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ETNO Intervention at the FTTH Conference, Milan, 10 February


10 Feb 2011


EU Priorities 2020

FTTH Conference, Milano Feb. 9-10, 2011
Europe in 2020
Intervention by Luigi Gambardella
ETNO Executive Board Chairman

Dear Commissioner Kroes,
Dear Ladies and Gentlemen,

First of all, let me thank the FTTH Council for having invited ETNO to
participate in the closing plenary of this conference. As highlighted by both the
EU 2020 and the Digital Agenda for Europe the benefits of high speed
broadband networks for Europe’s economy and society are now fully recognised
and represent key challenges for the ICT Industry. I would also like to praise the
FTTH Council for its important contribution to this debate. ETNO members, as
main investors in Europe’s high speed broadband networks, share the conviction
that NGA can put Europe back to the driving seat of competitiveness.

The Digital Agenda provides an ambitious vision: the full potential of high
speed Internet must be embraced by all sectors and the society as whole to
enable a smart and sustainable growth. If the targets are met, by 2020, Europe
will have evolved from the Information Society to the Digital Age.

High speed Internet will be the backbone for communications between people,
objects and machines. The key condition for this vision to materialise is of
course to ensure that the necessary infrastructure is deployed and that new
services are widely adopted both by private and public sectors. All European
citizens and public administrations will then benefit from it.

The targets in terms of high speed broadband deployment are ambitious: all
households should have access to at least 30 Mbps and half of them subscribe to
100 Mbps.

The size of the investment required in NGA in Europe is estimated by the EU
Commission at up to 58 billion euros to achieve the 30Mbps coverage and up to
268 billion euros to achieve 50% take-up of households at 100Mbps.

The scale of these investment figures requires a balance between private
contribution and EU and member states’ funds which should be carefully
targeted to complement and not to crowd-out private investment.

Such large scale investments will provide EU citizens and business with new

Let me give an example: broadband-enabled innovation will play an increased
role in delivering healthcare, contributing to improve patients’ quality of life and
to reduce public spending. Commissioner Kroes rightly acknowledged this at the
ETNO Innovation Day some days ago in Brussels.

In terms of the development of business applications, most enterprises are
expected to increasingly use the Internet as part of the production process itself,
also through functionalities developed by communities of users. Goods will
most likely embed softwares enabling enterprises to monitor their usages and to
adapt features.

ETNO members are ready to play their role to make sure that this vision
becomes a reality. But we believe that some key conditions need to be put in
place to encourage investments:

First of all, we need to question ourselves on whether the current model of the
Internet development is sustainable in the long term. We are faced with an
exponential increase of data traffic – by more than 35% over fixed networks and
100% over mobile ones – driven mainly by bandwidth-hungry applications such
as video.

Networks require therefore constant upgrade and investments. At the same time,
the competitive pressure made services available for lower and lower prices to
the final customer. In the light of this market context, the industry needs to keep
its investment capability.

Business models need to evolve, improving incentives for all players in the
value chain to contribute to meet the huge investment challenge we are facing.

Secondly, NGA requires a more proportionate and targeted regulatory
environment which would take more into account different levels of competition
in markets in order to encourage risky investments. We observe that some
national Regulators reflect the various degrees of competition within their
national market and favour commercial agreements between operators instead of
enforcing a strict access price regulation of the new fibre networks.

Artificially reducing wholesale access prices for copper broadband networks
would undermine the NGA investment case. This was also recently recognised
by Commissioner Kroes.

Furthermore, a systematic application of cost-based access obligations to NGAs
acts as a deterrent to investments, since a key factor influencing the investment
case for NGN deployment is consumer demand and his willingness to pay. Not
all consumers make the same usage of high speed broadband. Some of them
may wish to pay more in order to get higher speed and more capacity while
others may have lower needs.

Finally, our approach to NGA must remain technology neutral. Investing
companies will need to choose the network architecture and technology which
adapt better to the market needs of the area where the investment takes place.
Let me conclude by saying that the critical factor for the success of the Digital
Agenda is the creation of a digital single market for content and services, as
legitimate online content applications are the main drivers of consumers’ take up
of broadband. ETNO members call therefore on policy makers to facilitate the
creation of a single market for content services, through the simplification of
copyright and licensing regimes.

As main innovators and investors in high-speed networks and services, ETNO
members are committed to play their role in achieving the objective of providing
all European households and businesses with fast and ultra-fast broadband

Commissioner Kroes,
Ladies and Gentlemen, a strong commitment by whole ICT industry and policy
makers is in place. Let’s work together towards the goal of having a Digital

Thank you for your attention.