The digital revolution: How to finance EU network infrastructures?

POLICY

The European Parliament Long-Term Investment and Reindustrialisation Intergroup held a conference dedicated to the long-term financing of EU digital network infrastructures on March 21 2016. NExsT presents some highlights…

Günther H. Oettinger

EUROPEAN COMMISSIONER FOR DIGITAL ECONOMY AND SOCIETY

Over 200 participants attended, including Members of the European Parliament, officials from the European Commission and Permanent Representations of Member States, as well as journalists and representatives of the civil society, in particular from the digital sector. Intergroup Chairman MEP Dominique Riquet opened the conference, pointing out that EU investment requirements for high-speed broadband infrastructures will be around € 200 billion per year until 2020. The next speaker was Viviane Reding, Commissioner for Information Society and Media from 2004 to 2010. She pointed out the existence of an estimated € 90 billion investment gap in Europe and insisted regulation must be in line with technological innovation and that competition is key to liberating the energy and unlocking investments.

 

During a Roundtable on High Speed Internet entitled “Everywhere for everyone, but how?” former FTTH Council Europe President Edgar Aker focused on the fact that in 2015, 42 million kilometres of fibre were installed in Europe, while China alone installed 135 million km. He pleaded for universal agreements to consider the fibre-based networks the only replacement to digital land infrastructures. Optical fibre should be explicitly selected by regulators, who then would leave deployment to the market. Edgar also pointed out that 5G and fibre networks are complementary and can’t exist without the other. To diversify investments, mitigate risks and become more attractive to private investors, intermediately-sized projects could be aggregated in investment platforms, argued Gael Sérandour, Head of digital infrastructures at Caisse des Dépôts et Consignations (CDC).

 

 

World leader in high-speed broadband

 

In his concluding speech, Commissioner Oettinger compared the growing need for digital infrastructures with the need for quality roads at the time car was invented. He estimated that the emergence of sectors such as eHealth and connected cars would create huge demand. Oettinger stressed the importance of a transnational approach, possibly involving countries bordering on the EU, and bridging of cross-border telephone and mobile internet coverage gaps.

 

The increasing importance of connectivity requires a clear long-term policy vision on networks, which may go beyond the investment horizon of current market participants. The EU is doing its part in helping design the global regulatory framework for 5G with € 700 million in investments for the period 2014-2020. Investments in digital infrastructures must be considered a priority, says Oettinger, but private funds need to be harnessed, which account for the largest share of the total investments. To realize this, the EU would need incentives and has to create a favourable triangle between risk assessment, Return on investments (ROI), and asset management considerations for investments in digital infrastructures.

“The telecommunication industry is the future of telecoms and needs to function in the appropriate regulatory framework”, said Commissioner Oettinger, who reaffirmed his belief that connectivity is the foundation of any modern and competitive society. “Through the necessary investments in digital infrastructures, the EU may surpass the US in terms of deployment and join South Korea as a world leader in high-speed broadband access.”

FOCUS AREAS INCLUDE:

  • Broadband, energy and transport networks
  • Education, research and innovation
  • Renewable energy and energy efficiency
  • Youth employment support project
  • Small and medium-sized enterprises and mid-cap firms

 

PUBLIC MONEY AS A CATALYST FOR PRIVATE INVESTMENT

 

SOURCE: European Commission

© Copyright Prysmian Group.

All rights reserved.

Over 200 participants attended, including Members of the European Parliament, officials from the European Commission and Permanent Representations of Member States, as well as journalists and representatives of the civil society, in particular from the digital sector. Intergroup Chairman MEP Dominique Riquet opened the conference, pointing out that EU investment requirements for high-speed broadband infrastructures will be around € 200 billion per year until 2020. The next speaker was Viviane Reding, Commissioner for Information Society and Media from 2004 to 2010. She pointed out the existence of an estimated € 90 billion investment gap in Europe and insisted regulation must be in line with technological innovation and that competition is key to liberating the energy and unlocking investments.

 

During a Roundtable on High Speed Internet entitled “Everywhere for everyone, but how?” former FTTH Council Europe President Edgar Aker focused on the fact that in 2015, 42 million kilometres of fibre were installed in Europe, while China alone installed 135 million km. He pleaded for universal agreements to consider the fibre-based networks the only replacement to digital land infrastructures. Optical fibre should be explicitly selected by regulators, who then would leave deployment to the market. Edgar also pointed out that 5G and fibre networks are complementary and can’t exist without the other. To diversify investments, mitigate risks and become more attractive to private investors, intermediately-sized projects could be aggregated in investment platforms, argued Gael Sérandour, Head of digital infrastructures at Caisse des Dépôts et Consignations (CDC).

 

 

World leader in high-speed broadband

 

In his concluding speech, Commissioner Oettinger compared the growing need for digital infrastructures with the need for quality roads at the time car was invented. He estimated that the emergence of sectors such as eHealth and connected cars would create huge demand. Oettinger stressed the importance of a transnational approach, possibly involving countries bordering on the EU, and bridging of cross-border telephone and mobile internet coverage gaps.

 

The increasing importance of connectivity requires a clear long-term policy vision on networks, which may go beyond the investment horizon of current market participants. The EU is doing its part in helping design the global regulatory framework for 5G with € 700 million in investments for the period 2014-2020. Investments in digital infrastructures must be considered a priority, says Oettinger, but private funds need to be harnessed, which account for the largest share of the total investments. To realize this, the EU would need incentives and has to create a favourable triangle between risk assessment, Return on investments (ROI), and asset management considerations for investments in digital infrastructures.

© Copyright Prysmian Group.

All rights reserved.