Don't lose sight of digital objectives in economic crisis, urges Kroes

In a speech to the European Telecoms Network Operators she stressed that fibre broadband is essential to remaining competitive

Europe must not lose sight of its long-term target of ensuring Europe's competitiveness through an advanced digital infrastructure, even though it is currently beset with the short-term problem of the economic crisis, according to Neelie Kroes, European commissioner for digital agenda.

Kroes made the statement in a speech delivered to the European Telecoms Network Operators in Brussels today.

She also argued that the most productive countries in Europe are those that have invested in, and made best use of, ICT. The sector contributes half of Europe's productivity growth.

She recommended several approaches that will make investment in fibre more attractive to telcos and ISPs. These include encouraging an approach that will lower the access prices for copper networks.

Copper brings in a great deal of revenue for the former state monopolies, such as BT, that usually own the networks. Lowering the regulated prices they charge to rivals to use their lines will severely dent profits. Kroes did not commit to legislating for this, but the threat may encourage incumbents to switch to fibre.

She went on to say that incumbents should commit to investing in fibre networks within a relevant time frame, and look to switch off the old copper networks once the new fibre infrastructure is in place.

She said: "I have seen evidence that the gradual switch-off of copper could reduce the cost of maintaining an infrastructure to such a degree that new fibre investments break even in under 10 years."

Kroes also talked about the Connecting Europe Facility scheme, launched in June, which will see the EC provide €9.2bn, to be distributed between 2014 and 2020. This will support broadband investment and pan-European digital public services.

Some €6.4bn of this will be earmarked for broadband infrastructure, largely in the form of equity, alleviating debt or guaranteeing loans.

The Commission and the European Investment Bank will also provide credibility, and improve the project's credit rating by absorbing part of the risk.

In this way, the EU money will leverage other private and public investment, said Kroes. She claimed she expects it to generate up to €100bn in broadband investment, more than one-third of the estimated figure needed to meet digital agenda targets.

Kroes added that an increase in broadband penetration of 10 per cent will increase Europe's annual GDP growth by between 0.9 and 1.5 per cent.

She said: "You know my philosophy: the best way to deliver an open internet is through competitive markets."

Finally, Kroes explained that she regrets the Netherlands' decision to move unilaterally on the issue: the country has prohibited ISPs from charging for certain types of traffic, thereby ensuring net neutrality.

"Requiring operators to provide only full internet could kill innovative new offers. Even worse, it could mean higher prices for those consumers with more limited needs who were ready to accept a cheaper, limited package," she said.

Kroes also reiterated that the focus on interoperability between different networks is important.

"This will ensure that, in future, there are no difficulties in offering enhanced services such as videoconferencing, high-quality video, or cloud computing," she added.