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The European Commission has launched a new €500 million fund to help keep Europe’s broadband infrastructure competitive globally. Initial capital comes from the European Investment Bank (EIB) and three National Promotional Banks and Institutions (NPBIs).
Günther H. Oettinger, European Commissioner for Digital Economy and Society, commented: “I am grateful to our financial partners for the establishment of this broadband fund. It represents an important step towards smart and efficient financing of broadband projects, particularly in underserved areas, in line with the Investment Plan. It brings us closer to a European Gigabit Society for everyone.”
The EU’s ongoing Digital Agenda for Europe seeks to ensure that homes across the continent have access to at least 30 Mbps “superfast” broadband by 2020. The new Connecting Europe Broadband Fund (CEBF) raises that ambition, aiming for 100 Mbps for all households by 2025.
Even though the United Kingdom voted to leave the EU, it remains a member until two years after Article 50 is triggered. The UK is on track to meet the Digital Agenda’s 30 Mbps target before 2020, while several other European countries are still expected to miss that goal.
The long-term objective is to create “gigabit cities” — cities where businesses and public institutions benefit from connections of 1 Gbps or more by 2025, while typical households receive at least 100 Mbps. The UK is not included in this new EU proposal because it is likely to have completed its withdrawal by the time these targets take effect and would therefore neither contribute to nor directly benefit from the CEBF.
In the UK’s Autumn Statement last year, the government pledged £400 million toward its own Digital Infrastructure Investment Fund, which is expected to reach more than £1.5 billion once private investment is added.
The EU estimates that around €500 billion is needed to finance the planned infrastructure upgrades across member states. Most of that will need to come from private investors, and the EU estimates a likely investment shortfall of about €155 billion.
While €500 million is only a small portion of the €500 billion required to meet the EU’s broadband goals, it is a meaningful start. Additional funding will be necessary from member states and private investors to bridge the remaining gap.
Werner Hoyer, President of the EIB, explained the rationale: “Until now, smaller-scale broadband projects faced difficulties accessing finance, and EU financial instruments for such projects were lacking. Consequently, deployments in sparsely populated or rural areas—where private operators may not see immediate commercial returns—were hard to implement.”
The initial €500 million package is the result of an agreement between the European Commission, the European Investment Bank, and three National Promotional Banks and Institutions. Only €100 million of the total will come from the Commission’s dedicated Connecting Europe Facility (CEF), which suffered significant budget cuts in 2013.
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