European Commission cuts 2020 Digital Agenda budget by 90%


Coming on the heels of Liam’s adventures in the hallowed halls of the European Commission and just in time for one of telecoms biggest events of the year, the Mobile World Congress in Barcelona, comes some disappointing news from Neelie Kroes, the European Commissioner for Digital Agenda.  In the midst of the tough EU budget deal negotiations, some unfortunate sacrifices had to be made.  One of the biggest, which was announced over the weekend on Commissioner Kroes’ blog, is sure to be a big let down to Europe’s telecoms, governments, tech communities, and the general public alike. Unfortunately, the digital part of the Connecting Europe Facility, the investment vehicle funding the EU’s 2020 digital agenda, will be cut substantially from €9.2 billion to €1 billion.  Commissioner Kroes anticipates that the remaining funds will still enable them to invest in service infrastructure (i.e. eProcurement and eInvoicing), helping to create a digital single market and ‘quality, 21st century public services” for Europeans.  However, digital services will be the limit of what the EC can now invest in as there is no longer enough to help fund, arguably, the biggest and most important initiative, the expansion of ultra-high speed broadband networks across the EU.

As a reminder, the EU’s Digital Agenda, which will be funded by the Connecting Europe Facility, set out 7 main pillars that are meant to “reboot the EU economy and enable Europe’s citizens and businesses to get the most out of digital technologies.”  One of the principal pillars, which pretty much provides the foundation for the other six, is pillar IV – high-speed and ultra high-speed internet access.  There are various actions underpinning this pillar, but there are two main objectives to retain:  1) for the entire EU to be covered by broadband above 30Mbps by 2020 and b) for 50 % of the EU to subscribe to broadband above 100 Mbps by 2020.  When announcing the big budget cut, Commissioner Kroes declared that the 2020 goal would remain.  The obvious question is how are they going to achieve such ambitious objectives with €8 billion less? Comissioner Kroes didn’t have any definitive answers to this problem, but did offer a bit of consolation in the form of the  European Investment Bank, which she committed to actively lobby in order to convince them to increase their lending for broadband infrastructure projects.  However, as it’s clear that this isn’t going to completely make up for the shortfall, she also encouraged member states to look to public-private partnerships as an answer.  She stressed that this could be a workable solution, however to ensure their success member states’ local markets need to be “more integrated, coherent and efficient, with a better balance of risk and reward.”

Given the substantial cost required to build broadband networks, it’s obvious that even €8 billion would never have covered the full cost of these projects across Europe. These types of projects are notoriously difficult given the substantial level of upfront investment required, which often deters the private sector from taking on a lead role.  France, for example, obviously has a ways to go until there’s truly ultra high-speed (or even high-speed) internet across all of France.  To make sure project comes to fruition, the French government pretty much had to take the lead role on this one. They’ve demonstrated, at least initially, that they’re committed to the goal and are working hard to put a practical model in place to achieve it.  As France is leaning heavily on public-private initiatives to get this done, if the French government manages to structure and execute these partnerships well, perhaps they could serve as a model to follow for other EU countries also pushing to achieve the 2020 goals.