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Summary

On September 14, 2016, the European Commission (EC) announced a new telecoms package that outlines its vision to achieve universal coverage of very high-capacity Internet connectivity in the Digital Single Market, and revised the telecoms regulatory framework. The proposal set out three aims to be achieved by 2025 to ensure the widespread availability and take-up of next-generation networks. These consist of gigabit Internet connections for public services, download speeds of at least 100Mbps for all rural and urban households, and uninterrupted 5G coverage in all urban areas with the help of a 5G Action Plan. The EC also proposed a new initiative to offer a public voucher scheme to allow local authorities to offer free Wi-Fi connections to its citizens in public areas. It will be difficult for the member states to follow the EC's request to update their national broadband plans by the end of 2017.

100Mbps connectivity, free public Wi-Fi, and coordinated 5G deployment to support growing connectivity demands

With the growing expectations from users for faster, better quality, and reliable Internet connectivity, basic connections will soon no longer be sufficient to meet the needs of multiple users simultaneously. As a result, the EC has proposed ambitious new connectivity targets with the aim to build a gigabit society and provide seamless coverage across Europe.

The proposal outlines that all providers of public services will have access to download speeds of above 1Gbps by 2025. The digital divide between member states and between urban and rural areas will also be reduced because all European households, including those in rural areas, should have access to download speeds of at least 100Mbps. The EC's connectivity objectives for 2025, which are likely to require around €500bn ($561bn) in investment, are intended to be within the reach of commercial operators and therefore will be mainly be funded by the private sector. Based on current investment trends, the EC predicts an investment shortfall of €155bn. To ensure improved coverage in more financially unviable rural areas, this will be supplemented by public funding.

The proposals not only encourage investment in very high-capacity networks but will also accelerate public access to Wi-Fi and provide greater backhaul capabilities to support improvements in 5G wireless coverage. Ultimately, all urban areas are expected to have uninterrupted 5G coverage. However, as an interim target, 5G should be commercially available in at least one major city in each member state by 2020. The viability of some of the new applications of 5G connectivity, such as a continuous service of connected cars across borders, will require coverage to become available simultaneously in all member states. This requires a coordinated 5G timeline that aims to see early commercial launch in 2018. The coordinated timeline has led to the EC proposing a 5G Action Plan, which has ambitions to place Europe as the front-runner in 5G deployment. The Action Plan, which is largely voluntary at this stage, demands a cross-border spectrum policy to avoid incompatible standards emerging in different regions. A major new requirement of 5G is large, contiguous bandwidths of spectrum that will need to be identified by member states by the end of 2017. It is expected to involve spectrum above 6GHz, the 700MHz band, and the 3.5GHz band. It is also proposed that spectrum licenses will need to be issued for a minimum of 25 years to improve investment certainty for operators.

The EC is also aiming to support and encourage the provision of free Wi-Fi across Europe. Free Wi-Fi initiatives are currently fairly fragmented. However, under a WiFi4EU program, a new €120m public voucher scheme from the EC aims to eradicate this by providing support for between 6,000 and 8,000 local communities to offer free Wi-Fi connections to any citizen in and around public spaces by 2020. This is being reinforced by simplified planning procedures and deregulation. To ensure that the scheme does not challenge commercial offers, funding will be limited to situations where no freely accessible public or private access points delivering very high-speed broadband already exist. The greater availability of free Wi-Fi in public spaces is likely to encourage European interest in high-capacity Internet services and therefore will also contribute to the take-up of broadband services.

Appendix

Further reading

“EU member states are at very different stages of digital economy development,” TE0007-001034 (June 2016)

“5G: It's different this time,” TE0006-001067 (May 2015)

Author

Sarah McBride, Analyst, Regulation

sarah.mcbride@ovum.com

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