Today, across Europe, we can find widespread consensus on the need to invest in high speed networks. However, there are some vital elements missing from the discussion: characterization of the technologies that will allow for such deployment, and ways to achieve this.
According to the World Economic Forum, the Internet-based business activity will reach 4.2 trillion dollars in the G-20 countries by 2016.
The digital economy is growing faster (about 10% per year) compared to the economy as a whole, while in emerging markets it is growing at a rate of 12-25 % per year, with significant results in social and political terms, as well as economic impact.
The digital challenge is also central for the European Union countries to stimulate inclusive and sustainable economic growth.
The potential of the digital economy, the European single market, the Internet of things and the convergence between broadband and TV, can only be achieved if there is adequate digital infrastructure enabling speed in excess of 30 Mbps (Megabits per second).
Next generation access networks are a general-purpose technology with the potential to trigger productivity gains on a massive scale.
These gains might take years to accrue, because new applications and new organizational and production designs that use Next generation access networks need time to be developed.
Nevertheless, we consider wide Next generation access infrastructure roll-out to be welfare enhancing and that it should therefore be an objective of the European Union. This is consistent with the view taken by the European Commission.
The manner in which the transition to this next generation infrastructure is managed and encouraged will be crucial. Optical fiber is for sure a response to the need of durable, symmetric, reliable and easy to maintain technology.
Today, across Europe, we can find a widespread consensus on the need to invest in ‘reliable, trustworthy, high speed and affordable networks and services’: the Digital Single Market Strategy and Juncker Plan are a powerful illustration of this consensus.
However, there are some vital elements missing from the discussion: characterization of the technologies that will allow for such deployment, and ways to achieve this – all the more important at this point of time as the EU is building tomorrow’s infrastructure.
More than one year after the Junker Plan entered into force, the projects on digital infrastructure are below the expectations. To promote investments the EC shall drive the innovation through a clear framework and better coordinating member states’ initiatives.
Fibre has a number of benefits which other solutions cannot match. Apart from speed, we need to take the quality and durability of the network components and homogeneity of the network into account.
Here, fibre outperforms everything else. The network should remain in place for decades and support several consecutive generations of active equipment and services.
Fibre is the most future-proof option and progress in technologies such as bend-immunity and data compression can increase its active life even further.
According to the Digital Agenda of the EU Commission, Europe needs competitively priced fast and ultra fast Internet access for all.
In this regard, the EU is to establish next generation access networks. The Commission intends to use European funds in order to finance investment in broadband but at the same time shall encourage and coordinate MS ‘efforts and private initiatives.
If Europe wants to benefit of all the advantages offered by the digital revolution, a reliable, trustworthy, high speed and affordable network is at the basis of the digital single market.
Picture credits: Abby
I do want the Juncker Plan to be a success, yet I am not sure that what investors need more urgently is the European Fund for Strategic Investments but rather a regulatory framework conducive to their activity, says MEP Dominique Riquet.
The Juncker plan is still raising many questions with respect to its effectiveness. What’s your view?
Like the vast majority in the Parliament, I am very supportive of the idea of setting up an investment plan at EU level. President Juncker’s proposal goes in the right direction by targeting areas that are strategic for growth and by trying to attract more private funds.
At the same time, given the estimated investment needed in trans-European networks in the fields of transport, energy and telecoms until 2020 (around 1000 billion), the objective of raising 315 billion of investments may seem a bit limited.
For telecoms, the investment gap mainly concerns the deployment of broadband in rural areas as the private sector usually takes charge of other kinds of investment. Another area of concern with this plan is the financing of the EU guarantee fund.
Why taking money in programmes already dedicated to investment, which are fully operational and already foresee the possibility to use innovative financial instruments?
Finally, I am not sure that what investors need more urgently is the European Fund for Strategic Investments but rather a regulatory framework conducive to their activity. Trust is the key. However, I do want the Juncker Plan to be a success and we are currently working very hard on achieving this.
Will the so-called leverage effect work, notably in helping Europe meet its ambitious targets for ultra-fast broadband?
The leverage effect targeted by the Commission with the EFSI is 15, which is not unrealistic. We also know that there are dozens of trillions available in the private sector, within pension funds or insurance companies for example, and these liquid assets are insufficiently redirected to real economy.
The leverage effect will depend on the EFSI capacity to attract contributions from other actors and the cooperation between the EIB and national promotional banks will be crucial in that respect, together with the efforts in improving the regulatory environment.
Changing rules all the time, having a fragmented market where taxation and public procurement vary from one country to another clearly acts as a deterrent for potential investors.
The Digital Single Market Strategy presented Wednesday by the Commission is a crucial step in improving the EU competitiveness in this sector but it remains to be seen whether Member States will embrace the same ambition and have enough political will to put an end to all kind of obstacles.
Do you see the digital economy benefitting from the plan as touted by the European Commission? The proposal to divert funds from Horizon 2020 and the CEF to the EFSI, which the European Parliament has rejected, seems to prove the contrary.
The potential of the digital economy is huge and more should be done to reap its benefits. We do not want to choose between Horizon 2020, the Connecting Europe Facility and the EFSI as all are needed and this is why we have suggested to rather use unallocated resources such as margins and surpluses to finance the EFSI guarantee fund.
Just for 2014, the surpluses which remained this year were 1,4 billion, an amount which largely covers what we are supposed to put for 2015 in the EU guarantee fund. However, the surpluses currently serve to reduce Member States contributions to the EU budget which is why it is so difficult to use them for the EFSI.
As regards the EFSI, innovation and digital economy have clearly been identified as an investment area and there are a lot of possibilities : equipment of universities, support to SMEs in this sector, promotion of connected vehicles and of smart grids in order to reduce our energy consumption are just a few examples.
Negotiations between the EP and the Council have just started and they seem rather tense. What to expect?
There are a lot of divergences between the European Parliament and the Council but the main issue is by far the way we will finance the EU guarantee fund.
We are not protecting “our money” as I can hear from time to time. The Parliament is simply doing its job when defending programmes that have been democratically adopted just two years ago after a wide consultation, and I must say that in six years I have rarely seen our assembly being so united.
We are having the third trilogue today and, to be honest, the discussions have been quite difficult so far. If we are to find an agreement before the summer break as the Commission wants, each side of the negotiation will have to make efforts.
Dominique Riquet (born in 1946) holds a degree in general medicine and a degree in urological surgery. Elected at the European Parliament in 2014 for a second mandate, he is the first Vice-Chair of the transport and tourism committee and a member of the industry, research and energy committee. As a member of the UDI (Union des Démocrates et Indépendants) in France, he joined the ALDE (Alliance of Liberals and Democrats for Europe) within the European Parliament. Particularly involved in infrastructure financing, he was rapporteur on the Connecting Europe Facility and he recently created an intergroup on long-term investment. Prior to that, he was Regional Councillor for the Nord Pas-de-Calais region (1992-2009) and he also served for ten years as the mayor of Valenciennes (2002-2012). Follow him on: @