European Commission Broadband Investment Handbook 2024 PDF

Broadband investment handbook 2024  2 The present Handbook has been prepared by Marco Forzati (contract SMART 2018 0019) and Pietro Pantalissi (in his personal capacity), and is available on the European Commission website. Marco Forzati is a scientist, technology expert, society analyst, manag...

Broadband investment handbook 2024  2 The present Handbook has been prepared by Marco Forzati (contract SMART 2018 0019) and Pietro Pantalissi (in his personal capacity), and is available on the European Commission website. Marco Forzati is a scientist, technology expert, society analyst, manager and entrepreneur. He holds a PhD in electrical engineering and a BSc in economics. Mr. Forzati has undertaken research and consulting in the fields of digital communications, socio-economic analysis and business modelling for Ericsson, RISE Research Institutes of Sweden, as well as as an independent consultant. He has assisted public authorities across Europe as well as the European Commission with several studies and assessments on broadband projects, digitalisation and smart specialisation. Pietro Pantalissi is a Case Handler for the European Commission Directorate General for Competition (DG COMP), Unit C4: Information, Communication and Media - State aid. He has worked in DG COMP since 2015, and specialises in State aid within the Information, Communication, and Media sectors, with a primary focus on the broadband industry. From 2021 to 2022, Mr. Pantalissi led the revision of the guidelines on State aid for broadband networks (commonly known as the ‚broadband guidelines’) and contributed to the amendment of the Global Block Exemption Regulation (GBER). Before joining the European Commission, Mr. Pantalissi accumulated 16 years of experience working for several telecommunication operators and Italtel, a leading multinational system integrator, focusing on strategic planning, marketing and business development. Mr. Pantalissi holds an MSc in Telecommunication Engineering, a Master’s in Business Administration, and a Master’s in Economy and Enterprise Management. This document has been prepared by the Authors for the European Commission. The document can be subject to updates, in particular to reflect the latest policy, technological or regulatory developments. The views expressed are those of the authors and may not be regarded as stating an official position of the European Commission. The European Commission cannot be held responsible for any use which may be made of the information contained therein. PDF ISBN 978-92-68-14355-1 DOI:10.2759/44347 KK-05-24-262-EN-N Copyright © European Union 2024  3 Executive summary 6 1. Introduction and key concepts 8 1.1 Objective of the handbook 8 1.2 What is broadband? 8 INFOBOX 1 Broadband quality of service: key concepts and terms 10 1.3 Broadband connection classification 11 1.4 Fixed broadband and mobile broadband 11 INFOBOX 2 Fixed VHCN criteria 12 INFOBOX 3 The EU Electronic Communications Code (EECC) 13 2. The broadband plan 14 2.1 Writing a national broadband plan 14 2.2 Writing a regional or local broadband plan 15 2.3 Policy context: Europe’s strategic connectivity objectives 15 2.4 The broadband plan as an enabling condition for ERDF and EAFRD funding 16 2.5 Mapping the current situation and defining the investment goals 17 2.6 Identifying stakeholders and securing collaboration 17 INFOBOX 4 Utilities and mobile operators: special types of stakeholders 18 2.7 General State aid considerations 19 INFOBOX 5 The Broadband Competence Offices Network (BCO) 20 3. Investment models 21 3.1 Four investment models 21 INFOBOX 6 Co-investment and public-private partnerships (PPP) 22 3.2 The direct investment model 22 INFOBOX 7 Direct investment examples 23 3.3 The concession model 24 INFOBOX 8 Concession model examples 25 3.4 The operator subsidy model (gap funding and in-kind support) 25 INFOBOX 9 Operator subsidy examples 27 3.5 The community support model (bottom-up) 28 INFOBOX 10 Community broadband examples 29 3.6 Choosing the investment model 29 3.7 State aid considerations 30 4. Infrastructure types and technology evolution 31 4.1 Layers of a broadband network and the peculiarity of passive infrastructure 31 4.2 Passive infrastructure vs. active equipment (tehnology) 33 INFOBOX 11 Broadband communications concepts: a metaphor 34 4.4 Available transmission media for the passive infrastructure 34 4.5 Broadband access solutions (infrastructure in the last mile) 36 INFOBOX 12 FTTH/FTTB vs FTTC+VDSL 40  4 INFOBOX 13 Network infrastructure topologies 41 INFOBOX 14 Fibre access: PON vs Ethernet p2p and topology choices 42 4.6 Network robustness 42 INFOBOX 15 5G opportunities and challenges 43 INFOBOX 16 IoT, utilities and network requirements 44 4.7 State aid implications of infrastructure and technology choices 44 5. Business models 45 INFOBOX 17 Investment model vs. business model: what is what? 46 5.1 Network layers, business roles and business actors 46 5.2 Vertical integration vs. wholesale-only 47 5.3 Passive-layer wholesale-only model 48 5.4 Active-layer wholesale-only model 49 5.5 Mediated wholesale-only model 49 5.6 Vertically integrated model 49 5.7 Choosing the business model 50 6. Financing tools 52 6.1 Different tools 52 6.2 Investing own resources 53 INFOBOX 18 Municipal networks: built with tax money? 53 6.3 Debt financing (loans) 54 6.4 Equity financing 54 INFOBOX 19 Raising financing from the market 54 6.5 Grant financing 54 INFOBOX 20 EU funds: choosing the right one 55 6.6 Tax incentives 56 INFOBOX 21 Financing bottom-up initiatives 56 INFOBOX 22 Innovative financing for a local wholesale-only private network financed by CEBF 57 6.7 State aid considerations 57 7. Action plan and execution 58 7.1 Cost estimates and financial planning 58 7.2 Risk assessment and management 59 INFOBOX 23 The Gigabit Infrastructure Act 59 7.3 Network design, key connections and urban planning 60 7.4 Procurement 60 INFOBOX 24 Tendering a nation-wide FTTH deployment using the concession investment model: the example of Italy 61 7.5 Monitoring and management of the network 61 7.6 Identification of potential customers 62 7.7 Establishing internal and external coordination and collaboration 62 7.8 The broadband champion 63  5 7.9 Marketing and communication plan 63 7.10 Stimulating demand 64 7.11 Decision making 64 8. Broadband investment and State aid 65 8.1 General principles 65 8.2 Public funds that do not amount to State aid 66 INFOBOX 25 The Citynet Amsterdam project, Case C53/2006 69 INFOBOX 26 The Trentino NGN project, Case C53/06 70 INFOBOX 27 SA.37183 (2015 / NN) – France Très Haut Débit scheme, and three other French SGEI measures 71 8.3 Aid exempted from notification under GBER 72 8.4 Aid exempted from notification under the SGEI Decision 74 8.5 Broadband Guidelines 74 8.6 Market failure for fixed access networks 75 8.7 Step change 76 8.8 Determining the market failure: mapping and public consultation 77 8.9 Wholesale access 79 INFOBOX 28 Wholesale access based on reasonable demand 80 INFOBOX 29 Private expansion 81 8.10 Monitoring and claw-back 82 8.11 Broadband vouchers schemes 82 INFOBOX 30 Italy - social voucher scheme SA.57495; Greece – student voucher scheme SA.57357, 2020 85 8.12 Overview of the key procedural steps for State aid projects 85 8.13 Non-Altmark SGEI compatible with 106(2) TFEU 86 Acronyms, abbreviations and terminology 87 References 89 6 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 Executive summary This handbook aims to assist public authorities in planning, implementing, and monitoring broadband projects within their territories. It primarily addresses the deployment of access and backhaul segments of fixed broadband networks and the adoption of broadband services. Additionally, the forthcoming version of the handbook will incorporate insights from other domains, particularly mobile broadband networks. The handbook’s structure builds on the ‘The high-speed broadband investment guide’ published in 2015. It has been comprehensively updated to encompass the latest technological, policy, regulatory, and financial developments. Notably, a new chapter on State aid has been introduced to reflect the updated Broadband State Aid Guidelines and other developments. The handbook is structured in eight chapters. Chapter 1 Introduction of key concepts and context Chapter 2 The importance of designing a broadband plan Chapters 3 to 6 present the four critical strategic choices that public authorities must make to fulfil the objectives set out in their broadband plans: Chapter 3 Investment model The public authority’s role concerning the implementation, operation, ownership, and management of the infrastructure. Chapter 4 Network type The factors that a public authority should consider in making infrastructure and technology decisions. Chapter 5 Business model The advantages and disadvantages of each business model. Chapter 6 Financing tools The alternative financial tools available to a public authority for supporting capital and operational expenditure. Chapter 7 Action plan and execution Once these choices are made, an action plan needs to be defined and executed. As explained in Chapter 7, this process must be monitored closely to ensure that the broadband plan goals are achieved. Chapter 8 Broadband investment and State aid Finally, Chapter 8 gives an overview of State aid rules, explaining their rationale and how they apply to broadband development projects.  7 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 Mapping Stakeholders National Plan Broadband plan Local Plan Role of public and private Deploy future-proof in deployment, operation, infrastucture or upgrade the ownership? current one (interim)? Dealing with State Aid Investment Model Infrastructure Types Business Model Financing Tools How to provide the necessary Vertically integrated or open financing and which actors can access (aka wholesale-only)? contribute what? Action Plan and Monitoring Procurement Execution Management Demand Stimulation Coordination Figure 1 – The topics covered by the handbook Readers who are familiar with the previous version of this handbook (‘The high-speed broadband investment guide’) should note that some updated concepts and definitions have been introduced to improve consistency with the latest terminology used in the sector.  8 1 Introduction and key concepts 1 In Chapter 4, we will see that a broadband connection consists In this chapter, we introduce key concepts 1.2 What is broadband? concerning broadband networks, the main of a passive and an active layer. motivations driving a network upgrade as well as It is important to clarify several key terms used 2 Meaning connection to the the role of the market and the public sector. We in this handbook from the start. open Internet: the global system also provide a short overview of the European of interconnected computer networks that uses the Internet Union policy and regulatory context. A broadband connection1 or broadband protocol suite (TCP/IP) to network is the channel over which broadband communicate between networks services are delivered to an end user, such as a and devices. 1.1 Objective of the household, a business or a public administration. The broadband network relies on passive and 3 Internet, digital TV and IP telephony are sometimes handbook active components. Passive components collectively referred to as ‘triple include, for instance, ducts, poles, masts, play’. The handbook is written primarily for public dark fibres, cabinets and manholes. Active authorities, notably local and regional, who wish components include, for instance, transponders, to drive broadband development in their territory routers, switches and active antennas. in order to foster social cohesion and economic progress. Examples of broadband services include internet2, digital TV, IP-telephony3, but also The handbook can also be a useful reference e-health, smart home or cloud computing for all stakeholders involved in broadband applications, among others. development, such as citizens, SMEs, consumer associations, operators and infrastructure The internet is therefore just one of the services owners. that can be delivered over a broadband network. What makes it a special service is that it is itself used as a communications platform, over which a plethora of applications and content can be delivered.  9 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 Many broadband services can also be delivered applications. Unlike broadband services, an OTT as applications on top of the internet service service does not usually need direct access to a (for example, audio and video communication, specific end user’s broadband connection: it just e-health, smart home, entertainment). For needs to be available on the internet (typically this reason, applications are sometimes called relying on a server) in order to be accessed by over-the-top (OTT) services, or simply OTT, all end users, irrespective of their geographic and the term digital services is normally location. used to designate both broadband services and Figure 2 – A broadband connection allows the delivery of different types of services, from TV and telephony to e-health. One of these services is the Internet service, which can function as a channel to deliver many different applications which can increasingly replace broadband services. These applications are therefore referred to as OTT services.  10 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 4 The technical term bandwidth has a specific meaning (for a physical property which in turns influences achievable data INFOBOX 1 rates, see INFOBOX 11), but it is often used as a synonym or even a substitute for ‘data rate’, Broadband quality of service: key concepts and terms especially in policy documents. In fact, the term broadband itself is In the press and in everyday language, broadband networks are classified according to how connected to the idea of having ‘fast’ they are, and this speed is measured in terms of data rate or bandwidth. However, broad bandwidth, meaning high data rates. there are several other parameters that determine the quality of a broadband service and how it is experienced by the user. As a set, these parameters make up the Quality of 5 The scientific notation Service (QoS). Here are the key terms and concepts: for megabit per seconds is Mb/s, although Mbps is more widespread in everyday contexts. Information is measured in binary units, called bits (b). The data rate, commonly referred to as connection speed or bandwidth4, 6 Note that, for historical reasons, information storage expresses how much information is transmitted per second and is usually is measured in basic units measured in millions of bits per second (one million bits is referred to as a of bytes (symbol: capital B), megabit; the data rate is therefore measured in megabits per second, Mbps5), or whereby 1 byte = 8 bits. Hence file sizes as well as storage gigabits per second (1 gigabit = 1,000 megabits)6. capacity in electronic devices are expressed in megabytes (MB) or Downlink speed is the most commonly used QoS parameter. It measures gigabytes (GB). So, for example, the rate at which data are downloaded from the network to the end user. downloading a 1 GB file at a The majority of services are designed for the user to consume more data in data rate of 1 Gbps will take 8 downlink than they would send in uplink. However, for some services, such as seconds. video conferencing, there is a more symmetric flow of data across downlink and 7 As explained in section uplink. In the future, uplink speeds will become increasingly important for the use 8.8, the European Electronic of interactive applications, including web 4.0, multiverse and cloud computing, Communications Code (EECC) and the latest ‘Guidelines on State which require a high degree of symmetry in the data flow. aid for broadband networks’ (referred to as the ‘Broadband Connection symmetry refers to the upload speed being as high as download Guidelines’) introduced the speed. While entertainment services like TV and video-on-demand only require notion of peak-time conditions. high download speeds, others require high upload speeds as well, such as video According to this notion, if a conferencing, social media, certain e-health and e-education applications, and network is supposed to provide a certain performance, this Internet of Things (IoT), among others. performance must be provided under peak-time conditions. Peak-time conditions refer to the conditions under which the network is expected to operate at ‘peak time’: the network load is usually at its maximum when the highest number of users are simultaneously sharing network capacity7 The capacity of a channel, a network or a broadband connection is the total maximum data rate achievable over it, often stemming from the characteristic of the medium as well as the technological and design characteristics of the channel. Contention refers to when the overall available capacity must be shared among many active users, causing the actual connection speed experienced by the end users to drop significantly below the nominal speed of the connection. Latency is the time it takes for a packet of information to reach its destination or for a data transfer to start, irrespective of data rate. Some applications are time- critical and may require low data rates but very fast response times inside the network. Examples of applications with stringent low latency requirements are stock exchange data transfer, self-driving vehicle applications, remote surgery, gaming and video conferencing. Jitter is latency fluctuation. Applications sensitive to latency tend to suffer greatly from jitter as well. Network availability (also known as uptime) is the percentage of time the network is fully operational.  11 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 1.3 Broadband connection Fixed very high-capacity 8 In Chapter 4, the concepts of infrastructure, technology and networks (VHCN) are a subset classification of ultrafast broadband networks services are explained in detail. consisting wholly of optical fibre 9 ‘Always-on’, to distinguish This handbook focuses on the deployment of elements at least up to the broadband from so-called dial- broadband infrastructure8 and uses the following building or capable of offering a up connections, which involved accessing a regular copper phone definitions: similar quality of service (QoS). line with a modem whenever The Body of European Regulators for one wanted to connect to the Basic broadband is the first Internet; connection speeds were Electronic Communications (BEREC), generation of ‘always-on’ typically up to 128 Kbps (or 0.1 has defined VHCN QoS as follows: Mbps). connectivity9 and can be proffered among other parameters (including using telephone copper lines (such 10 ADSL: Asymmetric Digital for fixed wireless access - FWA), VHCN as ADSL10), coaxial cables11 for TV Subscriber Line are networks capable of offering distribution (such as DOCSIS12 2.0), download speeds of at least 1 Gbps 11 Coaxial Cable: electrical satellite connections (to non-enhanced (for fixed-line connection) and 350 cable consisting of an inner systems), wireless connections (such conductor surrounded by a Mbps (for wireless connection) as well as 3G mobile networks or systems concentric conducting shield, with as, among others, low latency and the two separated by a dielectric based on unlicensed spectrum like high service availability (see INFOBOX (insulating material). WiMAX13 or Wi-Fi networks). These 2 for a full list of the QoS parameters connections are usually asymmetric 12 DOCSIS: Data Over Cable to be met by fixed-line VHCN). with download speeds below 30 Service Interface Specification Mbps, typically limited to a few Mbps. 13 WiMAX: Worldwide As foreseen in the Digital Agenda for Europe (DAE), 100% basic broadband 1.4 Fixed broadband and Interoperability for Microwave Access coverage had been achieved in the EU mobile broadband 14 VDSL: Very High Bitrate as of 2013. Digital Subscriber Line By fixed broadband we mean broadband Next Generation Access (NGA) services delivered to a fixed location (such as 15 G.fast is a digital subscriber broadband is wired access networks a household or a workplace) irrespective of line (DSL) protocol standard for which consist, either wholly or in part, whether a landline or a wireless connection local loops shorter than 500 of optical elements and which can meters, with performance targets is used. By mobile broadband we mean between 100 Mbps and 1 Gbps, deliver broadband access services broadband services delivered to mobile devices. depending on loop length. High with enhanced characteristics (such This handbook only covers fixed broadband. speeds are only achieved over as higher throughput) as compared very short loops. with those provided solely over It should be noted, however, that fixed networks existing copper networks. They usually can be used to deploy a mobile network, for provide download speeds of 30-100 example, by acting as backhauling for a mobile Mbps. The most common designs of service operator, while wireless networks can network topologies are FTTC (Fibre- be used to connect remote households in so- to-the-Cabinet, which combines fibre called fixed wireless access (FWA), using 5G for and copper using VDSL14 technology) example. Because the entities connected are and HFC (Hybrid Fibre Coaxial, which fixed, this is generally treated as fixed broadband combines fibre and coaxial cable from the market and regulation point of view. using DOCSIS 3.x technology). Ultrafast broadband allows download speeds of over 100 Mbps. As with basic broadband, this level of connectivity can be achieved over most types of infrastructure but requires the use of more sophisticated technology. Ultrafast connections deployed today are most often asymmetric and special conditions must be met for them to work on traditional infrastructure, such as copper. These conditions include short distance from the first aggregation node to the user, limited number of users sharing the line, and installation of advanced equipment at the first aggregation node (for example, G.Fast15, DOCSIS 3.1 or higher).  12 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 16 See table of references at the end of the Handbook: BEREC 2023 INFOBOX 2 17 Y.1540: Internet protocol data communication service - IP packet transfer and availability Fixed VHCN criteria performance parameters. The EU Electronic Communications Code (EECC) defines fixed VHCN as either a fixed network which consists ‘wholly of optical fibre elements at least up to the distribution point at the serving location’ or one ‘capable of delivering, under usual peak-time conditions, similar network performance in terms of available downlink and uplink bandwidth, resilience, error- related parameters, and latency and its variation’. Based on the EECC, BEREC has recently updated its VHCN Guidelines to include a set of criteria to be satisfied for a network to be classified as a fixed VHCN16. A fixed VHCN is: a) either a network consisting of fibre at least up to the multi-dwelling building (FTTB or FTTH, see INFOBOX 12) b) or one capable of delivering, under usual peak-time conditions, services to end users with the following quality of service (QoS) parameters: Downlink data rate ≥ 1000 Mbps; Uplink data rate ≥ 200 Mbps; IP packet error ratio (Y.154017) ≤ 0.05%; IP packet loss ratio (Y.1540) ≤ 0.0025%; Latency, in terms of round-trip IP packet delay (RFC 2681) ≤ 10ms; Jitter, in terms of IP packet delay variation (RFC 3393) ≤ 2ms; IP service availability (Y.1540) ≥ 99.9% per year.  13 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 18 The EECC was defined in a Directive issued in 2018; see table of references at the end of INFOBOX 3 the Handbook: EU 2018 EECC The EU Electronic Communications Code (EECC) The EU telecoms rules aim to stimulate competition that drives investments and strengthens the internal market as well as consumer rights. The EU Electronic Communications Code (EECC)18, aims to: Promote connectivity and take-up of VHCN, including fixed and mobile networks, for all EU citizens and businesses (including defining QoS criteria); Promote the interests of EU citizens (effective competition, network and services security, consumer protection, as well as addressing needs of specific social groups); Facilitate market entry and promote competition in the delivery of telecoms networks and associated facilities; Foster the development of the internal telecom market in the EU, by featuring common rules and predictable regulation (radio spectrum, open innovation, trans-European networks, availability and interoperability of Europe-wide services, and end-to-end connectivity). The EECC also sets out the responsibility of Member States in terms of cooperation with each other and with the European Commission in the strategic planning and coordination of radio spectrum policy, avoiding harmful interference, through a Radio Spectrum Policy Group; as well as defining a competent authority to undertake the tasks set out in the Code. Member States should ensure that the National Regulatory Authorities (NRAs) are independent of telecoms equipment manufacturers and service providers and protected against external intervention or political pressure which might jeopardise their independent assessment. Member States should also ensure that NRAs have budget autonomy and adequate financial and human resources to carry out the tasks assigned to them. The EECC introduces a series of new objectives and tasks: Strengthened consumer rules, for example, regarding switching service providers and bundled services. Over-the-top (OTT) services (see Section 1.2) to be classified as telecoms services. Affordable and adequate broadband internet access must be available to all citizens. A public warning system to be set up by Member States in the event of major emergencies. Regulation certainty and new frequency bands for 5G investment. A regulatory regime easing investment in new VHC infrastructure. The latter includes relaxation of access regulation of wholesale-only networks and of small local projects (see INFOBOX 23).  14 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 2 The broadband plan 19 See table of references at The first step in the process of broadband information, support and coordination should be the end of the Handbook: SMART development is to define a politically endorsed provided to regional and local actors responsible 2014/77 broadband plan for the territory, be it at for broadband development in their territory. 20 See table of references at local, regional or national level. An effective the end of the Handbook: EU broadband plan should explain how All Member States currently have an NBP, with 2020 RRF broadband investment will help achieve varying levels of detail and not always in the the objectives of the overall development form of a single document. In general, successful programme in the territory. NBPs consider their respective starting positions and describe concrete measures that take This chapter gives an overview of the questions advantage of individual strengths, as well as that should be considered when writing a defining measures to mitigate the effects of broadband plan. weaknesses19. While there is no one-size-fits-all solution for 2.1 Writing a national broadband strategies across Europe, and an NBP is not fully transferrable from Member State to broadband plan Member State, some measures implemented in one Member State can be taken as an example Broadband development policy varies between for implementation in another Member State, Member States. In some cases, development is provided it is done under the right conditions. mainly defined and planned at national level, while in others it is the prerogative of the Member States have been called to update their regional or even local level. broadband plans to address the new European Union targets for 2025 and 2030, and many In all cases, however, a national broadband Member States have already done so. The plan (NBP) is crucial for broadband development. European Commission has emphasised the It sets the priorities, defines investment importance of NBPs in its Guidance to Member schemes, financing tools and business models, States’ Recovery and Resilience Plans20. adapting generic models to the specific market and socio-economic conditions of the Member State. It also defines roles at national, regional and local level, and defines how the necessary  15 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 2.2 Writing a regional or It will also facilitate investments in 21 See table of references at the end of the Handbook: EU multi-country projects to reap the local broadband plan €2.2 trillion worth of digital potential 2022 DIGRIGHT for the EU, as well as to ensure that 22 See table of references at While the NBP sets the general strategy for we capitalise on the new digitalisation the end of the Handbook: EU broadband development for each Member State, trends instigated by the COVID-19 2023 DDPP regional and local authorities also need to define pandemic and the unprecedented a plan for their territory. Where national plans opportunity for digital investment envisage local interventions, consistency should provided by the Next Generation be ensured by the concerned regional and local EU’s Recovery and Resilience authorities. The level of detail and ambition of Facility (RRF). regional and local broadband plans will vary depending on the scope and level of detail of The rapid launch of multi-country projects will the national plan, as well the resources and be facilitated through a mechanism to combine responsibilities allocated at regional and local investments from the EU budget, Member levels. States and the private sector, building on the RRF and other EU funding sources. Envisioned Although in some cases an implementation and projects include a European Blockchain Service monitoring strategy may be all that is needed, Infrastructure and European Common Data in most cases, regional and local authorities will Infrastructure and Services. need to define a plan that includes key strategic choices on investment models, financing tools, In addition to multi-country projects, under infrastructure type and business models, as well the RRF, Member States will invest in skills, as an implementation plan. These choices should connectivity, transformation of business be made within the scope of any schemes and and transformation of public administration. models defined at national level, and their State aid implications will need to be understood. 2. The connectivity objectives To meet these needs and prepare Europe’s digital future, the European Commission has 2.3 Policy context: Europe’s defined strategic connectivity objectives for the strategic connectivity Digital Decade: objectives a. By 2025: the European Gigabit Society objectives The broadband plan needs to take into account the overall EU, national, as well as regional and All main socio-economic drivers, local development policies and the role that such as schools, universities, research digitalisation, and connectivity in particular, play centres, transport hubs, all providers within them. of public services such as hospitals and administrations, and enterprises At EU level relying on digital technologies, should have gigabit connectivity (download/ 1. The Digital Decade Policy Programme upload speeds of 1 Gbps). On 15 December 2022, President of the All European households, rural European Commission Ursula von der Leyen and urban, should have access to signed the European Declaration on Digital connectivity offering download Rights and Principles21, which underlines speeds of 100 Mbps minimum, the EU’s commitment to a secure, safe and upgradable to 1 Gbps, reflecting the sustainable digital transformation that puts Commission’s expectation that, as the people at the centre, in line with the EU’s core decade progresses, households will values and fundamental rights. increasingly need 1 Gbps symmetric connections. The European Commission sets a framework All urban areas as well as major for action through the Digital Decade Policy roads and railways should have Programme (DDPP)22 which is intended to equip uninterrupted 5G coverage, the EU with secure and performant sustainable the fifth generation of wireless digital infrastructures by 2030. The DDPP is the communication systems. first ever digital governance tool, putting it on a par with the European Green Deal: b. By 2030: Europe’s Digital Decade objectives It introduces a framework for cooperation All European households should to ensure consistency and synergies be covered by gigabit network among all policy initiatives, actions and connectivity (line or wireless) measures in the digital sphere.  16 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 23 Gigabit Infrastructure Act All populated areas should be The fast deployment of very high-capacity Proposal and Impact Assessment covered by 5G with its full capabilities, networks, including 5G and fibre, is expected to | Shaping Europe’s digital future (europa.eu): https://digital- or by other wireless networks with benefit society as a whole, such as by providing strategy.ec.europa.eu/en/library/ characteristics at least equivalent the appropriate bandwidth and coverage for gigabit-infrastructure-act- to those of 5G networks. sectors that are essential, such as agriculture, proposal-and-impact-assessment transport, health and education. These connectivity objectives are supported by 24 See also: Guidance to the Member States on the the current EU seven-year budget, the 2021- It will also help enhance Europe’s open preparation of the national 2027 Multiannual Financial Framework (MFF) strategic autonomy, while reaping the benefits Digital Decade strategic (see INFOBOX 20 for a description of relevant from an open economy by providing support roadmaps | Shaping Europe’s EU programmes); a regulatory framework based digital future (europa.eu) to implement the infrastructure which will be on the EECC (see INFOBOX 3); as well as other needed for future applications and processes. 25 See table of references at legislation, such as the European Commission’s the end of the Handbook: EU CEF proposal for a ‘Gigabit Infrastructure Act’ (GIA)23. 26 See table of references at 2.4 The broadband plan as the end of the Handbook: EU At national level 2021 CPR an enabling condition for Investments and reforms should support reaching the Digital Decade targets. ERDF and EAFRD funding Member States’ strategic national Whenever a Member State or a region roadmaps24 (October 2023) include the main administers funding from the European existing and planned policies, measures and Regional Development Fund (ERDF) for actions to achieve the Digital Decade objectives broadband development, regulation mandates and targets with their assessment and a timeline a corresponding national or regional broadband for their implementation. plan in line with the strategic objectives set in the DDPP. Mobilising private resources may be done under the new InvestEU programme, which The European Common Provision Regulation26 allows the European Investment Bank (EIB) and requires that a national or regional broadband National Promotional Banks to make use of the plan is in place which includes an assessment EU guarantee and leverage public resources of the investment gap (see Section 2.5). It by attracting additional resources from the must also “justify the planned public intervention private sector. Participation of private investors on the basis of sustainable investment in blended finance schemes is undoubtedly an models that enhance affordability and access to important way to achieve the 2030 targets. open, quality and future-proof infrastructure and services” and “allow for a complementary use of With a €2 billion budget, CEF Digital25 is the first different forms of financing from EU, national or programme under the Multiannual Financial regional sources, adjusted to the market failures Framework (MFF) 2021-2027 directly managed identified”. by the Commission, through the Health and Digital Executive Agency (HaDEA), devoted to The broadband plan should also outline how it gigabit and 5G connectivity deployment. will be executed and monitored, what measures are planned to support and stimulate demand, CEF Digital supports the deployment of 5G: as well as cost-reduction actions. These and other matters can be covered in a dedicated For ‘5G corridors’, supporting action plan (see Chapter 7). connected and automated mobility along major transport Technical assistance and expert advice paths; mechanisms to reinforce the capacity of local stakeholders and advise project promoters For ‘smart communities’, should also be put in place. One useful way to supporting sectoral industries and do that is through the Broadband Competence public authorities as providers of Offices (see INFOBOX 5). services of general interest (SGI) Member States can also fund the deployment of For ‘digital global gateways’, broadband networks in rural and remote areas providing secure backbone (mainly the last mile) through the Common connectivity including submarine Agricultural Policy (CAP), in particular through cables and critical digital capacities, the European Agricultural Funds for Rural such as quantum-secured links, Development (EAFRD) (Art. 73.3.f), through among others. their CAP Strategic Plans, whose assessment These investments are important in order to contributes to ensuring complementarity with bridge the digital divide while avoiding the other broadband interventions as well coherence crowding out private investment in cases where with the European Green Deal. no market failure exists.  17 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 2.5 Mapping the current different market actors (‘undertakings’) in order 27 See table of references at the end of the Handbook: EU to produce a forecast of broadband coverage situation and defining the as a preliminary basis for potential future 2021 CPR investments (including State aid interventions). investment goals However, mapping of credibly planned 28 See table of references at the end of the Handbook: EU 2022 BB-SA-GL A broadband plan should define high-level investments becomes mandatory if public concrete goals for broadband coverage in the funding is involved, as explained in the 29 Article 22 of the EU Code territory. Broadband Guidelines31. for Electronic Communications; see table of references at the end of the Handbook: EU 2018 Annex IV of the EU Common Provision To mitigate risks effectively, this forecast should EECC Regulation27 defines the main features of a undergo verification both before and after national or regional broadband plan, including: implementation. Such verification is crucial to 30 See table of references at ensure that areas do not miss out on public the end of the Handbook: BEREC 2021 An assessment of the investment gap funding if roll-out plans are not executed as that needs to be addressed to ensure anticipated. It also prevents the scenario where The BEREC Handbook contains the following documents: that all EU citizens have access to a private investor’s infrastructure is ‚overbuilt’ very high capacity networks; due to a failure in declaring future roll-out 1. The BEREC Guidelines plans, thereby avoiding potential litigation and to assist NRAs on the The justification of planned public consistent application of uncertainty. Geographical surveys of intervention on the basis of network deployments – sustainable investment models; Consumer demand, encompassing both document BoR (20) 42 (the individuals and businesses, is a crucial “Core Guidelines”); Measures to support demand and use of very high capacity networks; component of any business case for 2. The BEREC Guidelines infrastructure deployment. This demand is on Geographical surveys Technical assistance and expert often stimulated by healthy competition of network deployments Article 22 (2), 22 (3) and advice mechanisms, such as the in services. National Regulatory Authorities 22 (4) – document BoR Broadband Competence Offices; (NRAs) have a vital role in collecting pertinent (21) 32 (the “Procedural statistics and evaluating the landscape of retail Guidelines”); A monitoring mechanism based on standard broadband mapping competition, local loop unbundling, and the 3. The BEREC Guidelines on indicators. range of services offered by various providers. geographical surveys of network deployments - Analysing the socio-economic and demographic Verification of information Mapping is necessary to identify the scope and characteristics of the territory, including factors – document BoR (21) type of investment needed to reach the goals such as income levels, educational attainment, 82 (the “Verification set. Broadband infrastructure mapping enables ICT skills, age distribution, and the prevalence of Guidelines”). the identification of areas for intervention and micro-enterprises and SMEs, is instrumental in 31 See Broadband Guidelines the prediction of costs 28. It is also a pre-requisite forming an initial understanding of the potential ANNEX I Mapping of fixed and for any investment being supported by State demand for these services. mobile access networks – best funds and falling under the State aid rules. practices referred to in section 5.2.2.4.1 of these Guidelines: Publications Office (europa.eu) At national level, for regulatory purposes, the EECC mandates that Member States conduct a 2.6 Identifying stakeholders geographical survey (or mapping) of broadband and securing collaboration coverage (‘geographic reach’) by 21 December 2023 and update it at least every three years A broadband plan must create the right conditions thereafter29. and incentives for all relevant stakeholders to participate in the project. In doing so, it can more BEREC has released a ‘Handbook of BEREC effectively leverage the resources, competences, Guidelines on Geographical surveys of network and assets available in the region, thereby deployments’30, which also specify how the significantly enhancing its chances of success. collected data on address level or inside grid level should be aggregated on different Stakeholders may assist in identifying demand nomenclature of territorial units for statistics for connectivity, such as: and administrative levels (such as municipal or regional), data publication and access by public Telecom companies as access seekers authorities. interested in passive infrastructure, especially backhaul infrastructure When the deployment of the broadband network (for example, by leasing ducts or dark is financed with State aid, Annex I of the fibre); Broadband Guidelines provides best practices on Non-telecom companies wishing to how to carry out the mapping exercise to fulfil lease dark fibre (for example, banks, the State aid requirements. large corporations, TV production companies). In addition, while not compulsory for Article 22, BEREC recommends annual mapping of credibly planned investments and roll-out plans by  18 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 32 There are even In addition, there are important institutional These SGIs and SGEIs are often directly or examples of utilities building stakeholders that interact with end users indirectly controlled by the public authority telecommunication service subsidiary. Besides the case to deliver social benefits through advanced running the project. They should be involved in of local public-owned utilities social ICT services. These stakeholders, SGIs the project early on to strengthen the business acting as broadband deployment and services of general economic interest case, reduce investment risk, and ensure that the vehicles for municipalities and regions, there are some (SGEIs), are among the largest potential network is designed to accommodate the socio- high-profile examples from customers of the new broadband network and economic needs of the territory. national utilities. One example is can act as ‘anchor tenants’ to attract citizens SIRO, launched in 2015 by Irish to the new broadband network. These include: power utility ESB together with Vodafone, to build a nationwide 100% Fibre-to-the-Building Hospitals; network; the first of its kind in Ireland. The second example Schools; is Italian power utility ENEL, which, together with the Italian Elderly and social housing companies/ investment bank Cassa Depositi e associations; Prestiti, built open fibre to deliver ultra-fast broadband across the Police, emergency services, military; country, mainly through FTTH. Utilities; 33 Gigabit Infrastructure Act Public administration authorities and offices. INFOBOX 4 Utilities and mobile operators: special types of stakeholders 1. Utilities represent a critical stakeholder in many broadband deployment projects as they can take many crucial roles: Strategic network users: broadband networks are key in ensuring the provision of mission-critical high-speed broadband communications in the context of utilities (such as in the management of intelligent energy / smart energy grids, intelligent transport safety and transport management systems, among others). As such, utilities can represent a solid customer base, providing network requirement specification (such as in terms of bandwidth, reliability and latency) as well as much needed revenue. Infrastructure owner: because digital connectivity is so critical for their operations, many utilities have deployed infrastructure32 (ducts, poles, masts) over the years that could be reused for the broadband project33. Moreover, utilities are sometimes partly or fully owned by the regional or local government. 2. Mobile operators, although generally privately owned and operating at national level, also need to rely on fibre infrastructure and can therefore be anchor tenants (such as by leasing fibre for their base stations) and infrastructure providers (by sharing their ducts and fibres with other users or cooperating in building backhaul network).  19 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 2.7 General State aid Public authorities are allowed and encouraged to intervene in market failure areas subject to considerations certain conditions, including that the intervention demonstrates a ‘step change’. The use of public resources to fund an economic activity in the EU is subject to the EU’s State aid The qualification of areas as white, grey, or rules, whose overarching principle is that State black may be reviewed regularly to verify, for intervention must limit the risk of crowding instance, that the private investment plans out or replacing private investments, of declared by operators in the public consultation altering commercial investment incentives, are indeed materialising. If the public authority and ultimately of distorting competition in identifies deviations from the plan which the EU. suggest that the project will not materialise, or which give sufficient reasons to doubt that the Under certain conditions, State investment will be completed as declared, the interventions can correct market failures. public authority may, at any time during the A market failure exists if markets, without relevant time horizon, consider including the intervention, fail to deliver an efficient outcome areas concerned by the investment in a new for society. public consultation with a view to verifying their potential eligibility for State aid intervention. In the context of broadband, market failure occurs when private investors lack commercial For example, in the case of an area classified incentives to invest, despite the societal benefits as grey based on investment plans declared of broadband deployment outweighing the costs. by private operators: should those plans not An example of this market failure is linked to materialise in the announced timeframe, the positive externalities, where market participants public authority may request that the area fail to account for the full benefits of their be reclassified. This can, for example, allow actions. For example, the availability of advanced minimising the risk of the operator strategically broadband networks enables the delivery of blocking publicly supported deployments. advanced services and drives innovation, which offer greater benefits of public interest than A proper mapping and public consultation should immediate returns to the network’s investors in fact require that operators demonstrate that and subscribers. Such market conditions planned investments are credible. This could therefore result in insufficient private investment be, for instance, by specifying an investment in broadband networks. roadmap throughout a determined time period so that potential deviations from the investment In order to establish that there is a market failure, plan can be detected early on. mapping and public consultations are required to verify the presence of existing or planned private Public authorities are responsible for assessing investments in broadband networks, giving clear the credibility of investments and for deciding indications on which areas can be considered whether the investment plans can no longer be as constituting a market failure and therefore considered credible for justified reasons, before justifying public interventions. considering reclassifying an area in view of a potential public intervention. Based on the mapping and public consultations, areas can be classified as white, grey or black, Public authorities considering supporting depending on the number of infrastructures broadband investment projects should familiarise (not operators) that provide at least 100 Mbps themselves with the EU’s State aid rules. Under download speed under peak-time conditions certain conditions, the use of State funds must (ultrafast networks) which are present or be notified to the European Commission for planned in the near future in a given area. For approval. In view of the importance of State aid mapping purposes, the near future is intended as rules (see chapter 8), it is advisable, at an early the time horizon in which the planned supported planning stage, to start informal discussions project is expected to be completed. Areas are with the Commission (pre-notification phase) classified as: and consult with the national BCO on the design of State aided projects. White, if there is no ‘targeted type of network for mapping’ present or planned; Grey, if there is only one ‘targeted type of network for mapping’ present or planned; Black, if there are at least two ‘targeted type of network for mapping’ present or planned.  20 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 34 Visit www.bconetwork.eu to find out more about the BCO Network, the mandate of BCOs, and the national contact points. INFOBOX 5 35 See table of references at the end of the Handbook: BCO-SF The Broadband Competence Offices Network (BCO) The National Broadband Competence Offices (BCOs) are Member States’ single contact points for broadband at national level. Depending on national contexts, BCOs may also be established at regional level. BCOs provide broadband-related guidance and good practices to broadband project promoters, investors and users (municipalities, regions, citizens, operators, businesses and any relevant stakeholders), focusing mainly on technology, funding and regulatory issues. As part of the BCO Network34, BCOs regularly gather together with the European Commission to exchange good practices and receive technical, regulatory and implementation advice in the field of broadband deployment. The BCO Network is an initiative launched by the European Commission in 2017 to enable the acceleration of broadband investment and deployment in order to reach EU connectivity targets. The BCO Network has a dedicated Support Facility35 which plans and animates the Network’s capacity-building activities on an annual basis, in coordination with the European Commission Directorates-General for Agriculture and Rural Development; Communications Networks, Content and Technology; Regional and Urban Policy; and Competition.  21 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 3 Investment models There are different ways for a public authority to become involved in broadband development 3.1 Four investment models 36 Please note that the ‘EU Guidelines on State aid for broadband networks’ use a in its territory: A fundamental choice that must be made by slightly different classification public authorities is how much to commit and (see table of references at It can choose to invest directly and the end of the Handbook: EU what role to take in relation to the market, the become the owner of the network 2022 BB-SA-GL, Annex IV) and citizens, and the businesses in the region. Four distinguish between gap funding infrastructure (in this case, the investment models can be identified: and in-kind support, rather than network can be run directly by the operator subsidy and community public authority owning it or by a Direct investment model (also support. That classification market actor through a concession); known as public design, build and makes more sense from the standpoint of State aid. It can support another actor (either a operate (public DBO)); commercial operator or an end-user Concession model; association) by providing them with financial and/or in-kind support. Operator subsidy model (gap funding, in-kind or in another form; The choice of one investment model over another also known as private DBO); is a political decision based on the cultural and socio-economic situation, the ambition level of Community support model36. the public authority, and the medium and long- The four models have been used in different term development goals for the territory. areas across Europe, sometimes in different Note: the investment model should not be parts of the network and with different levels of confused with the business model, which is success. described in Chapter 5. The degree of influence a public authority will have regarding the choice of characteristics of the project, such as the infrastructure itself, the business model or the financing tools, will depend on the investment model chosen, as described next.  22 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 37 See also Article 76 of the CODE on “Regulatory treatment of new very high capacity network elements” INFOBOX 6 38 See table of references at the end of the Handbook: EU Co-investment and public-private partnerships (PPP) 2012 EPEC In general terms, co-investment37 refers to initiatives in which two or more investors agree to invest together to deploy network infrastructure over which to provide services such as broadband connections. Co-investment may take place in three ways: By establishing a joint-venture, meaning a new entity jointly owned and controlled by the co-investors for developing and operating network infrastructure. The joint venture sells access at active or passive level to its partners and potentially to third parties, depending on the specific business model chosen. By agreeing on reciprocal access, whereby co-investors are responsible for developing and operating their own network infrastructure (usually in geographically separate areas) and are given access to the infrastructure of all the agreement partners. By agreeing long-term access, in which one party is in charge of the construction of the network infrastructure and a contractual agreement establishes how to provide access to new infrastructure and share costs, risks and profits between all the co-investors. The term co-investment is most often used in conjunction with private partnerships. When public actors and private actors are involved, it is usually referred to as a Public- Private Partnership (PPP). The term PPP may be used to designate different forms of collaborations, and PPP projects vary according to their legal structure, the parties involved, as well as other characteristics38. A common PPP example in broadband development is a direct investment in which the public authority decides to co-invest with other private companies. In this case, both the public and private partners own the infrastructure deployed, or parts of it, and take similar roles. This approach may be advisable if a private actor already owns key infrastructure in the territory and is willing to make it available to the project. Examples of PPPs are also projects with elements of direct and concession investment models. Projects using a pure concession model are not really PPP in the sense that the public sector takes the ownership role and the private actor takes the role of a concessionary to build and/or operate the network, although the PPP label is sometimes used in those situations as well. Whatever form the PPP takes, care should be taken in dealing with public financing and State aid aspects. 3.2 The direct investment Typically, a special-purpose company, an in- house entity, or a dedicated division within an model existing in-house entity, needs to be established with the task of deploying and operating the In the direct investment model, the public network, and procuring the necessary works authority builds and operates a broadband from the market, from civil engineering to project network in the territory. As such, it is sometimes management. referred to as public design, build and operate (public DBO). Although it may take In this model, the public authority or special- place in collaboration with the market as a purpose company needs a considerable PPP, in which the role of building, owning and engagement and bears all the financial risks of operating the network is shared with a private the operation, possibly jointly with the private actor (see INFOBOX 6), what defines the model partner if a PPP is used. On the other hand, it is that the public authority is directly involved in also retains full control of the design and the design, deployment, operation and ownership service-provisioning process, placing it in the of the network, at least at the passive or physical best position to determine the shape of the layer (see section 4.1). network based on socio-economic priorities.  23 B R O A D B A N D I N V E S T M E N T H A N D B O O K 2 0 2 4 The network is to be made available to all A PPP-enabled version of the direct market actors under fair and non-discriminatory investment model can be followed, which wholesale access conditions, in accordance with leverages the presence of a private actor with State aid rules. Generally, this is done through extensive fibre infrastructure and willingness to the wholesale-only business model (at the collaborate (see INFOBOX 6). passive or active layer, see Chapter 0). The revenues raised from leasing fibre or connecti