidth 
consumption for NGA (FTTC and FTTP) networks was around two times higher than 
bandwidth  consumption  for  non-NGA  networks,  with  significantly  higher  use  of 
upload capacity.  

  This  evidence  of  higher  usage  being  associated  with  the  availability  of  NGA  is 
supported  by  the  case  of  Palaiseau  in  France,  which  has  been  the  subject  of  a  pilot 

24 

 
 
 
  
 

trial  for  the  switch-over  of  Orange  copper  customers  to  FTTH  networks:  it  was 
observed  that  the  average  Internet  traffic  of  Orange’s  broadband  customers  was 
multiplied  by  a  factor  of  three.  Importantly,  this  trial  also  resulted  in  fibre  clients’ 
usage of upload bandwidth being increased 8 times41.  
In Sweden, following an early boost by the central government, one out of every two 
municipalities is involved in VHC to the business and VHC to the home deployments. 
This has led to very high take-up: as of July 2015, 68% of the broadband connections 
in Sweden are NGA, achieved predominantly through FTTH and FTTB connections. 
Where FTTH is widespread, extending VHC to base stations is far more feasible and 
efficient.  This  is  well  illustrated  by  the  example  of  4G  in  Stockholm  where  the 
world’s  first  4G  deployment  took  place  helped  by  the  virtually  100%  VHC 
coverage.42 

Although all technologies are likely to  continue to  improve, the gradual replacement of the 
medium  over  which  connectivity  is  provided  appears  inevitable.  Leveraging  the  speed  of 
light,  fibre  has  an  efficiency  range  for  delivering  high  quality,  symmetrical  connections  of 
dozens of kilometres as against 250 meters for the most promising copper developments.  

While existing copper-based infrastructure has the advantage of wide territorial reach in most 
of the Union, continuous reliance on this infrastructure in all but the very outer reaches of the 
network (e.g. within multi-dwelling buildings) may limit the availability – and possible take-
up  -  of  applications  which  demand  the  highest  quality  of  connectivity,  retarding 
developments  necessary  for  the  digitalisation  of  European  industry,  access  to  cost-reducing 
cloud  services  for  SMEs  and  spontaneous,  game-based  skill  development  for  the  new 
generation.  

Europe’s gaps in high speed broadband connectivity are likely to have a significant impact on 
productivity  and  growth:  econometric  analysis  conducted  by  WIK-Consult/Ecorys,  VVA43 
suggests that broadband speed is positively correlated with Total Factor Productivity across a 
range  of  industrial  sectors,  while  external  studies  have  also  identified  positive  economic 
effects  from  Gigabit  technologies.44  There  is  also  evidence  that  a  persisting  digital  divide 
between  countries  and  regions  of  Europe  may  affect  migration,  employment  and  social 
inclusion.45 

In  line  with  literature  pointing  out  that  an  increase  of  10  percentage  points  in  standard 
broadband penetration could contribute between 0.25% to 1.38% to GDP growth46, a small, 

41 http://www.fibre-systems.com/news/story/orange-plans-full-fibre-coverage-9-french-cities-2016  
42 Source: Vodafone’s call for the Gigabit Society, Dec. 2015 
43 Study supporting the Impact Assessment for the Review of the Framework for electronic communications. 
44  A  Study  by  Analysis  Group  found  that  14  broadband  communities  which  benefited  from  gigabit  connectivity  enjoyed 
approximately $1.4 billion in additional GDP when gigabit broadband became widely available (Early Evidence Suggests 
2015, 
Gigabit 
http://www.analysisgroup.com/uploadedfiles/content/insights/publishing/gigabit_broadband_sosa.pdf 
and 
Mattsson (2013) estimate the benefit of fibre installation in Stockholm by Stokab at 16 billion SEK. 

).  Forzati 

Broadband 

Drives 

David 

GDP, 

Sosa 

45 For example, Forzati and Mattsson (2012) found that a 10% increase in the proportion of the population living within 353 
metres from a fibre connected premise corresponds to a positive change in the population after three years. Xiong (2013) 
also found that a higher fibre penetration of 10% at workplaces and 13% at residential places in a municipality in 2007 
lead to a 0.17% improved population evolution between 2007 and 2010. 

46  Among  others:  Crandall,  R.,  Lehr,  W.,  and  Litan,  R.  (2007),  The  Effects  of  Broadband  Deployment  on  Output  and 
Employment: A Cross-sectional Analysis of U.S. Data, Issues in Economic Policy, 6; Czernich, N., Falck, O., Kretschmer 
T., and Woessman, L. (2011), Broadband infrastructure and economic growth, Economic Journal, 121(552); Koutroumpis, 
P.  (2009).  The Economic  Impact  of  Broadband  on  Growth:  A  Simultaneous Approach,  Telecommunications  Policy,  33; 

25 

 
 
 
                                                            
 
but expanding body of literature highlights how the effects of faster broadband through VHC 
connectivity could boost growth further and offer a new lease of life to rural communities47,  

3.  Cost and benefits of very high capacity connectivity 

3.1  Costing the networks for a Gigabit Society 

3.1.1  Costing the gap and the financial endowment of current initiatives 

Some  studies  have  tried  to  estimate  the  NGA  broadband  gap  in  Europe  and  to  provide 
estimates  about  the  cost  to  fill  it.  The  best  known  of  these  studies  is  probably  the  one 
performed by the European Investment Bank in 2011. The study considers four scenarios for 
broadband deployment in Europe. The most  ambitious scenario foresees FTTH/B roll-out 
throughout Europe and the gap was estimated at €221 billion48.  

The same scenario of 100% FTTH/B coverage was analysed by Analysys Mason in a study 
for DG CONNECT in 201249. The amount foreseen is similar (€250 billion, for deployment 
of FTTP-only, across Europe). The amount is reduced to €154 billion in case of high duct re-
use. Analysys Mason also estimated the costs associated to a 100% FTTC deployment which 
are  in  the  area  of  €50  billion.  In  case  of  high  duct  re-use,  the  cost  would  go  down  to  €31 
billion. 
Studies suggest that the costs are justified by the benefits. Analysys Mason's study50 showed 
that the bigger is the intervention, the higher is the consumer surplus. 

Table 3: NGA investments and associated benefits under three scenarios 

Source:  Analysys Mason 2013 Study on the Socio-economic impact of bandwidth 

Qiang,  C.  Z.,  and  Rossotto,  C.  M.  (2009),  Economic  Impacts  of  Broadband,  In  Information  and  Communications  for 
Development 2009: Extending Reach and Increasing Impact, 35–50.Washington, DC: World Bank. 

47 See Study SMART 005/2015 
48 http://www.eib.europa.eu/attachments/efs/eibpapers/eibpapers_2011_v16_n02_en.pdf 
49 Analysys Mason, The socio-economic impact of bandwidth (2013). 
50 ibidem 

26 

 
 
 
 
                                                                                                                                                                                         
An  internal  estimate  carried  out  by  DG  CONNECT  in  2014  on  the  basis  of  the  Analysys 
Mason study of 2013 showed that Europe needed an additional €34 billion in investment to 
reach the objective of 100% coverage at 30 Mbps, and an additional €92 billion to credibly 
enable reaching the 50% take-up objective at 100 Mbps51. These figures already take account 
of the amount that the private sector could be expected to invest52 and would leave part of the 
network  below  the  performance  levels  required  to  serve  a  Gigabit  society  if  substantial 
copper-based parts of the networks (e.g. beyond the cabinets) were to be durably maintained 
thereafter.  

The financial resources available at the European level are certainly not sufficient to meet 
the  challenge  presented  above  and  need  to  be  focused  on  mobilising  more  private  and 
national public investments. The allocation of European Structural and Investment Funds 
(ESIF) for high speed broadband networks experienced a sharp increase from €2.7 billion in 
2007-2013  to  around  €6  billion  for  2014-2020  (about  €5.1  billion  ERDF  and  an  estimated 
€0.9 billion EAFRD)53. Most of this investment is expected to be made in the form of grants. 
However, the Communication on the Investment Plan for Europe called for a doubling in the 
use of financial instruments under ESIF54, including an indicative target of 10% of support in 
the field of ICT. Overall, with the leverage effect of ERDF and EAFRD on public (national 
and/or  regional  co-funding)  and  private  co-funding,  it  is  expected  €9-10  billion  will  be 
invested  in  broadband  during  the  2014-2020  programing  period,  with  the  target  to  provide 
high  speed  connectivity  to  an  additional  14.6  million  households  and  make  33%  of  rural 
population benefit from new or improved ICT services or infrastructures.55 

The Connecting Europe Facility (CEF) in the digital area is endowed with a limited budget of 
€150 million to support deployment of state-of-the-art broadband infrastructure, based on the 
provision of financial instruments via the European Investment Bank (EIB). The broadband 
component of CEF is expected to mobilise around €1 billion56. 

Finally,  the  European  Fund  for  Strategic  Investment  (EFSI)  does  not  have  sectorial 
earmarking, hence it is difficult to anticipate how much broadband infrastructure investment 
will be facilitated by it. 

51 Based on a 75% coverage assumption. 
52  According  to  the  Digital  Agenda  Scoreboard,  telecom  (including  fixed,  integrated  and  mobile-only)  CAPEX  in  Europe 
was € 43 billion in 2013. CAPEX figures remained relatively stable over the 2011-2014 years despite the fact that in the 
same  period  NGA  coverage  increased  from  29%  to  68%.  In  2014,  Mobile  CAPEX  spending  represented  59%  of  total 
spending. However, this CAPEX is not only directed at modernising the network, so the part which is spent on increasing 
coverage  in  the  coming  years  might  be  subject  to  the  operators'  strategic  priorities  being  it,  among  others,  network 
expansion,  modernization  or  cost  optimization.  On  top  of  it,  operator  expenses  depend  on  the  evolution  of  the  market 
trends and the investment climate. 

53 An estimate as the Commission cannot differentiate between allocations foreseen in EAFRD for ICT and Broadband as 
this  type  of  information  is  not  requested  by  the  regulation.  However,  additional  information  is  requested  and  will  be 
provided in the context of monitoring activities (in particular, monitoring will be done for ''N° of operations", "Population 
benefiting  from  new  or  improved  IT  infrastructure"  differentiating  here  between  "Broadband"  and  "Other  than 
broadband"). See for more information the ICT Monitoring Tool : http://s3platform.jrc.ec.europa.eu/ict-monitoring  

54 See COM(2014) 903 final, p.10 
55 https://cohesiondata.ec.europa.eu/themes/2  
56 Under the pilot phase of the Europe 2020 Project Bond Initiative, the EIB and the Commission closed in July 2014 the 
first  deal  on  a  broadband  project  bond  (in  France  –  Axione  is  the  beneficiary).  The  leverage  factor  foreseen  for  the 
broadband part of CEF is around 7 times, so it is expected to mobilise around €1 billion. This leverage was exceeded by 
the Axione deal which had a leverage factor of 14 times. 

27 

 
 
 
                                                            
Analysys  Mason's  most  recent  study  for  the  European  Commission  (SMART  2015/0068) 
"Costing the new potential connectivity needs" analysed 6 scenarios, the outcomes of which 
and the necessary investments are presented in table 4. 

Table 4: Description of costing scenarios with their price tags in the recent Analysys Mason 
study 

Gigabit connectivity for socioeconomic drivers 

Scenario A  Most important e-health, e-

education and e-
government players as well 
as medium sized SMEs57 

€46 billion 

486 thousand medium sized SMEs (50-249 
employees),  
210 thousand local authority buildings,  
110 thousand hospital and doctor's surgeries;  
210 thousand primary and secondary 
schools; half of the existing s SMEs, 
hospitals and secondary school is assumed to 
have already a leased line connection 

Scenario D 

All big and small 
socioeconomics drivers 
such as teleworkers, 
professionals, small and 
micro enterprises and most 
important cultural sites 

All from scenario A plus: 
31.5 million small and microenterprises, 
10 million teleworkers and freelancers 
265 thousand libraries, museums, and sites 
of cultural interest 
134 thousand post offices and police stations 

€149 billion 

Ubiquitous mobility58 

Scenario F1  Railways 

Currently 75% covered 

Scenario F2  Railways and motorways 

Currently 75% covered 

Scenario F3  Railways, motorways and 
state roads 

Railways, motorways (75% coverage), state 
roads (50% coverage) 

€5.2 billion 

€6.7 billion 

€28 billion 

Scenario F4  Railways, motorways, state 

and provincial roads 

Railways, motorways (75% coverage), state 
and provincial roads (50% coverage) 

€103 billion 

Improved connectivity for rural areas 

Scenario B 

Residential coverage for all 
the population with 
wireless connectivity above 
100 Mbps (macro cells) 

Base station radius: 4km; 
active equipment cost €20 000 per site for 
interim upgrade and EUR40 000 per site for 
full upgrade 

€79 billion 

Scenario C 

Residential coverage for all 
the population with 1 Gbps 
wireless connectivity 

Base station radius: 200 m; active equipment 
cost €1000 per cell 

€143 billion 

57  For  medium  SMEs,  hospitals  and  secondary  schools  only  half  are  supposed  to  need  connection  as  the  other  half  are 

assumed to be using leased lines. 

58 For the Scenario F all the calculations are based on the price per length of the transport corridor calculated by reference to 

the amount of connected base stations required. 

28 

 
 
 
                                                            
(micro cells) 

Scenario E 

Residential coverage for all 
the population with 1 Gbps 
fixed connectivity 

1Gbps access available to all residential 
customers; 81% of them are assumed to take 
up services 

€183 billion 

Figure 20 shows the total standalone costs for each of the above-mentioned scenarios. 

Figure  20:  Summary  of  the  scenarios:  Total  costs  split  by  technology  and  commercial 
viability). 

For scenarios B and C costs reflect 95% population coverage. Source: Analysys Mason, 2016 

Despite the investments already undertaken, there is still a long way to go to complete any of 
the scenarios as to date at most roughly 25% of the total sum has been invested, as shown in 
Figure 21. 

29 

23 11 26 57 77 -42 55 140 172 40 -44 38 -64 64 55 119 197 249 103 050100150200250300A, LargeSEDPsB, MacromobileC, Small cellmobileD, SmallSEDPsE, ResidentialcoverageF, TransportlinksTotal investment cost (EUR billion)Fibre commercialFibre remainderWirelessTotal 
 
 
 
 
Figure 21: Summary of the scenarios: Investment already undertaken. 

For scenarios B and C costs for 100% coverage. Source: Analysys Mason, 2016 

3.1.2  The trajectory of private infrastructure investments  
The Commission estimates, on the basis of trends throughout the decade to date, an annual 
investment  by  operators  of  €40  billion  that  should  reach  a  cumulative  investment  of  €360 
billion by 2025. This baseline estimate is based on the projected overall capex for the period, 
based  on  continuation  of  most  recent  observable  trends,  and  corrected  on  the  basis  of 
assumptions  on  non-network-related  capital  expenditure  (e.g.  terminal  equipment  such  as 
routers /set-top boxes).  

This  calculation  is  in  line  with  the  growing  interest  from  the  private  telecom  sector  in 
investing  in  the  network.  In  November  2014,  10  CEOs  of  the  main  telecom  and 
manufacturing  companies  committed  to  invest  €150  billion  in  CAPEX  in  Europe  over  five 
years,  to  play  a  major  role  in  the  Commission's  agenda  for  investment,  growth  and 
employment59.  

This estimate also takes into account that a share of the investment required will be common 
to  all  proposed  options  and  that  certain  synergies  can  be  expected.  For  instance  backhaul 
high-speed  networks  can  be  used  across  scenarios,  and  high–speed  Internet  access  to 
socioeconomic  drivers  resulting  in  fibre  deepening  diminishes  also  the  cost  of  connecting 
households  in  the  same  area.  The  exact  amount  of  the  spending  saved  through  synergies 
depends on the scenarios selected and increases with the amount of investment. 

3.2  The importance of defining objectives for broadband 

In 2010 the Digital Agenda for Europe (DAE) defined objectives for connectivity by 2020: it 
introduced  objectives  of  universal  availability  at  30  Mbps  to  ensure  territorial  cohesion  in 
Europe and a penetration objective of 100 Mbps (subscription by at least 50% of European 
households) to anticipate future competitiveness needs.  

59 "Make the Net Work" initiative of Alcatel-Lucent, Deutsch Telekom, Ericsson, Liberty Global, Orange, Telecom Italia, 

Telefónica, Telenor, TeliaSonera, Vodafone. 

30 

 
 
 
 
 
                                                            
These objectives have progressively become a reference for public policy. In retrospect, the 
DAE objectives represented a sea change for European digital policy. Despite a lot of early 
scepticism, in particular from the private sector, the 2010 objectives succeeded in formulating 
the level of ambition and providing direction, consolidating first public and then increasingly 
private  investment  plans  around  the  path  towards  2020.  The  objectives  were  taken  up  as  a 
reference point under the rules and guidelines in both the European Structural and Investment 
Funds and the Connecting Europe Facility (CEF Broadband), as well as under the Broadband 
State Aid guidelines.  

Private sector investment plans are often adjusted to the objectives as well, and the expressed 
research and innovation ambition with regard to improvement of current technologies often 
refers to DAE objectives. At national level, setting objectives has become the cornerstone of 
broadband deployment public policy. Every Member State has today established broadband 
targets but also, on this basis and as shown in a recent study commissioned by the European 
Commission on National Broadband Plans in the EU60, adopted or planned a set of funding 
and regulatory measures aiming at reaching them. 

The  impact  of  objectives,  in  terms  of  setting  direction  and  a  European  common  approach 
based  on  common  minimum  standards,  is  well  reflected  in  the  overview  of  the  NGN  plans 
adopted  by  Member  States.  Many  Member  States  have  indeed  aligned  their  national  or 
regional NGN plans to the DAE speed categories. 

60 AteneKom: National Broadband Plans in the EU -28 Smart 2014/007. 

31 

 
 
 
                                                            
Figure 22: Overview of the degree of alignment of NBP with DAE objectives: Map 

32 

 
 
 
 
  
 
 
Figure 23: Overview of the degree of alignment of NBP with DAE objectives: Table 

Member State 

NBP-objectives 

Austria 
Belgium 
Bulgaria 

Croatia 

Cyprus 

99% coverage with 100 Mbps by 2020 
50% connections with 1 Gbps by 2020 
100% coverage with 30 Mbps by 2020 
50% of households and 80% of businesses 
subscribing > 100 Mbps by 2020 
100% coverage with 30 Mbps by 2020 
50% HH penetration with 100 Mbps service by 
2020 
100% coverage with 30 Mbps by 2020 
50% HH penetration with 100 Mbps service by 
2020 

Czech Republic  100% coverage with 30 Mbps by 2020 

Denmark 

Estonia 

Finland 

France 
Greece 

Germany 
Hungary 

Ireland 

Italy 

Latvia 

Lithuania 

Luxembourg 
Malta 

Netherlands 

Poland 

50% HH penetration with 100 MBps service by 
2020 
100% coverage with 100 Mbps download and 30 
Mbps upload by 2020 
100% coverage with 30 Mbps by 2020 
60% coverage with 100 Mbps by 2020 
99% of all permanent residences and offices 
should be located within 2km of an optic fibre 
network or cable network that enables connections 
of 100 Mbps 
100%coverage with 100 Mbps by 2022 
100% coverage with 30 Mbps by 2020 
50% coverage with 100 Mbps by 2020 
100% coverage with 50 Mbps by 2018 
100% coverage with 30 Mbps by 2020 
50% HH penetration with 100 Mbps service by 
2020 
100% coverage with 30Mbps by 2020 
50% HH penetration with 100Mbps service by 
2020 
100% coverage with 30 Mbps by 2020  
85% HH coverage to reach 50% penetration of 
100 Mbps services by 2020 
100% coverage with 30 Mbps by 2020 
50% HH penetration with 100 Mbps service by 
2020 
100% coverage with 30 Mbps by 2020 
50% coverage with 100 Mbps by 2020 
100% coverage with 1 Gbps by 2020 
100% coverage with 30 Mbps by 2020 
50% HH penetration with 100 Mbps service by 
2020 
100% coverage with 30 Mbps by 2020 
50% HH penetration with 100 Mbps service by 
2020 
100% coverage with 30 Mbps by 2020 

National vs 
Coverage 
objective 

National vs 
take up 
objective 

++ 
N.A. 
= 

= 

= 

= 

++ 

+ 

N.A 

++ 
= 

+ 
= 

= 

= 

= 

= 

++ 
= 

= 

= 

N.A. 
++ 
+ 

= 

= 

= 

N.A. 

+ 

N.A. 

N.A. 
= 

N.A. 
= 

= 

= 

= 

= 

N.A. 
= 

= 

= 

33 

 
 
 
Portugal 

Romania 

Slovakia 
Slovenia 

Spain 

50% HH penetration with 100 Mbps service by 
2020 
100% coverage with 30 Mbps by 2020 
50% HH penetration with 100 Mbps service by 
2020 
80% coverage with 30 Mbps by 2020 
45% HH penetration with 100 Mbps service by 
2020 
100% coverage with 30 Mbps by 2020. 
96% coverage with 100 Mbps 
4% coverage 30 Mbps by 2020. 
100% coverage with 30 Mbps by 2020 
50% HH penetration with 100 Mbps service by 
2020 
90% coverage with 100 Mbps by 2020 
95% coverage with superfast broadband by 2017 

Sweden 
United 
Kingdom 
Source: National Broadband Plans in the EU -28 Smart 2014/007; AteneKom 

= 

- 

= 
++ 

= 

++ 
- 

= 

- 

N.A. 
N.A. 

= 

N.A. 
N.A. 

34 

 
 
 
 
 
4.  Strategic objectives for 2025  

4.1  The importance of setting realistic political guiding objectives  
The  Europe  2020  Strategy61  set  five  ambitious  objectives  -  on  employment,  innovation, 
education, social inclusion and climate/energy - to be reached by 2020. Each Member State 
has adopted its own national targets in each of these areas, underpinned by concrete actions at 
EU and national levels. 

Political  objectives  –  also  sometimes  called  targets  -  are  recognised  as  a  clear  signal  of 
priorities to be achieved and as a way of influencing decision-making – by both public and 
private players – on a continuous and homogeneous basis. By themselves they cannot resolve 
the  challenges  related  to  achieving  them;  additional  instruments  –  policy,  funding  and 
legislation,  have  to  be  used  so  that  they  are  fully  effective.  Well  defined  objectives  can 
nonetheless have an early effect on private investor decision making if there is a clear public 
policy  commitment  to  achieve  them,  by  mobilising  public  support  through  available 
instruments, and avoiding public policy interventions which would be counter-effective. 

An increasing number  of  EU  Member States is already focusing  on new objectives  beyond 
those set in the Europe 2020 Strategy, notably with a view to providing businesses and the 
public  sector  with  Gigabit  connectivity.  In  Bulgaria,  structural  funds  help  connecting 
community  centres.  In  Poland,  all  schools  will  be  connected  with  at  least  100  Mbps,  and 
some  bigger  ones  even  with  1  Gbps  by  2017.  Similarly,  in  Ireland,  750  schools  have  been 
connected with 100 Mbps in 2014 and the program is continuing.  

Outside the EU, in South Korea, the Giga Korea project has the ultimate goal of building a 
digital  information  distribution  infrastructure  for  a  Gbps  fixed-line  and  mobile  connection 
network  covering  all  people  by  202062.  The  US  have  the  ambition  that  every  American 
community  should  have  affordable  access  to  at  least  1  Gbps  broadband  service  to  anchor 
institutions  such  as  schools,  hospitals  and  government  buildings  by  2020.  Russia  plans  to 
make 100 Mbps available to 80% of Russian residents by 2018. 

Against  this  background  the  European  Commission  has  identified  3  strategic  objectives  for 
2025 that will complement those set up for 2020: 

1. 

2. 

Gigabit  connectivity  for  all  main  socio-economic  drivers  such  as  schools,  transport 
hubs and main providers of public services63 as well as digitally intensive enterprises. 
All urban areas64 and all major terrestrial transport paths65 to have uninterrupted 5G 
coverage. 

As  an  Intermediate  objective  for  2020,  5G  connectivity  to  be  available  as  a  fully-
fledged commercial service in at least one major city in each Member State, building 
on commercial introduction in 2018. 

61  Communication  from  the  Commission  EUROPE  2020;  A  strategy  for  smart,  sustainable  and  inclusive  growth, 

COM(2010) 2020 final 

62Electronics 

and 

Telecommunications 

Research 

Institute 

(ETRI) 

President 

Kim 

Heung-nam; 

http://newsworld.co.kr/detail.htm?no=436, 

63  Covering:  e.g.  primary  and  secondary  schools,  train  stations,  ports  and  airports,  local  authority  buildings,  universities, 
research centres, doctors' surgeries, hospitals and stadiums. 
64 As per definition: http://ec.europa.eu/eurostat/statistics-explained/index.php/European_cities_%E2%80%93_the_EU-
OECD_functional_urban_area_definition. 
65 Motorways, national roads and railways, in line with the definition of Trans-European Transport Networks. 

35 

 
 
 
                                                            
3. 

All  European  households,  rural  or  urban,  to  have  access  to  Internet  connectivity 
offering a downlink of at least 100 Mbps, upgradable to Gigabit speed. 

4.2  Leveraging mutually reinforcing objectives and existing infrastructures 

Demand developments (see section 2.2.) confirm the virtuous dynamic  between availability 
and take-up of VHC broadband services. Given the very slow start of take-up for 100 Mbps 
services  in  Europe,  the  strategic  objectives  for  2025  need  to  a)  maximise  the  number  of 
Europeans who have access to VHC networks for a given cost as well as b) enable the most 
innovative and beneficial connected services to be used throughout the Digital Single Market.  

The new strategic objectives proposed for 2025 are therefore mutually reinforcing, focusing 
on  entities  which  are  best  placed  to  further  stimulate  the  demand  for  and  use  of  online 
services  and  applications  and  on  encouraging  synergies  in  network  expansion.  They  all 
require the deployment of VHC networks.  

The  deployment  of  VHC  fixed  networks  will  also  contribute  to  the  backhaul  needs  for  the 
upcoming dense 5G wireless network deployments as close as possible to the end-user, thus 
strengthening the convergence between mobile and fixed networks.  

The  new  objectives  for  2025  build  on  the  DAE  objectives,  in  particular  on  the  100  Mbps 
objective.  Indeed,  the  efforts  to  reach  the  100  Mbps  DAE  objective  will  contribute  to  the 
achievement of the objectives for 2025. 

The new strategic objective to reach all European households with 100 Mbps builds on and 
reinforces the 100 Mbps DAE objective (50% of households having 100 Mbps subscriptions 
or  higher).  It  is  very  likely  that  particularly  rural  area  networks  built  to  reach  the  30  Mbps 
DAE  objectives  in  2020,  will  be  able  to  deliver  100  Mbps  in  2025,  as  it  is  economically 
advantageous  for  mobile  operators  to  expand  networks  coverage  into  rural  areas  (e.g.  by 
serving 5G base stations with the same backhaul).  

In  addition,  reaching  the  DAE  100  Mbps  take-up  objective  can  only  be  done  with  far-
reaching  deployment  of  VHC  networks.  Reaching  the  first  and  second  strategic  objectives, 
can  thus  benefit  from  using  such  deployments,  bearing  in  mind  that  at  least  75-80%  of  the 
population has to be covered with such networks for at least 50% of European households to 
actually subscribe to 100 Mbps services. 

4.3  Benefits of the strategic objectives for 2025  

4.3.1  Gigabit  connectivity  for  all  main  socio-economic  drivers  such  as  schools, 
transport  hubs  and  main  providers  of  public  services  as  well  as  digitally 
intensive enterprises 

This objective will optimise investment in VHC networks by connecting with priority socio-
economic drivers, i.e. physical places or online hubs where people gather or which they visit 
to  learn,  to  work  and  to  access  public  services  and  where  a  single  connection  provides 
Internet 
to  multiple  users.  Providing  European  socio-economic  drivers  with  VHC 
connectivity by 2025 will have multiple benefits for the DSM, in particular by:  

-  Encouraging  such  institutions  to  subscribe  to  very  high-capacity  connectivity  (Gigabit, 
symmetrical, low latency, etc.) that will enable the use of the best products, services and 
applications and to provide the best service to European citizens. This in turn, creates a 
market for such online services. The Commission estimates that almost 100 million pupils 

36 

 
 
 
 
and students, more than 70 million workers as well as almost 2 million doctors and more 
than 2.5 million patients in hospitals across Europe will benefit directly66. 

-  Contributing  to  and  stimulating  the  extension  of  very  high  capacity  networks  and  the 
densification  of  mobile  coverage,  including  for  5G  backhaul  needs,  would  benefit  from 
proximity of very high capacity interconnection and backhaul opportunities. This will in 
turn  increase  the  chances  for  advanced  users,  including  in  particular  small  and  micro 
businesses and home office users, to be served by VHC connections.  

-  Creating a spill-over effect on demand for better connectivity in the rest of the economy 
(business  ecosystems)  and  in  the  population  at  large  (households),  since  users  who 
experience  very  high  capacity  networks  are  more  likely  to  subscribe  to  such  services 
when they become available67. Higher take-up will in turn improve the economic case for 
further investment, as the higher penetration of services results in more users sharing the 
same  connection  and  the  cost  of  the  investment,  leading  to  a  decrease  of  the  cost  per 
user.. 

The  Commission  services  have  considered,  on  the  basis  of  the  findings  of  Study  SMART 
2015/006868, two main options for this strategic objective:  

A.  Providing all the significant socio-economic drivers (in particular schools, transport hubs 
digitally  intensive  enterprises,  local  authority  buildings69)  with  Gigabit  connectivity. 
According  to  the  cost  estimates,  the  investment  needs  would  be  approximately  €46 
billion.  

B.  Providing  all the socio-economic drivers without exception (in particular, in  addition to 
the  significant  socio-economic  drivers:  micro  and  small  enterprises,  libraries  and 
museums)  with  Gigabit  connectivity.  According  to  estimates,  the  investment  needs 
amount to €149 billion70. 

Option  A  has  been  chosen,  primarily  on  cost-effectiveness  grounds.  By  bringing  Gigabit 
connectivity  to  e.g.  over  200.000  schools,  over  200.000  public  authorities  buildings  and 
roughly half a million digitally intensive enterprises71, it is already fully relevant to stimulate 
the extension of further fixed and mobile networks and to create additional appetite for better 
connectivity. 

It  is  also  worth  noting  that  these  efforts  will  complement  the  growing  investment  in  the 
digitalization  of  industry  and  other  sectors.  Digitized  products  and  services  generate 

66  Estimate  based  on  the  findings  of  the  Study  "Costing  the  new  potential  connectivity  needs"  (Smart  2015/0068)  by 

Analysys Mason. 

67 The socio-economic return on Stockholm municipality's Stokab investment in fibre infrastructure is estimated to be over 
16 billion SEK (approx. €1.6 billion), almost three times the investment in 2013. See Figure 2.20 of the Annex in Study 
SMART 2015/0002. 

68 Study "Costing the new potential connectivity needs" (Smart 2015/0068) by Analysys Mason 
69  The  full  list  includes  primary  schools,  secondary  schools,  universities,  local  authority  buildings,  digitally  intensive 

enterprises, hospitals, doctor's surgeries, research centres, business parks, airports and stadiums. 

70  The  full  list  includes,  in  addition  to  the  large  socio-economic  drivers:  micro  enterprises,  small enterprises,  post offices, 

police stations, libraries, community centres, home workers, farmers markets, museums and galleries. 

71 The number of digitally intensive enterprises has been estimated by the Commission by cross referencing the estimates 
from the study by Analysys Mason "Costing the new potential connectivity needs" (Smart 2015/0068) and the assumptions 
underpinning the analysis of Integration of Digital Technology by enterprises in the DESI Index. 

37 

 
 
 
                                                            
approximately  €110  billion  of  additional  revenues  per  year  for  the  European  industry.  It  is 
estimated  that  by  2020,  European  industrial  companies  will  invest  €140  billion  annually  in 
industrial internet applications72. The European Commission Communication on "Digitising 
European Industry - Reaping the full benefits of a Digital Single Market"73 proposes actions 
that are expected to mobilise close to €50 billion of public and private investment in the next 
5 years, but which are largely dependent on underlying connectivity provision. 
In  this  respect,  ETNO  has  recently  underlined74  that  digitization  is  important  in  all  public 
service  domains  and  should  include:  i)  100%  EU  schools  and  universities  connected  to  at 
least 1Gbps by 2030, ii) 100% administrative procedures digitised by 2025 and iii) 100% IDs 
in  the  EU  to  be  turned  into  electronic  IDs  or  mobile  IDs  by  2025  (all  the  IDs  in  EU  to  be 
digitized and e-administration enabled). 

4.3.2  High performance 5G connectivity: by 2020 a fully-fledged commercial service in 
at  least  one  major  city  in  each  of  the  28  Member  States  and  by  2025 
uninterrupted  5G  coverage  of  all  urban  areas  and  major  terrestrial  transport 
paths 

The 5G objective aims at addressing Europe's future competitiveness in wireless technology. 
5G  services  will  be  crucial  to  cope  with  increasingly  demanding  connectivity.  Media 
applications,  professional-grade  communications  in  various  industrial  and  service  sectors 
such  as  automotive,  transport,  manufacturing,  health  as  well  as  next  generation  safety  and 
emergency services will have to rely on a seamless, shared, fixed and wireless infrastructure 
which  offers  various  pre-determined  levels  of  reliability  and  quality  of  service  tailored  to 
specific business needs.  

In Japan, 5G networks have received substantial policy attention, and there are objectives to 
introduce  a  system  trial  in  Tokyo  in  2017,  with  implementation  in  time  for  the  2020 
Olympics and Paralympics. In Europe Teliasonera and Ericsson have already announced that 
they will launch 5G services in Stockholm and Tallinn in 2018. Building on this experience, a 
fully-fledged commercial service in at least one major city in each Member State by 2020 is a 
necessary but reasonable objective and a stepping stone in the process of wider deployment 
of 5G. 

In  addition, as  part  of  the  5G  connectivity  objective, the  Commission  aims  at  achieving  by 
2025  a  5G  coverage  of  major  terrestrial  transport  paths  (defined  as  motorways,  national 
roads, and railways). 

5G  connectivity  on  railways  is  needed  to  address  in  the  long  term  the  train  passengers 
connectivity  needs  on  board.  According  to  estimates,  in  order  to  provide  railways  with  5G 
connectivity investment needs exceed €5 billion. 

In  addition,  5G  coverage  of  road  transport  routes  will  be  the  basis  for  the  development  of 
innovative  applications  for  connected  cars.  The  Commission  services  have  considered  the 
following scenarios75:  

72 http://www.strategyand.pwc.com/media/file/Industry-4-0.pdf 
73 COM(2016) 180 final; 19 April 2016. 
74 
Union 

I  What’s 

digital 

new 

"A 

in 

it 

for 

citizens 

with 

IoT 

and 

5G", 

https://www.etno.eu/datas/publications/studies/Narrative_Final_2016.pdf 

75 Based on the findings of the Study "Costing the new potential connectivity needs" (Smart 2015/0068) by Analysys Mason. 

38 

 
 
 
 
                                                            
A.  Providing motorways with 5G connectivity. According to estimates, the investment needs 

would be €1.5 billion.  

B.  Providing  motorways  and  national/state  roads  with  5G  connectivity.  The  investment 

needs would be close to €23 billion. 

C.  Providing motorways, national/state roads and provincial roads with 5G connectivity. In 

this case the investment needs would amount to €98 billion. 

Option  B76  has  been  chosen  because  it  would  allow  an  EU-wide  infrastructure  to  be 
developed which is capable of supporting solutions delivering information and entertainment 
on  board  and  the  progressive  evolution  towards  fully  autonomous  driving,  including  the 
delivery  of  security  functions  reducing  dramatically  road  casualties  in  Europe.  Option  A  is 
considered too restrictive to achieve these goals. As to Option C (including provincial roads), 
it seems at this stage too costly but could represent a natural future evolution.  

4.3.3  All European households, rural or urban, to have access to Internet connectivity 

offering a download speed of at least 100 Mbps, upgradable to Gigabit speed. 

The challenge of comprehensive coverage objectives that concern all households lies in the 
last percentages of the population, those living in the most remote areas which are the most 
difficult and costly to reach. The lack of connectivity has an extremely high cost, not only by 
forgoing  benefits  of  the  digital  single  market,  but  also  in  terms  of  digital  divide, 
depopulation, lack of cohesion etc.  

Figure  24:  Total  cost  (cumulative)  of  connecting  countries  with  FTTP/H  depending  on  the 
population covered per country (Analysys Mason77) 

76 Under this option, for terrestrial transport paths, and depending on the considered transport service, account will be taken 
of ongoing investments in C-ITS technologies while ensuring coordination with relevant stakeholders, Action 4 of the 5G 
Action Plan 
77 Study SMART 2015/0068, page 22. 

39 

 
 
 
 
 
 
                                                            
This objective aims at making sure that no one is left behind in the digital world. It is to be 
seen  against  a  wider  ambition  that  there  should  be  access  to  mobile  data  connectivity 
throughout the territory, in all places where people live, work, travel and gather. 

In most rural and remote areas connectivity plays an essential role in rural development and 
agriculture, as well as in preventing digital divide, isolation and depopulation. It also enables 
remote  or  rural  businesses  to  reduce  the  costs  of  commercial  activities  through  video-
conferencing,  access  to  online  administration,  e-commerce,  or  data  storage  in  the  cloud. 
European  households,  rural  or  urban,  will  require  a  minimum  level  of  fixed  or  mobile 
connectivity in 2025 much higher than it is today due to the growing needs for connectivity.  

The investment needs for 100% household coverage of at least 100 Mbps will depend on the 
type(s) of infrastructure deployed. According to estimates78: 

-  The  investment  needs  to  provide  100%  of  the  households  with  a  (macro  cell)  wireless 

connectivity offering at least a download speed of 100 Mbps amount to €79 billion. 

-  The  investment  needs  to  provide  100%  of  the  households  with  a  (micro  cell)  wireless 

connectivity offering at least a download speed of 1 Gbps would cost €143 billion. 

-  The  investment  needs  to  provide  100%  of  the  households  with  a  fixed  (FTTH) 
symmetrical Gigabit connectivity offering at least a download speed of 1 Gbps amount to 
€183 billion. 

On the assumption that each type of infrastructure will account for an equal part of the future 
deployment (macro and micro cells for wireless and FTTH for fixed connectivity, mostly in 
urban areas), the investment needs for improved rural connectivity are estimated to amount to 
€127 billion; including €24 billion to cover the last 5% (around 11 million households) with 
wireless connectivity offering at least a download speed of 100 Mbps.  

78 Based on the findings of Study SMART 2015/0068. 

40 

01020304050600%50%100%Cumulative total investment cost (EUR billion)Population coverageFranceGermanyItalySpainUK02468101214160%50%100%Cumulative total investment cost (EUR billion)Population coverageBelgiumPolandRomaniaSloveniaSweden 
 
 
 
 
 
 
                                                            
4.4  The need to prioritise investments  

The  proposed  additional  objectives  for  2025  are  based  on  a  focused  approach  choosing 
objectives that are designed to maximise societal and economic benefits relative to costs, but 
continue to ensure adequate connectivity even in rural areas and at the same time widen the 
approach  to  take  into  account  the  growing  importance  of  the  mobile/wireless  dimension  of 
broadband.  This  can  unlock  significant  additional  benefits,  including  for  the  equipment 
industry  and  for  various  "vertical"  sectors  (automotive,  health,  audiovisual)  in  which 
European leadership in the connected transformation is attainable.  

The  Commission  services  have  therefore  examined  strategic  needs  and  corresponding 
objectives of three types: 

 

 
 

for  leader  institutions,  with  significant  user  numbers  and  an  important  place  in 
national and local economies and societies – the socio-economic drivers – which can 
be expected to have especially important connectivity needs; 
for wireless connectivity, by reference to the next (5G) technology generation; 
for universal coverage, including of rural households. 

The Commission has sought expert advice to cost some specific scenarios for 2025 defined 
on  the  basis  of  the  criteria  described  above.  This  includes  the  already  mentioned  study 
"Costing the new potential connectivity needs"79and has been complemented by further work 
by its own services. 

The total estimated cost for the fulfilment of the three proposed objectives by 2025 is c. €515 
billion. This entails an additional investment of €155 billion, to complement the investment 
of €360 billion that can already be expected in a "business as usual" or baseline scenario from 
telecommunications operators over the 2016 to 2025 period (see section 4.4). 

In more detail, the individual amounts necessary to achieve the three objectives, not counting 
synergies between them, are estimated as follows, based on plausible assumptions about the 
proportion  of  underlying  infrastructure  needs  that  would  in  each  area  already  be  met  by 
"business as usual" market activity (e.g. fibre along motorways): 

  Gigabit  connectivity  for  socio-economic  drivers:  Providing  all  main  European  socio-
economic drivers with gigabit connectivity by 2025 will require an additional €46 billion 
investment  on  very  high  capacity  fixed  networks  to  connect  primary  and  secondary 
schools,  local  authority  buildings,  digitally  intensive  enterprises,  business  parks, 
universities, research centres, doctors' surgeries, hospitals, stadiums, train stations, ports 
and  airports.  This  will  amount  on  average  to  an  estimated  maximum  additional 
connectivity  cost  for  each  socio-economic  driver  institution  of  roughly  €3500-4000 
annually. In the case of a school of 20 classes with 25 students this would translate into an 
additional annual connectivity cost of €7-8 per student,80. 

  High  performance  5G  connectivity  along  main  transport  corridors  including  railways, 
motorways  and  national  roads  will  require  another  €28  billion  investment  in  mixed  fix 
and  wireless  networks:  €5.2  billion  to  connect  railways,  €1.5  billion  to  connect 

79 See Study SMART 2015/0068. 
80The  costs  are  estimated  assuming  15  years  return  on  investment  period,  20%  profitability  margin  for  the  operator  and 
operational cost that are spread over all other users in a larger territory who will be served via the backhaul network that 
serves the relevant socio-economic driver institution (e.g. nearby households and businesses, etc.). 

41 

 
 
 
 
                                                            
motorways, and €21 billion to connect national roads. In comparison with the scale of the 
automotive  industry  providing  jobs  for  12  million  people  and  accounting  for  4%  of  the 
EU’s  GDP  (more  than  €400  billion)  the  investment  is  not  huge  and  would  be  a  logical 
step in the process of innovation of the transport sector. 
Improved  connectivity  in  rural  areas  will  require  a  €127  billion  investment  in  a 
combination of fixed, wireless large and small cell-based networks: 

 

o  The  cost  per  user  grows  exponentially  as  the  network  reaches  less  and  less 
populated areas,  where  the  number  of  users  sharing  it  is  smaller.  While  the  first 
50% population coverage requires 20-25% of the total investment the last 5% are 
the most costly and difficult to connect. For this reason, the last 5% of households, 
roughly  11  million  households,  are  assumed  to  be  covered  by  macro  cell 
infrastructure  only  (with  very  high  capacity  backhaul).  Deployment  of  wireless 
connectivity  offering  the  last  5%  at  least  a  download  speed  of  100  Mbps  is 
estimated  to  cost  over  €24  billion.  It  is  clear  that  this  investment  will  require 
public intervention – public investment or publicly enabled investment. 

o  For  the  other  95%  of  households,  we  expect  a  variety  of  approaches,  between 
macro  and  micro  cells  for  wireless  and  FTTH/B  for  fixed  connectivity.  On  the 
assumption  that  each  type  of  infrastructure  will  account  for  an  equal  part  of  the 
future deployment, the investment needs would amount to €103 billion, 

The total of €201 billion, being the sum of all three options, does not take into consideration 
economies  of  scale  and  the  synergies  which  could  be  used  in  combining  more  than  one 
scenario. Based on the study by Analysys Mason we assume in particular that the re-use of 
the  fibre  networks  rollout  for  reaching  the  first  objective  could  produce  up  to  € 46 billion 
savings  in  the  third  one.  Therefore  the  final  additional  investment  needed  would  be 
approximately € 155 billion. 

42 

 
 
 
 
 
 
Annex:   Technological developments  

I.  Which technology? 

Each year more and more fibre is being laid in Europe increasing the capacity, reliability and 
speed  of  the  network.  The  deepening  of  the  fibre  (bringing  it  closer  to  the  user)  is  taking 
place  in  a  growing  number  of  densely  populated  areas.  However,  the  picture  is  not 
homogeneous.  Even  in  more  prosperous  Member  States,  there  are  wide  variations  – 
attributable  in  part  to  differences  in  costs,  in  availability  of  duct  infrastructure,  in  digital 
literacy and demand, but  also  no doubt  to differences in  commercial  strategy  –  while some 
poorer Member States are leap-frogging.  

A key question for policy-makers as well as investors is how will technological developments 
impact network performance and, in particular, i) whether future bandwidth requirements can 
be  met  through  incremental  upgrades  of  existing  twisted  pair  copper  and  coax  networks  or 
require  new  investment  notably  in  fibre  networks  reaching  the  user  (FTTH/B);  and  ii) 
whether evolution of mobile technologies may enable some degree of substitution with fixed 
networks. 

While in new greenfield deployments fibre will be the technology of choice, in the presence 
of  a  network  constituted  of  twisted  copper  pairs,  operators  must  decide  whether  to  prolong 
the life of the existing network through new technologies, often replacing a limited part of the 
network with fibre, or roll out an entirely new fibre network.  

Twisted copper pairs may be able to cope with downlink demand for video until 2024, when 
8KTV (the current highest ultra-high definition television resolution in digital television and 
digital cinematography) will become available81. However the result is different in a demand 
scenario taking account of cloud and small business and home office usage where customers 
also  have  increased  requirements  for  traffic  symmetry  (similar  upload  and  download 
capabilities).  In  this  scenario,  very  high  capacity  (VHC)  technologies  (G.Fast  very  close  to 
the end user/FTTB, DOCSIS 3.1 and FTTH) would be needed at an earlier stage to meet the 
challenge.  

In  due  course  and  as  an  alternative  to  the  fixed  last  mile,  it  will  be  most  likely  possible  to 
connect  the  customer  with  wireless  high  capacity  networks,  including  wireless  fixed  links 
which  focus  on  serving  specific  premises  rather  than  supporting  mobile  use  throughout  an 
area.  However,  this  will  also  require  fibre  connectivity  to  the  base  station,  which  will 
translate into a few hundred meters from the user depending on the spectrum availability. 

This having been said, it should be noted that no data exists that would allow the estimation 
of future bandwidth needs of those sections of today's society that can be considered "digital 
natives " (below 25 years old) and which are driving data consumption already today.  

Overall, fully or almost fully fibre-based networks are clearly in a better position to handle 
the  challenges  of  improve  connectivity  parameters  than  their  VDSL  or  cable  competitors, 
although technological evolution such as the advent of DOCSIS 3.1 may alleviate several of 
the  latter's  constraints,  though  probably  not  offering  all  the  benefits  and  characteristics  of 
fully  fibre-based  networks  (see  section  IV  below).  It  must  also  be  acknowledged  that  the 

81 See WIK-Deloitte-IDATE Study "Access regimes for network investment and business models in Europe" SMART 

2015/0002 

43 

 
 
 
 
                                                            
quality of a fully fibred network can also vary depending on design choices of the operator, 
including  as  regards  active  equipment.  There  is  an  emerging  consensus  among  industry 
players and investors that, in the medium and long run, connectivity providers, both fixed and 
mobile, will have to rely on ubiquitous fibre infrastructures deployed very close to end-users' 
premises (buildings, wireless small cells) to support their business.  

There are also differences of view as to what the timeline should be, which may be founded 
on genuinely different assessments as regards the pick-up in demand, the materialization of 
new  services  and  applications,  and  the  progress  that  can  be  made  through  intermediate 
technical solutions linked to legacy infrastructures  – but can also be influenced by strategic 
considerations of operators who currently own such legacy infrastructures and may consider 
it  to  be  profit-maximizing  to  delay  such  a  transition,  even  at  the  cost  of  beneficial 
externalities for society as a whole.  

II.  What will technology deliver 

The next figure illustrates that physical capabilities of the technologies or transmission media 
set barriers to certain applications – some of which derive directly from the laws of physics 
(the  speed  of  light  relative  to  the  transmission  of  electrons).  For  example,  the  last  arrow, 
showing the efficiency range for technologies, illustrates that the high-speed copper solutions 
give rapidly declining performance at more than 250 metres from the end-user, thus requiring 
fibre  to  be  deployed  to  a  drop  point  situated  at  that  maximum  distance  from  the  end  user 
premises to be effective. 

Figure 25: Physical capabilities of the technologies or transmission media 

44 

 
 
 
 
 
 
 
 
 
III.  Copper based technologies  

Twisted pair copper cables have been widely deployed in the past to provide telephony). In 
western  European  countries  they  have  reached  almost  100%  of  homes,  although  in  central 
European countries the deployment has peaked at approx. 60% as mobile wireless access has 
filled the gaps.82  

Internet  access  over  twisted  copper  pairs  has  evolved  over  time.  New  technologies  such  as 
ADSL  have  made  possible  to  provide  higher  data  rates  over  copper  networks.  Figure  26 
shows the progress in the theoretical data rates of the various DSL access technologies. It is 
notable  that  the  introduction  of  VDSL2  vectoring  is  likely  to  raise  download  speed 
capabilities to 100 Mbps, while G.Fast could reach 1Gbps in a 2020 timeframe. However, the 
faster  the  DSL  technology,  the  shorter  is  the  distance  from  the  drop  point  (where  the  fibre 
component of the network ends) to the customer that can still be covered on the basis of an 
upgraded copper network. 

Figure 26: Evolution of DSL data rates, 1995-2020 

Source:  FttH Council Europe (2014). G.Fast. Brussels: FttH Council Europe 

The  practical  consequence  is  that  operators  which  are  relying  on  improvements  in  copper 
technology to drive higher speeds must  ultimately deploy fibre  and locate associated active 
equipment ever closer to the customer83.  

82 See Study "Access regimes for network investment and business models in Europe" SMART 2015/0002, Section 1.2. 
83 Ibidem, Section 5.1. 

45 

 
 
 
 
 
 
                                                            
Figure  27:  Copper  access  line  use  migration:  Higher  bandwidth  over  shorter  sub-loops 
(source WIK) 

Figure 28 shows the historic technological developments and speed ranges in Belgium from 
Proximus and Telenet to the period 2015 and a forecast for subsequent years.84 

84 The forecast is based on the extrapolation of the 16% bandwidth growth rate observed over recent years as measured by 
Akamai, this being combined with the forecast on technological capabilities According to Akamai, the average connection 
speed  is  low  because  of:  (1)  parallel  requests,  whereby  an  average  webpage  generates  90  requests  for  content;  i.e. 
involving  relatively  small  files  as  many  components  make  up  a  webpage;  each  session  being  too  short  to  ramp  up  to 
maximum  speed;  and  (2)  IP  address  sharing,  whereby  multiple  devices  use  an  internet  connection  with  an  unique  IP 
address,  with  simultaneous  requests  sharing  the  available  bandwidth.  The  average  peak  connection  speed  reflects  the 
highest  connection  speeds  from  each  unique  IP  address.  Thereby  it  is  representative  of  internet  connection  capacity.  It 
reflects  larger  files,  such  as  software  updates  occurring  late  at  night.  Source:  Akamai  (2015).  State  of  the  Internet,  4Q-
2014. Cambridge, MA. 

46 

 
 
 
 
                                                            
 
Figure 28: The useful life of copper, 2025 perspective 

Source:  Wolter Lemstra 

This scenario projects an average data rate of 50 Mbps and an average peak rate of approx. 
220 Mbps downstream for the year 2025. The chart reflects the early and wide deployment of 
vectoring  by  Proximus.  With  many  G.Fast  trials  underway  and  the  first  commercial 
deployments  being  announced,  broad  deployment  of  G.Fast  could  start  in  2018.  The 
predicted capacity of FttDP 85+G.fast+G.vector on copper loops of 100 meters or less is given 
as at least 250 Mbps symmetrical. Under this scenario the useful life of twisted pair copper in 
the cable drop and in-house cable segment would be extended well beyond 2025. However, it 
should  be  noted  that  G.Fast  requires  the  deployment  of  fibre  very  close  to  the  end-user 
(FttDP), as well as continued OPEX heavy management of the energy and maintenance needs 
of active equipment at many points close to the edge of the network. It is thus not a costless 
solution. 
While  DOCSIS 3.086  could  meet  projected  demand  up  to  2020,  this  scenario  suggests  an 
average  peak  connection  rate  in  excess  of  100  Mbps  for  2020.  However,  within  the  next  5 
years period Telenet will be in a position to upgrade from DOCSIS 3.0 to DOCSIS 3.1 and 
hence will be able to meet – and generate - growing demand under this scenario.87 

85 Fibre-to-the-Distribution-Point – i.e. somewhere between Fibre-to-the-Node (FTTN) and Fibre-to-the-Home (FTTH). 
86 Standard employed by many cable television operators to provide Internet access over their existing hybrid fibre-coaxial 

(HFC) infrastructure. 

87 See Study "Access regimes for network investment and business models in Europe" Smart 2015/0002, Section 1.2. 

47 

 
 
 
 
 
 
                                                            
 
 
 
 
 
 
In  conclusion,  this  case  analysis  suggests  the  possibility  of  an  ‘extended  life’  for  copper-
based  access  technologies  towards  the  2025  horizon,  but  only  as  the  "last  mile",  which  in 
practical terms means few hundred meters or less. 

However, the above discussion concerns the demand on the downlink. Demand on the uplink 
has traditionally been much smaller than on the down link, but a shift towards more balanced 
use is expected as a result of an increase in the use of cloud services, social media and more 
business usage from the customer premises. G.Fast is said to support 250 Mbps symmetrical, 
while DOCSIS3.1 supports 10G/1G in a shared configuration and the ratios can be adapted to 
market  demand.  Hence,  both  technologies  appear  to  have  ‘head  room’  on  the  uplink  for  a 
"business as usual" evolution. 

In addition, beyond the traditional focus on speed, quality (in particular jitter and packet loss) 
as  well  as  responsiveness  (in  particular  latency)  of  the  network  are  increasingly  relevant. 
Figure  25  shows  that  while  incremental  upgrades  of  copper  networks  through  technologies 
such as vectoring and G.Fast can deliver higher speeds in particular in short distances (e.g. G-
fast  up  to  250m),  fibre  networks  seem  to  be  in  a  better  position  than  copper-enhanced 
networks  to  handle  challenges  such  as  symmetry  between  up-  and  download,  low  latency, 
jitter  and  packet loss due to  the physical parameters of the medium (e.g. electric vs optical 
signal). 

IV.  Optical fibre – a new generation of networks 

In  order  to  meet  growing  demand  from  the  users,  access  with  new  technologies  will  be 
necessary and the most appropriate technology mix would be a combination of the fixed and 
wireless networks proving the most efficient mix at a reasonable price. Whatever technology 
is selected as the access to the customer in the final mile, the core network and backhaul will 
require optical fibre. Similarly,  fibre deepening to  a large degree is  a prerequisite to all the 
other technologies, which deliver high connectivity. 

Optical  fibre-based  transmission  is  probably  the  most  robust  high-throughput  technology 
available  today.  It  has  seen  wide  deployment  in  long-distance  networks  following  the 
liberalization  in  the  late  1980s,  in  support  of  the  growing  needs  from  the  booming  Internet 
and mobile communication services.88  

Apart from output fibre networks offer quite a few beneficial characteristics: 

  Low latency: the ability to support instantaneous connections and transit data without 
almost  any  ‘delay’,  measured  in  just  Milliseconds  over  distances  greater  than 
1000km, and only microseconds at distances in the 100’s of KM  

  Availability: 
availability  

these  networks  are 

inherently  stable,  offering  extremely  high 

  Security: such networks, given the physical and often buried, nature of the cable, are 
harder  to  interfere  with  than  wireless  networks  (or  even  ‘radiating’  copper  based 
cables)  

88  See  for  a  discussion  of  pan-European  network  deployments  during  the  euphoric  period  and  the  consolidation  in  the 
aftermath of the crash Lemstra, W. (2006). Dissertation: The Internet bubble and the impact on the development path of 
the telecommunication sector. Department Technology, Policy and Management. Delft, the Netherlands: TU Delft.  

48 

 
 
 
 
                                                            
  Packet  loss  &  low  jitter:  near  zero  packet  loss  and  variance  in  packet  delay,  i.e. 

“smooth signals”  

  Distance  agnostic:  grade  of  service  is  essentially  the  same  almost  regardless  of 

distance  

  Dynamic  symmetry:  such  networks  can  be  configured  to  allow  flexibility  in 
assigning upload and download throughput for each connection, depending on the use 
case  

  Low maintenance: fibre is inherently reliable, hence little maintenance is needed  
  Future  proof:  transmitting  equipment  can  be  easily  replaced  and  raw  medium  is 

future proof  

  No  radio  frequency  interference:  signals  travelling  over  fibre  are  not  subject  to 

radio frequency interference versus copper which is susceptible. 

Figure 29: What is throughput? – measured as “time to download*” 

Digital item (examples)  

Typical size  

Legacy network  

FTTH network  

Average Kindle eBook  

2.6 megabyte  

1 second  

50 ms  

CT scan (sent across hospitals)  

2 gigabyte  

14 minutes  

40 seconds  

Virtual reality game  

5 gigabyte  

34 minutes  

1.7 minutes  

Blu-ray movie  

Galaxy S7 storage  

4K movie  

25 gigabyte  

2.8 hours  

8 minutes  

32 gigabyte  

3.6 hours  

11 minutes  

100 gigabyte  

11 hours  

33 minutes  

Hard disc of a PC  

240 gigabyte  

27 hours  

1.3 hours  

Medium sized corporate server restore  

6 terabytes  

Human genome (uncompressed)  

7 terabytes  

28 days  

33 days  

33 hours  

39 hours  

*  Today’s  actual  effective  download  speeds  illustrated  a  20Mbps  for  a  typical  European  ‘legacy 
network’ (usually ADSL2+ type) and 0.4Gbps for FTTH network 
Source: Creating a Gigabit Society; Arthur D. Little for Vodafone89 

a.  Fibre-to-the-Business 

As business users have higher demand than consumers and are typically located in business 
districts  or  business  parks,  the  business  case  for  providing  a  new  network  technology  by 
digging  up  the  streets  has  largely  been  positive.  In  many  cases  we  can  observe  competing 
fibre-based services being offered to business users. This includes the incumbents, locally as 
well  as  from  abroad,  but  also  new  entrant  providers  specializing  in  servicing  the  business 
community. 

b.  Fibre-to-the-Home 

Two  standards  are  prevailing  in  the  market  place  in  Europe:  the  GPON  standard  providing 
2.5 Gbps downstream and 1.25 Gbps upstream, shared by a maximum of 64 users; and the 
XG-PON90 providing 10 Gbps downstream and 2.5 Gbps upstream, i.e., a fourfold increase 

89http://www.vodafone.com/content/dam/group/policy/downloads/Vodafone_Group_Call_for_the_Gigabit_SocietyFV.pdf 
90 Serving 128 customers per splitter. 

49 

 
 
 
 
                                                            
compared  to  GPON.  This  latter  arrangement  provides  a  minimum  of  78/19  Mbps  per  end-
user,  depending  on  how  much  capacity  is  made  available  per  user  and  reflecting  shared 
medium constraints in case of uniformly massive demand growth.  

For point-to-point networks the ‘Ethernet in the First Mile’ (EFM) standard, used over single 
mode  fibre,  is  defined  for  a  span  of  nominal  10  km.  State  of  the  art  technology  is  able  to 
bridge higher distances up to 80 km. 

c.  Outlook for the 2025 horizon 

For the PON architectures, a further upgrade is foreseen under the name of NG-PON2 with a 
capacity of at least 40/10 Gbps (download/upload), for a minimum span of 20 km. Extensions 
to 80/20 Gbps and 60 km are being addressed. This standard makes use of four wavelengths 
and eight in the extended version. The minimum end-user data rates are 625/156 at a ratio of 
1:64, respectively 312/78 Mbps at 1:256.  

A  combination  of  TDM-PON  and  TWDM-PON  is  also  foreseen  running  at  100  Gbps 
reaching 100 km with a split ratio of 1:1024. 

The evolution in user data rates using fibre is shown in figure 30. 

Figure 30: Evolution of FttH data rates, 1995-2025 

Source:  FttH Council Europe (2014). FTTH Handbook: FTTH Council Europe 

d.  Investing in FTTH 

While  DSL  and  DOCSIS  technologies  have  mostly  been  deployed  as  upgrades  to  legacy 
networks by historic incumbent and cable operators, FTTH is characterised by a more diverse 
investor-base.  

50 

 
 
 
 
 
 
 
 
In  Sweden91,  which  has  a  very  low  population  density  –  23  persons  per  square  kilometre, 
municipalities  have  taken  the  lead  in  the  deployment  of  open-access  fibre  networks, 
encouraged  into  that  role  by  the  central  government.92  The  business  case  for  these  largely 
rural  area  deployments  turns  positive  through  a  combination  of  factors:  (1)  the  costs  for 
procurement of communication services for the local government in all its facets turns from 
external  to  internal;  (2)  the  community  network  provides  lower  cost  bundled  access  for 
service providers; (3) at the same time providing for increased services competition; (4) the 
use of civil infrastructure owned by the municipality; (5) shared interest in the execution of 
the works; and (6) willingness of prospective subscribers to pay an upfront fee . 

Commercial  non-telecom  infrastructure  investors  have  also  in  some  cases  seen  a  profitable 
business  case  in  building  an  FTTH  access  network  in  competition  with  the  existing  copper 
network(s).  These  cases  are  typically  built  around  demand  aggregation  (i.e.  activating 
projects in an area only when a minimum threshold of interested future subscribers has been 
passed),  often  in  combination  with  payment  of  upfront  fees  by  prospective  end-users,  and 
novel  low-cost  techniques  of  laying  the  fibres.  These  networks  are  often  open-access,  with 
competition  on  the  services  layer.  A  typical  example  is  the  case  of  Reggefiber  in  the 
Netherlands.93 

The  lack  of  broadband  provision  by  traditional  players  in  central  Europe  has  led  to  grass-
roots  initiatives  by  local  entrepreneurs  in  deploying  fibre  to  provide  Ethernet-based 
connectivity  in  apartment  buildings  and  city  neighbourhoods.94  This  has  propelled  some 
central  European  countries,  for  instance  Latvia  and  Bulgaria,  to  the  top  of  the  broadband 
league tables in terms of peak connection data rates.  

Higher  deployment  of  FTTH  can  also  be  observed  in  circumstances  where  the  costs  of 
deployment  are  lower  (for  instance  thanks  to  duct  availability)  and  in  countries  with 
competitive pressure from alternative FTTH investors. Incumbents may also be expected to 
deploy FTTH in greenfield situations, as it provides for higher data rates, is more future proof 
and comes with lower operational costs. 

e.  Will fibre-based technologies be able to meet growing demand? 

Fibre has been and still is the technology providing the highest possible data rates with the 
highest  and  most  consistent  quality  of  service.  Since  the  early  2000s  fibre-based  Internet 
access has been offered at 50 Mbps and 100 Mbps symmetrical to residential customers and 
into  the  Gbps  range  to  business  customers.  If  demand  grows  the  split  ratio  in  fibre  PON 
networks  can  be  reduced.  If  demand  would  grow  much  further,  wavelength  division 
multiplexing  (WDM)  can  be  introduced  which makes  it  possible to  use  multiple colours  of 

91  For  a  description  of  the  Stockholm  municipality  fibre  network  Stokab,  the  role  of  housing  corporations,  initiatives  in 
Swedish municipalities including rural communities and an example of regional coordination, see Section 1.3 of the Annex 
in Study SMART 2015/0002, see footnote 12. 

92  See  Chapter  7  Sweden  by  Forzati  and  Mattson  in  Lemstra,  W.  &  W.  H.  Melody  (Eds).  The  dynamics  of  broadband 

markets in Europe: Realizing the 2020 Digital Agenda. Cambridge: Cambridge University Press. 

93 See Chapter 4 The Netherlands by Lemstra in Lemstra, W. & W.H. Melody (2015). “The dynamics of broadband markets 

in Europe – Realizing the 2020 Digital Agenda”. Cambridge University Press. 

94 See Chapter 15 Latvia by Virtmanis and Karnitis in Lemstra, W. & W.H. Melody (2015). “The dynamics of broadband 
markets in Europe – Realizing the 2020 Digital Agenda”. Cambridge University Press.) As well as. Rood, H. (2010). Very 
high  speed  broadband  deployment  in  Europe:  The  Netherlands  and  Bulgaria  compared.  Telecom  Policy  Research 
Conference, Arlington, VA: TPRC. 

51 

 
 
 
 
                                                            
light  to  expand  the  capacity  of  a  single  (existing)  fibre.  This  can  be  accomplished  by  an 
upgrade of the electronics at either end of the fibre. 

Recent  technological  developments  suggest  that  a  combination  of  time  and  wavelength 
division multiplexing (TWDM) can be deployed over passive optical networks (PONs) such 
that  the  (physical)  point-to-multipoint  architecture  can  be  turned  into  a  (logical)  point-to-
point architecture, combining the benefits of both architectures. 
According  to  many  sources95  fibre  can  stay  ahead  of  even  the  most  optimistic  forecasts  in 
terms of end-user demand for at least next 25 years. 

V.  Wireless technological developments 

Although Moore’s Law does not directly apply to progress in performance of radio frequency 
chips96, exponential growth is very clearly reflected at the systems level when performance is 
expressed in peak data rates, in particular as achieved in mobile communications, Figure 31 
represents  a  data  rate  increase  by  a  factor  of  approx.  1.8  every  year.  This  is  essentially  the 
result of more capable digital signal processing. We may expect this trend to continue since 
the succession of generations of cellular mobile networks shows a high degree of regularity. 

Figure 31: Peak data rates in mobile, 1990-2020 

Source:  Niemegeers,  I.  &  S.  Heemstra  de  Groot  (2015).  Cognitive  Radio+  for  5G  and  beyond.  Eindhoven: 

Technical University Eindhoven 

95 Research done by e.g. Ericsson, FTTH Council and ITU. 
96 As Golio observed: “In digital systems, the fundamental unit of electrical design is the bit. Any bit will work as long as the 

difference between the ‘1’state and the ‘0’ state can be distinguished as scaling reduces the size of devices, no 
fundamental change in electronic design is required. In contrast, the fundamental unit of RF/wireless systems design is the 
Watt. A specific amount of power is required from the transmitter in order to achieve link margin at the receiver the 
required power level is not nearly as scalable as the bit.” Source: Golio, M. (2015). "Fifty years of Moore's Law." 
Proceedings of the IEEE 103(10): 1932-1937. 

52 

   
 
 
 
 
 
                                                            
 
 
 
Since  data  communication  was  introduced  through  GPRS  the  data  rates  have  increased 
through  different  technologies.  LTE  Advanced  was  first  introduced  in  2013  and  provides  a 
peak cell capacity of 1.2 Gbps, which is shared among the users. The design vision for 5G 
aims  for  1000  times  higher  overall  capacity  and  for  10  to  100  times  higher  end-user  data 
rates.  This  is  expected  to  result  in  guaranteed  user  rates  of  over  50  Mbit/s.  For  more 
information  on  the  future  capabilities  of  5G  systems,  please  consult  the  Staff  Working 
Document  on  "5G  Global  developments"97  accompanying  the  Communication  "5G  for 
Europe: An Action Plan"98.  

Figure 32: Features of connectivity medium and technologies 

Medi
um 

Technol
ogies 

Down 
/ 
upstre
am 
Rate(1
) 

Efficie
ncy 
range(1
) 

Typi
cal 
laten
cy (5) 

Shar
ed 
medi
um 
for 
last 
mile
? 

Freque
ncy 
bandw
idth (6) 

Wired 
Broadba
nd 
Technol
ogies 

ADSL, 
ADSL2, 
ADSL2+ 

VDSL, 
VDSL2, 
Vectorin
g 

copp
er 

24/1 
Mbps 

5 km 

100 
/40 
Mbps 

1 km 

G.Fast 

500/5
00 
Mbps 

250 m  

15-
40 
ms 

15-
40 
ms 

15-
40 
ms 

no 

0,0022 
GHz 

no 

0,017 
GHz 

no 

0,212 
GHz 

Infrastructure 
architecture 

Suitability  

Future 
technology 

of 

the 

or 

local 

·  internet  access  by 
digital 
transmitting 
data over the wires of 
a 
telephone 
network  copper  line 
terminates 
at 
exchange 
telephone 
street 
(ADSL) 
(VDSL) 
cabinet 
· 
Vectoring: 
Elimination  of  cross 
higher 
for 
talks 
bandwidths 
·  G.Fast:  Frequency 
to  212 
increase  up 
MHz 
achieve 
to 
higher bandwidth 

fast 

·  use  of  existing 
telephone 
infrastructure 
· 
install 
to 
·  small  efficiency 
range  due  to  the 
line  resistance  of 
copper  connection 
lines 

·  further  speed  and 
range  improvements 
by  enhancing  and 
combining 
new 
DSL-based 
technologies 
(phantom 
mode, 
bonding,  vectoring)  
·  bridge  technology 
complete 
towards 
fibre 
cable 
optic 
infrastructure 

200/1
00 
Mbps
(4) 

2-100 
km(2) 

15-
40 
ms 

yes 

1 GHz 

·  coaxial  cable  in  the 
streets  and  buildings; 
fibre  at 
the  feeder 
segments 
·  network  extensions 
to  provide  backward 
channel functionality 

·  use  of  existing 
cable 
television 
infrastructure 
· 
install  
to 
·  high  transmission 
rates 

fast 

Further 
· 
of 
implementation 
new 
standards 
(DOCSIS  3.1)  will 
allow 
to  provide 
higher  bandwidth  to 
end-users 

CATV 

Optical 
Broadba
nd 
Technol
ogies 

fibre 

97 Commission Staff Working Document 5G Global Developments COM(2016)XXXX final. 
98 Communication from the Commission to the European Parliament, the Council, the European Economic and Social 

Committee and the Committee of the Regions, COM(2016) XXX final, 5G for Europe: An Action Plan. 

53 

 
 
 
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
                                                            
p2p 

p2mp 

Wireless 
Broadba
nd 
Technol
ogies 

LTE 
(Advanc
ed) 

1/1 
Gbps 
(and 
more) 

10-60 
km 

0.3 
ms (5 
µs 
per 
km) 

no 

yes 

50000 
GHz 

·  signal  transmission 
via 
fibre 
of 
distribution 
· 
signals  by  electrically 
network 
powered 
equipment 
or 
unpowered 
optical 
splitters 

100/3
0 
(1000
/30) 
Mbps
(3) 

3-6 
km 

5-10 
ms 

yes 

0.1 
GHz 

HSPA 

42,2  / 
5,76 
Mbps 

3 km 

30-
70 
ms 

yes 

0.005 
GHz 

air 

Satellite 

20/6 
Mbps 

High 

500-
700 
ms 

yes 

10 
GHz 

Wi-Fi 

300/3
00 
Mbps 

300 m 

100  -
1000 
ms 

yes 

0.005-
0.160 
GHz(7
) 

WiMAX 

4/4 
Mbps 

60 km 

50 
ms 

yes 

0.01 
GHz 

·  mobile  devices  send 
radio 
and 
receive 
signals  with 
any 
number  of  cell  site 
fitted 
base  stations 
with 
microwave 
antennas 
·  sites  connected  to  a 
cabled 
communication 
network 
switching system 

and 

· highest bandwidth 
capacities  
·  high  efficiency 
range 
·  high  investment 
costs 
bandwidth 
· 
the 
depends 
on 
of 
transformation 
the 
into 
optical 
electronic signals at 
the cabinet (FTTC), 
building  (FTTB)  or 
home (FTTH) 

·  next  generation 
technology  to  meet 
future 
bandwidth 
demands 

· highly suitable for 
coverage  of  remote 
areas  (esp.  700  and 
800 
MHz) 
· quickly and easily 
implementable 
·  shared  medium 
limited 
· 
frequencies 

· highly suitable for 
coverage  of  remote 
areas 
· quickly and easily 
implementable 
·  run  time  latency 
· asymmetrically 

·  inexpensive  and 
proven 
· quickly and easily 
implementable 
·  small  efficiency 
range 
· shared medium 

· 
commercial 
deployment  of  new 
with 
standards 
additional 
features 
(5G)  and  provision 
of  more  frequency 
spectrum 
blocks 
(490  -  700  MHz) 
·  meets  future  needs 
of  mobility 
and 
bandwidth  accessing 
NGA-Services 

·  30  Mbps  by  2020 
based 
next 
on 
generation  of  high-
throughput satellites 

·  increased  use  of 
hotspots  at  central 
places  

·  gets  continually 
replaced  by  Wi-Fi 
and LTE 

54 

 
 
 
  
  
  
  
  
  
  
  
Glossary   

  FTTB  –  fibre  to  the  building.  Used  also  for  buildings  inhabited  by  more  than  one 

tenant.  
 FTTC – fibre to the cabinet. Fibre to a street cabinet close to the end-user.  
 FTTH – fibre to the home. Typically used for residential homes.  
 FTTP – fibre to the premise = FTTB + FTTH. 

 
 
 
  High Capacity – capacity relates to the bandwidth of the connection and does not take 

into account the distance and the time necessary to establish connection. 

  High Connections Density – is necessary when many devices try to connect with each 

other. 

  High Download Speed – download speed is how fast one can pull data from others to 
you.  It  is  measured in  megabits  per  second (Mbps).  The  majority  of  online  activity, 
like loading web pages or streaming videos, consists of downloads. 

  High  Peak  data  rate  –  peak  data  rate  is  the  fastest  data  transfer  rate  for  a  device, 
typically available in short bursts during transfer activity, and not sustainable for long 
periods of time 

  High  Reliability  –  reliability  is  an  attribute  of  any  computer-related  component 
(software,  or  hardware,  or  a  network,  for  example)  that  consistently  performs 
according to its specifications. 

  High  Security  –  secure  connection  is  difficult  to  intercept  and  decode  without  the 

permission of the parties communicating, therefore the content is safe. 

  High  Ubiquity  –  ubiquity  means  being  connected  everywhere,  anytime,  on  any 

device. 

  High Upload Speed – upload speed is how fast one sends data from you to others. It is 
measured in megabits per second (Mbps). Uploading is necessary for sending files via 
email, or in using video-chat to talk to someone else online (since you have to send 
your video feed to them). 

  Low Jitter – jitter is the deviation from true periodicity of a presumed periodic signal, 

often in relation to a reference clock source. 

  Low Latency – latency is the delay between the sender and the receiver decoding it, 
this is mainly a function of the signals travel time, and processing time at any nodes 
the information traverses. 

  Low  Packet  Loss  –  packet  loss  occurs  when  one  or  more  packets  of  data  travelling 

across a computer network fail to reach their destination. 

  NGA – Next Generation Access with a minimum download speed of 30 Mbps. 
  Symmetry – when download bandwidth is the same as upload bandwidth. 
  VHC  -  Very  high-capacity  networks  are  networks  with  best-in-class  performance  in 

terms of speed (i.e. significantly above 100. 

55