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Multi-billion Euro broadband fund obliterated by EU budget cut

Steelie Neelie sees 2020 digital agenda for speedier networks wiped out

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A €9.2bn fund proposed by Brussels officials to help bring faster broadband to the 27 Member States by 2020 has been obliterated after the European Union agreed to a budget cut that was engineered by Brit Prime Minister David Cameron.

It's a disaster for commissioner Neelie Kroes, whose digital agenda has been left in tatters with investment for broadband deployments proving to be the biggest casualty.

Late last week, Cameron - with a lot of help from Germany - managed to get the EU budget reduced [PDF] to €908bn from the European Commission's demand of €988bn over seven years. The move was seen as a victory for Blighty's PM, but it could still be chucked out by the European Parliament.

Unelected digital czar Kroes, meanwhile, said she was "disappointed" with the decision, after the Member States agreed that the Connecting Europe Facility project should only be given €1bn. The commissioner had hoped to secure a massive €9.2bn in funds for the programme.

She wrote in a blog post:

[T]his funding will have to be exclusively for digital services: because such a smaller sum does not leave room for investing in broadband networks.

I regret that: because broadband is essential for a digital single market, the rails on which all tomorrow’s digital services will run; and this could have been an innovative and highly market oriented way to deliver it, almost budget-neutral in the long run.

Kroes said that the cash would now be solely used to invest in service infrastructure such as eProcurement and eInvoicing. But she claimed that the broadband targets - to bring faster and better coverage across Europe by 2020 - were now "harder to reach".

She warned:

If they do not support that wider policy agenda, national governments will not achieve their own ambitions on broadband and the digital divide; they will face far more pressure to set up their own support schemes in areas where the market alone will act; and we risk not being able to build a connected, competitive continent.

Kroes added that the European Investment Bank (EIB) may be able to pump some cash into her now-flailing digital agenda. "The recent capital increase of the Bank of €10bn brings the promise of fresh broadband funding, and we should make the most of that," the commissioner said.

She had hoped that Brussels would pump €9.2bn into "broadband investment and pan-European digital public services" between 2014 and 2020.

Kroes wanted €6.4bn of that funding pot set aside for broadband infrastructure "largely in the form of equity, debt or guarantees". The commission and EIB had also been expected to "provide credibility, and improve the projects' credit rating by absorbing part of the risk".

The Register asked Department for Culture, Media and Sport - which is responsible for steering the £680m Broadband Delivery UK project - what the cut in European funding would mean for Brits hoping for faster internet connections in their homes and businesses over the coming years.

But Secretary of State Maria Miller's department hadn't got back to us at time of writing.

In late 2012, state aid clearance for the deployment of broadband in rural parts of the UK was finally granted by the EC only after lots of wrangling about paperwork between Brussels' officials and the DCMS.

Blighty's coalition government is hoping to bring universal broadband access of at least 2Mbit/s and super-fast connections for 90 per cent of properties across the UK by 2015. That's even though national telco BT, which has won all the local authority BDUK contracts to date, keeps saying that individual projects won't be completed until 2016.

The UK does in fact have reserve funds of £300m from the TV licence settlement which it may tap into beyond 2015 - when the current Parliament ends. Broadband minister Ed Vaizey indicated late last year that no decision had been taken about how that would be spent. Whitehall officials, however, might now be giving it some serious thought. ®

Updated to add

A DCMS spokesman told El Reg this afternoon: "It remains important that the EU agrees an affordable budget which reflects the current fiscal position faced by Member States. The UK does not support unaffordable increases in spending. The commission had interesting proposals for the €9.2bn CEF but the government has not developed any future broadband plans on the assumption that it would go ahead."

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