Last night’s decision to cut the European Union’s seven-year 2014 to 2020 budget by 3% to around £768bn has taken a significant casualty. The European Commission’s (EC) plan to boost funding for future superfast broadband projects through its €9.2bn (£7.78bn) Connecting Europe Facility (CEF) has effectively been wiped out.
One of Europe’s key Digital Agenda goals had been to ensure that superfast broadband (30Mbps+) services would be made available to 100% of Europeans by 2020 (including in the UK), with some 50% also gaining access to speeds of 100Mbps+.
As part of this effort the EC proposed to create a €50bn pan-European Connecting Europe Facility (CEF), which would have seen €31.7bn allocated to develop transport, €9.1 for energy and €9.2bn for digital services (i.e. telecoms) via a mix of equity, grants and debt instruments. But the budget talks have changed all that.
Initially the news looked good. The President of the European Commission, José Manuel Durão Barroso, issued a joint statement that said, “the basic structure of the Commission proposal and some innovative instruments have been preserved, including the Connecting Europe Facility which provides for investment in transport, energy and the digital agenda. This makes our budget a tool for competitiveness and growth with a pan-European logic.” The word “preserved” is highly misleading.
In fact the €9.2bn pot for digital and broadband services experienced a catastrophic cut to just €1bn. Needless to say that Neelie Kroes, Vice President of the EC’s Digital Agenda Project, was less than pleased.
Neelie Kroes said:
“I am of course disappointed that Member States could not agree on our proposal for the digital part of the Connecting Europe Facility, only agreeing to €1 billion out of the €9.2 billion we had put forward.
This still leaves room to invest in service infrastructure, in fields like eProcurement and eInvoicing, that can support a digital single market and ensure top-quality, 21st century public services for Europeans.
But this funding will have to be exclusively for digital services: because such a smaller sum does not leave room for investing in broadband networks. I regret that: because broadband is essential for a digital single market, the rails on which all tomorrow’s digital services will run; and this could have been an innovative and highly-market oriented way to deliver it, almost budget-neutral in the long run.”
Kroes went on to say that the EU’s 2020 targets for superfast broadband would now be “harder to reach” and that she will “keep fighting” to improve them. In the meantime government’s around Europe have been told that they will need to stick rigidly to her 10 point broadband plan (market regulation).
It’s perhaps ironic that the United Kingdom, which fought so hard for a budget cut, has also been one of the biggest beneficiaries of EU broadband funding to date. On the other hand we are one of the top four contributors. The EC had previously warned that any cut in broadband investment would risk damaging growth.
UPDATE 11th Feb 2013
The FTTH Council Europe has today said that it’s “very disappointed” with the decision, which it says “shows that there still is a lack of understanding of European Governments on the importance of future-proof broadband networks … the European Union has just missed an important chance to make the right decision, not only for the years to come but also, and more importantly, for the future of a competitive Europe“.
We also added a longer statement from Kroes above.
UPDATE 12th Feb 2013
Now the UK government (DCMS) has issued a statement saying, “It remains important that the EU agrees an affordable budget which reflects the current fiscal position faced by Member States. The UK does not support unaffordable increases in spending. The commission had interesting proposals for the €9.2bn CEF but the government has not developed any future broadband plans on the assumption that it would go ahead.” We’re not sure whether they meant the EU or UK government in that last sentence.
UPDATE 13th Feb 2013
A BT spokesperson has now issued a statement of its own. “Details of the CEF, and its actual method of application, had not yet been finalised. As such, BT had no plans to make use of the facility, and its reduction (from €9bn to €1bn) should have no impact on existing or planned funded projects such as Cornwall, Northern Ireland or BDUK. We support the European Commission’s ambitions to encourage widespread broadband deployment – the UK is seeing the fastest rollout of any European country and this progress will continue.”
Still we’re sure that BT wouldn’t mind another source of public funding, if it existed.