opportunities for health professionals to take on new roles and to provide care in different and innovative ways.
Such systems create opportunities for health professionals other than doctors to order certain tests and to make treatment
sector with an array of new information and communication technologies (ICTS) that promise to revolutionise the delivery of
themselves and so have been rapidly increasing investment in the new technologies. 1-3 The rhetoric of vendors and governments
Will information and communication technology disrupt the health system and deliver on its promise Johanna I Westbrook and Jeffrey Braithwaite
•Investment in information and communication technology (ICT in the health sector can bring important benefits.
procedure manuals †and assess how ICT can create opportunities for supporting new care delivery models rather than replicating
entrenching existing problems †rather than as an opportunity for truly reforming health care delivery Competing interests
17 Department of Broadband, Communications and the Digital economy. Aus -tralia†s digital economy: future directions. Final report.
23 Zuboff S. The emperor†s new information economy. In: Orlikowski W, Walsham G Jones M, et al, editors.
Will information and communication technology disrupt the health system and deliver on its promise Johanna I Westbrook and Jeffrey Braithwaite
17 Department of Broadband, Communications and the Digital economy. Australia†s digital economy: future directions. Final report
23 Zuboff S. The emperor†s new information economy. In: Orlikowski W, Walsham G, Jones M, et al, editors.
and stakeholders, allowing them to explore the potential for collaboration and to better understand innovation dynamics.
communication technologies, food, advanced materials, services, tourism, sustainable innovation advanced manufacturing systems, and the cultural and creative industries.
Finally, we compare the main areas of planned investment with sectoral data on firms, employment and patents, with the conclusion that the connection between priorities and the
in order to ensure effective and efficient investments in research and innovation (R&i)( European Commission, 2010b. One essential feature of RIS3 is the concentration of funding on a limited
economic system (a region for example) to generate new specialities through the discovery of new domains of opportunity and the local concentration and agglomeration of resources and
competences in these domains†(Foray, 2015. These are codified then in RIS3. According to the 1) http://s3platform. jrc. ec. europa. eu/map
in order to address emerging opportunities and market developments in a coherent manner, while avoiding duplication and fragmentation of effortsâ€;
3) A process whereby national or regional managing authorities, together with stakeholders such as research institutions
allow emerging opportunities and market developments to be addressed in a coherent manner while avoiding duplication and fragmentation of efforts.
services as regards innovation policy development and implementation: the analysis of technological and scientific strengths and how to use them for growth by the Directorate-General
DG Enterprise and Industry†s experiences with cluster policies sector-specific innovation policies and the Lead Market Initiative (European commission, 2009
including regional innovation systems, economic geography, institutional economics and evolutionary geography (e g. Asheim et al. 2007; Frenken and Boschma, 2007;
customers for innovative solutions, etc. However, most innovation results from existing regional capabilities that transform into new industries in different forms
but demand in certain product markets (which can be influenced by market access, legal frameworks impacting on private and public demand for
innovative solutions, etc..The Lead Market Initiative brought demand-driven innovation policy instruments into EU innovation policy thinking (Aho et al.
2006). ) In its report on reindustrialising Europe to promote competitiveness and sustainability, the European parliament stressed again the
services living up to societal needs"(European parliament, 2013: 14-15 This concept of market creation is also important in the context of RIS3
and users/civil society to develop a better understanding of both future and private investment
It argued that research investments in Europe have been overly fragmented, have lacked critical mass and have been plagued by a †me too†syndrome, which
manifested as regions making investments in very similar and fashionable areas such as information and communication technologies (ICT),
and nano-and biotechnologies. These areas of investment were disconnected often from actual local capabilities, and, in many cases, based on
hopes of developing future industries. Also DG REGIO observed this challenge in its work with RIS
as well as DG Enterprise and Industry in the context of politically driven cluster initiatives. The lack of connections between these investments and existing capabilities was
probably one of the greatest problems; recent related research underlines this issue by showing that regional innovation, in many cases, begins with a set of existing capabilities (Neffke et al
prevent regions from developing economies of agglomeration and positive spill overs. In order to overcome these problems of fragmentation, mimesis and lack of critical mass, great importance
investments in R&i were expected to increase considerably in ESIF, DG REGIO and the Joint Research Centre set up the Smart Specialisation Platform at the Institute for Prospective
as of 2012, identifying priorities for their RIS3 investments 3. Developing an open data tool for mapping innovation priorities
visibility and an opportunity to be recognised by potential counterparts looking for collaboration in a particular area.
because this sector encompasses large parts of the economy. Moreover, an important goal of smart specialisation is to stimulate R&i activities linking industry and research,
which also influence planned investments Table 1: Number of priorities within the main category †research and innovation capabilityâ€
%Information and communication technologies (ICT) 157 12.0 %Energy production and distribution 138 10.6 %Agriculture, forestry and fishing 112 8. 6
%Services 93 7. 1 %Creative and cultural arts and entertainment 60 4. 6 %Tourism, restaurants and recreation 51 3. 9
%Information and communication technologies (ICT) 98 7. 5 %Tourism, restaurants and recreation 74 5. 7
%Services 69 5. 3 %Agriculture, forestry and fishing 65 5. 0 %Creative and cultural arts and entertainment 52 4. 0
For example, ICT, services, creative industries, and agriculture forestry and fishing are described most frequently as R&i capabilities, whereas health-,tourism
%Human health activities (medical services) 47 3. 6 %Machinery and equipment 41 3. 1 %Basic pharmaceutical products and pharmaceutical preparations 35 2. 7
%Human health activities (medical services) 71 5. 4 %Energy distribution 46 3. 5 %Power generation/renewable sources 43 3. 3
communication technologies Information and communication technologies 6 %Public health and security Human health 5. 6 %As expected, there is a higher frequency in the priority combinations based on these main
categories than based on the sub-categories. Among these main category combinations, there are fewer combinations and more priorities belonging to each of these combinations, as illustrated in
communication technologies (ICT ï Health ï Food ï Advanced materials ï Services ï Tourism ï Sustainable innovation
ï Advanced manufacturing systems ï Cultural and creative industries tourism (and culture) not figuring prominently among the ERDF Thematic Objectives.
that these investments stem from political priorities, rather than from a real discovery process and
creative industries, tourism and services When comparing the absolute numbers of firms by sector with
services. However, few regions specifically mention any of the other major sectors†legal services, engineering or head officesâ€
in the text descriptions of their priorities. Likewise, few regions mention priorities in retail trade, but
Construction, real estate and related services are large sectors, but they do not correlate strongly with RIS3 priorities.
ï services (to some extent) and †civil engineering†After looking at the number of local units in absolute terms, growth in absolute terms and relative
food, services and advanced manufacturing and ï †food and beverage service activities†ï the †manufacture of food productsâ€
ï †services to buildings and landscape activities†(possibly ï the †manufacture of fabricated metal products, except machinery and equipmentâ€
†mining support services actionsâ€, †mining of metal ores†and †veterinary activitiesâ€. The main
overlaps were found to be with services, sustainable innovation and ICT priorities 0 %10 %20
management services Retail trade not in stores, stalls or markets Manufacture of basic pharmaceutical products and pharmaceutical preparations
ï ICT and †electric communication technique†and †computing, calculating, counting†ï energy and †generation, conversion or distribution of powerâ€
relevant to some of the main priority areas, such as tourism, services, and the creative and food
management services Veterinary activities Waste collection, treatment and disposal activities materials recovery Information service activities
Electric communication technique Measuring; testing Basic electric elements Computing; calculating; counting Vehicles in general Engineering elements or units;
this, they had to select a limited number of investment priorities, via an entrepreneurial discovery
communication between countries and regions. Currently, the dataset covers 1 307 priorities from 20 EU countries, 174 EU regions, 6 non-EU countries and 18 non-EU regions;
materials, services, tourism, sustainable innovation, advanced manufacturing systems, and the cultural and creative industries In order to explore the extent to which regions
regional stakeholders engaged in an entrepreneurial process of discovery. In the coming years priorities that are defined more broadly should be broken down,
the concept, Knowledge Economists Policy Brief 9. Available online: http://ec. europa. eu/invest-in
opportunities and challenges for regional innovation policy Routledge: Abingdon Frenken, K. and Boschma, R. 2007.
Development Economics 72 (2: 603†633 IPTS (2011. The RIS3 Guide. Available online: http://s3platform. jrc. ec. europa. eu/s3pguide
Agricultural services Crop and animal production, hunting and related service activities Fishing and aquaculture Forestry and logging
Human health activities (medical services Residential care activities Social work activities without accommodation Information and communication technologies (ICT
Computer programming, consultancy and related activities Information service activities Motion picture, video and television programme production, sound recording and music publishing activities
Services Activities auxiliary to financial services and insurance activities Activities of head offices and management consultancy activities
Services to buildings and landscape activities Travel agency, tour operator and other reservation service and related activities
Air transport and related services Postal and courier activities Rail transport and related services Road transport and related services
25 Warehousing and support activities for transportation (logistics storage Water transport and related services Water supply, sewerage, waste management and remediation activities
Sewerage Waste collection, treatment and disposal activities, materials recovery and remediation activities Water collection, treatment and supply
Wholesale and retail trade Retail trade Wholesale trade 26 Appendix 2: Categories and sub-categories for EU priorities
Aeronautics and environment Bio-fuels and energy efficiency Remotely piloted aircrafts Safety and security Space Transport and logistics
Cleaner environment and efficient energy networks (e g. smart grids E-commerce and SMES online e-Government (e g. e-Procurement, e-Participation
New or improved service products (commodities or public services Social innovation New organisational models and social relations that meet social needs
New products or services that meet social needs Social innovation with regard to child care Social innovation with regard to education, skills and training
and stakeholders, allowing them to explore the potential for collaboration and to better understand innovation dynamics.
in the EU are energy, health, information and communication technologies, food, advanced materials, services, tourism
Finally, we compare the main areas of planned investment with sectoral data on firms, employment and patents, with the conclusion that the connection between priorities and the economic and
Facilities-based infrastructure competition 7 Overall assessment 8 Glossary 9 1 Introduction 11 2 Key goals of the Digital Agenda for Europe (DAE) 14
2. 4 What are the implications of realistic consumer bandwidth demands? 20 3 Potential benefits of broadband in Europe 22
7 Facilities-based infrastructure competition 68 7. 1 The Regulatory Framework and facilities-based competition 69
7. 2 Societal welfare benefits from facilities-based competition 70 7. 3 Facilities-based competition as a stimulus for fibre-based NGA deployment 71
7. 4 Prospects for achieving sufficient facilities-based competition 72 References 75 III FIGURES Figure 1:
Global Internet consumer traffic growth trends over time 16 Figure 2: Global consumer Internet traffic 17
Figure 3: The evolution over time of consumer bandwidth demand during the busy hour 20
Figure 4: The â€oebroadband bonus†in the OECD countries 25 Figure 5: Consumer surplus in Europe (bn.
Investment subsidies required per customer for each geographic cluster 46 Figure 19: The traditional one-way cable TV network 50
Facilities-based competition and NGA deployment 72 IV Rethinking the Digital Agenda for Europe (DAE
Impacts of high speed broadband investment in Europe 2012-2020 26 Table 4: Typical maximum achievable speeds for various wireless solutions 33
-based fixed network alternative to an FTTX network, thus enhancing competition Wireless also functions in a useful complementary role (1) to provide coverage in low
broadband, may be greater in countries where competition is more effective The goals of the Digital Agenda for Europe
interpretation should track trends in consumer demand for broadband 2 Rethinking the Digital Agenda for Europe (DAE
Consumer demand for bandwidth has grown steadily over the last decade, albeit at a percentage rate of growth that is declining over time.
demand per household is less than many assume, even though total global bandwidth demand is substantial. Per projections based on Cisco VNI data, average global bandwidth
demand per household in 2020 (the target data for achieving the DAE€ s objectives for
The evolution over time of consumer bandwidth demand during the busy hour Source: Cisco VNI 2011 data, 1 WIK calculations
but in light of realistic consumer demand it is not necessary to assume that every broadband user will consume maximum capacity all
Ability of different technologies to meet realistic consumer demand Eurodocsis 3. 0 cable systems already comfortably exceed the 100 Mbps called for in
networks, as well as fixed and mobile wireless services In assessing the current status, it is important to distinguish between the coverage or
progressively closer to the end-user as and when needed to meet customer demand •The cost of upgrading existing digital cable systems to Eurodocsis 3. 0 is minimal
there has been little customer demand for upstream data bandwidth. The biggest single impediment is that such a shift would conflict with analogue FM radio
The recently published study by J. Hätã nen of the European Investment Bank (EIB
rather than a gain in facilities-based competition, is a separate question The Feijoo/Barroso and EIB studies seem to be in reasonably good agreement for Spain
Facilities-based infrastructure competition The European regulatory framework for electronic communications has advocated always an approach to regulation that is,
infrastructure competition, it is striking that the Digital Agenda for Europe contains only a single reference to cable television †and that an altogether backward-looking statement
Cable provides facilities-based infrastructure competition. The value of infrastructure competition is recognised explicitly in the European Regulatory Framework
Infrastructure-based competition is important in the long term. A European network environment where only a single medium provides last mile access is a European network
environment where detailed regulation to address market power is needed forever Cable tends to enjoy low unit costs in providing broadband services at whatever speed
This puts pressure on incumbents to innovate, and to operate efficiently Infrastructure competition is a valuable complement to SMP-based regulation.
For instance, it can help to correct for any errors in regulatory price-setting A recent WIK study found a strong link between DOCSIS 3. 0 coverage and FTTN/VDSL
roll out (typically by the incumbent), but no statistically significant relationship between DOCSIS 3. 0 coverage and FTTH/FTTB roll out.
This suggests that incumbents find FTTN/VDSL to be an adequate response to cable A recent analysis by Feijoo and Barroso of potential NGA deployment in Spain
distinguishes between areas of â€oe2+†competition, where the fixed network, cable and mobile all compete,
versus â€oe1+†competition, where only fixed and mobile compete Facilities-based inter-modal competition,
even if limited to discrete geographic areas may have the tendency to constrain prices to reasonable levels across much larger
fixed network alternative to an FTTX network, thus enhancing competition Wireless also functions in a useful complementary role (1) to provide coverage in low
technology for providing consumer broadband services over copper telephone lines ARPU Average Revenue per User BW Bandwidth;
EIB European Investment Bank EU European union FTTX Fibre to the â€oexâ€; x=N c, B, H;
communication of high-speed data Mbps Mega bit per second (one million bits per second MDF Main distribution frame
ROI Return on Investment RSPG Radio spectrum Policy Group RSPP Radio spectrum Policy Program SMP Significant Market Power;
appreciable extent independently of competitors, customers and ultimately consumers†(Framework Directive SMTP Simple Mail Transfer Protocol
Vod Video-on-Demand; a Video on Demand enables end-users to select and watch video content over a network
Wimax Worldwide Interoperability for Microwave Access WTP Willingness to Pay 4g Fourth-generation mobile communication standard
11 1 INTRODUCTION Key Findings â The goals of the Digital Agenda for Europe (DAE),
network, thus enhancing competition â Wireless also functions in a useful complementary role (1) to provide coverage
//ec. europa. eu/information society/digital-agenda/documents/digital-agenda-communication-en. pdf K ey F
current consumer incremental willingness to pay for high bandwidth services is estimated at a mere â 5 per month4 †too little to support so broad a deployment of fibre
-based fixed network alternative to an FTTX network, thus enhancing competition The key issues addressed in this study are
communications purposes? What is expected the time frame in which remaining cable can be expected to be upgraded to Eurodocsis 3. 0
See also European Investment Bank (2011), â€oeproductivity and growth in Europe; ICT and the e-economyâ€
interpretation should track trends in consumer demand for broadband â Consumer demand for bandwidth has grown steadily over the last decade, albeit
at a percentage rate of growth that is declining over time â Bandwidth demand per household is less than many assume, even though total
global bandwidth demand is substantial. Per projections based on Cisco VNI data, average global bandwidth demand per household in the busy hour in 2020
is less than 2 Mbps â Ultra-fast broadband access is useful, but it is not necessary to assume that every
A series of studies by the European Investment Bank appropriately raised the question What do the bandwidth targets in the DAE signify
the interpretation should track trends in consumer demand for broadband. Consumer demand for bandwidth has grown steadily over the last decade,
albeit at a percentage rate of growth that is declining over time (see Figure 1), and this trend can be expected
that tracks this evolution of consumer bandwidth demand over time 6 DAE, page 19 16 Rethinking the Digital Agenda for Europe (DAE
What bandwidth are customers likely to want going forward? It is not as difficult as one
the bandwidth demand of individual households tends to be far less than many have assumed. Moreover, it is clear that even in 2015, a very small fraction
Translating the above Cisco data into Mbps demand, during the average hour and during the busy hour, we have depicted the results in Table 2. Data networks are generally
Estimation of the mean aggregate bandwidth demand during the busy hour from the data is straightforward,
The evolution over time of consumer bandwidth demand during the busy hour Source: Cisco VNI 2011 data, 15 WIK calculations
What is particularly striking is that the mean global bandwidth demand per household is far less than most have assumed,
the average demand during the busy hour is well below 2 Mbps. This has important
2. 4 What are the implications of realistic consumer bandwidth demands Many policy implications flow from the bandwidth demand characteristics noted in Section
2. 3. In this respect, it is important to distinguish between the access network (e g. the
as demand grows •Different customers will have different bandwidth needs. Different networks will have different customers,
and their customers may use their respective networks in different ways (especially fixed versus mobile.
All of this argues against a one -size-fits-all approach, and also against a one-technology-fits-all approach.
Again networks should be designed so as to evolve over time to meet the needs of their respective customers
•Eurodocsis 3. 0 cable systems already comfortably exceed the 100 Mbps called for in the DAE.
and for that matter in excess of consumer demand that is likely to present considerably beyond 2020. Under reasonable assumptions
and the degree to which bandwidth demands differ from those of fixed network users (due, for example, to smaller screen size.
customer groups, to the different geographic areas in which customers are located, to the capabilities of networks already deployed there,
be greater in countries where competition is more effective â Caution is appropriate in interpreting any of these results
Internet applications, services and content benefit by selling services to consumers or by selling advertising to a wide range of firms.
economic growth. 19 A study by Micus Management Consulting and WIK-Consult20 suggests that companies adopting broadband-based processes improve their employees†labour productivity by
and by 10%in the services sector Thompson and Garbacz21 found that an increase in broadband penetration produces
2009) 22 find that an additional â¤5 billion investment in broadband networks would create or retain an estimated 280,500 UK jobs for a year
LSE Enterprise ltd. & The Information technology and Innovation Foundation; April 23 Grimes, A.,Ren, C. and P. Stevens (2009:
at the 33rd Research Conference on Communication, Information, and Internet Policy (TPRC), Arlington, Virginia September 23-25;
Issues in Economic policy no. 6, The Brookings Institute, July 27 Greenstein, S. and R. Mcdevitt (2012), â€oemeasuring the Broadband Bonus in Thirty OECD Countriesâ€, OECD Digital
Economy Papers, No. 197, OECD Publishing. http://dx. doi. org/10.1787/5k9bcwkg3hwf-en 25 To the extent that the price of broadband subsequently declines, 28 or that the quality
Countries with large Internet economies, including the United States, Japan and Germany, are receiving large benefits from broadband.
7. 18 in the OECD Communications Outlook 2011, multiplied by the estimated subscribers by access type.
countries with substantial competition between the fixed telecommunications network and cable. Hungary, where cable competition is strong,
also does quite well by this measure At the same time, countries where cable is absent do not necessarily perform poorly
these differences in broadband surplus are primarily a function of the level of competition A strong cable presence contributes strongly to competition;
however, competition may be weaker than otherwise expected for other reasons (for example, an institutionally weak regulatory system),
or stronger than otherwise expected due to effective use of competitive remedies such as unbundled local loop (ULL
-economic impact of high-speed broadband investment in Europe. To this end, three main indicators were calculated
•Return on investment (ROI), and •Cumulative impact on GDP Table 3: Impacts of high speed broadband investment in Europe 2012-2020
Expenditure EUR bn Expenditure per head (EUR I/O benefit EUR bn) ROI Cumulative impact on GDP
which takes into account the respective investment expenditures for electronic equipment, construction and telecoms 30 Intermediate results were presented at a public workshop in Brussels in February 2012.
investment (ROI) of 2. 2. The cumulative impact on GDP is estimated to be 2. 0
If inflation is taken into account, the expected average price for ultra-fast broadband access in 2020 is estimated to be 61.8
Internet access, 31 and taking inflation into account Figure 5: Consumer surplus in Europe (bn. Euro
Household Demand for Broadband Internet Service Final report to the Broadband. gov Task force, Federal Communications Commission;
3 february 2010 1. 2 1. 0 0. 8 0. 6 0. 4 0. 2 0. 0
Inflation adjustment EUR 10 willingness to pay 28 Rethinking the Digital Agenda for Europe (DAE
television, as well as fixed and mobile wireless services â In assessing the current status, it is important to distinguish between the coverage
Study on the Implementation of the existing Broadband Guidelines Final Report DG Competition; December 7 available at:
http://ec. europa. eu/competition/consultations/2011 broadband guidelines/index en. html 33 Vectoring has the potential for very significant bit rate increase,
simultaneously carrying voice, data and video services. In a nutshell, the key elements of a cable network are39 one or more master headend (s)( together with a Network
CMTS), optical nodes (fibre hubs) defining a specific cable cluster of customers, and trunk and line amplifiers (reflecting attenuation) within each cable cluster.
customers within a given cable cluster, however, share this capacity. 40 We discuss cable capabilities at length in Section 5
broadband access for customers are considerable and they could well compensate for lower guaranteed speeds. †41 One might well add that mobility offers advantages of its
economy, with an ambitious target for universal broadband coverage with speeds of at least 30 Mbps for all Europeans by 2020. â€
In the cable system, the customers in a given cable cluster share the available capacity, while in a GPON
system this is the case for the customers connected to a given splitter 41 Feijoo, C.,GÃ mez-Barroso, J.-L.,Ramos, S. and R. Coomonte (2011a:
â€oethe Mobile Communications Role in Next Generation Networks: The Case of Spainâ€, 22nd European Regional ITS Conference, Budapest
fast broadband internet in the future network-based knowledge economy, with an ambitious target for universal broadband coverage with speeds of at least 30 Mbps for
â€oethe economic impact of fixed and mobile high-speed networksâ€, European Investment Bank (EIB 45 See Feijã o, C,
â€oethe Mobile Communications Role in Next Generation Networks: The Case of Spainâ€, op cit 46 See IDATE (2011), Broadband Coverage in Europe, Final Report, 2011 Survey Data as of 31 december 2010,2011
services for different kinds of conventional and ultra-fast broadband. Since these complex issues are covered at length in many other studies,
represents a significant opportunity for Europe and for the industry Figure 9: Homes passed by cable
In conclusion, the graph shows a pattern of investment relatively close to the distribution of the proportion of the total population among the
and residential customers. These particular results were computed for Germany, but they are consistent with previous less detailed results,
â€oethe Economics of Next Generation Access†published by ECTA, Brussels, 16 september 2008 6. 5%14.4%8. 2%18.6%10.1%22.5%7. 2%9. 6%1. 9%1. 1
%of the total investment Average price per subscriber EUR/subscriber Zone 45 Four fibre-based telecommunications architectures were considered:
If customers paid for their fibre-based ultra-fast access based on the individualised cost of deploying it,
profits, it would be possible to cover far more of the population. In effect, those in geotypes
Investment subsidies required per customer for each geographic cluster Source: WIK. 57 57 See Jay, S,
Investment subsidy per customer (at 70%penetration) AFTER CROSS SUBSIDIES Investment per customer (at 70%penetration
Investment per customer EUR Profitable clusters profitable through cross subsidy additional invest subsidies required 47
The apparent conclusions are that a full 100%fibre-based ultra-fast broadband coverage cannot be profitable in Germany under today†s circumstances.
or else an investment subsidy of up to â 2, 500 per access would appear to be required. 58
It is worth noting that these results are very sensitive to profit, which is the difference
meet customer demand. Both upgrades have been in progress for some time â The cost of upgrading existing digital cable systems to Eurodocsis 3. 0 is minimal
demand for upstream data bandwidth. The biggest single impediment is that such a shift would conflict with analogue FM radio
end-user as and when needed to meet customer demand. Both upgrades have been in progress for some time •Some cable operators choose to use purely fibre-based systems (e g.
some customers, for example in greenfield development settings The upgrades that we are considering in this chapter are concerned primarily with
traffic demand, contrary to what many have assumed, is becoming more asymmetric over time, not less. â€oewith video growth, Internet traffic is evolving from a relatively steady
because there has been little customer demand for upstream bandwidth 50 Rethinking the Digital Agenda for Europe (DAE
TV services to cable network subscribers. As the following figure shows, the key elements of a traditional cable network are (1) headends,
play services is different in fundamental ways. Figure 20 gives an overview of the main
facilities for the provision of television, IP and telephony services; and supra -regional, regional and local physical infrastructures.
services. 60 Where there are multiple headends, they are linked typically via supra -regional backbones based on fibre optics
to selected customers on a trial basis, 66 and other cable operators have demonstrated still higher ultra-fast speeds over cable. 67
is available is shared by all connected customers. With proper management, however the data capacity can meet realistic customer requirements under quite a wide range
broadband communications •Upgrade to a Eurodocsis 3. 0 enabled network •Upgrade of the Eurodocsis 3. 0 enabled network by progressively driving fibre
communications Considerable work is needed to enable a traditional cable network to deliver broadband connectivity; however, this has long since been accomplished throughout Europe
customers who require (and pay for) the higher bandwidths that are only possible with DOCSIS 3. 0. 68
As with any shared medium, competition for resources with other users can introduce delay, affecting the performance seen by the user
needs of their customers •First, a cable operator might enlarge the frequency spectrum used on its network
•Second, the cable operator might reduce the number of competing end-customers served per fibre hub
attenuation) and economic (costs of additional investments) considerations 56 Rethinking the Digital Agenda for Europe (DAE
First, as long as multiple customers share the same existing coaxial cable, unit costs will tend to be lower than Fibre-to-the-Home
To date, there has not been sufficient customer demand to warrant such a change †the available upstream bandwidth has been sufficient to meet
70 Section 2. 3 shows that individual bandwidth demand (and willingness to pay) in all likelihood will remain well below
towards more bandwidth hungry video based services and applications can be expected. Thus, cable systems (and also wireless systems) that share bandwidth among multiple users will continue to be relevant well into the future
Figure 22 makes clear that the frequency spectrum allocated to upstream services (from 5 to 65 MHZ) is usually much smaller than the spectrum allocated to downstream services
from 80 to 862 MHZ. The available downstream frequency spectrum is allocated to the following services
•FM radio services •analogue TV channels •DIGITAL TV channels and Vod services •Euro DOCSIS (and Euro Packet Cable) services
A major revision to the frequency allocation plan would entail significant disruption, but it has been under discussion for some time,
and could be implemented if there were sufficient consumer demand. A number of technical, economic and practical considerations come
into play First, cable operators would be reluctant to lose video channels that they offer today
Fortunately, cable benefits from the same improvements that enabled broadcast spectrum to be reassigned under the Digital Dividend.
support 30 to 35 analogue services, hundreds of standard definition TV services, and tens of high definition services
Not usable Signal Pilot Tonesfm Analogue TV DIGITAL TV +Vod Eurodocsis and Europacketcable Eurodocsis and Europacketcable
â The recently published study by J. Hätã nen of the European Investment Bank
savings, rather than a gain in facilities-based competition, is a separate question â The Feijoo/Barroso and EIB studies seem to be in reasonably good agreement
The recently published study by J. Hätã nen of the European Investment Bank (EIB), 76
ICT and the e-economy, EIB Papers, Volume 16, No 2 63 Figure 25: Cost of meeting DAE objectives with and without cable in various
post offices, or libraries) to electronic communication services rather than universal service in the home; however, we do not believe that Europeans would
than a gain in facilities-based competition, is a separate question 83.4 55.9 142.4 103.9
7 FACILITIES-BASED INFRASTRUCTURE COMPETITION Key Findings â The European Regulatory Framework has advocated always an approach to
and for infrastructure competition, it is striking that the Digital Agenda for Europe contains only a single reference to cable television †and that an altogether
â Cable provides facilities-based infrastructure competition. The value of infrastructure competition is recognised explicitly in the European Regulatory Framework
â Infrastructure-based competition is important in the long term. A European network environment where only a single medium provides last mile access is
a European network environment where detailed regulation to address market power is needed forever â Cable tends to enjoy low unit costs in providing broadband services at whatever
speed. This puts pressure on incumbents to innovate, and to operate efficiently â Infrastructure competition is a valuable complement to SMP-based regulation
For instance, it can help to correct for any errors in regulatory price-setting â There are many indications that cable (DOCSIS 3. 0) coverage stimulates fixed
network operators to deploy fibre-based ultra-fast broadband more quickly â A recent analysis of potential NGA deployment in Spain distinguishes between
areas of â€oe2+†competition, where the fixed network, cable and mobile all compete versus â€oe1+†competition, where only fixed
and mobile compete. Facilities-based inter-modal competition, even if limited to discrete geographic areas, may have the
tendency to constrain prices to reasonable levels across much larger geographic areas Policy and regulation in Europe and in Member States alike have put a strong emphasis
on the maintenance of procompetitive remedies for fibre-based solutions (FTTN/VDSL FTTB/FTTH. The results of fibre-based NGA deployment internationally in terms of
competition have, however, been mixed decidedly to date. NGA deployment in Japan for instance, has come at the expense of a re-monopolisation of the last mile of the
NBN) in Australia comes at the expense of inhibiting inter-modal competition in order to ensure that the NBN can be profitable
7. 1 The Regulatory Framework and facilities-based competition The European Regulatory Framework has advocated always an approach to regulation
Specific Directives, in particular those designed to ensure effective competition, national regulatory authorities do likewise. †Article 8 (5) goes on to say:
safeguarding competition to the benefit of consumers and promoting, where appropriate infrastructure-based competition; †â€
The Regulatory Framework as enacted in 2002-2003 is grounded, moreover at its core in the belief,
or at least the hope, that increasing competition would in time obviate the need for regulation that primarily responds to the presence or absence of Significant
competition. The DAE speaks of the need for â€oe†providing the right incentives to stimulate
private investment, complemented by carefully targeted public investments, without re -monopolising our networksâ€; however, it seems to disregard any concerns that a European
network environment where only a single medium provides last mile access is a European network environment where detailed SMP-based regulation is needed forever
Given this preference of the Regulatory Framework for technological neutrality, and for infrastructure competition, it is striking that the Digital Agenda for Europe contains only a
single reference to cable television †and that an altogether backward-looking statement. 80 The absence of cable from the initial DAE documents is not a particular cause for
7. 2 Societal welfare benefits from facilities-based competition The values of competition are recognised well in the economic literature,
and are a cornerstone of the European Regulatory Framework for Electronic communications Competition tends to promote lower prices for consumers, greater consumer choice
and incentives for service providers to operate efficiently and to innovate Cable provides facilities-based infrastructure competition, in contrast to the competition
provided by means of regulatory remedies based on Significant Market Power (SMP under the Framework. The value of infrastructure competition is already explicitly
recognised in Article 8 of the Framework Directive, which establishes the high-level regulatory principles that National Regulatory authorities (NRAS) are to follow. â€oethe
and proportionate regulatory principles †safeguarding competition to the benefit of consumers and promoting, where appropriate, infrastructure-based competition ††83
Facilities-based competition from cable is not sufficient to enable lifting of regulation from telecommunications incumbents,
but it is a valuable complement to traditional regulatory mechanisms. Notably, since facilities-based competition is market-based,
and does not depend on regulated prices, it can help to correct any possible errors that might be made
82 †Enhancing the broadband investment environmentâ€, 12 july 2012, at http://europa. eu/rapid/pressreleasesaction. do?
Cable tends to enjoy low unit costs in providing broadband services at whatever speed This puts pressure on incumbents to innovate,
7. 3 Facilities-based competition as a stimulus for fibre-based NGA deployment It has long been assumed that the presence of cable serves to stimulate fixed telephony
can offer our customers the best service quality. In doing so, we have fastened on the
â€oewe have to some extent lost a lot of customers to cable companies. I am not just talking about Cablecom,
7. 4 Prospects for achieving sufficient facilities-based competition Deployment of a mix of technologies has the benefit of enabling inter-modal facilities
-based competition in broadband markets A recent analysis of potential NGA deployment in Spain (see Figure 29) 88 distinguishes
between areas of â€oe2+†competition, where the fixed network, cable and mobile all compete
versus â€oe1+†competition, where only fixed and mobile compete. Facilities-based inter -modal competition,
even if limited to discrete geographic areas, may have the tendency to constrain prices to reasonable levels across much larger geographic areas
Facilities-based competition and NGA deployment Source: Feijoo and Gomez-Barroso (2010a. 89 88 Feijoo, C.,GÃ mez-Barroso, J.-L.,Ramos, S. and R. Coomonte (2011a;
Issues in Economic policy no. 6, The Brookings Institute, July Czernich, N.,Falck, O.,Kretschmer, T. and L. Woessmann (2009:
and Economic growth; CESIFO Working paper no. 2861, Munich, December Elixmann, D.,Ilic, D.,Neumann, K.-H. and T. Plã ckebaum (2008:
The Economics of Next Ge -neration Access, Report published by ECTA, Brussels, 16 september European commission (2010:
ICT and the e-economy, EIB Papers, Volume 16, No. 2 Howell, B. and A. Grimes (2010:
paper presented at the 33rd Research Conference on Communication, Information, and Inter -net Policy (TPRC), Arlington, Virginia, September 23-25,2005, revised January 17, 2006
Recovery, LSE Enterprise ltd. & The Information technology and Innovation Foundation, April Marcus, J. S. 1999:
-mentation of the existing Broadband Guidelines, Final Report DG Competition, December 7; available at: http://ec. europa. eu/competition/consultations/2011 broadband guidelines
/index en. html Nooren, P.,Marcus, J. S. and I. Philbeck (2012: State-of-the-art Mobile Internet connectivity
Household Demand for Broadband Internet Service; Final report to the Broadband. gov Task force, Federal Communications
Commission, 3 february Radio spectrum Policy Group (2011: RSPG Report on Improving Broadband Coverage RSPG11-393 Final, 16 november
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