Kroes’s high-speed Internet plan faces obstacles


This article is part of our special report Broadband: driving recovery?.

Neelie Kroes, the European Union's Digital Agenda commissioner, proposed a number of measures yesterday (20 September) aimed at boosting high-speed Internet across Europe. But her plan faces opposition from some member states and key industry groups.

The European Commission presented three long-awaited policy initiatives on broadband, with the intention of guiding future developments in the sector.

One of the initiatives, the Radio Spectrum Policy Programme (RSPP), is a five-year plan aimed at harmonising the use of frequencies across Europe, which proposes opening up a specific frequency for wireless broadband operators.

The sought-after frequency is the valued 800 MHz band currently used by broadcasters, which is being freed up by the switch to digital TV.

The Commission's communication sets a deadline of 1 January 2013 for the switch to take place, "with possible derogations until 2015 in exceptional cases".

In practice, however, the Commission's ultimatum can do little to change frequency allocation plans. Harmonisation is a taboo word when it comes to radio frequencies and the approval of member states is still essential to push through binding measures on the matter.

Germany is the only EU country so far to make the broadcast spectrum available for mobile broadband. Airwaves auction were held in May, with Deutsche Telekom and Vodafone acquiring many of the new radio frequencies.

But in other countries, the entrenched interests of national politicians and public broadcasters represent a powerful opposition lobby against the use of spectrum for purposes other than broadcasting.

In Italy, where Prime Minister Silvio Berlusconi built his political fortunes on the basis of his television empire, it is unlikely that broadband operators will stand a real chance of competing. Indeed, all bidders for the freed frequencies in Italy are at present exclusively broadcasters, not Internet service providers.

Investment in infrastructure

The other facet of Kroes's proposals comprises a long-awaited recommendation on access to Next Generation Networks (NGNs) and a communication on broadband infrastructure investment.

As its name indicates, the recommendation is not legally binding. Member states are invited to follow the Commission's advice, but there is little chance of forcing a recalcitrant national regulator to implement it.

Asked twice about the Commission's authority to enforce the proposals, Kroes did not give a clear answer during a press conference yesterday (20 September).

Moreover, opposition to the plans already looks strong. As reported by EURACTIV (EURACTIV 10/09/10), incumbent operators that have invested in new fibre-based networks warn that the proposal would give competitors easy access to their infrastructure. This would stifle investment in the sector, according to ETNO, the European Telecommunications Network Operators' Association.

New operators, represented by the European Competitive Telecommunication Association (ECTA), sent the opposite warning. While applauding the Commission's recommendation – which is slightly more to their advantage than previous drafts – they said accessing networks may end up being too costly if European regulators are unable to impose the right price. However, this ability will remain within the competence of national authorities, ECTA stressed.

The third initiative presented by Kroes relates to investments in new high-speed Internet infrastructure, with the European Investment Bank (EIB) set to table innovative financial instruments to back the initiative. Public-private partnerships are also encouraged.

However, with little money available at a time of economic crisis, the plan faces significant implementation hurdles.

Presenting the package of measures on 20 September, Neelie Kroes, the EU's Digital Agenda commissionersaid: "I cannot sit by and allow our businesses to continue to compete against Asian businesses with Internet 100 times faster than our own. I cannot sit by and watch our broadband advantage disappear through complacency. So today's measures should send a loud and clear signal to European businesses and citizens," she said, seeking allies in support of her plans.

However, she was soon contradicted. ETNO, the association representing Europe's incumbent telecoms operators, said "the proposed regulatory approach for NGA will be challenging for investors". "ETNO remains concerned that a systematic application of cost-based regulated access obligations is not appropriate in an NGA (Next Generation Access) environment and highly competitive markets," read a press release issued by the association.

Others were more supportive.

"This long-awaited Recommendation should herald an end to the regulatory holidays that have held back innovation and choice over the past five years and should force dominant operators to open up their fibre networks to competition," said Hubertus Von Roenne, chairman of the European Competitive Telecommunication Association (ECTA). "However, there is unfortunately a long way to go before consumers will be able to see the results," said Von Roenne, who represents new operators entering the telecoms market.

"Setting the correct wholesale price for both legacy copper lines and the new fibre will be fundamental in determining whether consumers reap the benefits of this new Commission Recommendation," he added.

"The Broadband Strategy, the NGA recommendation and the Radio Spectrum Policy Programme offer a concrete possibility of pushing the Digital Agenda among the top priorities of each member state," reads a statement by Vodafone, the EU's largest mobile telecoms operator.

"Today's package is praiseworthy progress towards achieving open and competitive networks," said Monique Goyens, director-general of BEUC, the European Consumers' Organisation. "It is now over to national regulators to ensure consumers benefit by overseeing a competitive European network. If that does not happen, the simple fact is that service choices for consumers will be sadly lacking."

"Today's package does not bring us across the finish line however. The Commission should go further and include fast and ultra-fast broadband in the scope of the Universal Services Directive - that would be a proper leap towards the political goal of broadband for all," she added.

"The European Commission's broadband strategy released today highlights the need for greater attention to competition as a driver for investment," reads a statement by Cable Europe, a trade association that groups all leading cable TV operators.

"EU decision-makers recognise that the goal to spur telco incumbents to make new investments in fibre is stimulated by the cable industry's market presence across Europe," it continued.  

Only 24.8% of EU households have access to high-speed Internet. In other words, the remaining three-quarters of Europeans are left out.

To prevent this "digital divide" from widening, Brussels has long debated supporting fibre-based networks and exploiting the "digital dividend" - spectrum that is freed up as a result of the switchover from analogue to digital technology.

Optical fibre backbones are considered the future of telecommunications infrastructure, because they allow for faster and wider transmission of data than current, largely copper-based networks. Fibres are at the core of so-called 'Next Generation Networks' (NGNs).

The digital dividend has been hailed as a way to boost growth in a highly profitable digital market and bring broadband to remote areas that may not have terrestrial networks.

But this implies giving frequencies to telecommunications operators rather than to broadcasters, as is instead happening in many EU countries.

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