07 November, 2016

New BCG report calls for inclusive gigabit society, €660bn required to reach the goal

New BCG report shows that 5G and mix of fixed technologies will meet EU’s connectivity ambitions, boost digital opportunities

Brussels, 4 November 2016 – ETNO, the Association representing Europe’s leading providers of digital communications and services, has today presented a new report on “Building the gigabit society: an inclusive path toward its realisation”, prepared by BCG – the Boston Consulting Group (download here).

A few weeks from the presentation of the European Commission Communication on the gigabit society and of the new European Electronic Communications Code (see here), this report provides a practical perspective on how European telcos can contribute to achieving Europe’s connectivity ambitions in an inclusive way.

BCG’s inclusive model for the gigabit society

The main finding of this new BCG report is that the best path towards the gigabit society lies in a technology-inclusive approach supported by a broad range of investment models. The objective is to ensure that no European territory is left behind, by connecting as many citizens as possible in the shortest period of time and with the best technology.

As digital empowerment becomes more and more essential to citizens’ lives, BCG warns that “those who have the lowest speeds today should not be the ones who benefit from the gigabit society the last”.

Technological choices and investments are key

The BCG report finds that “connecting all households to a Very High Capacity (VHC) network by 2025 should be possible in combination with substantial 5G coverage by the same year”. The condition is to use a mix of technologies and allow an increase of the annual network investment, financed by improved returns, by demand stimulation measures and by subsidies for challenging areas.

As for the technology-mix, the gigabit society will require both FTTH and advanced copper-based networks, which bring fibre closer to the home, as well as hybrid fibre coaxial (HFC) networks. In addition to this, telecom operators will need to push 5G roll-out, especially in urban areas, facilitated by deep fibre networks. FTTH is indicated as the most capable technology, but many options exist for efficient step-by-step investment.

In this context, regulation will play a fundamental role. BCG vouches for a simplified and streamlined access regulation, for forward looking spectrum policies and for a dynamic-efficiencies approach to competition policy.

Costs and timing

The BCG report finds that the required investment to fund the gigabit society vision is €660 billion if delivered via FTTH only. This includes €360bn to enable FTTH broadband for all European households, €200bn in 5G radio access networks as well as €100bn for low-latency proximity data centres.

This effort is expected to be funded mainly by private investment, even though at the current pace this would take up to 30 years. However, with the technology-inclusive approach proposed by BCG, the objective can be achieved by 2025. This requires both an investment-centric regulatory environment and improved returns on investment, to allow an additional annual investment of €10bn.

Lise Fuhr, ETNO Director General, said: “The gigabit society is a vision for universal access and fair participation into Europe’s digital future. The investment effort of ETNO’s companies can turn that vision into reality. The new Electronic Communications Code needs to incentivise a technology-inclusive approach supported by diverse investment models”.

Wolfgang Bock, BCG Senior Partner & Managing Director, said: “The European Commission has recognised the crucial role of networks and has set ambitious connectivity goals. Mobilising the massive investment required is possible, but it depends on flexible regulatory and technological choices, tailored to local conditions”.

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