EECC aims to improve the broadband coverage of all EU countries, enable more citizens to participate in economic digitization, and leverage the socio-economic benefits of digitisation to improve public welfare. The requirements on network investments are as follows:
The Code encourages investment in new networks in line with objectives of Broadband 2025, with particular emphasis on Very High Capacity Networks (VHCNs), such as full-fibre network, fibre-to-the-distribution-point, and 5G networks;
Encourage the sharing of civil infrastructure to lower the cost of network deployment and bring out the above-mentioned investment;
Inspired by successful models in Europe, the EU advocate to create incentives to invest through lighter regulatory obligations for co-investment and wholesale-only networks;
Increase regulatory stability and facilitate network investment and business planning. The National Regulatory Authorities (NRAs) shall carry out the five-year market review cycle instead of the current three-year limit;
Assure more predictability for the deployment of new generation’s mobile technologies by guaranteeing a minimum licensing duration of 20 years for the harmonisation of regional spectrum and more transparency in the renewal rights; and
Simplify administrative rules for deploying wireless access points in small areas to facilitate the deployment of denser mobile networks.
Practices in Germany and the UK
Although there are uncertainties and differences between the specific time and determination of the EU members in implementing the EECC, we can see that some EU member states have been practicing the investment guidelines over the past few years.
Germany launched the Gigabit Initiative of Germany in 2017, aiming to build a converged gigabit network covering the whole country by 2025. The German federal government plays a crucial role in promoting the deployment of VHCNs networks. In addition to continuous network construction subsidies (about €4 billion in 2014–2017, up to 70% of the total investment amount), the German government also decreed the DigiNetzG Act to optimize the conditions and efficiency for network construction. The DigiNetzG Act requires traffic construction projects using public investment to support fibre deployment under certain conditions. It will be mandatory to make existing infrastructure such as electricity, waterways and waste water systems, gas and district heating, roads and railways etc. available and coordinated in broadband deployment. The municipal government needs to ensure that new residential areas are equipped with passive fibre network infrastructure. The right of way (ROW) acquisition process must be completed within three months to avoid lengthy and unnecessary bureaucratic approval procedures. The act undoubtedly lays a very favorable legal foundation for the long-term fiber deployment.
A trendsetter of network infrastructure rollout in a country also plays a vital role in facilitating ultra-broadband deployment. Deutsche Telekom (DT) announced that 50Mbps broadband service was available nationwide at the end of 2018, and that 250 Mbps has covered nearly 24 million homes by September, 2019. In 2018, DT started the FTTH deployment plan for new residential areas, commercial campuses, and schools. In addition, cooperation, co-investment, collaborative network construction, and access network wholesale are adopted to achieve the goal of 2 million lines in 2021. DT's network deployment strategy in response to the Government's gigabit initiative, to some extent, also activates market competition. Consumers will have more opportunities to select high-quality and cost-effective Internet services.
The UK also has a deep understanding of the importance of digitalisation and full connectivity. In 2018, the UK released the Future Telecoms Infrastructure Review (FTIR), setting targets to provide fibre access for 15 million homes by 2025, cover the majority of the population with 5G networks by 2027, and cover the entire UK with fibers by 2033. A new Universal Service Obligation was also approved for giving every household and business the right to request a broadband connection of at least 10Mbps in The Digital Economy Act 2017. The UK government believes that the most efficient way to build full-fibre networks is to encourage competition and business investment. If necessary, the government will intervene and assist with the process.
In addition to the £1.1 billion fund for digital connection, assist by the UK Government also includes an obstacle task force which aims to reduce the cost of building fibre networks by identifying and eliminating deployment obstacles. Key tasks of the task force include simplifying the way leave agreement to facilitate access to multi-dwelling units (MDUs).
By developing national standardised construction methods to lower the rollout cost and time caused by street work and ensure fiber connections in new buildings, the UK Government facilitates ROW acquisition and ensures that new residential areas can enjoy the fibre broadband technology. The main contractor of the UK network construction plan is the Openreach, which is a new independent branch of the BT Group. In August, 2018, the Chief Executive Officer of BT reported the full-fibre broadband deployment plan to the new Prime Minister, mentioned the short-term goal of covering 4 million homes with fibre and long-term goal of covering 15 million homes with fibre by 2025. The estimated total investment is about £30 billion to achieve the copper-out fibre-in gigabit acceleration strategy, which will create 30,000 jobs. The CEO of BT stressed that this is a government task and requires quick and decisive actions and assistance from the government and regulators. If the regulator Ofcom provides investment incentives (subsidies), BT can double the target to 32 million homes.
Four key factors to succeed in facilitating fibre-based VHCNs
From the VHCNs construction plans of Germany and the UK, we can see that many preferential policies are made in response to the EECC. These policies have effectively promoted the deployment of fiber based networks in both countries.
Public investment: For cutting-edge technology applications, especially fixed network technologies, the government must show its determination to simulate private sector investment by public funding and subsidies, so as to effectively facilitate large-scale network deployment. Decades ago, telephony networks were actually invested by state-owned telephone companies. Nowadays, optical fibre rollout also requires government investment, especially in areas with long payback periods.
Friendly ROW policy: The government should simplify ROW acquisition by setting up laws and regulations. Passive optical fibre cable pre-installation is a good practice of ROW policy.
Infrastructure sharing: Reusing existing resources is an efficient way to lower network deployment costs. The government can encourage cross-industry infrastructure co-construction and facilitate the sharing of existing civil infrastructure such as poles and conducts to reduce fibre deployment time, investment costs, street work, and impact on the environment.
A trendsetter of network deployment is required: It is better to carry out a national strategy with an entity that has sufficient resources. In Western Europe, operators with significant market power are usually the main contractors of VHCNs. In some cases, new players can obtain a large share of public funding and subsidies through public bidding to rollout VHCNs as well; for instance, Open Fiber in Italy. In any case, deploying VHCNs networks requires an efficient contractor to take the lead.
In order to realise VHCNs, fibre deployment policies are of crucial importance. This is because optical fibre is currently the best medium not only for broadband development but an important resource for 5G base station fronthaul and backhaul. Unlike spectrum allocation, optical fibre cable rollout requires more support from government policies and regulations to address the challenges of insufficient funds and difficulty in ROW acquisition.
