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EU Establish New £420m Fund to Upgrade Broadband Infrastructure

Monday, December 12th, 2016 (3:28 pm) - Score 1,106
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The European Commission and the European Investment Bank (EIB) have today unveiled plans for a new €500m (£420m at today’s rate) Connecting Europe Broadband Fund (CEBF), which over the next 10 years will help the EU to reach their “Gigabit Society” objectives (e.g. 100Mbps+ for all by 2025).

At present the existing Digital Agenda for Europe (DAE) strategy is still trying to ensure that very home in the EU can access a 30Mbps+ capable superfast broadband connection (plus 50% subscribed to a 100Mbps+ service) by 2020. Interestingly the UK seems more likely than most to achieve this objective (here), while a fair few others may fall short (71% of the EU can access a NGA broadband connection and this rises to 90.5% for the UK, using old data).

However the EU has already started work on the next set of “non-binding connectivity targets” (here). Under the new plan the EC aims to ensure that “all European households” are able to receive a minimum broadband download speed of 100Mbps+ by 2025, with businesses and the public sector being told to expect 1Gbps+. Future 5G Mobile and WiFi services were also given support.

Obviously this is a major undertaking and at the time the EU suggested that it would need to be supported by an investment of €500 billion, most of which would “largely have to come from private sources“. Easier said than done and even the EU admitted that “there is likely to be a €155bn investment shortfall” (as compensation they’ve been trying to cut red tape for infrastructure builders).

As such today’s agreement between the EC, EIB and three National Promotional Banks and Institutions (NPBIs) – KfW Bankengruppe (Germany), Cassa Depositi e Prestiti (Italy) and Caisse des dépôts et consignations (France) – will form a key part of the new fund as anchor investors.

The figure of €500 million is still way short of the €500bn being talked about earlier (i.e. most of that will need to come from member states and private firms) and only €100 million of the initial investment will come from the EC’s Connecting Europe Facility (CEF), which in 2013 was shredded to pieces by budget cuts (here). At least it’s a start, albeit a very small one.

Günther H. Oettinger, EC Commissioner for Digital Economy and Society, said:

“I am grateful to our financial partners for the establishment of this broadband Fund. It is an important development for smart and efficient funding of broadband projects, especially in underserved areas, in line with the spirit and the letter of the Investment Plan. It is a great step towards a European Gigabit Society for all.”

Werner Hoyer, EIB President, said:

“Until today, smaller-scale broadband projects did not have easy access to funding and EU financial instruments did not exist. Consequently, projects in less populated or rural areas, where purely private-led initiatives may not see the economic benefits of deploying broadband networks, were difficult to implement.

The new fund will help bridge this market gap, and I am glad that the EU Bank is part of this joint initiative.”

Notable by its absence from this is the United Kingdom, which is likely to complete its Brexit divorce from the EU just as the new “Gigabit Society” strategy is beginning to get underway. At this stage we still don’t know what that agreement will look like, although it seems likely that the UK will neither contribute nor directly benefit from the proposed investment (depending upon the settlement).

Never the less the UK Government does appear to be mindful of these developments and last month’s Autumn Statement committed £400m of extra public funding towards a new Digital Infrastructure Investment Fund (here). The fund, which could eventually be worth upwards of £1.5bn+ when matched with private investment, is designed to be made available to alternative fibre optic network (AltNet) providers. On top of that it’s supported by 100% business rates relief on new full-fibre infrastructure for a 5 year period from 1st April 2017.

Otherwise the new CEBF aims to invest in “equity and quasi-equity, including mezzanine and subordinated debt” (reflecting around 7 to 12 broadband projects each year from 2017 to 2021). The Fund’s investments will be of a size between €1m and €30m, for projects representing total costs of €150m or less.

Overall, the Fund is expected to unlock additional investments between €1bn and €1.7bn in broadband deployment in underserved areas, where very high-capacity networks are not deployed yet. The Fund aims to have invested in 20 countries by 2021.

The operational launch of the Fund is expected to take place mid-2017 and this will be managed by Cube Infrastructure Managers S.A. (i.e. their formal appointment is expected early in 2017), which means that some UK projects might still be able to benefit but don’t bank on it just yet.

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Mark Jackson
By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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11 Responses
  1. Avatar Will

    Remind me again why people voted Brexit? No doubt BT Openreach will still be sweating copper lines for all they’re worth by then.

    • Avatar AndyH

      Why does it matter how the technology is delivered? If a provider can deliver ultrafast speeds over copper, fibre, coaxial, or wireless, why should we complain about the delivery method? Surely it’s the headline speed that people should look at.

    • Avatar GNewton

      How does voting for Brexit improve BT?

    • Avatar FibreFred

      Broadband didn’t factor into my vote, I doubt it was a factor in anyones vote

    • Avatar Steve Jones

      £420m is a drop in the ocean. That’s less that 0.1% of the EU estimate on investment and just what part would the UK get anyway if there’s only £42m a year over a decade to share out among all the member countries. I could imagine that much of it will just disappear into the bureaucracy. In any event, it would just be the members money being recycled and the UK would (like the other more prosperous economies) put more in that they got out.

  2. Avatar Peter

    Well, broadband and specifically the way the EU “demanded” to inspect our government’s BDUK plans for broadband improvement lest they fell foul of some state aid EU rule was certainly just one of the many reasons I voted Brexit.

    It really was a total disgrace that the EU had the nerve to demand such inspections.
    It seems they were worried that such state aid might give us in the UK an unfair advantage.

    ….but then again I spent 30 years working for UK exporting industries and know exactly how the EU likes to F**k up UK based firms over time and time again. To the extent that we pretty well focused on the rest of the world and ignored the EU countries and left them to swirl around in a cesspit of their own making.

    • Avatar AndyH

      So you would have approved BDUK money being spent on areas where there is already a commercial deployment?!

    • Avatar 125uS

      Those state aid rules work both ways though. It would be unfair for the UK government to offer illegal aid to BT because it would make it harder for other telcos to compete here.

      UK telcos are active in lots of other EU markets – notably Colt and BT – and illegal state aid in those countries would make it harder for the British to be successful on the continent.

      It’s not interference undue by the EU, it’s sensible oversight to ensure level playing fields.

  3. Avatar Cecil Ward

    So where does this nebulous announcement leave us in respect of the satellite cop-out? This is what I ask myself every time I hear yet another of these semi-promises, so apologies for sounding like a cracked record, but continual vigilance is needed. Do governments just tell us all that we can get 30 Mbps or 100 Mbps or whatever downloads by paying for satellite right now? And never mind all the performance problems, filtering, throttling, traffic allowance limits, upstream and horrific costs.

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