Funding Europe’s broadband ambitions
Countries are testing a variety of models to finance essential broadband infrastructure
Demand for broadband soared in 2020 as the COVID-19 crisis drove people to work and learn from home and increasingly turn to the internet for shopping and entertainment. According to the Organisation for Economic Co-operation and Development, telecoms operators saw spikes in internet traffic of up to 60 percent as the pandemic took hold.
Europe’s recognition of the strategic importance of fast, reliable connectivity predates the pandemic. COVID-19 has only highlighted the importance of the continent’s two key priorities: increasing access in rural areas and driving uptake of superior, materially faster fiber-to-the-home connections everywhere.
But funding investment in broadband networks and full-fiber rollouts is likely to be complex. Only in the past decade did infrastructure funds and institutional investors begin to consider broadband as core infrastructure. Most commercial banks are still most comfortable financing traditional infrastructure assets such as utilities and toll roads, which means project finance for broadband infrastructure is likely to incur higher interest rates. And infrastructure funding models such as private finance initiatives and public-private partnerships are still relatively nascent in the broadband context.
Different countries have different requirements, with nations such as France, the UK, Germany and Italy all taking different approaches—each with their own tradeoffs. What’s clear is that some form of cooperation is required between the private and public sectors to achieve the best financial outcomes for commercial operators and strategic objectives for governments.
As the pandemic reinforces broadband’s position as essential national infrastructure, European countries have much to learn from observing each other’s approaches to funding high-speed connectivity.