Transcript Slide 1

CEF: Future proofing the EU
economy
ONIEB workshop
High speed broaband – a platform for innovation
Filippo Munisteri, DG CONNECT
19 September 2012
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CEF: Policy
rationale
CEF: a common approach to growth…
Europe’s economic future requires smart, sustainable and fully
interconnected transport, energy and digital networks => key for
the Europe 2020 Strategy.
Effective interconnection of networks can only be achieved at the
European level, guaranteeing minimum cost to all citizens.
CEF aims at supporting infrastructures with a European and Single
Market dimension, targeting EU support on priority networks to be
implemented by 2020 where European action is most warranted.
CEF aims at building an environment conducive to private investment
and develop instruments that will be attractive vehicles for specialised
infrastructure investors.
CEF seeks to find common solutions for all sectors, wherever possible
and practical.
Smart performance indicators common to CEF aligned on Europe 2020
strategy and 20-20-20 energy and climate change objectives, as well as
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specific sectoral objectives and indicators.
CEF: Policy
rationale
…to specific political requests
•
Letter by 12 Prime Ministers (UK, NL, IT, EE, LV, FI, IE, CZ, SK, ES, SE,
PL) 20 February 2012
(…) we must step up our efforts to create a truly digital single market by 2015.
(…) We must (…) continue our efforts to build modern infrastructure to provide
better broadband coverage and take-up and extend and promote e-government
services to simplify the start up and running of businesses and aid the mobility
of workers.
•
G8/G20 Deauville
The global digital economy has served as a powerful economic driver and
engine of growth and innovation. Broadband Internet access is an
essential infrastructure for participation in today's economy
•
European Council 1-2 March 2012
In particular, efforts will continue in order to (…) complete the Digital Single
Market by 2015, in particular by adopting measures to boost confidence in online trade and by providing better broadband coverage, including by
reducing the cost of high-speed broadband infrastructure;
•
A. Merkel quote from BITKOM (5 March 2012)
The best technical possibilities, (…) will remain hidden if the visible connections
do not exist and data cannot get transferred. This is why infrastructure is
bread and butter, to allow people access to these technical developments. 3
CEF digital networks:
Policy rationale
.
.
Broadband deployment:
»
»
»
Through a portfolio of projects enabling fast and ultra-fast internet access
Europe 2020 broadband objectives (access: 100% of households at 30
Mbps; use: 50% of households at 100 Mbps)
Market driven (i.e beyond the grants logic) through credit enhancement,
involvement of private sector operators and institutional investors
Cross-border ICT digital services
»
»
»
»
Common digital service architectures in line with Digital Single Market logic
Grants to project consortia and procurement of European platforms
No changes required to existing national platforms
Move on-line and render European key services of public interest such as:
• High-speed backbone connections for public administrations (sTESTA..)
• Cross-border delivery of e-Government services to European citizens (E-ID, eHealth)
• Support the Digital Single Market by removing barriers to companies operating
cross-border (e-Procurement, e-Invoicing, e-Signature)
• Enabling open data access to public sector information and multilingual services
• Internet Safety for Kids and security through coordination of European CERTs
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Why CEF: Broadband
drives competiveness
Correlation Fixed Broadband Penetration and Competitiveness
WEF's Global Competitive Index score
5.8
Sweden
5.6
Finland
Japan
5.4
5.2
US
UK
Belgium
Austria
Germany
4.8
Netherlands
France
Luxembourg
5
Denmark
Korea
Ireland
Estonia
4.6
Czech Rep.
Poland
4.4
Portugal
Lithuania Italy
Hungary
4.2
Bulgaria
Slovakia
Spain
Cyprus
Slovenia
Malta
Latvia
Romania
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0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
Fixed broadband lines per 100 population
"An increase in the broadband penetration rate by 10
percentage points raises annual growth in per-capita GDP by 0.9 to 1.5
percentage points". Faster broadband = higher growth.
(Czernich et al. - CESIFO WORKING PAPER NO. 2861, Ifo Institute for Economic Research, 2009) 5
Why CEF: Broadband
creates jobs
2.6 jobs are created by the Internet for every job lost
(McKinsey, 2011, SME survey)
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…demand is soaring
from citizens…
Multiple
application
usage
eHealth:
Remote
eHealth: Virtual
Diagnostic
Care Unit
Examination
HD education
fast downloads
Downstream bandwidth requirements
100Mbps
25Mbps
HD
telepresence
HDTV
8Mbps
2Mbps
VoIP
Standard
Standard
def TV
Fast
def TV P2P file- MPEG2
internet MPEG4 sharing
Online
browsing
radio
Source: Analysis based on Broadband Stakeholder Group
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…and business…
Three applications for which SMEs will need high-speed
broadband:
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Cloud computing: separates IT resources from the devices used
to access them. By 2015 it will be a $85 bn business, with market
doubling every two years. Cloud-based solutions reduce costs and
create new markets.
-
Internet of Things: sensors embedded in physical objects
become linked and connected to the internet. This generates
enormous volumes of data (remote health monitoring, smart
grids). Connected IoT nodes grow at 35% annually. This creates
new ways for companies to manage information and reduce costs.
-
Big data: as databases become massive and complexity increases,
it creates new markets for companies to handle data, reducing
search time for clients. The European public sector could witness
annual productivity gains of €255 bn. in the next decade.
Source McKinsey (2011)
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…but supply is still
lagging behind
Is Europe investing enough?
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…supply is still
missing
the EU scores against the Digital
Agenda targets reflect supply gap
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Making it happen
EC strategy for NGA investment
• Focus: Incentivising private NGA infrastructure investment
by improving risk-return trade-off
VP Kroes statement 12/7/12
Recalibrate regulatory instruments:
• Cost reduction measures
• Cost methodologies
• Rec. on non-discrimination
Increases private
investor returns
MFF proposal 2014-2020
EU enhanced project-financing
facilities:
• Connecting Europe
Facility
Reduce private
investor risk
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What we
finance
• For broadband:
• Mapping, planning, feasibility studies
=> Grants
• Broadband roll-out => Financial
instruments
• For digital services:
• Promotion and policy support =>
grants
Broadband (1)
• Potential beneficiaries:
•
•
•
•
Telecoms (incumbent or new entrant)
Utilities
Regional bodies, including municipalities
New alliances and partnerships, including
equipment providers
• PPPs
Broadband (2)
 No business case: => grants (Structural
funds)
 Where strengthening of business case
possible: through financial instruments




Loans
Guarantees
Bonds (project bond pilot)
Equity (infrastructure investment funds)
Digital Service
Infrastructures
 Smart energy services
• Linking energy and telecoms infrastructure
 Safety and security
• Safer internet for children online
• Critical information infrastructures
 eGovernment
• eHealth
• eIdentification for secure transactions
• Setting up a business across borders
• eJustice (information on justice systems and
improving access to justice throughout the
EU)
 Access to public sector information, digitised cultural
goods and to multilingual services
An example:
Europeana
CEF: how does it
work
CEF: EC assumes project
risk
Broadband
(2)
 Revenue potential, but risk of revenue stream (too) high:
EC/EIB "underwrite" part of project risk through financial
instruments (FIs)
 Debt-related: Loans, guarantees, project bonds
 Equity (infrastructure investment funds)
 Design of CEF FIs to be tested – Project Bonds pilot
scheme
 Areas without viable business case: grants (direct EU
contribution to costs)
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Financial instruments
under CEF
•
No risk for EU budget beyond commitment: no guarantee
entered in EU budget. Residual risk stays with financial partner.
•
Financial partners to decide on projects to be supported, but the
eligibility criteria determined by the Guidelines and WPs, on 1st
come 1st served basis.
•
Blending of FI from CEF and grants from Structural funds and
other EU/MS sources possible to optimise the impact of the
project.
•
Flexibility: different project sizes to receive support through
different financial instruments.
•
Project Bonds: projects requiring higher project size eg €50 million.
•
Smaller size PB projects (e.g. €10 million) can receive support if
aggregated (eg “repackaged” by financial partner in a single
instrument)
•
Use of other instruments dedicated to smaller size projects (e.g.
equity, debt)
Leverage effect
•
The leverage effect measures the capacity of mobilising private
capital. It is higher for FI, than for grants (typically in 50% cofinancing);
•
In the on-going RSFF programme: leverage effect is 14x. LGTT
(Loan Guarantee instrument for Trans-European Transport): leverage
effect 40x;
•
CEF proposal: a conservative 6x estimate adopted.
Some scenarios
CEF funds, split
leverage factor amount leveraged (bn.€)
Additional households covered (mln.)
2 bn. Grants, 5 bn.
Fis
6x
42
33.6
1 bn. Grants, 6 bn.
Fis
6x
45.5
36.4
2 bn. Grants, 5 bn.
Fis
8x
52
41.6
1 bn. Grants, 6 bn.
Fis
8x
57.5
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Based on a simplifying assumption of €1,250 of average cost per line for all households
EC project-financing
(1) - PBI
Project bonds (PBI): The concept
 Designed to enhance the rating of senior debt of projects,
ideally to single A
 Funded or unfunded subordinated tranche provided by EIB
with the support of the EU budget
 Subordinated tranche maximum 20% of senior debt
▶ Cushion for senior debt service if project risks materialise
 For ICT: EC budget €20 million for 2013, pipeline building
begins this autumn
 Intended to facilitate creation of liquid and mainstream
infrastructure asset class
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Project bonds
Project bonds (PBI): The concept
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Source: DG ECFIN
Broadband impacts
and spillovers
Bb coverage accelerated the take-up
of entrepreneurship in ICT by 54%
(general 8%)
+2.7 m. man-year jobs and €152 bn.
of added value to the EU economy
+10% bb
penetration =>
+1.5% lab. prod
growth
Homeworkers
took on average
a 1/4 days sick
leave a year than
their office
attending
counterparts
+5% bb => + $4.3
bn. GDP and
+40,000 jobs in
education in the US
Direct job
Indirect job
creation
creation
Labour prod.
GDP
Tele
ICT networks and
digital services
working
deployment
Education
€27.89 bn. benefit from tele
monitoring/e-health (0.299% of
EU GDP)
+10% in bb
household
penetration =>
+0.9-1.5% GDP
Smart grids
Savings for
Gov’ts
Tele
Smart
monitoring
buildings
Bb-enabled smart
grid services
=>€850 bn. in
gross energy
savings (US)
157 m€/year in ES
from eCadastre.
EU wide Eprocurement: €50
Bn. savings
Up to -70% energy use in new
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office buildings using broadband
connections
Thank you for your
attention
[email protected]
European Commission, DG CONNECT, Unit B5 – Broadband
BU33 2/38, Tel: +32 (2) 298 72 46