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Europe faces funding gap for digital goals

The European Union faces a shortfall of €106 billion in funding needed to reach its goals for mobile and broadband coverage, according to the Financial Times13 Oct 2015

Meeting the EU's goals will cost around €216 billion to implement, but research commissioned by professional services firm Boston Consulting Group found that only €110 billion is likely to be available from public and private funds, the Financial Times said.

The research also found that Europe's share of the global consumer telecommunications market is likely to fall by 2% as other regions invest more in technology, the Financial Times said.

Boston Consulting Group is due to unveil the research at a Financial Times telecoms conference today, the newspaper said.

Wolfgang Bock, the author of the report said that consolidation will be needed in the industry to improve the "economics of the industry" and fill the investment gap, the Financial Times said.

Corporate lawyer Frederic Ichay of Pinsent Masons, the law firm behind Out-Law.com said: "Telecoms operators are indeed facing major challenges nowadays with the arrival of a new generation of competitors that are offering competing telecom services such as Skype, but with much lower fixed costs structure. Also, the increasing development of the internet of things will force the historical telecom operators to offer cost-efficient technical solutions."

"There is, in other words, a need to reshape the old business model of telecom operators that was only based on providing voice and data through a reliable infrastructure with sufficient bandwidth," Ichay said.

Last month Günther Oettinger, EU commissioner for the digital economy launched two public consultations – one on a review of the current telecoms framework and one on Europeans' broadband needs.

"Europe needs a competitive telecoms sector which invests in the high-performing, high-speed, secure, trustworthy and affordable digital networks which are essential for Europe’s economy and society", Oettinger said.

"The principle that competition drives investment is not under question, but the sheer size of the investment required for digital age forces us to reflect. We must make investments in the highest capacity networks rewarding and consider how regulation could increase incentives for incumbents and more recent competitors," he said.