The European Union has put in place an investment-friendly regulatory framework for telecommunications to encourage investment in internet infrastructure. However, this is not always enough to attract investment especially in rural and even sub-urban areas. Certain groups and territories also lack the skills and incentives to go on-line and public intervention is needed to prevent a digital divide causing some Europeans to miss out on the social and economic benefits of the internet.
Part of the solution is in the smart use of the EU budget, within the framework set by the next multi-annual financial framework (MFF). The digital support from the Connecting Europe Facility (CEF) proposed by the Commission at €9.2bn was reduced to €1bn at the February 2013 European Council.
The major part of this reduced funding will be used to facilitate the mobility of citizens and businesses by providing seamless cross-border public services such as eProcurement, eHealth, or Open Data. For broadband, the Connecting Europe Facility will only be able to provide seed funding for a limited number of broadband projects, together with the European Investment Bank (EIB) and limited technical assistance for projects seeking support from CEF or Structural Funds, or both.
Projects that will benefit directly from CEF will need to demonstrate state-of-the-art technological solutions and represent either innovative business models or highly replicable solutions (including those which successfully combine grants and long term financing). They will benefit from the EIB's expertise and AAA rating, as well as the diversification of risk within multi-sector, multi-country instrument. Such CEF instrument will also continue the mission of the project bond pilot to a new kind of private investors (pension funds, insurance companies) into the telecom sector.
In addition, it is important that use is made of existing instruments, in particular the European Structural and Investment Funds (ESIF), so as to benefit from the internet's growth potential. Information and Communication Technologies (ICT) are one of four areas on which investment from the European Regional Development Fund (ERDF) will be concentrated until 2020, and the deployment of high-speed connections will be eligible across the whole EU territory.
Likewise, the European Agricultural and Rural Development Fund (EARDF) should be used to close the gap between urban and rural regions in terms of digital infrastructure and public services online. The European Social Fund (ESF) should be used to provide disadvantaged groups with the skills that are necessary to benefit from the internet, as well as to improve the provision of public services using digital technologies.