Questions and Answers: Commission presents new initiatives, laying the ground for the transformation of the connectivity sector in the EU

Source: EuPC

22 February 2023

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Gigabit Infrastructure Act

Why has the Commission proposed to update the 2014 Broadband Cost Reduction Directive?

The Broadband cost reduction directive contributed to ensuring that EU households are covered by networks of at least 30 Mbps speeds, which are enough to ensure smooth use of email and web browsing. The share of households covered by a 30 Mbps network increased from 58% in 2013 to 90% in 2021, according to the annual Digital Economy and Society Index (DESI).

The Commission has proposed to update the rules in view of citizens' and businesses' increasing needs for connectivity and the connectivity targets of Europe's Digital Decade, according to which all EU households and businesses should be covered by a gigabit and fast mobile networks by 2030.

Given the fast advances in digital technologies, such as the metaverse, artificial intelligence (AI), quantum computing, augmented and virtual reality, significant network investments are required to keep up with the increasing bandwidth needs. However, full coverage of very high capacity, or Gigabit, networks, including both fibre and 5G rollout, in all Member States still faces high network deployment costs and slow network deployment.

The review of the Broadband Cost Reduction Directive showed persisting challenges such as its inconsistent implementation across the EU and diverging interpretations of its provisions. The resulting patchwork of rules prevents economies of scale for operators and creates barriers to cross-border investment, affecting the proper functioning of the internal market, in particular for inherently cross-border applications, such as connected and autonomous driving that need widespread availability of Gigabit networks. The problems encountered are common to most, if not all, Member States and require a bold and uniform response at EU level.

The proposed Gigabit Infrastructure Act will incentivise network investments and rollout by addressing the persistent barriers to network deployment. It will simplify and digitise permit granting procedures and the availability of information on existing physical infrastructure and planned civil works for operators looking to rollout gigabit networks.

The Gigabit Infrastructure Act is also aligned with the European Electronic Communications Code which came into force in December 2020 and introduced a regulatory framework to incentivise investments in advanced connectivity networks.

How will the proposed Gigabit Infrastructure Act ensure a swift deployment of gigabit networks?

The proposed Gigabit Infrastructure Act will foster the deployment of more advanced networks, such as fibre and 5G, by simplifying network deployment.

The regulation targets some main challenges to quick and efficient network deployment. The measures of the proposed Gigabit Infrastructure Act aim to:

Improve coordination across sectors: the measures will facilitate the coordination of physical infrastructure deployment, such as ducts, towers or masts, with works on other public infrastructure. This will help reduce nuisance to citizens.
Streamline and speed up permit granting procedures: the measures will make it easier to request permits and reduce delays in obtaining them by requiring the competent authorities to confirm the completeness of a permit application within 15 days from its receipt and by establishing the rule that permit applications, which are not answered within four months, will be considered as tacitly approved.
Go fully digital: operators will be able to access all information on existing infrastructure and planned civil works online. They will also be able to submit permit applications online.
Simplify deployments: the measures will make it easier for operators to re-use public infrastructure, such as ducts or masts, and spaces, such as rooftops, to install network infrastructure.
Prepare for innovation: the proposed regulation will require that all new and majorly renovated buildings, except in justified cases, are pre-equipped with fibre and fibre-ready infrastructure.
Contribute to sustainability: the measures will help reduce the environmental footprint of electronic communications networks by promoting the deployment of more environmentally efficient technologies, such as fibre and 5G. More so, the measures promote the re-use of existing physical infrastructure and greater coordination of civil works thereby reducing the environmental impact of such works.

How does the proposal for a Gigabit Infrastructure Act build upon the 2020 Connectivity Toolbox Recommendation?

The proposal builds on the Connectivity Toolbox Recommendation adopted in September 2020. The Connectivity Toolbox Recommendation was an agile response to increased demand on connectivity triggered by the COVID-19 pandemic, aiming at reducing the cost of Gigabit network deployment and ensuring timely access to radio spectrum for 5G.

To that aim, in March 2021, the Member States agreed on 39 best practices (out of which 22 are about reducing the cost of deployment) to include in the Connectivity toolbox.

The Connectivity Toolbox is a soft law instrument which leaves Member States margin to decide which best practices to implement. The best practices proposed in the Toolbox aim at improving network deployment and access to 5G spectrum before the Gigabit Infrastructure Act becomes applicable.

However, the Connectivity Toolbox Recommendation and the respective Toolbox do not contain any best practice relating to coordination of civil works or in-building infrastructure, even though the latter constitutes a substantial portion of the cost of deploying very high-capacity networks (estimated at 10-15%) and electronic communications network operators consider that challenges persist in many Member States. Moreover, some roadmaps and their implementation reports provided by Member States did not take up some of the best practices of the Connectivity Toolbox, such as introducing digital platforms for permit granting or requiring simultaneous processing of permits and rights of way (i.e. the legal right to pass along a specific route through property belonging to another).

The proposed Gigabit Infrastructure Act builds on these best practices and their implementation, spearheading towards faster, simpler and less costly common administrative procedures relating to Gigabit networks' deployment.

How did the Commission consult stakeholders in the review of the Broadband Cost Reduction Directive?

The Commission has carried out a broad analysis and sought input from market and institutional actors to understand the challenges to achieving the swift rollout of Gigabit connectivity. In particular, for the review of the Broadband Cost Reduction Directive, the Commission published a roadmap to collect feedback in June 2020, opened a public consultation that took place from December 2020 to March 2021, organised two participatory online workshops on network deployment drivers and barriers in January 2021 and on institutional aspects in February 2021, as well as sought the opinion of the Body of European Regulators of Electronic Communications (BEREC). The Commission also commissioned a study, ensuring both a backward- and a forward-looking assessment.

Draft Gigabit Recommendation

Why has the Commission adopted new draft Recommendation? What has changed since the previous Recommendations?

The draft Gigabit Recommendation replaces the Next Generation Access (2010) Recommendation and the Non-discrimination and Costing Methodology Recommendation (2013).

This update is necessary due to the evolution of telecommunication markets in the last decade, as well as to support the connectivity targets enshrined in the 2030 Digital Decade policy programme.

Also, the new draft Recommendation aligns the measures with the EU Electronic Communications Code, which came into force in 2020. The Code allows National Regulatory Authorities to impose access obligations on operators that are found to have significant market power. These obligations usually include provisions by which the concerned operators have to give regulated access to their electronic communications network to competitors. The Gigabit Recommendation will be the new soft law mechanism providing guidance to National Regulatory Authorities upon which conditions to impose this regulated access.

Moreover, the Code introduced the objective to incentivise investments in very high capacity, or gigabit, networks. The Recommendation therefore aims to ensure a consistent application of the access provisions of the Code and to help National Regulatory Authorities and market players to address the considerable challenges for the years to come in relation to investment in, and deployment of very high capacity, or gigabit, networks.

What types of measures are included in the draft Gigabit Recommendation?

The draft Gigabit Recommendation, which is subject to BEREC's opinion, aims to support the rollout of Gigabit networks by ensuring that all operators can play a part and have access to existing network infrastructure. To this effect it provides updated guidance to National Regulatory Authorities on how to design access remedy obligations to be imposed on operators with significant market power, primarily in the market for wholesale local access provided at a fixed location (market 1 of the Recommendation (EU) 2020/2245). The objective is to assist National Regulatory Authorities in finding the balance between the legitimate interests of operators who own network infrastructure (e.g. copper and fibre wiring, ducts, masts) to be rewarded for their investments, and conditions under which operators with significant market power must allow other operators to use their infrastructures in order to ensure competition.

The guidance is updated against the background of the current stage of development of fixed networks, where legacy technologies, such as copper, with respect to which operators has been found to have significant market power, are being switched-off.

How did the Commission consult stakeholders in the review of the Recommendations on Next Generation Access Networks and on consistent non-discrimination obligations and costing methodologies?

To support this review, the Commission has carried out an external study and has sought the opinion of stakeholders via a targeted consultation and a workshop.

How does the draft Gigabit Recommendation interrelate with the proposed Gigabit Infrastructure Act?

The new Recommendation will complement the proposed Gigabit Infrastructure Act and support the implementation of the European Electronic Communications Code. The draft Recommendation aims to provide guidelines on the conditions of access to the networks of operators with significant market power, whereas the proposed Act aims to ensure that all operators have access to existing physical infrastructure, irrespective of whom owns it.

Both sets of measures will contribute to Gigabit network rollout, in particular by setting a regulatory framework that rewards investments in a fair manner and removes obstacles to network deployment.

In developing the two initiatives in parallel, the Commission is strengthening their complementarity and consistency, in particular, with respect to ensuring access to existing physical infrastructure.

How do the proposed Gigabit Infrastructure Act and the draft Gigabit Recommendation contribute to the goals of the European Electronic Communications Code?

The European Electronic Communications Code, which came into force in December 2020, modernised the EU electronic communications regulatory framework. It is designed to improve connectivity across the EU, encourage innovation and incentivise investments.

The proposed Gigabit Infrastructure Act, similarly to its predecessor the Broadband Cost Reduction Directive, complements the Code in regard to measures boosting network deployment. It provides for access obligations addressed to owners of physical infrastructure, such as ducts or masts, suitable for hosting very high-capacity networks independently of their position on the market. The Code contains obligations targeted to undertakings with significant market power and concerning not only physical infrastructure but also electronic communications networks, such as fibre cables.

The main purpose of the Gigabit Infrastructure Act is to eliminate obstacles to deploy networks, whereas the Code has a larger set of objectives, which include the protection of competition on the market. The proposed Gigabit Infrastructure Act also aligns the measures with the Code. The proposed measures support the rollout of very high-capacity, or Gigabit, networks, as opposed to networks of at least 30 Mbps, which is the case of the measures in the Broadband Cost Reduction Directive. In this way, they support the new ambition set out in the 2030 Digital Decade according to which, by 2030, all European households should be covered by a Gigabit and fast mobile networks.

The draft Gigabit Recommendation aligns the guidance from the Commission on regulated access to networks with the provisions of the Code. In particular, it reflects the balance established by the Code between incentivising investments in very high-capacity, or Gigabit, networks and promoting competition. It also provides guidance on new regulatory tools and features introduced in the Code, among which co-investment agreements, regulatory commitments, treatment of wholesale-only operators, migration to faster networks and use of pricing flexibility.

Exploratory consultation on the future of the connectivity sector

What is the aim of the exploratory consultation on the future of the connectivity sector and infrastructure?

Digital markets and in particular connectivity markets are facing exponential technological and market developments, such as new infrastructure needs, edge computing, metaverse, and more. These developments are expected to have a significant impact on the business model of providers of electronic communications networks. They would also likely affect all European consumers and end-users, including SMEs, who are increasingly dependent on Internet access, services and content.

It is therefore a key moment to look at the electronic communications sector and reflect on where it stands and where it will or should be in the future, taking into account the dynamics between the electronic communications and the online services segment.

The exploratory consultation focuses on the future of the connectivity sector and its infrastructure needs. It looks into technological and market developments including their impact on future networks and business models for electronic communications; consumers; barriers to the Single Market; spectrum; types of infrastructure and amount of investments needed in the coming years; and more. This exploratory consultation aims to open up the debate so as to have a more comprehensive conversation with all interested parties and gather additional data.

The exploratory consultation also addresses the potential need for all players benefitting from the digital transformation to fairly contribute to the required investments. This is a complex issue which requires a thorough understanding of the underlying facts and figures.

Based on the outcome of the consultation, the Commission will consider the most appropriate follow-up actions. The Commission is strongly committed to protecting a neutral and open internet.

How will this consultation contribute to the issue of the potential need for a fair and proportional contribution to network costs by content providers?

Europe needs to increase investments for more modern and more resilient networks across the EU. The exploratory consultation seeks to identify the types of infrastructure and amount of investments that Europe needs to keep ahead of transformative technological developments and to lead the digital transformation in the coming years. The consultation also seeks stakeholders' views on how to ensure that the investments required to roll out such infrastructure can be timely mobilised across the Union.

In this context, the exploratory consultation also addresses the potential need for all players benefitting from the digital transformation to fairly contribute to the required investments. This is a complex issue which requires a thorough understanding of the underlying facts and figures.

The Declaration of digital rights and principles states that “all market actors benefiting from the digital transformation should assume their social responsibilities and make a fair and proportionate contribution to the public goods, services and infrastructures, for the benefit of all Europeans.”

The Commission is engaging in an open dialogue and invites all stakeholders to participate in the exploratory consultation.