Annexes to COM(2016)587 - Connectivity for a Competitive Digital Single Market - Towards a European Gigabit Society - Main contents
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This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2016)587 - Connectivity for a Competitive Digital Single Market - Towards a European Gigabit Society. |
|---|---|
| document | COM(2016)587  |
| date | September 14, 2016 |
The proposed Code prioritises network access remedies that directly support competitive infrastructure deployment wherever feasible, and will reflect the retail choices already available to end users.
In areas where infrastructure-based competition may not be realistic, co-investment by rival operators allows pooling of costs, reduction of risks, overcoming of scale barriers by smaller operators and sustainable retail competition over time which is less dependent on regulation. Significant market power operators who are open to such co-investment in very high capacity networks should therefore be allowed to differentiate themselves from non-investing competitors; this can give all players an incentive to engage the necessary capital.
Business models based on selling wholesale network access to retail operators can reduce competition risks, attract "patient" capital which supports longer-term investment in very high-capacity networks and thus push out the dividing line between commercial and non-commercial deployment areas. This relatively new, but growing, business model deserves a clearer and simpler regulatory treatment in cases where such operators are found to have significant market power.
The proposed Code establishes predictable regulatory conditions to promote co-investment and wholesale-only business models, facilitating deployment of very high-capacity networks deeper into suburban and rural areas.
End-users in more challenging areas may be willing to invest upfront in very high-capacity fibre connections to their homes, either individually or as part of demand aggregation schemes. This financial commitment should be possible on the basis of a separate contract allowing for affordable long-term instalments, provided the end-user retains the right to switch service provider after a maximum of 24 months.
The proposed Code clarifies that long-term instalment payments for connections are consistent with end-user protection rules.
Spectrum rules for mobile connectivity and 5G
The EU was first to develop 4G wireless technology, but late in deploying it compared to other advanced regions. A delayed and fragmented assignment of the relevant spectrum by Member States has a direct negative impact on wireless network coverage and penetration overall in Europe. Such delays, if repeated, will endanger the successful introduction of 5G in Europe and the deployment of new innovative services.
In addition to faster processes to designate spectrum for electronic communications, with clear deadlines for when the spectrum is to be made available to the market, investors in the next generation of wireless broadband need more predictability and consistency regarding future licensing models and the key conditions for assigning or renewing national spectrum rights. These include a minimum licence duration to ensure returns on investment, greater scope for spectrum trading and leasing, and consistency and objectivity in market-shaping regulatory measures (reserve prices, auction design, spectrum blocks and caps, exceptional spectrum reservations or wholesale access obligations). On the other hand, operators should commit to use the spectrum assigned to them effectively.
The proposed Code establishes key principles for spectrum assignment in the Union, new Union-level instruments to establish assignment deadlines and licence periods (minimum 25 years), and a peer review among national regulators to ensure consistent assignment practices.
Coverage obligations in spectrum licences are an efficient tool to address gaps in wireless connectivity and to ensure high-quality coverage of the EU population and territory. While coverage obligations are already widely used, they need to be better tailored towards the 2025 objectives in this Communication, particularly regarding main transport paths and rural areas. Operators need to be able quickly to roll out denser networks based on small cells. Regulators need additional tools to address localised coverage gaps (white spots), such as facilitation of network sharing.
The proposed Code promotes a consistent approach to coverage obligations, to small-cell deployment and to network sharing, thereby stimulating 5G deployment and rural connectivity.
Shared use of spectrum, either on the basis of general authorisation or individual rights of use, can enable more efficient and intensive exploitation of this scarce resource. This is particularly relevant for the new, very short-range ("millimetre") spectrum bands foreseen for 5G communications. Users of radio spectrum under general authorisation merit greater regulatory protection from harmful in-band interference, obstacles to deploying Wi-Fi access points will be removed and end-user access to shared Wi-Fi connections will be easier.
The proposed Code facilitates spectrum sharing in 5G networks, and promotes end-user access to Wi-Fi-based connectivity.
Incentivising take-up through competitive markets, consumer choice and affordable tariffs
Very high-capacity networks only produce both a return on investment and wider economic benefits if they are taken up by citizens and businesses. While many different factors play a role, the rules need to ensure competitive markets and consumer choice. The proposed Code ensures inter alia that end-users can fully avail themselves of their switching rights, including when they contract for bundles of Internet access services or communications services and other goods or services (such as devices or content).
The proposed Code modernises end-user switching rights, including for bundles.
Even as the focus turns to deployment and take-up of very high-capacity connectivity, no one should be excluded from access to basic connectivity. While other policy instruments are more suited to promoting network roll-out in excluded areas, universal service should be used to ensure that members of vulnerable social groups can get access to affordable basic services if the market does not deliver.
The proposed Code ensures that vulnerable end-users have a right to an affordable connectivity contract.
Rules adapted to new communications services and to the internal market
Internet connectivity has enabled new forms of online communications services, with major benefits for end-users. Sectorial rules should not distort competition between traditional operators and new communications platforms, but should address the remaining end-user issues in a proportionate and non-discriminatory way on the basis of the relevant characteristics of the services concerned. Both service providers and end users should benefit on level terms from a truly internal market in services, with adequate protection in fields such as security. A level playing field should also ensure that network operators are not at a disadvantage when they also provide communications services.
The proposed Code secures a fair internal market through maximum harmonisation of the main sector-specific end-user rules, applicable as appropriate to different categories of services.
A governance model that ensures regulatory stability and coherence
An efficient governance system rests on the cooperation of strong and independent national regulators with adequate powers, working together with the Commission in a reinforced institutional structure (BEREC) with corresponding tasks, and more structured recourse to strategic expertise as regards spectrum policy (through the RSPG). The common goal should be to ensure that, building on the experience and expertise developed by BEREC and national regulators while implementing the current framework, the new Code is applied in a consistent, predictable and far-sighted way in the long-term interests of end-users, in a competitive internal market.
The Code proposes to establish a more efficient EU system of electronic communications regulators to ensure consistent implementation of the regulatory framework in order to develop the internal market.
4.2.5G Action Plan
The Commission also proposes a 5G Action Plan to foster a coordinated approach for the deployment of 5G infrastructures which will play a major role in Europe's future Internet connectivity. It will open up entirely new opportunities to innovate, not only in the communications sector, but also throughout the whole economy and society. Establishing the new 5G infrastructure requires an appropriate degree of coordination between Member States and between relevant sectors to stimulate investments. The action plan aims to realise such coordination based on a number of targeted actions, largely of a voluntary nature. Together with the proposed Code, it should give Europe the tools to lead the 5G race for the benefit of its international competitiveness.
The Commission calls on the Member States to support the 5G action plan and will work with all stakeholders to ensure its effective implementation.
4.3.Public support to investment
Legislative and regulatory actions can remove barriers, enhance competitive incentives, provide greater predictability for investors and lower costs for network deployment. The Internet connectivity objectives for 2025 are set at a level intended to bring them largely within reach for commercial operators. However, public funding will be necessary to improve the business case for private promoters in the most difficult areas.
To date, funding from ESI Funds for broadband investment has largely taken the form of grants; the regulatory framework for the ESI Funds for 2014-2020 introduced a new possibility for use of financial instruments in this field, as underlined by the Communication on the Investment Plan for Europe, which called for a doubling in the use of financial instruments under these funds. The Connecting Europe Facility and the European Fund for Strategic Investment provide customised financial instruments to small and large broadband projects respectively or can be combined to support dedicated funds and platforms. Technical assistance can be delivered through the European Investment Advisory Hub.
Grant financing for broadband is often needed in the most remote areas, which may otherwise be unprofitable. However, a public contribution by way of financial instruments can attract additional long-term private investment by reducing the short-term risks for deployments in areas where the business case can be positive in the long term. By blending – i.e. combining both forms of public financing in areas with overall commercial potential for very high capacity networks - grants can be limited to the minimum necessary to build a business case in unprofitable sub-areas, while maximising private sector involvement across wider areas.
To make most of the public funding leverage effect of blended investments for very high capacity networks across Europe, Member States need to use an appropriate funding mix of grants and financial instruments and complementary actions between various EU and national financing programmes 31 .
The Connecting Europe Facility (CEF) is the EU instrument specifically dedicated to support trans-European networks. However, its current budget is only able to support a narrow sub-section of broadband projects, namely innovative projects, based on state-of-the-art technology and with a potential for replicability, and using only financial instruments. The existing and future EU financing at all levels should be simplified and rendered more flexible to enable blending of financial instruments and grants. In the context of the multi-annual financial framework mid-term review 32 , the Commission is proposing measures to facilitate the combination of the ESI Funds with EFSI in all fields, including broadband.
In preparing the financial programming post-2020, the Commission will weigh up future financial support needs under the various EU investment programmes in light of the objectives for 2025.
The Commission calls on Member States to efficiently combine their public support via grants and financial instruments to achieve the long-term objectives set in this Communication.
The Commission, in cooperation with the European Investment Bank, will launch by the end of the year a Broadband Fund, building on CEF and EFSI, and is exploring an initiative on financing options for the activities related to the Digital Single Market strategy, including on blending various sources of funding for European Internet connectivity projects of common interest up to 2025.
In the context of the financial programming post 2020, the Commission will weigh up the need for adequate budgetary resources for efficient broadband financing in underserved areas under CEF, and the need to dedicate ESI funds support, possibly with an indicative share, to the digital transformation of European economy and society.
National public support to investment which is not on market terms falls under State Aid rules, as set out by Article 107(1) TFEU. The Broadband State Aid Guidelines enable public funding for the deployment of networks offering substantial improvements over existing networks (the principle of "step change" in terms of broadband availability). Risks of distortion of competition are addressed through requirements such as using the least distortive public financing mechanism and ensuring open access to state-funded infrastructure.
The Digital Agenda for Europe targets for 2020 are already reflected in the Guidelines: State Aid for a step change from basic broadband to basic NGA (offering typically from 30 Mbps and less than 100 Mbps) is deemed to counter market failure in the absence of commercial deployment for high capacity networks. The Guidelines also envisage further possible step changes, e.g. upgrades, through extension of fibre closer to the end user, to "ultra-fast" broadband of 100 Mbps or more, subject to verifying unmet demand in cases where existing or planned basic NGA network is already present.
In assessing national plans to support very high-capacity networks, the Commission will take into account the needs and objectives identified in this Communication and the underlying evidence of long-term demand for such networks that could be under-served by the market. Following the principle of well-targeted State intervention limited to the minimum necessary to correct market failures and to achieve objectives of European interest, the Commission favourably considers the use of blended financing across funding instruments and areas where this generates a step change to ultra-fast broadband networks. This can reduce the risk attached to investments in very high-capacity networks, thus lowering costs to the public while minimising any competitive distortions.
The Commission will reflect the foreseeable evolution of long-term demand when applying the "step change" approach of the Broadband State Aid Guidelines in conjunction with the strategic objectives set in this Communication, and will consider favourably efficient blended financing that contributes to lower the aid intensity and to reduce risks of distorting competition, as part of its assessment of State aid interventions.
4.4.Wi-Fi for Europe
Internet access via Wi-Fi easily connects multiple users, and many local authorities already give free Internet access in public spaces. The Commission wishes to support and encourage the provision of free Wi-Fi access to citizens in all public services (e.g. public administrations, schools, libraries, health centres, museums, public parks and squares) to better integrate communities in the Digital Single Market, to give users a taste of Gigabit society, to improve digital literacy and to complement the public services provided in those locations.
The Commission will set up a public Wi-Fi voucher scheme for public authorities to offer free Wi-Fi connections in the centres of community life.
4.5.Accompanying measures to support Internet connectivity and convergence
Meeting Europe's Internet connectivity objectives will also require pro-active national or regional policies, building on their National Broadband Plans 33 . It is essential to increase planning transparency, strengthen multi-level governance and exchange best practices for the benefit of infrastructure providers, public authorities and connectivity users.
The Commission calls on Member States to review progress of their National Broadband Plans and update them by the end of 2017 with a time horizon of 2025, in line with the strategic objectives set in this Communication and the 5G Action Plan.
As the Connected Communities initiative 34 , developed by the Commission in 2014, showed, there is a high level of interest from local and regional decision makers in increased cooperation between public and private connectivity actors, more technical assistance, and better communication of best practices and available tools. The mapping of present and prospective networks will also give to public authorities at all levels of government greater visibility on market failures and connectivity gaps, and an opportunity to take well targeted public initiatives. But success also requires their involvement in encouraging active participation by citizens in digital activities.
The Commission, in cooperation with the Committee of the Regions, will set up by the end of 2016 a participatory broadband platform to ensure a high level of engagement and cooperation between relevant public and private entities for broadband investment and progress in implementing national broadband plans.
In order to facilitate the effective delivery of ESI Funds allocated for broadband projects, the Commission proposed the establishment of an EU network of Broadband Competence Offices (BCOs) 35 . It aims at accelerating exchanges of best practices between Member States/regions and providing technical support on ways to invest effectively in broadband projects, whenever possible in combination with financial instruments.
The Commission calls on Member States and regions to establish and support the EU network of Broadband Competence Offices at regional/national level.
Limiting the cost of civil engineering works – which represents up to 80% of investment in broadband networks – could further facilitate broadband roll-out. Directive 2014/61/EC 36 (the Broadband Cost Reduction Directive) seeks to increase the sharing and re-use of existing physical infrastructure, across various sectors (energy, transport, etc.) and to facilitate synergies with public works; and mandates that all new or refurbished buildings be broadband-ready. Cross-utilities synergies and collaboration are sparking increased interest from other sectors and have already shown good results. The Commission urges the Member States to speed up the transposition and ensure the effective implementation of the Directive, so that the full potential of the measures, and in particular the cross-sector synergies, can be realised.
In line with the Broadband Cost Reduction Directive, the Commission will, by 1 July 2018, evaluate its implementation; assess the impact on the cost of EU-funded broadband projects and issue guidance on the promotion of best practices to further contribute to the long-term objectives set in this Communication.
5. Conclusion
Internet access is today as important as electricity was for the second industrial revolution, for the economy and for society. Very high-capacity Internet connectivity is essential to unleash the next wave of competitiveness and innovation and to allow Europe's businesses and citizens to harvest the full benefits of the Digital Single Market. This Communication and the accompanying measures are intended to provide Europe with the tools needed to bring this about.
The Commission encourages the Member States, in close cooperation with all relevant stakeholders, to engage in policy, regulatory and financial support for the vision of a European Gigabit society contained in this Communication and invites:
- The European Council and the European Parliament to endorse the strategic objectives for Internet connectivity in the Digital Single Market;
- The European Parliament and the Council to proceed swiftly with the legislative discussion on the accompanying proposal for a European Electronic Communications Code with a view to reaching political agreement by the end of 2017, and implementation in the Member States well before 2020.
The Commission will report on the progress of the initiatives presented in this Communication as part of its regular Digital Single Market reporting.
ANNEX
Delivering High-Performance Internet Connectivity for the Digital Single Market
| Initiative | Actions and Timeline |
| Regulatory framework measures | |
| Legislative Proposal establishing the European Electronic Communications Code | The European Parliament and the Council to proceed swiftly with the legislative discussions with a view to reaching political agreement by the end of 2017, and implementation in the Member States well before 2020. |
| Legislative Proposal establishing the Body of European Regulators for Electronic Communications | |
| Support and other Measures | |
| Strategic objectives for Internet connectivity | The European Council and the European Parliament to endorse by end of 2016 the strategic objectives for Internet connectivity in the Digital Single Market. |
| 5G for Europe: Action Plan | Establishment of a common timetable and a set of enabling actions for the coordinated launch of 5G networks in Europe. |
| Broadband Fund, building on CEF and EFSI | The Commission, in cooperation with the European Investment Bank, to launch a Broadband Fund by end of 2016. |
| Financing options for the activities related to the DSM strategy | The Commission to explore an initiative on financing options, including on blending various sources of funding, for European Internet connectivity projects of common interest up to 2025. |
| Financial programming post 2020 | The Commission to weigh up the need for adequate budgetary resources for efficient broadband financing in underserved areas under CEF, and the need to dedicate structural funds support, possibly with an indicative share, to the digital transformation of European economy and society. |
| Wi-Fi for Europe | The Commission to set up a Wi-Fi voucher scheme for public authorities to offer free Wi-Fi connections in the centres of community life. |
| National Broadband Plans | By end of 2017 Member States to review and update National Broadband Plans with a time horizon of 2025, in line with the strategic objectives set in this Communication and the 5G Action Plan |
| Participatory Broadband Platform | The Commission, in cooperation with the Committee of the Regions, to set up by end of 2016 a participatory broadband platform to ensure a high level of engagement and cooperation between public and private entities for broadband investment and progress in implementing national broadband plans. |
| EU network of Broadband Competence Offices at regional/national level. | Member States and regions to establish and support, by end of 2016, the EU network of Broadband Competence Offices at regional/national level. |
| Evaluation of the Broadband Cost Reduction Directive and guidance on the promotion of best practices | The Commission, by July 2018, to evaluate the implementation of the Broadband Cost Reduction Directive, assess the impact on the cost of EU-funded broadband projects and issue guidance on the promotion of best practices. |
| State aid | The Commission to reflect the foreseeable evolution of long-term demand when applying the "step change" approach of the Broadband State Aid Guidelines in conjunction with the strategic objectives set in this Communication, and to consider favourably efficient blended financing that contributes to lower the aid intensity and to reduce risks of distorting competition, as part of its assessment of State aid interventions. |
(1) For example social networks, mobile gaming, apps and video streaming, ongoing digitisation of economic activity and public services, IP-based voice and messaging applications and remote storage and retrieval of data for consumers and businesses.
(2)
European Parliament resolution of 19 January 2016 on Towards a Digital Single Market Act ( 2015/2147(INI) ).
(3)
European Council conclusions, 28 June 2016 (EUCO 26/16).
(4) 5G refers to the next generation of network technologies offering prospects for new digital economic and business models.
(5) Proposal for a Directive of the European Parliament and of the Council establishing the European Electronic Communications Code
(6)
Commission Communication "5G for Europe: An Action Plan".
(7)
Digital Economy and Society Index: the coverage of fixed basic Next Generation Access (NGA) technologies (with download speeds of at least 30 Mbps).
(8)
At a speed of at least 2Mbps.
(9)
GSM Association: http://www.gsmamobileeconomy.com/GSMA_Global_Mobile_Economy_Report_2015.pdf , p. 8 and 13.
(10)
Separate reports by Ericsson, Cisco, GSMA and Gartner foresee a massive increase in such connected objects. See section 2.2. of the accompanying Staff Working Document.
(11)
"Very high-capacity network" means an electronic communications network which either consists wholly of optical fibre elements at least up to the distribution point at the serving location or which is capable of delivering under usual peak-time conditions similar network performance in terms of available down- and uplink bandwidth, resilience, error-related parameters, and latency and its variation. Network performance can be considered similar regardless of whether the end-user experience varies due to the inherently different characteristics of the medium by which the network ultimately connects with the network termination point.
(12)
Optical fibre transmits signals at the speed of light, and has an efficiency range for delivering quality, symmetrical connections over dozens of kilometres. The most promising copper-enhancement technologies currently have an effective range of c. 250 metres, and rely on fibre in the rest of the network. Upgraded cable (HFC) networks, using the DOCSIS family of standards to enhance performance, rely on fibre at least as far as the so-called optical node.
(13)
Also known as "backhaul". See point 4.3 in the 5G Action Plan.
(14)
The public consultation took place from 11 September to 7 December 2015. A full synopsis report is available at https://ec.europa.eu/digital-single-market/en/news/full-synopsis-report-public-consultation-needs-internet-speed-and-quality-beyond-2020 .
(15)
59% of respondents think they will need fixed download speeds above 1 Gbps in 2025; only 8% think they will need download speeds below 100 Mbps in 2025.
(16)
A large number recalled the importance of upload speeds and symmetry.
(17)
Austria, Belgium, Denmark, Finland, France, Luxembourg, Slovenia, Sweden, see Figures 22 and 23 in the accompanying Staff Working Document.
(18)
See section 3.2 of the accompanying Staff Working Document.
(19) Gigabit connectivity is to be understood as cost-effective symmetrical Internet connectivity offering a downlink and an uplink of at least 1 Gbps.
(20)
Opening up Education: Innovative teaching and learning for all through new Technologies and Open Educational Resources, COM(2013) 654
(21)
Enterprises with a high level of integration of digital technologies, like electronic information sharing or social media
(22)
For evidence that in the telecom sector, demand responds to supply, and that limited downlink and uplink speeds may restrict the types of usage and applications that might otherwise emerge, see section 2.2 of the accompanying Staff Working Document.
(23)
Covering: e.g. primary and secondary schools, train stations, ports and airports, local authority buildings, universities, research centres, doctors' surgeries, hospitals and stadiums.
(24) In line with the proposed Code.
(25)
5G will co-exist seamlessly with complementary technologies already being deployed, e.g. for short-range communication for vehicle-to-vehicle and vehicle-to-infrastructure (ITS-G5).
(26)
For terrestrial transport paths, and depending on the considered transport service, account will be taken of ongoing investments in C-ITS technologies while ensuring coordination with relevant stakeholders, Action 4 of the 5G Action Plan
(27)
Identification and quantification of key socio-economic data to support strategic planning for the introduction of 5G in Europe, SMART 2014/0008
(28)
As per definition: http://ec.europa.eu/eurostat/statistics-explained/index.php/European_cities_%E2%80%93_the_EU-OECD_functional_urban_area_definition .
(29)
Motorways, national roads and railways, in line with the definition of Trans-European Transport Networks.
(30)
Based on the study by Analysys Mason (SMART 2015/0068) and Commission estimates. See further the accompanying Staff Working Document, section 4.4.
(31)
For more information on complementarities between ESIF and EFSI, see: http://ec.europa.eu/regional_policy/sources/thefunds/fin_inst/pdf/efsi_esif_compl_en.pdf
(32)
Investment Plan for Europe: European Fund for Strategic Investments to be extended following successful first year ( IP-16-1933 ) and New guidelines on combining ESI Funds with the EFSI ( IP-16-329 )
(33) The development of National Broadband Plans is reported on by the Commission in its Digital Progress Reports.
(34) https://ec.europa.eu/digital-single-market/en/news/connected-communities-initiative For more information on the Connected Communities Initiative, see: .
(35)
For more information on the BCO initiative: https://ec.europa.eu/digital-single-market/en/broadband-competence-offices .
(36) Directive 2014/61/EU of the European Parliament and the Council of 15 May 2014 on measures to reduce the cost of deploying high-speed electronic communications networks.