Europe’s broadband investment needs

Quantifying the investment needed to deliver superfast broadband to Europe

Providing superfast broadband services to the whole of the European Union could be much less expensive than previously estimated. In this report, Point Topic describes a new model for estimating the cost of delivering superfast broadband across Europe. The report provides estimates for the investment required in each EU country and sets out the “Urban Opportunities” and “Rural Challenges” which the target presents.

Europe’s broadband investment needs – modelling the cost to deliver superfast broadband to Europe

Achieving the EU’s targets

The European Union has set ambitious targets for the availability of broadband services as part of it Digital Agenda programme.  The biggest in terms of its cost and impact on society is that by 2020 all European homes should have access to broadband services providing download speeds of 30Mbps or above, otherwise known as Next Generation Access broadband or NGA.  The cost of achieving this will be high, but estimates of the investment required vary widely.

Now Point Topic has brought together new research and new approaches to broadband needs and costs to provide more accurate estimates of investment requirements than have been possible before.  The results suggest that the EU will have to invest about €82 billion to reach the objective of 100% NGA coverage.  This is much less than is often suggested.  For example, the European Commission generally quotes a range of €180 to €270 billion as the cost of achieving all the Digital Agenda targets.

How the costs are distributed

The €82bn is dominated by the €52bn cost for reaching rural areas, although only 14% of the EU’s homes are there.  A further €22bn will be needed to cover the semi-rural sector.  But a modest €8bn should be enough to bring NGA to all the 148 million households, 71% of the total, which make up Europe’s cities, towns and suburbs.

Broadband investment need by type of area

AreaDefinitionInvestment need
UrbanMore than 600 people per square km€ 8bn
Semi-ruralBetween 100 and 600 people per square km€ 22bn
RuralLess than 100 people per square km€ 52bn
Total investment to deliver superfast to the remainder of the EU€ 82 bn

The high cost of rural coverage dominates the picture as far as individual countries are concerned.  Of Europe’s big four, France, as the most rural, has the biggest investment need at €17.5bn.  The UK on the other hand, although similar in population, needs only €7.5bn.  Among the medium-sized countries Spain, Sweden, Greece and Ireland require relatively large investments.  At the other end of the scale, countries which are relatively small, or highly urbanised, or both, have more modest needs, typically less than €350m, although that may still be high in terms of expenditure per head.

Within this broad picture, Point Topic highlights two areas of special interest, identified as the Urban Opportunity and the Rural Challenge.

Urban Opportunity

The Urban Opportunity is in those big cities of Europe which still have limited NGA coverage.  Rolling out NGA in these areas should produce a straightforward commercial return from sales of broadband services, as well bringing economic growth and social benefits.  But in the current economic climate such investments are slow to materialise.  Here is an area where modest public interventions could unlock much-needed growth, to the benefit of the whole of Europe as well as the areas directly concerned.

The biggest urban opportunities are almost all in the economically troubled countries of southern Europe, specifically Greece, Spain and Italy.  Investments here would provide a stimulus and long-term benefits where they are most needed.  Athens alone is estimated to need an investment of €220m to achieve 100% NGA coverage.

Rural Challenge

The Rural Challenge represents the opposite.  Here the cost of providing NGA for all will be much higher than can be covered by ordinary commercial returns and the social and economic benefits will be relatively small as well.  In fact, Point Topic believes, the open-ended financing of rural NGA costs will not be acceptable to governments or taxpayers.  Schemes which contribute a flat-rate subsidy for every rural household connected are a more likely alternative. Point Topic’s estimates of rural funding needs are based on a flat rate cost averaging €2,000 per household covered.

Point Topic - Europe's rural challenge - broadband investment needs mapPoint Topic has calculated the size of the Rural Challenge on this basis for every province in the EU.  By relating the investment needs of a province per head of population to its Gross Domestic Product per head it is possible to make comparisons of the relative burden of meeting the challenge between provinces and countries.  The provinces where the burden is high, or at least above average, are those where the Rural Challenge will be hardest to meet.

The results show the higher-challenge provinces are spread fairly evenly across the EU, not confined to the poorer countries of the south and east.  This is partly because the assumed costs of rural NGA reflect local price levels in each country.  The areas facing High or Above average challenges are often peripheral in their countries, or else simply areas of low economic activity, such as the thinly-populated hearts of France or Spain, or the provinces of former East Germany.

Looking at the countries which face the biggest proportionate rural challenge, Ireland and the Baltic States (Estonia, Latvia and Lithuania) come top. All these countries are highly rural, with a sharp gap between their urban and deeply-rural areas.  The gap between town and country creates a bigger than average challenge even in less rural countries such as Austria, France and Sweden.  It is countries like these which wil face the greatest difficulty in achieving 100% NGA coverage.

At the other end of the scale, six countries (Belgium, Cyprus, Luxemburg, Malta, Netherlands and Slovakia) have no provinces with more than an average Rural Challenge.  Five other countries (the UK, the Czech Republic, Italy, Spain and Portugal) face relatively small challenges.


The report also describes the methodology on which these results are based.  Its essential features are:

  1. Using the new research results from the “Broadband Coverage in Europe in 2011” project, carried out for the European Commission by Point Topic.  These provide figures for the coverage of NGA by province for the whole EU for the first time
  2. Taking a new approach to mapping urban and rural areas by separating them out using a “European Kilometre Grid”.  This identifies the coverage and population of low-cost urban areas and high-cost rural ones much more clearly than before
  3. Using to the full the consistent demographic and economic data and mapping provided for the whole EU at provincial level by the EC’s “Nomenclature of Units for Territorial Statistics” (NUTS) scheme.  Among other things this enables the comparison of cost levels and affordability between countries and provinces.
  4. Applying simple and transparent cost models for each of the land-cover segments considered (urban, semi-rural and urban).  These take account of the variation in NGA investment costs because of the difference in income and price levels between countries.

Next steps

Finally the paper looks at the further steps to be taken to apply these techniques to more detailed and in-depth analyses in future.  They include going to more granular geographies, producing more sophisticated cost models, gathering more detailed data on the availability and performance of broadband technologies, adding data on actual take-up and producing forecasts for both availability and take-up.

Point Topic believes that a wide range of organisations involved with the European broadband market will be able to make good use of the data and analytical tools explained here.  The results will increase confidence and reduce risk for their policy initiatives and business and network planning.  That should lead to the faster and more efficient achievement of Europe’s ambitious broadband targets.

Find out more

Registered users can download the full report for free:

Europe’s broadband investment needs – modelling the cost to deliver superfast broadband to Europe

The full NUTS 3 dataset for Europe is available to subscribers of Point Topic’s Broadband Competition Map of Europe service. Please e-mail [email protected] to find out more.