Services of general economic interest (SGEI) are economic activities that public authorities identify as being of particular importance to citizens and that would not be supplied (or would be supplied under differrent conditions) if there were no public intervention. Examples are transport networks, postal services and social services.


An undertaking which may be founded by a private partner for the purpose of concluding a PPP contract and/or implementing a PPP project.


Net Present Value (NPV) is a basic quantitative concept in finance. It represents the present value of all future receipts in money reduced to the present value of all future costs in money, i.e. the present value of all future pure cash flows resulting from the operation of the enterprise or a project of the enterprise or an intended transaction.


This term stands for "Long Term Evolution" - approved standard for 4G mobile broadband using radio waves. LTE was developed as a long-term alternative to DSL, cable, and other wired forms of Internet.


A document that helps the investor decide on an investment by answering the question whether a particular project is feasible in terms of the market and financial situation. If the study shows that the project is feasible, it becomes the basis for drawing up an implementation study, that is, the operative project. The feasibility study consists of a market analysis, a technological-technical analysis, a location analysis, an organisational analysis, and an analysis of economic and financial indicators. The information collected is then used to make an assessment of the feasibility and effectiveness, i.e. the viability of implementation of a particular investment project.


European system of national and regional accounts, abbreviated as ESA95 or sometimes 1995 ESA, which collects comparable, up-to-date and reliable information on the structure and developments of the economy of the EU Member States and their respective regions.


The Digital Agenda for Europe aims to reboot Europe´s economy and help European citizens and businesses to get the most out of digital technologies. It is the first of seven flagship initiatives under Europe 2020, the EU´s strategy to deliver smart, sustainable and inclusive growth.

DAE is available here.


An economic analysis method that is used to compare and evaluate all advantages and disadvantages of an economic undertaking or project through an analysis of all costs and benefits. It is important for making the right decision and any project adjustments that might be necessary.


PPP (= Public-Private Partnership) refers to a long-term, contractually regulated cooperation between the public and private sector for the efficient fulfillment of public tasks in combining the necessary resources (e.g. know-how, operational funds, capital, personnel) of the partners and distribution existing project risks appropriately according to the risk management competence of the project partners which is carried out by using the conditions laid down by the law.

There is a great variety of definitions for PPP available worldwide. The contents and objectives may vary according to the country specific background and the specific interests of the individual author.

Additionally, there exist four main characteristics of PPP:

  1. efficiency gained through appropriate sharing of risks and responsibilities; the public sector retains mainly sovereign tasks and the private sector bears those for implementation;

  2. lifecycle and private investment as crucial elements of PPP´s incentive structures;

  3. long-term contractual relationship;

  4. innovation, in particular through output specification, servcice levels and payment mechanisms, as a new way of describing the services to be supplied.

One of the major objective of PPP is to transfer tasks and responsibility for the provision of infrastructure to the private sector, in order to gain efficiency, cos reliability and financial security.


It is increasingly clear that governments cannot meet the constantly growing demand for services by acting on their own, and that there is a need to look for support from other sectors of society. Government revenues are usually not sufficient to meet spending demands. Partnerships can provide a continued or improved level of service at reduced costs. By developing partnerhips with private-sector entities, governments can maintain quality services despite budget limitations.

Public-private partnership is one of the most promising forms of such collaboration. It is based on the recognition that both public and private sectors can benefit from pooling their financial resources, know-how and expertise to improve the delivery of basic services to all citizens.

If properly designed and implemented, PPPs can bring real benefits in terms of helping governments to finance infrastructure investment in a more efficient way, freeing up scarce resources to allocate them to other national spending priorities.

The advantages of PPP in a competitive environment are considered as follows:

  • to remove the responsibility of funding the investment from the government´s balance sheet;

  • to introduce competition;

  • to adopt managerial practices and experience of the private sector;

  • to restructure public sector service by embracing private sector capital and practices;

  • to achiveve greater efficiency than traditional methods of providing public services.


Conventional procurement

Public sector institution prepares detailed specifications that describe the works required to deliver the necessary good or services. The works are then put out to tender in order to get the most competitive priced bid. Once the contract is awarded, the client (or its representative) closely supervises the works carried out by the successful partner in order to ensure compliance with the specifications.

Thus the client assumes the responsibility for designing and planning the project, fulfilling all statutory requirements (such as environmental permits, heritage approvals, town planning requirements, etc.) and covering any unexpected costs. The partner is responsible for the construction of the works in accordance with the tender documentation and is thus only responsible for matters covered in the tender documentation or those which could reasonably have been foreseen from the tender documents.

Conventional procurement is based on input specification where the Institution decides what it wants in order to deliver a service and takes full responsibility for all works related to the delivery of the service.

PPP procurement

When assessing a project through a PPP process it is crucial to define the desired functionality or result for procurement on the basis of output specifications. Here, the client defines the service that is required. These output specifications are then included in a financial model to allow for comparability between the two forms of procurement: public and private. Should the PPP option be preferred, the client leaves certain design stages of the works necessary to deliver that sevice up to the partner that will be selected through the bidding process. In some circumstances, due to plicy or strategic reasons the design requirements may not be left entirely to the discretion of the partner and in these cases the client may specify some inputs. The preferred approach however is to ensure that projects are driven substantially to the private party and thereby ensure greater value for money for the Government.


According to the EPEC PPP Guide, we can divide the PPP projects into five different models:

1) Public DBO (= design, build, operate)

A public DBO model involves the Managing Authority operating without any private sector intervention, except at a service provider level (involving either wholesale or retail service providers). All aspects of network deployment and operation are managed by the public sector. A network company is formed by the Managing Authority and typically offers wholesale services, with the potential to offer retail services (although this is not common).

2) Private DBO

The private design, build and operate model involves a private sector organisation receiving some level of public funding (often a grant) to assist in its deployment of a new network offering open wholesale access. Critically, in this model the public sector has no specific role in the ownership or running of the network, but it may impose obligations relating to either of these in return for the funding.

3) GOCO (Government Owned, Contractor Operated)

Government-owned-contractor-operated (Public outsourcing). Under a public outsourcing model a single contract is awarded to a private sector organisation, covering all aspects of the design or construction of the network. The key characteristic of this model is that the network is built and operated by the private sector, but the public sector retains ownership and some control of the network.

4) Joint-Venture

A joint venture is any agreement where ownership of the network is split between the public and private sector. Construction and operational functions are likely to be undertaken by a private sector organisation.

5) Bottom-up

The bottom-up, or local community, model involves a group of end users (comprising local residents and/or businesses) organising themselves into a jointly owned and democratically controlled organisational group (frequently a co-operative) capable of overseeing the contract to build their own local network. In this model it is likely that the public sector has no role in owning or running the project, but rather passes the funding to the group itself to oversee the investment project. Given the composition of the local group it is likely that the day-to-day running of the network will be outsourced to a telecoms operator with the necessary expertise. Bottom-up funded projects tend to be of a smaller scale than projects that use the other funding models.


Most PPP projects require a level of technical, financial and legal expertise not available through municipal staff. Therefore, as EPEC Guide to PPP suggests, it is important to attract experts from different fields of expertise who can provide guidance and information that allows informed decision-making bodies (consultants often have the advantage of experience with similar projects and circumstances and can "steer" a client away from pitfalls). They also provide independent advice, considering both the public and private perspective.

This is valuable in setting attainable goals, preparing the request for proposal, carrying out contract negotiations and in dispute resolution. Perhaps most significantly, consultants provide the expertise necessary to achive an even playing field in discussions and negotiations with the proposers who thus obtain sophisticated and highly experienced assistance.


The project proposal should be justified by a detailed analysis of needs and arguments for the suitability of the PPP approach. This is frequently called the Business Case. It is essential that the Business Case is well argued and receives the formal approval of senior governmental / political authorities before a PPP proejct be put out to the formal tender.

This analysis is likely to be a detailed exercise which takes some months of careful preparaion and will frequently require input from external experts. It should address the following:

  • the need for and nature of the proposed investment

  • options for investment and why the PPP route is proposed

  • the risks and implications of the project as a PPP

  • estimates of annual cost and considerations of affordability

  • timing and preparedness for PPP procurement

As part of the Business Case, the income to the public partner from the project is an issue to be carefully addressed.


POSSIBILITY TO LIMIT THE NUMBER OF BIDDERSNo prequalification or pre-selection is permitted. Any interested company may submit a bid.The number of bidders may be limited to no less than five in accordance with criteria specified in the contract notice (prequalification and short listing permitted).The number of bidders may be limited to no less than three in accordance with criteria specified in the contract notice (prequalification and short listing permitted).The number of bidders may be limited to no less than three in accordance with criteria specified in the contract notice (prequalification and short listing permitted).
DISCUSSIONS DURING THE PROCESSThe specifications may not be changed during the bidding process, and no negotiations or dialogue may take place with the bidders. Clarification is permitted.The specifications may not be changed during the bidding process, and no negotiations or dialogue may take place with the bidders. Clarification is permitted.Negotiations are permitted throughout process. Successive stages can be used to reduce the number of bidders (further short-listing).Dialogue with the bidders is permitted on all aspects (similar to negotiated procedure, including further short-listing). When the dialogue is concluded, final complete bids must be requested based on the solution(s) presented during the dialogue phase.
DISCUSSIONS AFTER THE FINAL BID IS SUBMITTEDNo scope for negotiations with the bidder after bids are submitted.No scope for negotiations with the bidder after bids are submitted.Not relevant because the negotiations can continue until the contract is agreed. No "final bid" as such is required.Only permitted to clarify, fine tune or specify a bid. No changes are permitted to the basic features.
THE BASIS FOR AWARDThe lowest price or the most economically advantageous tender.The lowest price or the most economically advantageous tender.The lowest price or the most economically advantageous tender.The most economically advantageous tender.


As laid down in EU rules on concessions and public-private partnerhips, a PPP draft contract shall contain at least the following topics:

  • the rights and obligations of the parties

  • risk allocation (this is usually achieved through setting out events which give the PPP Company a right to some compensation)

  • service performance standards and targets which need to be objective and measurable

  • the procedure for permitted modifications as well as their scope and nature

  • payment mechanisms (e.g. tariffs, subsidies, grants) and adjustments to payments in response to various contingencies

  • penalties (and possibly bonuses) which have financial consequences or give rise to warning notifications (eventually leading to termination of the PPP contract)

  • security and performance bonds

  • project insurances

  • the term of the PPP contract

  • the conditions for termination (categorised by party and type of event) and compensation upon termination (for each type)

  • step-in rights (both for lenders and, in emergency situations, the Authority)

  • the definition and impact of force majeure and changes in the law

  • the dispute resolution procedure

  • other rights, obligations and responsibilities of the parties

A PPP contract shall contain at least the following appendices concerning:

  • Standards of the services

  • Table of risk allocation

  • Guarantee for execution of the contract

  • Guarantee of the parent company for the special purpose vehicle

  • Financial model


Defining the most appropriate business model upon which to build a PPP is not an easy task. In general terms, it is a good practice not to impose one before consulting experts and/or potential private partners.

Most of the solutions are PPP/technology/case specific, but there are some issues that must be considered in any case:

  • risk mitigation

  • profit generating projects

  • state aid rules

  • self sustainability of the business model

  • affordability pre-assessment

  • risk allocation and management pre-assessment

  • bankability

  • business model pre-assessment

  • value for money pre-assessment

  • claw-back mechanism

  • economies of scale and project grouping

  • commercialization potential

  • market potential

  • capacity of assuming long-term commitments


Broadband is defined as a high bandwidth connection to the Internet and /or other experience rich contents or services. Broadband is easier and faster to use than the traditional telephone and modem as information can be sent and downloaded much quicker. The term represents the quantity, quality and rapidness of communication, the information obtained at local and global level, the currently minimal request for any community and the starting point for future development.

Broadband is a relative term understood according to its context. The wider (broader) the bandwidth of a channel, the greater the information-carrying capacity, given the same channel quality. Depending on the country, there seems to be a wide agreement that capacities below 128 kbps (or 256 kbps in some states) are not considered broadband.

Phone line, cable or satellite can provide the way for broadband connections. It involves large volumes of information being carried at high speeds to your PC. This allows websites, text, graphics, music and videos to be experienced in real time.

Features of broadband:

  • the connection to the internet is always on (allowing constant internet access and no need to dial up)

  • phone line is unaffected

  • standard monthly fee for unlimited internet access

  • content from internet can be downloaded at a fast rate

  • receive of uninterrupted real time internet services


Currently is broadband predominantly delivered to home users through copper (e.g. telephone) or coaxial (e.g. cable TV) networks and / or wireless access networks such as 3G mobile communications or fixed wireless access. Speeds on offer vary widely, but usually download speeds are in excess of 2 Mbps and upload speeds are above 256 Kbps.

Outside the areas where broadband providers face infrastructure competition, operaters have been reluctant to move beyond their established ADSL business.


Broadband has many key features that can make using the internet more relaxing, enjoyable and useful. By speeding up what you do online, it can make a real difference in your everyday life, be it at home or in the workplace.

Connection to the internet is much faster than the conventional dial-up connection. A 1 Mb service can send and receive information up to 20 times faster than a dial-up connection. Large volumes of data can be transferred - with high bandwidths that broadband has to offer large amounts of data can be sent and received by your PC at a fast rate. Your internet is always on, which means that you do not have the hassle of dialling up or logging on every time you want to access the internet. Your telephone line is unaffected, so you can make phone calls from your landline whilst the internet is running. There is no need to disconnect the internet when you want to make a telephone call. There are no surprise charges as broadband providers usually charge a standard monthly fee depending on what package you take. This means that you can pay for unlimited internet access and you do not get charged for the time you spend by surfing on the internet. As websites download almost instantly, you can enjoy complex web pages with detailed graphics without having to wait for them to load up. You can download music and videos and avoid the queues at the shops by purchasing music and videos online.

Downloads can be made online at a fast rate, you do not even have to leave your house. Through instant messaging or online interactive games you can communicate in real time with friends and family around the world.

The fast speeds that broadband has to offer and increased volume of data transfer can be used to help run a business more rapidly, efficiently and productively.

Some other benefits in related sectors:

  • EDUCATION: bringing dynamic resources into the calssroom while enabling seamless communication and partnering among teachers, students and parents.

  • HEALTH CARE: creating shared services that reduce operating costs and provide patients with a broader spectrum of enhanced services including remote diagnostics, administration, scheduling and electronic patient records.

  • PUBLIC SAFETY & EMERGENCY RESPONSE: rapidly connecting response teams with vital information improves coordinated, timely reaction to accidents and disasters. Moreover, citizens gain access to the information and tools they need to make decisions and seek support.

  • CITIZEN AND SOCIAL SERVICES: online services enhance service coverage and quality, save valuable time and public money while improving overall efficiency through services such as smart grid technology and platforms to communicate and collaborate.

  • ECONOMIC & WORKFORCE DEVELOPMENT: enhancing productivity and competitiveness. Through broadband new business practices and models can be adopted to increase revenues, reduce costs and improve customer service. Being online allows businesses to be anywhere and serve customers everywhere.

  • REGIONAL DEVELOPMENT: attracting and retaining innovative businesses, allowing the local economy to become more diverse and resistant to economic shocks, as well as providing well-paying, high-quality jobs.


The Digital Agenda For Europe (DAE 2020) states that by 2020 all Europeans should have access to the internet of above 30 Mbps and 50% or more of European households should have subscriptions above 100 Mbps.

DAE 2020 is not only about ticking-off items in a long list. It is about using technologies to make a real difference. It consists of 13 specific goals:

  1. the entire EU to be covered by broadband by 2013

  2. the entire EU to be covered by broadband above 30 Mbps by 2020

  3. 50% of the EU to subscribe to broadband above 100 Mbps by 2020

  4. 50% of the population to buy online by 2015

  5. 20% of the population to buy online cross-border by 2015

  6. 33% of SMEs to make online sales by 2015

  7. the difference between roaming and national tariffs to approach zero by 2015

  8. to increase regular internet usage from 60% to 75% by 2015, and from 41% to 60% among disadvantaged people

  9. to halve the proportion of the population that has never used the internet from 30% to 15% by 2015

  10. 50% of citizens to use eGovernment by 2015, with more than half returning completed e-forms

  11. all key cross-border public services agreed on by Member States in 2011 to be available online by 2015

  12. to double public investment in ICT R&D to € 11 bn by 2020

  13. to reduce energy use for lighting by 20% by 2020


NGA (= next-generation) networks consist wholly or in part of optical elements and are capable of delivering broadband access services with enhanced characteristics (such as higher throughput) as compared to those provided over already existing copper networks. NGA services can offer transfer rates of over 30 Mbps and therefore meet the broadband coverage target.

NGA networks can be deployed by using a number of different technologies and network architectures which will determine the maximum data speed which they will obtain. NGA network architectures currently being deployed include:

  • Fibre to the cabinet (FTTC) using Digital Subscriber Loop (DSL) technologies on copper end user connections or wireless broadband technologies

  • Fibre to the home/premises (FTTP) using point to point fibre

  • Fibre to the home/premises using passive optic networks (PON)


Ultrafast broadband is fibre-based network which can deliver large amounts of data further and faster than the copper cables based network that traditionally deliver telecommunications services. By using ultrafast broadband connection it will be possible to deliver the highest data speeds that can support services like internet television and high definition video conferencing.

Ultrafast broadband networks are able to transfer online services at ultrahigh speed rate of above 100 Mbps.


‘White spots’ are areas where is no broadband infrastructure and it is unlikely to be developed in the near future. The Commission targets for the DAE aim for a ubiquitous coverage of basic broadband services in the EU by 2013 and of at least 30 Mbps by 2020.


‘Grey spots’ are areas where one network operator is present and another network is unlikely to be developed in the near future. The same company may operate separate fixed and mobile networks in the same area but this will not change the ‘colour’ of such area. The competitive situation is assessed according to the number of existing infrastructure operators.


When in a given geographical zone there are or there will be in the near future at least two basic broadband networks of different operators and broadband services are provided under competitive conditions (infrastructure-based competition), it can be assumed that there is no market failure. If only one infrastructure is present, even if this infrastructure is used — via unbundling (LLU) — by several electronic communication operators, such situation shall be considered to be a competitive grey area. It is not considered a ‘black area’ within the meaning of the EU Guidelines.