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Broadband: Financing public-private and private-run deployments

In cooperations between private actors owing existing infrastructure and public authorities implementing a public- or private-run network, the investment efforts are partly supported by the private actor.

Full FTTH coverage for Senden, Germany

The investment concerns the deployment and operation of the passive infrastructure. This attracts other private investors as it provides greater stability to the equity base and improves the credit rating of the project company or joint venture.

Equity Finance

In a public-run municipal network, the public authority invests in a commercial entity that will build and operate the broadband network. This can take the form of cash or bonds that the entity can use as security or physical assets such as ducts, fibre cables and street furniture (e.g. lamp-posts or equipment cabinets).

The authority would receive shares equivalent to the value of the investment in the entity. These must be treated in the same way as any other share paid for by “normal market investors” in the entity alongside the authority. This is an important test of whether the Market Economy Investor Principle (MEIP) applies and state aid rules need to be respected.

Debt Finance

The authority can offer financial support by providing a loan to the entity. This loan would normally be cash, but could also be long-term use of assets where the authority retains ownership and title, a guarantee or security against other loans taken out by the entity.

The authority can cooperate with banks on attractive terms to encourage other investments. This financing would not be considered as state aid as long as the terms and any related interest rate does not deviate from the market investor principle, i.e. equivalent to those that would be offered by commercial markets.

Public authorities may assist an entity by offering this loan on more favourable terms with banks than the entity can expect to achieve on open markets. However, this would provide a benefit to the entity and would therefore be considered state aid.

Grants

An authority may choose to provide an entity with a grant to assist in building and operating high-capacity networks. This is extensively used in the operator subsidy model.

Other types of support

A region can actively improve demand side conditions, e.g. by using ICT innovation vouchers for SMEs, either to cover parts of the end users-costs of installation or purchase of broadband devices or of the monthly subscription. However, it has to be verified whether state aid rules apply.

Latest news

Calais: The Netherlands’ first CEBF-funded broadband project

Calais is the first Dutch broadband project funded by the Connecting Europe Broadband Fund (CEBF). The province of Groningen approached CEBF when they recognised their need for additional funding as well as a more strategic partner to reach the most remote areas. The resulting partnership will bring NGA access to over 100,000 inhabitants, combining fibre with a fixed wireless network for the hardest-to-reach areas. In this video, Jan Peter de Groot, Rodin Group CEO, explains that the pandemic made it very clear that people in all areas need to be able to “connect with the whole world”.

Guifi.net: Catalonian citizens’ broadband initiative reaches 100,000 rural inhabitants

As part of the Catalonian citizens’ initiative, Guifi.net, volunteers have helped install over 40,000 nodes, connecting 100,000 rural inhabitants. In this video, Ramon Roca, Guifi.net founder, explains how, since its foundation, the project has driven demand as well as rural development, becoming both a “local ecosystem” and a business model, and growing increasingly affordable as it expands. Driven by volunteers, Guifi.net focuses on building the infrastructure and cooperation between public administrations, local entrepreneurs and ISPs, among others.

Women farmers drive digital transformation in rural areas

With 30% of EU farms being managed by women, these farmers are key in driving the digital transformation of rural areas. As explained by Lotta Folkesson, an arable farmer in northern Sweden, high-speed connectivity is needed to allow the use of cutting edge technology in both agriculture and forestry, as well for everyday management. On top of this, it enables entrepreneurship and allows remote area inhabitants to connect with the wider community. “With good infrastructure, we will have a stronger farming community as well as better conditions to attract more people to rural areas”.

Rede Aberta: Spain’s first CEBF-funded broadband project

Rede Aberta is the first Spanish broadband project to be funded by the Connecting Europe Broadband Fund (CEBF). To promote economic growth, stop depopulation and rejuvenate the population of rural Galicia, the open access network will bring 10 Gbps symmetrical fibre connectivity to 400,000 homes. In this video, Pere Antentas, Rede Aberta CEO, explains that the project will help the population take advantage of the area’s “enormous growth potential” and natural resources. It “will allow the telecommunication networks and services to be at the same level as the ones in the big cities of Europe”.

Related Content

Big Picture

Broadband project planning

The Broadband planning section, along with the Broadband investment guide aids municipalities and other entities in their planning of successful broadband development projects.

See Also

Broadband: Carrier models

Municipalities, municipal companies, joint ventures, and private companies can be involved in one, two or all three stages of broadband development.

Broadband: Plan definition

The key to successful regional broadband development lies in defining a plan that includes goals, collaborations, and specific needs and stakeholders.

Broadband: Action plan

Broadband project plans help you map infrastructure needs, plan financing and deployment, monitor progress, find stakeholders, make the right choices and more.

Broadband: Technology overview

An overview of different wired, wireless and upcoming broadband technologies and a description of their advantages, disadvantages and sustainability.

Broadband: Investment models

Investment models present interesting involvement opportunities for a public authority that engages in regional broadband development.

Broadband: State aid

State aid for broadband may be necessary in some places where the market does not provide the necessary infrastructure investment.

Broadband: Network and topology

A broadband network consists of geographical parts. The topology of a network describes how the different parts of a network are connected. The most relevant topologies for the backbone and area networks are tree topologies, ring topologies and meshed topologies. For the first...

Broadband: Choice of infrastructure

Broadband networks require different infrastructure types based on different logistic, economic or demographic conditions. Use the questions to help choose.

Broadband: Technology comparison

A comparison of broadband technologies presents features of each solution and helps decisions on the best solution for different regions.