EIF News

James Elles, MEP and EIF Co-Founder, chaired the 10 October EIF breakfast debate which focused on the topic of Wireless Broadband and Universal Access.

Click here to see the programme of the debate and listen to the speeches.

The first speaker Gerard de Graaf, Director of Electronic Communications Networks and Services at DG CONNECT. He began with the observation that in order to meet the Commission’s Digital Agenda targets for broadband roll-out a mix of technologies will be needed, such as fiber, cable, ADSL, VDSL, vectoring and satellite. Europe, de Graaf noted with regret, has fallen behind the US in broadband access. Due to this, he continued, a number of major tech firms increasingly treat Europe as a secondary market. (de Graaf mentioned the fact that Apple’s new iPhone 5 lacks compatibility with 4G networks throughout much of Europe.)

Director de Graaf argued that while Europe is moving in the right direction unfortunately political decision-making is not keeping up with the pace of technological change and evolving economic realities. He noted that despite potentially huge dividend latent in the transition from analogue to digital television broadcasting (which freed up significant bands of spectrum) at present only seven member states are on-target to meet the established regulatory reform deadlines. This boon of additional spectrum may be unavailable for use throughout large parts of Europe due to political paralysis.

In the absence of a sense of political urgency on these issues, de Graaf continued, Europe risks falling farther behind, while the rest of the world rushes to embrace emerging technologies such as the internet of things and machine-to-machine communication. Referring to the previous evening's debate about the Connecting Europe Facility (CEF), Director de Graaf noted that while the CEF is a potentially invaluable instrument it urgently needs political support. If, he continued, CEF funding were to be reduced, what kind of signal would it communicate regarding Europe’s commitment to building modern infrastructure and maintaining competitive advantages?

Click here to listen to  Gerard de Graaf's speech.

Next up was Patrick Biewer, Managing Director at SES Broadband Services. He presented the benefits of hybrid systems discussed some key developments in this area. Subdistribution, for example, is a turnkey solution for serving villages in rural areas, where satellite is used as a backhaul and combined with terrestrial infrastructure to close the last mile. Hbb TV (Hybrid Broadcast Broadband TV) combines high-quality satellite television with internet via existing terrestrial broadband infrastructure. Where land-based connectivity is unavailable, next-generation satellite broadband connectivity can be used to close the gap. This combination, he argued, represents the most efficient use of spectrum and at minimal cost by leveraging the core of existing infrastructure. Biewer went on to discuss the new SAT>IP communication protocol for the reception and distribution of satellite signals. SAT>IP translates satellite TV signals (DVB-S and DVB-S2) into IP, allowing a household with existing satellite television access to attain download speeds of up to 4 GBps.

Mr. Biewer noted that these technological developments are relevant precisely because they address video distribution, which is both a core strength of satellite networks and also the biggest driver of traffic growth on the internet. Hybrid systems, he argued, can provide a low-cost revolutionary user experience regardless of geography. Satellite, Biewer continued, in combination with existing terrestrial infrastructure, can go a long way towards achieving 100% coverage by 2013.

European policymakers increasingly recognise the role of satellite in closing the digital divide. Yet while subdistribution represents both a pragmatic and cost-effective solution for rural villages it is frequently disqualified from public tenders which are limited to purely terrestrial approaches. Therefore ESOA has taken the lead in a coalition called DigitALL, which brings together the voices of rural citizens, regional authorities, and industry associations to promote the idea that every European should have the opportunity to enjoy the benefits of the broadband internet as fast as possible. In closing, he urged that the principal of technological neutrality be evenly applied.

Click here to listen to Patrick Biewer 's speech.

Mikael Halen, Director of Government & Industry Relations at Ericsson, was the morning's closing speaker. He opened by proclaiming that "it’s time for everyone to get broadband in Europe!" Halen observed that while 3G mobile broadband is widely deployed Europe has fallen behind in 4G build-out. While there are presently about 28 million 4G subscribers worldwide, according to his figures only about 1 million are in Europe with the remainder coming mainly from the US, South Korea and Japan. South Korea, Halen noted, has already reached 99% population coverage with 4G mobile broadband and is targeting 90% market penetration by 2014. He went on to ponder what this might mean to future South Korean economic competitiveness.

Halen acknowledged that early availability of sub-1GHz spectrum and mature fiber infrastructure for back-haul account for these countries' advantage in deploying 4G. South Korea swiftly reallocated its 850MHz spectrum to 4G while in the US 700MHz spectrum was allocated to Verizon and AT&T already by June 2009. Europe's goal of Universal Access would surely have benefited from earlier availability of 800Mhz spectrum along with the reallocation of the 900MHz bands. Halen pointed out that sub-1GHz spectrum is about 3-4 times as efficient in terms of geographic coverage when compared with the traditional 2.1GHz 3G bands.

Halen went on to highlight some European 4G successes. For example, within 18 months of the German 800MHz spectrum allocations there was full coverage within eleven Bundeländer. In the case of Sweden, of the remaining 500 or so remaining localities lacking a minimum of 1Mbps connectivity, 4G coverage will be deployed (based on the 800MHz bands) underwritten by revenues from the public spectrum auction.

4G broadband is also about 10x faster than 3G. This easily translates into back-haul demands of 100Mbps and up. In most cases fiber or microwave-relay backbone connectivity is needed to supply the bandwidth to meet this demand. While fiber and microwave links are generally the most cost-effective back-haul transport these technologies are not an option in very remote areas. Halen suggested that in such cases satellite connectivity is a good workable solution to 4G backbone transport.

While the impending release of sub-1GHz spectrum across Europe may be a giant leap forward towards the goal of Universal Access, this question of back-haul transport remains a major obstacle to be overcome. Halen proposed that streamlined microwave licensing procedures within the member states in combination with a viable deployment model for licensees would achieve much towards closing this backbone gap and thereby closing in on the goal of universal broadband access.

Click here to listen to Mikael Halen's speech.

Edit Herczog, MEP and EIF Governor, hosted the 9 October EIF dinner debate, which focused on the Connecting Europe Facility (CEF) and Europe’s funding needs for digital infrastructure expansion.

Click here to see the programme of the debate and listen to the speeches.

Gabrielle Gauthey, Executive VP Global Government & Public Affairs at Alcatel-Lucent, launched her talk by highlighting the economic difficulties Europe’s telecom sector is experiencing at present. There is a growing awareness within the telecom industry just how much investment will be needed in order to modernize Europe’s infrastructure and to avoid falling even farther behind in the world market. At present there are about 180 million kilometers of laid fiber throughout the world, of which nearly 105 million kilometers is deployed in the Asian-Pacific region. “Europe is lagging behind in the dynamic of investment”, she stressed. Given the ongoing economic crisis, the CEF is needed in order to allay investor fears by offsetting market risk and to attract long-term private ICT investment through innovative public-private models. Ms. Gauthey cited New Zealand’s Ultra-Fast Broadband Initiative as an example of just such a model.

Europe needs a global vision, she observed in closing. “We need to build appropriate investment vehicles, so Europe can keep its place in the world.  If we won’t get it timely enough there might be consequences for the industry, vendors and for all innovative services in Europe.”

Click here to listen to Gabrielle Gauthey's speech.

Next up was Robin Bienenstock, Senior Research Analyst at Bernstein. “I am here,” she remarked, “to represent money and for a couple of years I was telling my clients not to invest in European telecoms.”  There are two main reasons for this, she continued: first, there is a substantial valuation gap between US and European telecom firms, and second, the return of invested capital (ROIC) of the telecom sector as a whole (not only in Europe) is several basis points below the weight of average capital cost. These factors combine to make the European telecom industry economically value-destructive.

Bienenstock advocates a number of options to attract investment. First, she suggested incentivizing fiber deployment in urban areas. Second, looking towards more rural parts of Europe, the CEF (along with alternative investment vehicles) could prove the solution to drawing in private investors. Bienenstock urged policymakers to make a clear distinction regarding the underlying layer of real infrastructure. Enormous incremental investment may be achieved by offering RAB (Regulatory Asset Base) low-yield, low-risk returns. Furthermore, she recommends regional trials of these novel funding models which the CEF is intended to empower in order to prove the underlying assumptions. Successful trials will do much to offset investor fears about rural investments.

On the last point, Ms. Bienenstock stressed that for telecoms there is only a business case for building fiber in about 25% of Europe. To make a valid business case in the remaining 75% either regulatory changes will be needed or else the assurances and incentives provided by the CEF.

Click here to listen to Robin Bienenstock's speech.

The evening’s closing speaker was Roberto Viola, Deputy Director General at DG CONNECT. He opened by asserting his strong view that if the CEF is not approved in full, at minimum 50 million European consumers will be denied access to broadband and many European SMEs will not be in a position to take advantage of cloud computing. 

Mr. Viola emphasized that the CEF represents a cohesive strategy for broadband deployment. From the regulatory perspective the proposal seeks to stabilize cash flows within the telecom industry by making their economic environment more predictable.

At present, Europeans enjoy low-cost and open internet access. However, this model turns out to be better for the consumer than for the providers. Viola suggested that public authorities must pay their share in order to maintain this. Mr. Viola emphasized the degree to which the CEF can help, both in maintaining open network access and in expanding into more rural areas.

He pointed out that at the moment the telecoms industry is deadlocked. Shareholders, unsatisfied with market conditions, are demanding short-term returns. Telecom firms feel pressured to placate investors by giving out dividends. This creates a situation where capital is being diverted from potential infrastructure improvements. In light of this, Viola continued, the European Commission’s CEF proposal is intended to reassure the market by showing that policymakers will treat broadband as an essential utility.  

Mr. Viola closed his speech with an earnest appeal, arguing that to neglect investment in broadband infrastructure will prove to be a mistake with tremendous consequences, both for the member states and for future European competiveness as a whole.

Click here to listen to Roberto Viola's speech.

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