The role of infrastructure in the European roadmap for the digital decade. Digital Compass 2030

By 2030, all EU households in both urban and rural areas should be covered by a Gigabit network, and this is where digital infrastructures in general, and fiber optic networks, play a very important role in terms of connectivity.

Earlier this year the European Commission published the Communication “Digital Compass 2030: Europe’s Road to the Digital Decade”, which, among other things, set a clear target for connectivity: “all EU households, in both urban and rural areas, will be covered by a Gigabit network by 2030”.

The implementation of fiber networks in Spain is a reality, 84.9% of households in Spain have FTTH coverage according to the latest broadband coverage report published by the Ministry of Economic Affairs and Digital Transformation. The coverage levels achieved in urban areas are close to 100%, while in rural areas, where there is still work to be done, very high values of population coverage are associated with each speed (90% ≥ 30 Mbps and 60% ≥ 100Mbps) are also achieved.

With fiber optics, operators can offer services of more than 100 Mbps in general, being able to reach more than 1Gbps, and up to 10Gbps as recently announced by one of the main players in the market. Part of the investment effort of local and regional operators has been due to the migration of customers from other technologies such as WIMAX, HFC, or the switch-off of copper networks to fiber to the home. In terms of customers, FTTH lines are the fastest-growing, reaching 12.2 million in Spain in July, a year-on-year growth of 12%.

Non-fiber technologies are perceived as inferior solutions in the market for two reasons: customers are less willing to pay for such offers, and operators themselves find lower margins, as operating these networks is more costly than fiber networks.

Gigabit for everyone

Secure and sustainable digital infrastructures are one of the four cardinal points around which the EU’s Digital Decade vision is built.

The prerequisite for all citizens and businesses to be able to participate fully in society is excellent and secure connectivity for all and capable of reaching all corners of Europe. This ambition can be achieved with any combination of technologies enabling the deployment of very high-capacity networks and fixed, mobile, and satellite connectivity.

Investing in fiber, especially open-access networks, changes the ecosystem game for the country, as it has certain impacts on the market economy. There is a benefit for the investors themselves – with higher returns for shareholders – for the operators – as they have greater efficiency and marketing success – and for end-users who get gigabit speeds at affordable prices.

Multicountry projects

These ambitions are being released in the form of multi-country projects combining EU, Member State, and private sector investments.

At the local level, the first example can be found in the European funds coming from the Recovery and Resilience Mechanism. In the specific case of fiber optic infrastructures, with the new program to extend ultrafast broadband to 100% of the Spanish territory (UNICO), with the first call for 250 million euros, which is the largest allocation in history for fiber network structure, and where local operators are present in half of the 155 proposals received.

Another similar model can be found in Catalonia with the Strategic Plan for Digital Infrastructures (PEID), whose roadmap for the development of digital infrastructures until 2030 was recently approved.

Both are examples of how infrastructure networks are necessary for the deployment of current and future digital services. Connectivity is a social and economic right for all that ensures the development and competitiveness of the industry and the economy in our global and digitized market.

Wholesale operators, a new business model

The role of wholesale operators is key to ensuring that the above objectives are met, to the benefit of consumers, businesses, and socio-economic drivers. Wholesale operators facilitate the use of and access to infrastructure by operators, boosting competition in the broadband market and reducing the digital divide between urban and rural areas. They also make it easier for local and regional operators to manage the optimal footprint for connecting each customer in a much more efficient way, obtaining significant improvements in terms of cost impact.

In addition, the government is promoting the reduction of administrative hurdles to facilitate investment by operators and encourage partnerships and agreements between them, so that other models beyond individual network deployment, such as co-investments or co-deployments, network mutualization, or rights of use over networks, come to the fore.

Multiple wholesale business models are depending on the investment risk and implementation of the actual deployments. From securing an initial guaranteed base of retail customers (residential consumers, business customers, and public sector customers), through long-term purchase commitments from one or more initial wholesale customers to wholesale agreements with operators and ISPs. Even as networks are extended to less densely populated areas, the proportion of public funding (including the subsidies discussed above) is decreasing because fiber has become an easily “investable” market.