The FTTH Council Europe is aware that there is a long and difficult road ahead.
An example of what we are facing today: The local government of southern Austria—the country's largest federal state with over 1.6 million inhabitants—recently sent a letter to rural municipalities informing them that their broadband will be upgraded with the “latest wireless technology,” allowing “download speeds of up to 8 Mbps.” This means that €5 million of public money will be invested in a technology that isn't even included as a target in the European Commission's “Minimum Digital Agenda for 2020!”
This is a good example of how decision-makers across the European Union deal with ICT and broadband. Since the European Commission published the Digital Agenda (DAE) in 2010, some have argued that the broadband targets are ambitious. But given the ambitions and plans of strong economies outside Europe, the targets are little more than adequate, or even low.
After two years of escalating crisis, European governments and decision-makers are questioning the goals of the European Broadband Strategy (EBS), delaying progress and reducing targets instead of addressing the challenge and leading Europe toward a competitive future. Let's examine their main arguments for a reality check:
• There is no market evidence that higher speeds are needed.
• Network financing is not feasible.
• Europe has more pressing problems than broadband.
Is there no proof?
Many major operators admit that "Fiber to the Home" is the "endgame" solution, yet they claim there is no evidence of demand for higher bandwidth. The FTTH Council Europe has investigated fiber network deployment rates that have existed for several years. The result? Consumers will subscribe to high-speed fiber products, even at a higher price. Achieving this is just a matter of time, and consumers who have experienced high bandwidth and service quality are very loyal. However, many Europeans express distrust in bandwidth, as studies show large discrepancies between the promised speed and what they actually receive.
When someone tells you that “no one will need 100 Mbps in the next 10 years,” consider this: A century ago, governments claimed there was no evidence that car sales would ever reach that high again, and therefore no need for more roads. In 1958, IBM CEO Tom Watson stated, “There is a world market for about five computers.” In 1981, Bill Gates said, “No personal computer needs more than 640 KB of memory.”.
Just ten years ago, consumers knew nothing about high-definition television (HDTV), large LCD screens, tablets, smartphones, online business, or digital cameras. The first 4,000 devices, with four times the resolution of HDTV, will be on sale in time for Christmas this year. European consumers will soon want services widely available in many other parts of the world, but operators will be unable to provide them.
Is financing impossible?
A significant—though solvable—challenge is the scale of investment and the lack of funding for infrastructure projects. We have conducted several studies on this topic and established a special project on “fiber network financing” to support the availability of funds.
Many studies look at the European or national level and arrive at alarming figures—but without publishing the underlying model, making verification impossible. Therefore, the FTTH Council Europe started its own “cost project.” Instead of extrapolating rough cost estimates, our model is based on bottom-up cost calculations for existing fiber projects and real-world geographic data.
The surprising result: delivering fiber to almost every European home will cost (less than) half of many other cost estimates—just over €200 billion! (Germany alone spent over €80 billion on telecom infrastructure in the last 10 years...)
Furthermore, over the past 18 months, pension funds, institutional and private investors, and regional investment banks have begun exploring investment opportunities. A special "Investors Day" during the FTTH Conference in London in February 2013 will showcase fiber optic projects to investors.
Furthermore, the European Union's Connected Europe Facility (CEF) budget for 2014-2016 allocates €7 billion out of a total of €9.2 billion to broadband. Innovative financial tools and public-private partnership models will leverage a much larger portion of this budget.
Are there more pressing issues than ICT?
Although €9.2 billion isn't much compared to the EU's total €1 trillion budget, the CEF is under heavy attack. Decision-makers in several countries are questioning even the smallest budget allocations for broadband, preferring to invest in roads, railways, and airports—despite an existing infrastructure budget proposal four times larger than the CEF. The CEF budget could be substantially reduced in the coming months. However, European policymakers and economic studies on broadband often fail to mention that global competition is underway, and the winners will have access to sufficient broadband. Today, the biggest names in ICT and broadband applications and services are based outside Europe.
The FTTH Council Europe strongly supports the objectives of the European Accessibility Strategy (EAS), as there is clear evidence that only Fiber to the Home can provide the necessary upload and download speeds and quality of service, now and in the future. FTTH-enabled applications and services for healthcare, remote work, and home entertainment will ensure that Europe remains a global economic leader, but weakening the EAS objectives will reduce its global competitiveness.
According to Arthur D. Little, every 10% increase in broadband penetration generates a 1% increase in GDP. For every 1,000 new end users, 80 new jobs are created. Although the direct effects of broadband availability are only visible, studies by the OECD, the European Investment Bank, and others show that future-proof fiber optic networks have a positive impact on productivity and economic growth. They can help overcome the crisis and prepare Europe for the post-2020 world.
The way to get there
: The conclusion is simple: Europe must move towards future-proof fiber broadband networks as soon as possible. This will ensure successful developments for our economy, society, and environment. But achieving this requires significant changes in the European telecommunications market, which may not initially find support from the markets and the public, but this serves Europe's long-term success. Some major players may even disappear—but protecting them could jeopardize the entire European Union.
The EU needs strong leadership and decision-making that understands the long-term impact of broadband and ICT. Making the right decisions today will ensure Europe has the broadband it needs to succeed in the global market by 2020 and beyond.
Elections will be held next year in southern Austria. The local government may be hoping to win the votes of citizens who currently have less than 8 Mbps of broadband. But they may have underestimated the end users, who are already complaining that an upgrade to the current "up to 6 Mbps DSL" is insufficient and that the €5,000,000 of public money could have been better spent.
Author:
By Karin Ahl, Chair of the Board, FTTH Council Europe
