Secretary of State Dragos Preda: “The construction of NGN backhaul infrastructure requires more than 2 billion Euros”

“We estimate that Romania’s goal of ensuring speeds of at least 30 Mbps for 80% of households by 2027 will require most of the public funding effort, both in supporting increased coverage and in encouraging the ‘adoption’ of new services,” Dragos Preda, Secretary of State, Ministry of Transport, Infrastructure and Communication told The Diplomat-Bucharest.

“During the budget years 2021 – 2027, future developments of state-of-the-art (NGN) backbone and backhaul networks will be supported, either by launching new state aid programs or by taking additional measures that will encourage private investment in broadband infrastructure. It is estimated that the construction of NGN backhaul infrastructure currently exceeds 2 billion Euros, while 750 million Euros are needed to modernize existing networks in urban areas, and 1.25 billion Euros represent the financing needs to achieve NGN coverage in urban and rural areas.”

What are the most important projects in 2021 for the Ministry of Transport, Infrastructure and Communications? How can Romania accelerate the development of its infrastructure?

About half a year ago, I officially forwarded a National Broadband Investment Plan 2021-2027 following several informal meetings I had with Mr Marcel Bolos – at that time Minister of European Funding. We were prospecting to architect the access for every citizen of Romania to best current internet services.

The purpose of this plan of measures is to estimate the need for investments in broadband infrastructure for the next generation networks and to establish the necessary interventions on the market, so that Romania can meet the assumed objectives. It therefore describes the minimum rights and obligations aligned with the proposals put forward at European Union level to encourage the development of high-speed electronic communications networks and cross-sectoral coordination. The initiative also addresses a number of measures to encourage the development of next-generation networks (NGNs), including methods to reduce the costs of developing new-generation electronic communications networks. The investment plan focuses mainly on the new generation of access segment, the terminal segment of the new generation networks – this being the most difficult and expensive segment to develop – but also aims to highlight the necessary conditions for the development of transport networks (backbone ) and distribution (backhaul) already existing. The transmission and distribution networks in Romania are at a level of development that can be used and / or extended for ultra-fast NGA connections. However, in the case of rural areas in Romania, significant further developments of the distribution networks are needed to cover the “white areas”, and this is expected to happen through the RoNET project, as a necessary component of the National Investment Plan.

The new generation of Information Technology and Electronic Communications have an all-encompassing role in introducing communications and information in all economic and social processes and has an impact in all other high priority lines of action:

• modernization of public administration and reduction of administrative costs 
• the use of open data in public institutions and ensuring interoperability
• digitization of the most important life events for citizens and the business environment
• the introduction of ITC in education, health, culture and creating social inclusion environments
• promoting national and cross-border e-commerce
• security of cyber networks 

This plan will lead to the growth of an industrial sector whose purpose is the international spread of advanced solutions, in order to modernize the Romanian society and economy, increase its percentage in the GDP, due to exports from the technological sector and leading to increased export capacity of other sectors using new tech tools, made available as a result of the advancements of technological platforms. Moreover, studies show that a 10% increase in the penetration of broadband networks leads to a 1-1.5% increase in gross domestic product.

Investment costs will only be partially covered by private investment, the rest of the costs are expected to come from public and / or other sources of funding. Therefore, the amounts necessary for the implementation of the National Infrastructure Development Program will be provided from external non-reimbursable broadband funds post-accession related to the budget programming period of the European Union 2021-2027, private funds and national public contribution provided from the state budget and local budgets, as appropriate, within the limits of the funds approved annually for this purpose in the budgets of the authorizing officers. In order to close the significant investment gap between the Operational Programs and the budget needed to achieve the target indicators defined in the National Broadband Infrastructure Development Plan, we prospected complementary financing mechanisms as CEF, Junker Plan, World Bank, EIB, EBRD, and so on.

The coverage of broadband access networks based on fixed technology reaches up to 67.2% DSL, 17.4% VDSL, 54.7% FTTP (or FTTH) and 25.5% DOCSIS 3.0 cable, respectively. Regarding mobile broadband access networks, HSPA (High Speed Packet Access) coverage is currently 96.2% of households, 57.4% WiMAX networks and 23.6% of LTE (big cities) networks, respectively. But we already forwarded a vision to introduce to Romania the LORAWAN.

It is important to note that there is a significant development of the new generation national broadband infrastructure that takes place in Romania through the use of a wide range of terrestrial technologies (xDSL, FTTx, DOCSIS 3.0 cable) or radio technologies (WiMAX / LTE). 

Despite the constant development of broadband coverage, especially wireless / mobile extensions, the penetration of basic broadband services is still low, especially in rural areas… that is why I launched the expert debates to put forward a National Strategy of Critical Infrastructure.

We estimate that Romania’s goal of ensuring speeds of at least 30 Mbps for 80% of households by 2027 will require most of the public funding effort, both in supporting increased coverage and in encouraging the “adoption” of new services.

During the budget years 2021 – 2027, future developments of state-of-the-art (NGN) backbone and backhaul networks will be supported, either by launching new state aid programs or by taking additional measures that will encourage private investment in broadband infrastructure. It is estimated that the construction of NGN backhaul infrastructure currently exceeds 2 billion Euros, while 750 million Euros are needed to modernize existing networks in urban areas, and 1.25 billion Euros represent the financing needs to achieve NGN coverage in urban and rural areas.

Investments, namely public intervention (for example: investment incentives, grants, state aid, etc.) will focus on the development of a new generation of infrastructure in areas affected by market failure – areas with limited / no potential for private investment, the so-called “white areas”. Such areas must be defined in accordance with each development cycle following the market analysis, taking into account the development objectives of the regions, as well as relevant characteristics such as: land characteristics, population density, elements affecting demand (income level, education, ITC training), employment status, age structure, etc. The public intervention measures required in the “white areas” will be established in accordance with a set of criteria and rules.

Broadband communications allow and facilitate the development of a wide range of ITC services, while increasing productivity and competitiveness, respectively GDP growth. It is globally accepted that information and communication technology (ICT / ITC) has led to an increase in productivity by 40-50% in the last 10 years, with several studies showing a strong correlation between broadband access penetration and GDP per capita (R2 = 0 , 5419). The positive repercussions of the expansion of broadband access in the less developed regions of a country have been the subject of numerous international studies, which have outlined the main anticipated long-term benefits for the affected areas. We talk here about a quick V recession compared to a not so fortunate L recession and the history shows that the main fuel for this is the investment in the infrastructure – namely the classical one – terrestrial: highways and railways, energy transport, and the current most profitable on its return-on-investment data infrastructure.

By ensuring equitable coverage and access to broadband communications throughout Romania, the measure will help achieve greater cohesion and contribute to the formation of the single market for ICT services.

According to the Communication on the Commission Guidelines for the Application of State Aid Rules to the Rapid Development of Broadband Networks (2013 / C 25/01) ˮ, the various “investment models” usually include the State subsidy, unless which investments are made in accordance with the market economy investor principle.

Most of the infrastructure financing will be done through a Design-Build-Operate (BOD) model, which consists in selecting experienced communication service operators or a consortium of such operators capable of designing, building and operating transmission and access networks, as well as their maintenance throughout the concession period. The choice of such an operator will be made through an open process of competitive selection. In order to avoid the creation of dominant positions, by acquiring significant market power in the localities concerned, the EU recommendations on state aid in the field of broadband communications will be applied (Art. 43, 2013 / C25 / 01).

What are your priorities and objectives as Secretary of State? & How will the 5G technology help Romania improve its telecommunications and transportation system?

Member States and industry agreed for the first time to establish cross-border corridors in September 2017 at the Frankfurt Connected and Automatic Driving (DAC) Roundtable. A number of Member States continued to sign and / or announce bilateral agreements between themselves for several test corridors. Thanks to these 5G corridors, Europe is a leader in testing 5G technology. It affirms Europe’s ambition to maintain its leadership in the development of new technologies and more specifically, in this case, to introduce connected and automatic driving (or mobility). Only a pan-European effort will create a safe and predictable environment for citizens to enjoy the benefits of connected and automated mobility.

The Commission is currently planning other funding opportunities both in the last phase of Horizon 2020 and in the new EU budget proposal, in particular as part of the Connecting Europe Facility (CEF2 Digital) program for 2021-2027.

Overall, thanks to support for enhanced cross-border cooperation and support for EU funding for research and innovation, a new map of 5G cross-border corridors is gradually emerging in Europe. In this regard, I forwarded the proposal to initiate the connection of Romania, through a memorandum of understanding, to two of the cross-border corridors, namely: Slovenia, Hungary and Austria and Bulgaria, Greece, and Serbia on cross-border cooperation in electric vehicle development and testing, integrated and autonomous.

On January 7, 2021, the Government of Romania adopted by Emergency Ordinance the institutional framework and measures necessary for the establishment of the “National Access Point”, according to the delegated regulations supplementing the Directive 2010/40 / EU of the European Parliament and of the Council of July 7, 2010 on the framework for the implementation of intelligent transport systems. The summons of the Secretary of State, Ionel Irinel Scrioșteanu, and of the undersigned Dragoş Preda, under the coordination of Mr. Lucian BODE, Minister, as President and Vice-President of the Coordinating Council for Intelligent Transport Systems, brought Romania out of a possible infringement, the transposition of the directive having been overdue since 2014.

At the same time, the European Commission supports the introduction and deployment of Connected and Automatic Mobility (CAM) at different levels: 

• Policy initiatives: policy development, communications, roadmaps, strategies in close collaboration with stakeholders. DG CONNECT’s role is to bring together stakeholders and countries to encourage the exchange of experience, ideas, and proposals. 
• Development of standards at European level
• Co-financing of research and innovation projects (HORIZON 2020), support actions and infrastructure policies 
• European legislation, when needed 

In this sense, I have already started informal discussions internally and at the level of experts (such as Florin NEMȚANU, dean of the Faculty of Transports at the Polytechnic University of Bucharest, and of some clusters / DIHs at national and international level) on the elaboration of a national ITS Strategy. 

Also, in this direction, based on the collaboration protocol with ASRO – National Standardization Body, signed a few months ago, Romania has transposed ISO 37120/2018 “Indicators for urban services and quality of life”, approved by the Director General of ASRO on December 23, 2020. The aforementioned protocol aims the transposition into Romanian legislation of the entire set of ISO standards (10 in number, currently only three being found in the Romanian legal framework) dedicated to sustainable cities and territorial communities – SMART CITIES. We aim to maintain, intensify, and accelerate progress towards an improved level of urban services and quality of life, which are essential for defining both smart and resilient cities. Three other ISO standards are currently under way to be transposed into Romanian legal framework.

Regarding the research and innovation projects, also last year (2020), we assumed in partnership with the Ministry of Education and Research, the involvement in a series of research activities: Romania’s participation in the European Partnerships in the future research and innovation framework program Horizon Europe (2021-2027) MTIC – Ministry of Transports Infrastructure and Telecommunications expressing its intention to participate in the following partnerships:

• European Partnership for Key Digital Technologies
• European Partnership for High Performance Computers
• European Partnership for Promoting Urban Transition and Sustainable Development
• European Partnership for Innovative SMEs

Another highly strategically important axis not to be forgotten is the Three Seas Initiative (3SI). This platform was launched in 2015 with the aim of stimulating cooperation and interconnection between 12 EU Member States (Austria, Bulgaria, Estonia, Croatia, Lithuania, Latvia, Poland, Romania, Slovakia, Slovenia, the Czech Republic, and Hungary) which are located between 3 seas (Baltic, Adriatic, and Black Sea). The 3SI (Three Seas Initiative) project focuses on the transport, telecommunications, and energy sectors.

The 3SI 2020 Tallinn Summit introduced the Smart Connectivity vision, with a pressure to link energy and transport infrastructure with digital platforms and services. This will support new business models and technologies and contribute to energy and transport investments for the future. It will help the Three Seas region to develop competitively as a global attraction for smart mobility and energy innovation, which will also help us develop and sell smart solutions around the globe. Throughout 2020, Estonia oversaw the growth of the Three Seas Investment Fund. Estonia was the third country to join the fund as the main investor and was followed by six other participating countries that assumed to join the fund, bringing the total number of countries involved in the fund to nine. At the Tallinn Summit, the Polish development bank BGK announced an additional investment of 250 million euros to the fund, and the first private investor, Amber Infrastructure Group, announced its intention to invest up to 10 million euros. These pledges brought the total value of the fund up to 923 million euros. In addition, US Undersecretary Keith KRACH announced at the summit a $ 300 million investment through the US Corporation to finance the development of the Three Seas Fund (December 2020). Estonia has launched an interactive website of 3SI Priority Interconnection Projects in the energy, transport, and digital sectors available to investors to find out online and updated the status report of the projects. In this sense, I officially presented, in the autumn of last year (2020) the proposal for the elaboration of a Smart Connectivity Strategy 2030 based on the concept of critical infrastructures.

One of the most important projects generated by 3SI is the “Digital Highway” and was developed and launched by the President of the Republic of Poland at the Bucharest Summit in September 2018. It was accepted by all member states and put on the list of priority interconnection projects. The aim is to develop a digital network from NORTH to SOUTH by connecting all member states through a fiber optic network that will facilitate the creation of a 5G connection between its member states. 

Following the working meetings between the representatives of the Ministry of Transport, Infrastructure and Communications (MTIC), of Exim Bank and of the investment group Amber Infrastructure Group and the representatives of the Ministry of Foreign Affairs (MFA), and subsequently the decision on the development of the Gdansk – Constanta corridor, we have forwarded a broadband infrastructure project for the corridors of the two major projects, which is considered to be of great interest to the Amber Infrastructure Group.

Furthermore, to support such initiatives, the European Commission is providing financial support through the Connecting Europe Facility (CEF) Digital 2 to accelerate private investment in 5G infrastructure along motorways known as “5G corridors”. Implementing 5G connectivity along travel corridors will promote investment in and take over connected and automatic mobility (CAM). This technology will transform the automotive and transportation sectors and will lead to a number of benefits, including: 

• improved productivity due to reduced driving times – the cost of traffic jams can reach 1% of EU GDP
• improved fuel efficiency and low emissions – transport is responsible for almost 30% of total EU CO2 emissions 
• fewer road accidents – 23,400 people were killed in road accidents in 2018 in the EU. 

At the same time, on 13 November, the Working Party on Intermodal Issues and Networks met under the German Presidency proposing a new approach to mobility in Europe. Following the group discussions, Member States decided that the roadmap should aim at: 

• ensuring technology neutrality with regard to alternative fuels (hydrogen, zero emissions) and digital solutions
• the contribution of transport to reducing climate effects (decarbonisation of transport, ETS)
• social aspects (equal opportunities, professional training, working conditions).
• infrastructure (ensuring the connectivity of remote and peripheral areas; emphasizing the importance of public transport and active mobility)
• identifying all forms of European funding from which transport can benefit.

At what stage is the process of operationalization of the new CYBER center?

The development of 5G networks, while ensuring their cyber security and respecting the coordinated approach at EU level, is one of the key European priorities.

Commissioner Thierry Breton pointed out that the headquarters of the European Cybersecurity Center must be located in a country that is cybersecurity and connectivity secure, including in terms of cyber security of 5G networks.

Our country was selected before cities like Brussels or Warsaw. Until now, Romania did not host any European agency. Thanks to the efforts of President Klaus Werner Iohannis, Prime Minister Ludovic Orban, Minister Lucian Bode – as Minister of Transport, Infrastructure and Communications, Romanian state entity in the TTE Council, my colleague Alexandru Nazare, recently elected senator, and Minister of Finance, as well as to all our colleagues in the government ITC entities  (CERT .RO / STS / CYBERINT etc.) Romania has firmly positioned itself on the map of Europe and the world. 

The proposal for a regulation establishing the European Competence Center for Industrial, Technological and Research in Cyber Security and the Network of National Coordination Centers was the most important legislative proposal for Romania, in light of our country’s candidacy to host the competence center. 

The aim is to stimulate the European technological and industrial cyber security ecosystem.

The Center will have a comprehensive activity that will support cyber security throughout the value chain, from research to support the implementation and widespread adoption of key technologies. 

It will also provide support to Member States and other relevant actors through advice, sharing expertise and facilitating collaboration on projects and actions. 

Romania officially launched its candidacy in March 2020. 

In addition to Romania, Luxembourg, Belgium, Lithuania, Spain have also announced their candidacies, and Ireland and Portugal have indicated their intention to run. 

The location in Romania of the headquarters of this center is particularly important for the political and geo-strategic visibility of our country, placing it in a position of regional and European leadership in cybersecurity, but also a pole of technological expertise in security cybernetics at European and international level.

It will contribute to the promotion of Romania at European and international level as a strong digital country, with a competitive economy, with exceptional prospects for increased investments, in direct or related areas of cyber security, such as training and education in cybernetics, research, standardization, artificial intelligence, defense, innovation, cryptography, ICT security services, intrusion detection or human and societal aspects of security and privacy, etc.

At the same time, it will be mostly important to integrate Romanian companies in projects that develop on the structure of key strategic value chains. Established in the Report of the Strategic Forum for Important Projects of Common European Interest – IPCEI, the six key value chains proposed are: connected, clean autonomous vehicles; hydrogen-based technologies and systems; intelligent health; low CO2 industry; the industrial internet of things (industrial data); cyber security, all these generating an exponential economic ecosystem of tens of billions. 

To these we add-up three more areas in which the EU has advanced with IPCEI projects, namely microelectronics, supercomputers, and electric batteries, to which we (MTIC) partnered last year (2020) with the Ministry of Education and Research (European Partnership for Essential Digital Technologies / European Partnership for high performance computers / European Partnership for the Promotion of Urban Transition and for Sustainable Development / European Partnership for Innovative SMEs). 

It is necessary for Romania to connect in the European network of these value chains at company level and to attract investments at national level. 

I have always emphasized the importance of developing digital skills, data economics, artificial intelligence and strengthening cybersecurity, focusing on the role of digitalisation in achieving the objectives of the European Environment Agreement / European Green Deal. 

The implementation of the 5G toolkit also involves the application of European instruments for the protection of electronic communications networks, including the Electronic Communications Code – its transposition being forwarded to be assumed already by the end of summer of 2020 with the help of our expert colleagues from ANCOM, the NIS Directive (Network and Information Systems Security Directive) and the Cybersecurity Act and other relevant instruments, as the EU Regulation on Security Control for Foreign Investment (FDI), Anti-Dumping Legal Instrument, European Public Procurement Framework, EU Research and Innovation Funding Programs, IPCEIs (Major Projects of Common European Interest), GDPR, ePrivacy, radio equipment directive – this EU Directive has also been put forward in October 2020 to be transposed in form of the National Strategy for Digital Radio, etc. 

The correct implementation of the Cyber Security Act is particularly important in this process in view of the need for an adequate level of convergence as regards standardization and certification measures.

The architecture of the implementation of the EU Cyber Center, a European agency hosted by Romania, which will manage a budget of over two billion euros, must be solid, based on the Cyber Security Cube (also called the McCumber cube), a tool for managing network protection, domains, and the Internet, which systematizes the three-dimensional approach to the domain. The first dimension of the Cyber Security Cube includes the three principles of information security. These include information status, critical information characteristics and security measures.

From the moment of its implementation, the EU Cyber Center must use in its development the concept of Zero Trust, an imperative concept in cybersecurity. Organizations follow the principles of a zero-confidence network to help address the security requirements of rapid digital transformation and the expansion of the remote workforce. We aim to create an ecosystem that incorporates broader contextual information at the same time to stimulate more dynamic enforcement of stronger security policies and practices. Technologies that support Zero Trust are moving into the mainstream. That’s why security experts say it could be the best way to stop data breaches.

The location in Romania of the EU Cyber Center places us in a position of regional and European leader in the field of cyber security, but also at the pole of technological expertise in the field of cyber security at European and international level.

The hosting by Romania of the Cyber Center of the European Union, in Bucharest, brings a challenge for the local labour market. We need to become a pole of competitiveness, a frontispiece, a beacon for this cyber zone. This will be done when we will develop and create this curriculum for young people from other countries to study these skills in Romania. In this way, we will increase the level of the labour market in the field and the level of salaries and we will create a retention of the new generation on the Romanian market. 

Hereby, I already started defining a national labour framework based on EU labour framework to inhabit the new labour force opportunities and I wish to thank for the help to people as Liviu Moron – Network Security Engineer, GIAC Exploit Researcher and Advanced Penetration Tester (GXPN), or Andrei Avadanei – CEO Bit Sentinel, his contribution having fundamentally shaped the cybersecurity ecosystem in Romania and Central and Eastern Europe. 

Moreover, for the last two months I launched a serious debate to create a joint curricula with Queen’s University, Belfast – considered to be one of the main global cyber-security academic institutions and other Romanian universities. I wish to thank for this to Nigel BELLINGHAM, Country Director, British Council.

There are still many things to be prospected, done, and managed, but the future will definitely be brighter.

What should be Romania’s goals in terms of digitalization, connectivity, and smart cities?

As digital and physical infrastructure, powered by the converge of cloud computing and the Internet of Things (IoT), cities are becoming increasingly vulnerable to cyber-attacks. Smart Cities and Smart Communities cyber practice assists government and private organizations in addressing the risks of cyber security and privacy associated with connected environments, while adopting the power of new technologies – next generation networks, cloud, IoT, blockchain, artificial intelligence, machine learning, etc.

Given that Romania promotes and consolidates its European profile as a leader in the field of cyber security and high and very high-speed telecommunications, especially in the context of hosting the headquarters of the European Cyber Security Center, being particularly important for our country be a global actor, pro-active, vocal, and involved in the application of the common set of tools to address security risks related to the introduction of 5G. The development of 5G technology has a great impact on every industry. For the development of smart cities, putting forward safer transport, or in the field of health for remote medical care, or precision agriculture.

We seek the urgent adoption of a more flexible regulatory framework for the construction of broadband electronic communications networks – a new law on electronic communications network infrastructure and the transposition of the regulatory package related to the European Communications Code – which will boost investment in connectivity for all citizens. We are considering the flexibility of the economic framework of the companies in the field and the alignment of some tariffs / fees for the rights to use some parts of the existing infrastructures, in order to develop the broadband electronic communications networks. 

Vital is also the vision – the development of national strategies for the development of the concepts of Smart City, Smart Connectivity (Strategy for Electronic Communications, Cyber Security, Telecommunications and Radio Interoperability and Cloud Computing Infrastructure), with elements regarding financial support, to provide a complete connectivity package for all categories of the population (e-inclusion). This will allow the implementation of e-government, online education, telework and telemedicine systems, e-culture, e-commerce, research-development-innovation in the field of ICT, etc. at the level of all inhabited areas in Romania. 

We also aim to establish a community in the field of electronic communications through a joint management of companies such as SNR, Telecomunicații CFR etc. and determining a clear perspective on Critical Infrastructures. In this sense, we put forward a truly pragmatic investment plan: the Romanian Digital Highway within the framework of the Three Seas Initiative, putting on the table an extremely attractive and profitable project for AMBER 3SI to develop the national broadband backbone and thus transposing the EU ITS Directive … as well as the communication of the COM to the operators to develop autonomous transport highways, integrating GNSS – on an essential dimension – Search n Rescue (road safety), as well as the eCall program (developed in Romania by our expert colleagues from STS), or the aforementioned National Strategy for Digital Radio.

Digital solutions and connectivity must be targeted not only in the urban environment, but also in the inter and intra-county area, where there are still things to be adjust.

The implementation of new technologies in Romania will have an impact on GDP of approximately 13% in the coming years… and from the point of view of the services that will be simplified through this digital transformation, the impact is expected to result somewhere around 12%. The change will not happen overnight, it will be gradual. The systems approach will be a hybrid one. It takes a period of acclimatization of the entire society, to determine the new set of digital skills. In order to talk about the implementation of new technologies in electronic communications, it is also necessary to apply the provisions of the existing European Communications Code. We have generated a heated debate at the national level without realizing that these provisions clarify many issues, including technology neutrality, data security and, moreover, predictability. European Communications Code clearly specifies that we will have 20 years of predictability for the market, so that we can allow the market to grow, make clear investments and be able to generate “la mise en scene” for this digital transformation.

In order to truly live this new enriching experience, we need to join forces and set up a pro-active passionate community built on the expertise of all the stakeholders: Government, business leaders, innovative start-ups, NGOs, and academics, backed up by an ethically engaging mass media.  

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