Light Reading

Europe's Broadband Nightmare

Ray Le Maistre
2/11/2013
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Neelie Kroes, the European Commission's vice president responsible for the digital agenda, has spent the past few years developing and sharing her dream -- a dream that involved helping Europe to fulfill its potential through the construction of broadband and supporting IT infrastructure. On Friday, Feb. 8, that dream was shattered by a group of short-sighted, bickering, political Neanderthals, including U.K. prime minister David Cameron. Kroes, a determined and articulate individual, was the driving force behind the Connecting Europe Facility, a proposed €50 billion (US$66.9 billion) investment plan for the upcoming 2014-2020 European Union budgetary period that included a €9.2 billion ($12.3 billion) pot for seed investments in high-speed broadband access and digital services projects. Those projects, in turn, were set to help the region go some way toward reaching the ambitious broadband connectivity targets set out by Kroes, who (quite rightly, in my view) sees a positive correlation between broadband infrastructure investment and economic growth potential. You can read about that facility, and the way it was intended to function, in this blog from October 2012. But, following EU budget negotiations held late last week, that €9.2 billion is now just €1 billion ($1.34 billion). Kroes is putting on a brave face, as this EurActiv article and this blog by Kroes show. But it would seem that, with only a fraction of the expected catalyst funds now available for the coming seven years, Kroes has decided that the remaining facility isn't enough to tackle the region's broadband investment requirements, and so will try to salvage some of the digital services potential. Kroes had hoped that by providing seed funding, the Facility would encourage private investment in high-speed broadband access networks. Now that seed funding has disappeared, will private capital be pumped into European fiber-to-the-home/building/curb rollouts? While it's impossible to say, it's obvious that there will be less investment overall. And that will be damaging to the regional and individual EU member economies and further strengthen the grip that incumbent telcos have on high-speed broadband markets. That, in turn, will affect the development of the digital economy in Europe and harm the region's potential for attracting international investment in the form of corporations setting up operations in Europe: Multiple countries in Asia/Pacific, including China, will increasingly look far more enticing as locations for global business operations. Broadband, then, has been identified as little more than a pawn in the political chess games of Europe's senior politicians, who all talk about wanting to stimulate growth and attract investment but clearly fail to see how best to achieve those aims. All they seem to care about is being seen to get their own way while being somewhat oblivious to the medium- and long-term impact of their short-sighted decisions. Europe has shot itself in the foot by targeting the Connecting Europe Facility funds to meet its austerity targets and it's hard to see how the next generation of Europeans won't pay the price for what is a mindless act of industrial self-harm. — Ray Le Maistre, International Managing Editor, Light Reading

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brookseven
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brookseven,
User Rank: Light Sabre
2/13/2013 | 2:23:52 PM
re: Europe's Broadband Nightmare
Ray,

There used to be lots of studies around Teledensity and Economics. -áAnybody know of any on BB and Economics?

seven
Ray Le Maistre
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Ray Le Maistre,
User Rank: Light Sabre
2/13/2013 | 7:07:27 AM
re: Europe's Broadband Nightmare
Suffice to say that I disagree with the premise of your argument - I believe anything that would stimulate investment in high-speed broadband, especially for those that won't be served by the publicly-listed telcos/cable operators, is VERY compelling as it would open up new business and personal opportunities for everyone connected to what will become a hosted/online/Web-based global economy.

I am not disputing, by the way, that Kroes in not an elected politician -- I believe this is to her advantage, as this allows her to focus on the needs of all and not be self-serving.-á
Many Tits Up
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Many Tits Up,
User Rank: Light Beer
2/12/2013 | 2:56:50 PM
re: Europe's Broadband Nightmare
The author ignores that Neelie Kroes is not accontable to the EU citizens while also ignoring that those pesky politicians ARE accountable to their constituents.-á In the absense of a compelling idea or a massive fail, there is no reason that national politicians should give way to such missives from the EU.-á Such schemes are only given up in order to rationalize the EU bureaucracy.
mendyk
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mendyk,
User Rank: Light Sabre
2/12/2013 | 2:52:03 PM
re: Europe's Broadband Nightmare
Ray -- Doesn't the problem lie more with those public companies that are afraid of shareholder reaction than with a bureaucratic construct of dubious value? You often write about one operator that fancies itself a world-class incubator for digital content. Shouldn't that operator and others like it be focused on building the infrastructure that will carry that digital content?
Ray Le Maistre
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Ray Le Maistre,
User Rank: Light Sabre
2/12/2013 | 11:12:07 AM
re: Europe's Broadband Nightmare
Hi 186k
You say: "It's not as if just because the EU doesn't get it's broadband fund that investment in broadband across Europe is going to grind to a halt"

Which "investment in broadband across Europe" is this? The major problem for Europe, as I see it, is that there is precious little investment across Europe is high-speed broadband (fiber to the home/building) -- it is a market that needs seed funding and incentives to encourage any investment at all.

With the broadband funds cut at the EU, the market stays where it is, which, for the most part, means that the major telcos (all of which are constraiend by the pressures of being publicly-listed companies that don't want to scare away shareholders and be seen to up their capex in anything other than 4G) will decide where and when FTTX investments will be made, and that's not going to be enough to make Europe competitive.

London hosts the FTTH Council Europe event next week where there will be plenty of updates about the state of next gen fixed broadband rollouts in Europe -- and guess what? The updates are going to be depressing.-á

Europe's digital/broadband economy needs all the help it can get from any quarter -- Europe's politicians just relegated 21st century communications to the bottom of the investment pile. And that tells us a lot about Europe and the people that we have the misfortune to have running the show.-á
Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
2/12/2013 | 10:22:28 AM
re: Europe's Broadband Nightmare
That was my sort of my reaction too. There must be spending they could have cut from-áthe budget that delivers less return than broadband.
186k
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186k,
User Rank: Light Beer
2/12/2013 | 10:16:47 AM
re: Europe's Broadband Nightmare
I find it difficult to get too exercised about this. It's not as if just because the EU doesn't get it's broadband fund that investment in broadband across Europe is going to grind to a halt

I assume this funding was primarily targeted at the hard to reach rural areas where operators generally can't make a return without public subsidy of some sort. So this means we have less funds for rural broadband but there are clearly far fewer premises in rural areas so the overall impact is really quite minor. In addition, all the countries have existing plans which mix commercial & gov backed rollout which weren't dependent on EU funds. For instance in the UK the BBUK is fully funded and not dependent on EU funding at all

So overall, yes it would have been better to cut the funds from some of the other massive low hanging fruit (e.g., CAP) rather than broadband, but better some EU cuts than none and Europe has bigger problems than patchy rural broadband

Gabriel Brown
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Gabriel Brown,
User Rank: Light Sabre
2/12/2013 | 10:06:27 AM
re: Europe's Broadband Nightmare
Serious question: I agree that Europe needs investment in broadband, but why would-áthe European Commission be a good vehicle to administer it?

Flippant-áobservation: It's not like it has an amazing record on, say, fishing, or beef lasagne, or administration in general?
Ray Le Maistre
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Ray Le Maistre,
User Rank: Light Sabre
2/12/2013 | 8:36:56 AM
re: Europe's Broadband Nightmare
Unfortunately, that is the dilemma. Even if I were to take a plane out of Europe, where would I go? You may be right about Australia - let's see if that's working out in a few years.
There are pockets of Europe where local decisions have been made on high-speed broadband already eg Lithuania and the Netherlands, but the majority of the region is hamstrung by this political shortsightedness.

I thought Kroes had as good a model as any - EU seed money for FTTX projects that could then attract private investment, coupled with investments in regional IT/cloud infrastructure and the development of regional regulations on the management and delivery of hosted/cloud services. 'Joined-up thinking' is how some people describe it. Now she has to rethink -- the decision does not auger well for Europe though. -á
brookseven
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brookseven,
User Rank: Light Sabre
2/11/2013 | 5:51:48 PM
re: Europe's Broadband Nightmare
1. If you take a bus out of Europe....that leads you to ME/Africa and potentially Asia. -áAnd the bits of Asia you hit first will not have great connectivity :)

2. -áWhat do you desire as an access plan? -á

I stand by my assertions that future expenditure in access is either government or competition based. -áOutside of wireless nobody is doing very much in either vein (except maybe the Aussies).

seven
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