EU slashes broadband funding

A cash-strapped European Union has taken the axe to fixed broadband funding over the next seven years, slashing 90 percent of allocated funds in its latest budget.

Neelie Kroes.

The broadband funding was to come through the Connecting Europe Facility (CEF) (pdf), which is aimed at creating growth through infrastructure investment.

CEF was originally conceived with a 50 billion euro (A$65.2 billion) total budget for six years starting 2014.

Of that money, 9.2 billion euro (A$12 billion) was earmarked for broadband investment. This has now been cut back severely to just one billion euros (A$1.3 billion).

The vice president of the European Commission, Neelie Kroes, who had championed the proposal to invest in broadband, expressed her disappointment with the budget cuts.

Kroes said the funding will have to be exclusively for digital services and does not leave room for investing in broadband networks.

"I regret that because broadband is essential for a digital single market, the rails on which all tomorrow’s digital services will run, and this could have been an innovative and highly-market oriented way to deliver it, almost budget-neutral in the long run," Kroes writes.

The target for CEF Digital and the connected Digital Agenda for Europe (DAE) initiative is to provide universal broadband coverage throughout the union of 30 Mbps by 2020.

By that year, the DAE envisages that at least half of EU households will be subscribing to broadband faster than 100 Mbps.

According to the EU, investing in ICT has "so far had the highest correlation with growth". Just 10 percent more households connected to high-speed broadband could generate a gross domestic product rise of 1.5 percent and 20 million new jobs by 2020, it believes.

Source: CEF

EU believes that major investment of around 200 billion euro (A$261 billion) in broadband infrastructure is needed over the next five to ten years for Europe to close the gap with its leading competitors China, Japan and Korea.

Most of the investment will come from the private sector, the EU believes, and be concentrated in densely populated areas such as cities.

Structural funds and public grants would help fund rural and remote areas, whereas the CEF investment was aimed at zones between densely and sparsely populated places.

The EU will vote on the new budget in April or March this year.