Introduction

In a bid to usher in a new era of digital infrastructure across the EU, namely 5G systems, the Connecting Europe Facility (CEF Digital) was established in 2021 under the European Health and Digital Executive Agency. CEF Digital has a budget of €1.6 billion from 2021-2027. The initiative has held two calls for proposals, with a third closing at the end of February. The program's second round saw 42 projects selected from 69 proposals, with a total of €250 million allocated. The funding followed the program's first round, which allocated €150 million for 38 projects in January 2023. With the goal to catalyze public and private investment, the program is particularly interested in deploying high-capacity networks (including 5G), guaranteeing uninterrupted 5G coverage across trans-European transport and energy networks, and deploying or updating backbone networks.

These network investment programs intend to boost EU member states' ability to accelerate future smart city initiatives. While 5G enjoys a higher level of maturity in Europe and Asia-Pacific than in other regions, where it remains nascent, new funding should help improve 5G capacity and identify new use cases and applications.

The Take

Smart city and pervasive connected country initiatives are often only as successful as the quality of the digital infrastructure on which they rely. Digital infrastructure upgrades are critical if emerging technologies — including internet-of-things devices and (increasingly) connected and autonomous vehicles — are to fully realize their potential. The EU has looked to bulk up member states' digital infrastructure; namely, 5G and fiber networks, through programs like CEF Digital to drive development, equity and competitiveness. Vendors are primed for the opportunity to tap into government contracts, with IoT platform and endpoint providers providing both the hardware that collects smart city data and the software and analytics platforms that  ultimately make sense of it. After the second round of CEF Digital, close to 80 digital infrastructure projects will be funded, with 17 focused on 5G for smart communities.

Projects

The second round of CEF allocated funding to develop smart communities and cross-market 5G corridors, such as transportation networks and fiber gateways, including underwater cabling. The recipients of these funds span public and private and include network operators, infrastructure providers and universities.

Fiber gateways and smart community projects dominate in funding allocations

^{Source: S&P Global Market Intelligence 451 Research..
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5G connected smart communities: Ten funded projects supported 5G connected communities. These projects include building 5G capacity in rural Portugal, connecting a Croatian port to a high-density network and enabling mobile healthcare connectivity in Finland.

5G corridors: Cross-border 5G corridor development has been prioritized to ensure pervasive connectivity across Europe, namely in support of energy and transit networks. Seven projects or research studies addressed establishing corridors. Funding was allocated to study Eurolink 5G connectivity support, connecting the Mediterranean and Baltic, the Balkans with the Adriatics, and the Irish Sea.

Fiber gateways: Gateway funding made up the majority of projects. These gateways aim to establish backbone infrastructure to support connectivity through submarine/undersea cabling.

Connected and automated mobility: Two projects cited seeking funding and network infrastructure to support connected and autonomous mobility networks. Layering vehicle-to-everything network support on top of 5G corridor funding, recipients included Towerlink in Poland and Cignal Infrastructure in Ireland.

Implications: Smart cities, fiber gateways and vendor impact

Akin to the US' Inflation Reduction Act and Infrastructure Investment and Jobs Act, the EU is looking to subsidize investment into digital infrastructure in the name of innovation, competitiveness and safety. Through a public-private partnership model, it is likely that investment will extend far beyond the €250 million allocated by the EU, and should pay dividends in preparing the EU for more connected and sustainable cities and transportation networks.

Smart cities

The EU is set to benefit from an acceleration of smart city initiatives in the coming years as these network infrastructure investments pick up, affecting cities, network operators and technology specialists. In building out digital infrastructure capacity, grant recipients will offer insight into the emerging role 5G will play in connected communities. Among the projects selected in the connected communities category, applicants focused on rural connectivity/digital inclusion, 5G networks for healthcare and sustainability/resilience.

In support of bridging the digital divide and extending network access more broadly across the continent, two projects were funded in Greece and Portugal. In rural Greece, WINGS ICT will use funding to upgrade wireless backhaul equipment, antennas and links to deliver high-performance and IoT device connectivity. Focusing on supporting rural smart communities, DSTelecom will pilot smart community use cases in healthcare, education and agriculture on top of a new 5G infrastructure.

Three projects focused on providing 5G networks for healthcare facilities in Finland, Sweden and Portugal. Funding recipients aim to use the grants to deploy a private 5G network in support of augmented-/virtual-reality applications, investigate 5G video communication to enable emergency services, and deploy 5G connected emergency vehicles, respectively.

Looking to go green, two projects in Latvia and Sweden will combine 5G networks with emerging IoT and AR/VR applications. In Latvia, project beneficiaries will look to deploy unmanned aerial vehicles with 5G connectivity to promote situational awareness and natural disaster vulnerability assessments. In Sweden, project coordinators plan to leverage network slicing and edge computing to enhance environmental monitoring and traffic management.

Two universities also gained funding to deploy 5G/private 5G networks to support low-latency data transmission for student learning outcomes.

Fiber gateways

The program invested over 80% of the budget in infrastructure projects focused on reaching remote areas and laying connections between EU countries and third parties. The projects focus on improving backbone infrastructure in the region by either replacing existing cables with fiber or creating new connection points and routes. This should improve rural connectivity and provide improved services where current infrastructure is expected to be insufficient once EU digital connectivity goals are met. In addition, it is set to increase network resilience and reliability in the region via the buildout of required redundancies and the creation of network diversity to ensure uninterrupted connectivity should a corridor fail.

Ireland was the largest beneficiary in this round, winning six projects and €66.7 million in funds. Fiber to the home remains underdeveloped in the market, with penetration among the lowest in Europe at below 25% in 2023. It is characterized by rural areas and remote households, making national coverage a challenge. Isolated from the rest of continental EU, the priority is to connect the island to mainland Europe through subsea fiber cable reaching the west coast of France with the potential to expand the cable to Spain and Portugal. Spain and Portugal are the west gates connecting Europe to the US, Latin America and Africa, and enhancing the reliability of remote islands such as Tenerife and Carcavelos has become essential to linking major datacenters and cable landing stations.

The Nordics are also launching a series of new gateways to enhance their links to Central Europe. Projects such as the Baltic Ring and Nordic Wave aim to create redundancies that will secure their connection in the case of damage and failure of existing infrastructure.

Such deployments secure connectivity across the continent, enable reach in remote areas and improve the capacity of existing networks. These improvements will connect people to the digital world and are set to be the backbone for the further expansion of 5G deployments and the progress of smart city deployments.