Network operators urge EU not to cut proposed ICT funding

EU leaders to consider cutting funding at this week's summit

European telecom carriers on Wednesday urged European Union member states not to cut proposed funding for broadband and cross-border digital service infrastructure.

The Connecting Europe Facility (CEF), which has earmarked a ¬50 billion (US$67 billion) investment for transportation, energy and ICT between 2014 and 2020, will be debated by E.U. leaders on Thursday and Friday as they try to negotiate a budget package.

Current proposals by President of the European Council Herman Van Rompuy would see the overall CEF budget cut to around ¬40 billion. In a letter to Van Rompuy, ETNO (the European Telecommunications Network Operators' association) warned that a reduction in the proposed funding would be "a short-sighted decision."

CEF aims to speed up investment by telecom companies that at the moment may not have enough market incentive to invest, particularly where citizens do not yet have high-speed broadband access.

Under the original CEF plan, ¬9.2 billion was to go to ICT projects -- ¬7 billion to aid the deployment of fast and ultrafast broadband networks at speeds of 100M bps and above, and ¬2.2 billion for cross-border e-services such as eHealth, eSignatures, eProcurement, cybersecurity and Europeana (Europe's digital cultural archive). The European Commission, which first put forward the proposals in 2011, estimates that eProcurement alone could save up to ¬100 billion a year.

Although the e-services part of the proposals would be funded by direct grants, the money for broadband would be largely in the form of equity, debt or guarantees. The Commission estimates that each euro invested by the CEF could leverage between ¬6 and ¬15 of public and private investment by giving projects credibility and lowering their risk profiles.

"A full ¬9bn spent on broadband and cross-border digital service infrastructures would be money well spent. But we don't see it is as a competition with energy and transport -- all the elements of the proposal are valid. But we are realistic -- there will be a cut of some amount," said Commission Digital Agenda spokesman Ryan Heath.

He added that because the funding is backed by the European Investment Bank, national governments get back, with interest, the money they put into the CEF. "There is little short-term and no long-term financial gain in cutting this funding proposal," said Heath.

Follow Jennifer on Twitter at @BrusselsGeek or email tips and comments to jennifer_baker@idg.com.

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