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Europe’s digital agenda

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While South Africans debate bringing basic broadband access to all, the question in Europe is how to get high-speed fibre to the masses. NADIA BABAALI, Communications Director, FTTH Council Europe, explains the problem.
In the mid-nineteenth century the Frenchntown of Alençon was an important crossroads between Paris and the West ofnFrance, similar in size to its regional rival, Le Mans. Then, the trainnarrived. Or rather, it didn’t for Alençon. The railroad between Paris and thenWest cut through Le Mans and Alençon was side-tracked; the latter town slidninto a period of economic stagnation, while Le Mans boomed.nnnnToday it is ultra-high-speed broadbandninfrastructure that will become a determining factor in ensuring the economicnfortune of cities and regions. The European Commission (EC), for example,nestimates that every 10% increase in broadband penetration results in economicngrowth of between 1% and 1.5%. To spur this growth, EU Member States are beingnencouraged to implement the European Commission’s Digital Agenda, anmulti-faceted project to create a single European market for digital services.nnnnAt the heart of the Digital Agenda (DAE) is anbroadband infrastructure project to ensure the delivery of the services thatnwill boost Europe’s economic development. The EC estimates that if Europe is tonremain competitive with other regions globally, by 2020 it will need NextnGeneration Access (NGA) networks that ensure 50% of European households arensubscribing to Internet connection speeds of 100 Megabits per second (Mbps) andnthat 100% of households have a minimum download rate of 30 Mbps. So far, 21nMember States have defined quantitative coverage objectives for the deploymentnof NGA with download targets ranging from 25 Mbps to 1 Gigabit per secondn(Gbps) and with coverage footprints between 75% and 100% of households ornpopulation.nnnnHowever, these objectives are not yetntranslating into the widespread construction of much-needed ultra-high-speednbroadband networks and a correlative increase in Fibre to the Home (FTTH)nusage. As a result, Europe is lagging behind other regions. At the end of 2011nthe European Union had 4.5 million FTTH/B subscribers, according to IDATE,ncompared to 54.3 million FTTH/B subscribers in the Asia Pacific region and 9.7nmillion in North America. And in the major economies of Germany, the UK andnSpain, FTTH penetration was below 1% of total households.nnnnTo make DAE targets a reality, governments willnneed to be more proactive in creating the right legislation and incentives tonensure that enough NGA networks are built by the 2020 deadline. The pay-offnwill be a mixture of simplified legislation and new infrastructure that willnease cross-border trade and encourage economic growth. nnnnOne of the key drivers of the Digital Agenda isnthe wish to eradicate potential future digital divides in countries where therencould be little or no incentive for commercial operators to build high-speedninfrastructure in certain areas. Again, action is still needed. One answer isnfor governments to develop Public-Private Partnership (PPP) models on annational or local level. This would facilitate the funding of high-speednnetworks and ultimately provide services that benefit taxpayers.nnnnA survey by the OECD found that costnsavings derived from the use of NGA infrastructure in just four sectors of theneconomy—transport, health, electricity, and education—would justify thenconstruction of a national FTTH network. Certainly, governments that facilitatenthe construction of FTTH networks will be able to provide key public servicesnmore efficiently: for example, delivering online health services will open upnthe possibility of providing remote consultations using video in rural areasnand to patients unable to attend clinics. In addition, citizens withnultra-high-speed network access at home will find it easier to engage innteleworking, which can greatly benefit companies in terms of saving costs andnproviding flexibility for employees. That in turn, opens up new possibilitiesnto re-invigorate rural or economically depressed zones.nnnnYet so far the EC describes progress by thenregion’s governments in terms of implementing the Digital Agenda as ‘moderate’.nMany factors are stalling government action, not least of which is cost.nProviding access speeds of 100 Mbps to 50% of European households would costnbetween 181 billion euro and 268 billion euro, according to estimates in thenDigital Agenda’s Broadband Communication. The initial results of a cost model,ncurrently being developed by the FTTH Council Europe, show that the cost ofnmeeting the Digital Agenda targets with FTTH would be on the low side of thisnrange, requiring an estimated total investment of 192 billion euro. Innaddition, there is potential for huge savings, for example through reuse ornsharing of existing infrastructure. Coordinating such cost-saving measures mustnbe a key task for governments and regulators.nnnnThere are encouraging signs that private andnmunicipal organisations are increasingly taking steps that mean nationalngovernments will not have to foot the bill alone. This will result in annincrease in wholesale and retail fibre access networks that will underpinnfuture innovative services.nnnnIn Europe, a number of cities have alreadynrecognised the importance of ultra-high-speed FTTH networks in securing theirneconomic future and have encouraged investment by private companies. In Munich,nfor example, the utilities company SWM in conjunction with telecoms operatornM-net is investing 250 million euro in building FTTH networks and expectsn350,000 dwellings, or half of all homes in the city, to be connected by 2013.nIn Stockholm the municipality created a body, almost entirely funded byncommercial organisations, to build a wholesale FTTH network and lease the fibrento private service providers.nnnnIn the Netherlands, private investors haventeamed with the incumbent KPN to offer FTTH to the vast majority of thenpopulation within 5 to 10 years, resulting in 1 million homes already covered,nof which 40% are subscribers. Meanwhile in the UK, CityFibre aims to deploynFTTH at speeds of at least 100 Mbps to one million homes and 50,000 businessesnin second-tier cities.nnnnBut in order to ensure strategic nationalnframeworks, it is Europe’s governments that will need to play a crucial role innensuring coordination between all stakeholders including local and regionalnauthorities, private investors and regulators. Portugal, for example, hasninvested funds from the European Economic Recovery Plan to deploy NextnGeneration Access networks in 140 rural municipalities, requiring bidders tonconnect at least 50% of the population in a region to speeds of 40 Mbps ornmore. The country has also provided an 800 million euro credit facility toninvestors in NGA networks. France, meanwhile, has put in place regulation tonfacilitate inter-operator co-operation on FTTH roll-out with the aim ofnproviding ultra-high-speed broadband coverage to 70% of the population by 2020,nspreading to 100% by 2025. And at the end of 2011 the French telecoms regulatornforesaw approximately half of the estimated 19 billion euro cost of buildingnnationwide very high-speed broadband networks coming from public funding.nnnnThe reality for governments and their partnersnis clear. As new public and private services and devices are developed thatndemand increased capacity, priority should be given to a future-proofninfrastructure that can accommodate growth and changes in bandwidth usage.nUnlike Fibre to the Cabinet (FTTC), which is limited by its reliance on coppernnetworks to transmit data on the last leg to the home, FTTH providesnultra-high-speed fibre connections to the building from the outset.nnnnUltra-high-speed broadband FTTH networks are setnto play a key role in ensuring a competitive and prosperous future for Europe,nbut those networks can only fulfil their potential for transforming local andnnational economies if they are widespread. Given the huge scale of such anninfrastructure project, governments and decision-makers will need to step in toncoordinate private and public investment, so that networks are built in ancost-effective and timely manner. nnnnUnfortunately, many governments are still shyingnaway from getting to grips with the real challenge of deploying trulynfuture-proof NGA infrastructure. Indeed, some of them still question the neednfor setting Digital Agenda performance targets. But history illustrates thatneconomic transformation depends on infrastructure. If Europe does not beginnseriously implementing the broadband networks of tomorrow, it is in danger ofnmirroring the fate of nineteenth century Alençon and not experiencing theneconomic growth that it now so desperately needs.

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