|Financing Fibre to the Home|
|Written by Groupe Intellex Global|
|Thursday, 28 April 2011 10:20|
(Extract from FTTH Council Europe, Newsletter 28th April 2011)
Funding of next-generation access (NGA) networks is a hot topic. The relatively slow pace of investment by the private sector combined with the difficult business case in rural areas has prompted the European Commission to explore new ways to stimulate both public and private sector investment in broadband infrastructure projects.
Many people do not realise that Europe already has an important source of finance for long-term infrastructure projects, in the shape of the European Investment Bank (EIB). The EIB is a lending institute owned jointly by all 27 EU member states, whose purpose is to finance infrastructure projects that help to meet European policy objectives, such as the Digital Agenda.
Unlike most commercial banks, the EIB has an in-house engineering team that looks very closely at the technology aspects of the project. As a result, being financed by the EIB is viewed as a “quality mark” that can help a company attract further investment. Over the past couple of years, a number of FTTH operators have been supported by the EIB, including Portugal’s three big operators – Portugal Telecom, Sonaecom and ZON Multimedia – and Reggefiber in the Netherlands.
In addition, the Commission has recently opened a consultation on “Europe 2020 Project Bonds” which will provide an alternative to bank loans for companies and public-private partnership ventures carrying out long-term infrastructure projects. The aim is to stimulate additional private sector financing by providing guarantees and other types of credit-enhancement measures that reduce the risk for third-party investors.
For the public sector, the largest sources of EU funding for infrastructure projects are the Structural Funds, which include the European Regional Development Fund (ERDF), the European Social Fund (ESF), and the Cohesion Fund. The total resource allocated to these funds between 2007 and 2013 was €347bn – equivalent to approximately one-third of the EU’s total budget.
With these funds coming up for review in the next few years, the Commission has promised to streamline and simplify the financial instruments that can be used to invest in broadband networks. The financial landscape is changing, and there will be new opportunities to invest in fibre networks. It’s the ideal time to launch the FTTH Council Europe’s new initiative, called “How fibre?”, which will investigate and promote successful funding and business models for FTTH networks in Europe.