Questionnaire for Public Consultation

Lower coverage, high cost and low quality of broadband in remote, rural or sparsely populated areas of the European Union are often the main reasons driving public intervention on broadband for the social and economic development of these areas.

Alcatel welcomes the opportunity to respond to the European Commissions public consultation on the Digital Divide and congratulates the Commission for launching this important consultation which assesses the need for government action and policies in rural areas. Indeed, it is in European rural areas specifically that government action targeting broadband coverage, whether pan-European, Member State or local, is needed as a priority to ensure all European citizens have access to the benefits of broadband by the 2010 Lisbon objective. Alcatel today is the worldwide leader of broadband communications offering a complete technology portfolio of solutions including fixed (ADSL, VDSL, fibre), mobile (2G, 3G), wireless (WiMax) and satellite technologies. Alcatel is of the firm belief that each technology has an important role to play as a viable broadband solution based on population density and territorial coverage requirements. Alcatel would like to highlight the important role that satellite solutions can offer to the European Union as an immediate solution to cover isolated, rural areas. In this context, it is of utmost importance that the European Commission, alongside Member State and local actors consider launching a pan-European initiative gathering key stakeholders in order to assess broadband demand and needs in rural areas. Please find below more detailed answers to the questions raised by the European Commission.

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General questions relating to policy proposals and to policy proposal 1: 1. Is there a need for new public policy actions at the European level to stimulate the provision of broadband in remote, rural or sparsely populated areas of the European Union? YES/NO

The analysis of the broadband market development conducted by the EU to date clearly shows that, although the take-up of broadband services increased significantly in 2004, the current rates of penetration are still low and far from saturation and that the gap between these rates in urban areas and rural areas remains at an important level. In addition, the fragmented structure of the market, either in terms of local availability of services or type of operator present in those rural, remote areas, naturally leads to a wide diversity of take-up rates between regions. This set of observations already justifies a continuation of policies in favour of broadband at the European level for the years to come. When one takes into account the broadband status of most of the 10 new Member States, the need of this continuation can only be even more emphasised. Finally, a comparison between EU and international competitors shows that Europe, although progressing quickly is still lagging behind major industrial countries such as US, Japan, South Korea. All areas of Europe should be embraced in the move towards better and faster connections to Internet, to bring their contribution to economic development. In conclusion, the answer to the proposed question is : YES. Europe needs public actions at the European level, consistent with national, regional, local policies. These actions, can be either new, as demand will continue to evolve, or a continuation of existing actions. Two actions, identified by the Second Chamber of the eEurope Advisory Group - a Pan-European initiative in favour of very sparsely populated areas, based on broadband satellite technology, aggregation of public demand for eGovernment services - remain to be launched (see answer to question 6 below).

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2.

If YES, which ones? National broadband strategies, regulatory intervention, financial support, exchange of best/good practice, other measures?

Considering the wide diversity of the EU-25 countries with regard to broadband takeup, all types of policy actions have to be considered, as far as they do not bring some market distortion that could be detrimental to the end-user. The implementation of national broadband strategies is, in our opinion, the key of an acceleration of broadband take-up. Once put in place, these national strategies should be permanently reviewed and updated , to take into account the evolution of the demand in terms of services expected by business and residential users (access to richer content require higher data rates, access to local content, access to eGovernment services, ability to transmit significant amount of data created locally, ), as well as the new technical possibilities resulting from the new generations of technologies developed by the European industry. Whenever national strategies would call for actions that fall beyond the Member States possibilities of action, or when expert reports underline the need for actions that overcome the Member States borders, as is the case for satellite technology and remote areas, as an example, actions should be undertaken at EU level. Global actions, in the area of the support to crisis management or the EU border surveillance or the coverage of maritime routes, , do involve remote areas where terrestrial broadband is not available everywhere and where pan-European actions based on the global coverage feature of the satellite technology could be implemented. The aggregation of the corresponding unmet demand for high speed communication and exchange of data is an action that can only be led by the Commission. In the regulatory arena, interventions have to be continued to break the obstacles in the investment in networks and broadband services. Frequency spectrum planning plays a key role in the development of new generation networks or of new services. The protection of IPR, the management of digital rights, the guarantees associated to ePayments, , are areas where significant work remains to be done. Another obstacle to investment in networks and broadband services remains the funding capabilities of the telecommunication market actors. Support from public funds to implement Public-Private Partnerships will accelerate deployment of broadband as it can allow an acceptable financial risk mitigation. Financial support is another tool that can be used to allow some specific groups of users to get access to ICT. Finally, in the case of European wide actions that encompass multiple actors and countries, financial support/initiative from the Commission can be the required catalyst to launch projects where economies of scale are the key to large deployment of networks. From an end-user perspective, it appears that an important cause for the low broadband take-up in some areas is a lack of awareness from the end-user, be it a SME or a residential user. Relevant information have to be pushed to the end-user, thus stimulating demand and consequently provision of services to these end-users. A review of the actions undertaken by the Member States to date in this field, could

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provide an interesting source of concrete information that could be naturally be part of the exchange of best/good practice as proposed by the Commission. Alcatel Alenia Space welcomes the implementation of a website where all relevant information can be found, from national broadband policy to a description of the local/regional experience, via a section devoted to a description of technologies, in terms of performances and types of services that can be supported. Increasing confidence in the technologies and awareness of the services that can be offered, together with quality of service information can only be favourable to the penetration of broadband. Finally, at a point in time where the convergence move in the telecommunication world encompasses TV, Internet and voice services on the one hand , and fixed / mobile networks on the other hand, the fast and ubiquitous access to broadband should become an increasing priority for the Commission. The satellite technology appears to be an optimal solution to solve these issues in remote, rural areas. 3. On a scale from 1 to 5 (1 low and 5 high), how do you rate the justification for the need for public intervention for broadband in these areas, in particular the non-availability of broadband infrastructure (lack of coverage), high end-user prices (affordability), and the low quality of available services? Rate Lack of coverage:

Lack of coverage is certainly a major justification for public intervention in remote, rural and sparsely populated areas of the European Union, especially when one considers the convergence of services and fixed/mobile networks. Alcatel Alenia Space rates this factor as high (5). As already mentioned, a global pan-European approach for these areas, will outline the need for immediate actions at the Commission level. Rate Affordability:

The affordability criteria falls into the qualitative field and therefore varies with countries, regions, groups of users, types of services, quality of these services. However, decreasing the price of the equipment and of the service for the end-user is an objective that is fundamental to foster the growth of broadband penetration in these areas or for specific groups of users. Without cost-effectiveness targets, actions focused on the lack of coverage only could fail to meet their objectives. Alcatel Alenia Space rates this factor as rather medium high (4). Rate Quality of Service:

To be successful, a Service offering has to be based on a value for money approach and quality of service certainly contributes to the definition of this value for the enduser. As said above, defining Quality of Service depends on the type of service that is proposed and should mainly driven by market demand and by service providers to differentiate themselves from competition (when such competition exists).

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Nevertheless, whenever public pan-European plans would have been launched, this criteria should be part of the set of features that support the plans and in this specific frame, Quality of Service could be rated as medium (3). When considered in other frames, Alcatel Alenia Space rates this factor as low (1). 3. Can you identify further bottlenecks that inhibit broadband deployment in rural areas and corresponding policy options to address them?

There may be a large variety of local reasons that may inhibit broadband deployment in local areas, mainly for local reasons that cannot be anticipated. The Commission should implement some kind of a surveillance group to whom unexpected issues could be reported and who could intervene to overcome these issues. The following bottlenecks have already been mentioned in the sections above, to a certain extent and are more developed below: Awareness of solutions: the end-users, residential or SMEs (small or very small and medium enterprises) or local points of presence of administration are frequently not aware of the existence of solutions to their access to ICT problems. Pushing the information to the end-users is fundamental to create an aggregation of demand that will trigger the deployment of networks and services. Help to the end-users in the decision process : at the other extremity of the awareness process, the fight between service providers using different technologies and the huge quantity of technical information describing existing and new technologies and their developments contribute to blurring the decision process for the end-user (or the local authority who wants to support the roll out of a network) and to delaying the broadband take-up. In this regard, the Commission analysis that led to a recommendation for a satellite solution for areas that would meet some features (density of population, .) is clearly a facilitating tool in this decision process. Costs : rather than affordability, the cost of ownership has to be reduced drastically. Economies of scale can be easily achieved that would benefit immediately to the end-user and would boost the penetration of broadband. It is only required to have a look to the United States market situation, where continental strategies are launched for broadband satellite based services : service charges, installation costs and end-user equipment prices are immediately decreased significantly and tens of thousands of users connected. Interoperability of networks : the interoperability of networks has been identified since a long time as a barrier to broadband deployment. Progress has been made so far but the road to the full interoperability is still long. Standardisation at European level remains an important objective. As an example, in the area of the satellite technology, public action should be continued to consolidate the European satellite standards (DVB-RCS, DVB-S2).

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Specific questions relating to the policy proposal 2: Provide active assistance by using a website for regional and local authorities to publish their plans on a voluntary basis. 5. On a scale from 1 to 5 (1 Low, 5 High), how do you rate the usefulness of such a site for regional/local authorities and network operators in terms of assessment/aggregation of demand, exchange of best practices, and publication of regional local broadband plans, etc.? Rate usefulness for regional or local authorities:

Alcatel Alenia Space believes that such a web-site, and generally all the tools that ease a decision process for regional and local authorities, can be very useful. The rate usefulness will be however defined by these authorities. The proposed we-site should contain a section where authorities could raise specific regional and local issues and could dialogue with the ad-hoc experts, at various levels of confidentiality. Rate usefulness for network operators:

For network operators, the web-site can certainly contribute to a better understanding of the market needs and environments. However, the sensitivity of some information when it comes to their strategies of deployment will limit the role of the web-site. Alcatel Alenia Space would accordingly rate this usefulness as medium (3) for network operators. 6. Can you suggest an alternative mechanism (to the website) to aggregate demand, without distorting competition and private incentives, in areas where satellite is considered to be the best solution for broadband delivery?

A specific pan-European initiative for remote, rural areas with low density of population, based on satellite, is recommended by Alcatel Alenia Space. Such an initiative should be based in the short term on existing satellites, to provide immediate and global coverage, while new satellites with flexible architecture will be developed and will further improve the economy of the services. The European Commission should bring all Member States, regional authorities, satellite operators and suppliers together to identify the demand and the bottlenecks in the service delivery. This demand should cover all types of potential users in these areas, from individual residential users to small and very small businesses, tele-workers and public services points. The development of these public access points should effectively be part of a pan-European policy, as a tool against loss of population in remote areas as well as an efficient infrastructure to provide and support equal rights of access to all the information services to all citizens that needs.

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The resulting aggregation of demand, will bring the economies of scale that will influence significantly the end-user terminal and installation costs (the example of what has already been achieved in the United States, thanks to their domestic market size, with continental satellite solutions deployed, illustrates the benefits of such an approach).Then, competition between telecommunication operators and service providers will naturally lead to a decrease in the service charges and will drive broadband take-up. A pan-European initiative will also appear as a strong positive message to the main private stakeholders who are ready to invest in the satellite technologies to serve these areas. Financial support, both in terms of public funding or financial guarantees, can then be sought at different levels (European structural funds, Member States or regional governments). Public-private partnerships can also be envisaged in this initiative. 7. Which other activities could be undertaken by the website?

Increasing the awareness both in terms of technologies and services is a must in the fight against the digital divide. The proposed website, or another specific website to be implemented, should consider this awareness as a major goal. In addition to its objective of spreading information, the proposed website has to be considered as a forum of exchange for all parties involved in the development and distribution of broadband services, all along the value chain. Sections could be created, with different levels of confidentiality, to support this goal.

Responses should be sent to infso-i2010@cec.eu.int by September 16th 2005. (Publication under: http://europa.eu.int/information_society/eeurope/i2010/digital_divide/index_en.htm)

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