g acchioni: dg information society and media, unit: lisbon strategy and i2010page (1) broadband and...

G Acchioni: DG Information Society and Media, Unit: Lisbon Strategy and i2010 Page (1)

Broadband and Regional Development

Challenges and perspectives

Regions for Economic Change Conference

Building a sustainable growth

Workshop 1A & INTERREG IVC Signing Ceremony

Thursday 20 May 2010

Guido Acchioni

DG Information Society and Media


EU2020 Agenda Broadband targetEU2020 Agenda

Broadband target• EU Target: broadband access for all by 2013,

• By 2020: access for all to much higher internet speeds (30 Mbps or above) and 50% or more of European households subscribing to internet connections above 100 Mbps.

Areas of work:

• Spectrum policy

• Facilitate use of structural funds;

• Digital Single market: borderless web services and digital content market; trust confidence, clear rights regime; adequate protection and remuneration; multi-territorial licenses, digitisation of cultural heritage

• Reform the research and innovation funds to reinforce Europe technology strengths in strategic fields, stimulate SME lead in emerging markets,

• Promote internet access and take-up by all European citizens


2010 Digital Competitiveness report« Broadband »


• The fixed-broadband penetration rate in the EU reached 24.8 %,

• An increase of 2.3 percentage points over the previous year, but growth rate is slowing down

• Mostly based on xDSL technologies but mobile broadband is growing.

• Some countries (RO, BG, LT, EE, LT, SK and CZ) show sign of leapfrogging to new and more powerful technologies

• EU deployment of high-capacity broadband is insufficient to reach EU BB./NGA goals: 80 % of fixed broadband lines in the EU offer speeds above 2 Mbps, only 18 % are above 10 Mbps (effective speeds are even lower).




• Current speeds not enough to support new services: high-definition TV, fast downloading of images, simultaneous use within households, will require fast communication networks to operate efficiently.

• FTTH solutions and fibre + LAN only represent between 2 and 5 % of all broadband lines,

• While in Japan (51.4 %) or Korea (46 %).

• The market in Europe, not moving fast enough to higher capacity, as investment costs are high and business models are not yet developed.


FTTx deployment: EU, US, Japan, South Korea FTTx deployment: EU, US, Japan, South Korea

2 000 000

4 000 000

6 000 000

8 000 000

10 000 000

12 000 000

14 000 000

16 000 000

18 000 000

2005Q4 2006Q4 2007Q4 2008Q4 2009Q4

Japan South Korea USA EU Linear (Japan) Linear (South Korea) Linear (USA) Linear (EU)

Figures include FTTH and FTTB/x + LAN


The Broadband market is changingThe Broadband market is changing

• Transition to an all-IP environment in both fixed and mobile networks.

• Voice communications are increasingly being replaced by internet-based calls or being included in broadband bundles.

• New subscriptions in DSL is slowing. Increases in data traffic are not yet compensating for declining prices and decreasing voice traffic.

• To offset the slow revenue growth in 2009, incumbent operators focused on cost-cutting strategies using two main approaches: restructuring activities (OPEX) and cutting investment (CAPEX).

• CAPEX/revenue ratio is declining: estimated to be around 11 % (from a level of 14 % in 2008 and 15 % in 2007).

• Furthermore, operators are seeking agreements to share infrastructure and spectrum with competitors. Investment is declining at a faster pace than revenues.

• incumbents’ market share in the fixed broadband market stabilising at around 45 % in 2010 (with noticeable exceptions)


Percentage broadband lines by operator Percentage broadband lines by operator

28% 28%31% 34%

39% 40% 41%44% 44% 45% 45% 46% 46% 46% 48% 49% 49% 51% 51% 52% 52% 55% 55% 57%

63%67% 67%

78%

72% 72%69% 66%

61% 60% 59%56% 56% 55% 55% 54% 54% 54% 52% 51% 51% 49% 49% 48% 48% 45% 45% 43%

37%33% 33%

22%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

RO UK BG CZ SE PL HU PT SK MT EU27 FR SI DE NL BE LT IE AT LV EE ES EL IT DK FI LU CY

Incumbents Broadband New Entrants Broadband

Source: Communication Committee

In most largest EU Member States, incumbents still control a large share of the market : IT 57 %, ES 55 %, DE 46 %; FR 46 %, PL 40 %.


DSL national 94% and rural coverage 80% Dec. 2009

DSL national 94% and rural coverage 80% Dec. 2009

74%75%

82%85%

89%89%91%92%92%93%93%94%94%94%95%95%96%96%96%96%97%97%

99%99%100%100%100%100%100%100%

45%52%54%33%69%67%60%85%82%85%90%80%83%80%89%86%30%90%85%89%96%91% 99%100%100%100%100%91%100%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

RO PL SK BG LT LV EL CZ IE SI ES EU27AT EE HU IS CY FI IT PT NO DE MT NL BE DK FR LU SE UK

National DSL coverage Rural DSL coverage

Source: Communication Services on the basis of Idate study


EU27 Broadband Penetration (Jan 2010)EU27 Broadband Penetration (Jan 2010)

13.0

%

13.0

%

13.5

% 14.8

% 17.0

% 18.6

%

18.7

%

18.9

%

19.1

%

19.3

% 20.6

%

21.5

%

22.2

%

22.2

%

22.7

%

22.9

%

26.0

%

26.8

%

29.1

%

29.4

%

29.8

%

30.3

%

30.4

%

31.5

%

32.1

%

37.7

%

37.8

%

24.8

%0%

5%

10%

15%

20%

25%

30%

35%

40%

BG RO PL SK EL PT HU LT CZ LV IT ES CY IE AT SI EU27 EE MT BE FI UK FR DE SE LU NL DK

40 % of households are not yet connected

EU 27 penetration average: 24.8%

Source: Communication Committee


International fixed broadband penetration rates, July 2009

International fixed broadband penetration rates, July 2009

11

.9%

12

.3%

12

.8%

14

.3%

15

.6%

17

.2%

17

.5%

17

.6%

17

.8%

18

.2%

19

.8%

20

.7%

21

.0%

21

.2%

21

.8%

22

.1%

22

.8%

23

.9%

24

.2%

24

.8%

26

.2%

26

.7%

28

.3%

28

.8%

29

.2%

29

.4%

29

.7%

30

.5%

31

.2%

32

.5%

32

.8%

32

.8%

33

.8%

34

.5% 3

7.2

%

37

.9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

BG RO PL SK EL HU LV PT CZ LT IT ES CY IE AT SI NZEU27JP EE MT US BE UK FR DE CA FI LU SE IS KO CH NO DK NL


EU Broadband Penetration RateEU Broadband Penetration Rate

• More and more people are going online: 60 % of the EU population (a similar rate to that in the US

• Nonetheless, one third of the population has never used the internet

• Low income, low education, unemployed and the aged are among the groups at risk of exclusion from the digital society,

• Equipment costs also play a role.

• The same groups have fewer digital skills, with the gap increasing with the level of skills.

• Large gaps between regions in terms of internet use and ICT skills


Regular internet use in EU regions (2009) Regular internet use in EU regions (2009)

Source: Eurostat Community Survey on ICT Usage by Households and by Individuals


Digital skills distribution in EU regions (2009) Digital skills distribution in EU regions (2009)

Eurostat Community Survey on ICT Usage by Households and by Individuals


Study on ICT funded actions under EU structural and rural development fundsStudy on ICT funded actions under EU

structural and rural development funds

key recommendations on broadband deployment:

• "Public authorities should become more active in monitoring and coordinating the rollout of new advanced infrastructures … For example, … much more involved and active, in particular by maintaining regularly updated maps of telecommunications capacity and services in their territory."

• "There is a need for a variety of innovative business models in the telecommunications supply sector, including those in which ownership is vested in public authorities or with the subscribers themselves."

• The challenge, in environmental as well as economic costs terms, of developing ubiquitous NGA raises a question as to whether, for Europe and its Member States, it remains appropriate to assume – even in black spots - that multiple privately-owned networks operating in a free and competitive market is an efficient and sustainable use of resources.


Study on ICT funded actions under EU structural and rural development fundsStudy on ICT funded actions under EU

structural and rural development funds

• The Commission and Member States should investigate further the potential efficacy (in economic and social, and environmental terms) of single publicly-owned passive network infrastructure (of adequate capacity) operated and available to operators and service providers under the open access principle.

• "Greater efforts to achieve synergies in respect of common civil engineering requirements among utility companies and the exploitation of existing civil infrastructures."

• In particular, there appears to be significant potential benefits arising from demand aggregation and other forms of innovative procurement to deliver advanced broadband coverage especially in under-served areas.

• Especially the larger Member States should give consideration to establishing national frameworks that would help their regions to exploit such possibilities.


B3Regions Thematic NetworkB3Regions Thematic Network

Strengths

• Good mix of regions with long experience in broadband Development and regions in need of assistance

• Wide range of expertise in a number of domains: broadband planning, creating a business case for rural/remote areas, demand aggregations, state aid rules, mapping of BB infrastructure, ICT observatory functions (monitoring and benchmarking ICT developments, training, technical assistance etc), deployment of on-line public services, e-learning, etc.

• Considerable amount of good will and commitment to execute work from all partners and to assist other to acquire experience in other domains

• Good interaction with EC service on issues concerning competition and state aid, ICT policy, rural development issues

• Interaction and contribution to work and activity also outside the network. eg: cooperation with EBP, guests from other regions, participation to seminars, events, workshops etc;


B3Regions thematic NetworkB3Regions thematic NetworkAchievements

• To-do List for broadband deployment for public authorities in cooperation with EBP

• Exchange/adaptation of good practice on to specific context of region

• Development of 12 Action BB Plans

• Regions acquired new skills/expertise in a number of domains both from within and outside the network

• holistic vision of ICT/ BB deployment: embedding BB action into regional development plan/strategy,

• consideration of competition and regulatory issues, coordination with other policies eg: rural development

• Realisation that digital divide is changing: NGA deployment, BB penetration challenge (socio-economic issues),


B3Regions Thematic NetworkB3Regions Thematic Network

Critical issues

• Disruption of work: Political elections, changes of responsibilities of staff affected commitment of Management Authorities etc.

• Late start: Work of network started later than programming period: risk of mismatch between OP original plan/actions and action plans developed

• Separation: Perception that work in network was a parallel activity to programme execution and interaction was not always straightforward.

• Inflexibility of regulation: Regulation perceived as too inflexible, eg: network was made difficult reaching out to other interested parties (regions, other networks, experts necessary to participate in the work of the network), replacement of partners adaptation of work, etc;


B3Regions Thematic NetworkB3Regions Thematic NetworkFew thoughts for the future

• Good practice exchange should be integral part of programming action since beginning of programming period

• More flexible regulation: to allow adaptation on work to carry out, membership of network, involvement of external actors etc.

• A more thematic Technical Assistance: to acquire skills on key themes such as ICT deployment, innovation (need to change in regulation to reflect more thematic approach).

• Monitoring and benchmarking actions should be a regular feature of ICT planning actions

• The development and financial support of ICT competence/monitoring centres should drive a systemic and systematic action to improve regional capacity to plan and implement ICT/BB actions and exchange good practice (no more ad hoc actions);

• Good practice exchange should always have a international dimension.

• Key element in BB/NGA planning is the creation and maintenance of a BB mapping of existing infrastructure to monitor development and plan future actions


What’s NextWhat’s Next

• 19/5/2010: publication of « A Digital Agenda for Europe »

• September 2010: Publication of « EU Broadband Strategy, NGA Guidelines and Spectrum programme »

• January 2011 “EU Event on Broadband in Rural Areas” Brussels


For further informationFor further information

Further information

• DG Information Society Portal: http://ec.europa.eu/information_society/index_en.htm

• B3Regions: Thematic Network on Broadband good practice exchange http://www.b3regions.eu/

• European Broadband Portal: http://www.broadband-europe.eu/ )

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