Thursday, September 17, 2009

BPN1374 EC Guidelines for broadband networks

The European Commission has today adopted Guidelines on public funding for broadband networks:

The Guidelines offer Member States and public authorities a comprehensive and transparent tool to ensure that their plans for state funding of broadband are compliant with the EU's state aid rules. The Guidelines will therefore facilitate the widespread roll out of high speed and very high speed broadband networks, enhancing European competitiveness and helping to build a knowledge-based society in Europe.
We expect to see up to 300 billion euros of investment in both high and very high speed European broadband networks in the coming decade.

While this investment should be made mostly by private companies, there is an important role for public investment in achieving the widest possible access to broadband in underserved and non-profitable areas. As President Barroso said earlier this month:
* "all Europeans must have access to high speed broadband".

Failure to act decisively to pursue this goal would hurt Europe's future. And acting decisively requires legal certainty and predictability for both governments and private investors.

Public investments in line with the present guidelines will significantly contribute to shrinking the digital divide - both within and between EU Member States.

Guidelines details
Now, about the details of the guidelines .... The Guidelines provide a clear and predictable framework for all stakeholders and will help Member States and regions to make funding decisions.

This applies to traditional broadband as well to the Next Generation Access networks which will allow the provision of advanced interactive communication services - the services of the future - to European citizens. We want our guidelines to foster investment in this strategic infrastructure without re-creating old monopolies or unduly distorting competition.

These guidelines will help to clarify the conditions under which public money can be used to extend broadband coverage by serving areas where private operators do not exist or where broadband services are inadequate.

Such situations arise for both basic broadband networks - such as^ ADSL, cable, and wireless and satellite networks - and the Next Generation Access networks.

The Guidelines make distinctions between different types of areas:
* competitive areas ("black" areas), where state aid is not needed, such as densely populated cities
* areas where one broadband infrastructure already exists, but broadband services are not adequate - these are "grey areas", and
* areas where no infrastructure exists ("white areas"), such as rural areas.

Considering that the deployment of Next Generation Access networks is still at an early stage, in determining the areas where these networks can be financed with state aid, we will not only look at existing infrastructures but also at concrete future investment plans by telecom operators.

Moreover, in the guidelines we lay down a number of crucial safeguards to avoid undue distortions of competition and avoid the 'crowding out' of private investment.

These safeguards include:
* detailed mapping to identify the unserved or unprofitable areas
* operation of open and transparent tenders to grant the aid
* open access obligations to foster competition at the retail level
* technological neutrality to let the market pick the best technological solution and
* claw-back mechanisms to avoid disproportionate advantages to the beneficiary undertakings and a waste of taxpayers' money.

The Guidelines summarise also the rules for the cases where provision of a broadband infrastructure is designated as a Service of General Economic Interest. Telecoms is a liberalised sector, therefore an SGEI in this area is conceivable only if
* in the absence of private investments, a public service network is necessary to ensure universal coverage,
* compensation is granted only to deploy the network in the unprofitable areas, and
* the network is open to all service providers.

But make no mistake: public funds are not always needed for public authorities to promote broadband deployment and, in any event, they should not crowd out or delay private investments. Before granting state aid, public authorities should therefore consider whether they can promote private investments with other means, for instance by coordinating civil works and streamlining administrative procedures.

With a view to facilitating investment by private operators, the Commission is also working on a draft NGA Recommendation, on which it held a public consultation during the summer. Once adopted, the NGA Recommendation will set out the regulatory environment to encourage private investments in fibre while at the same time maintaining effective broadband competition.

These guidelines should facilitate public support for the rollout of new, neutral and open broadband infrastructures in underserved or unprofitable areas, on which a competitive market for services needs to develop. Today, with the Guidelines, the Commission has moved an important step forward to close the digital divide and this within Member States, among Member States and between Europe and those countries in the world where the rolling out of NGA Networks is already well advanced.

The Guidelines should be seen as a clear indication of the Commission's attempt to put Europe at the forefront of the digital economy and knowledge based society.

Blog Posting Number: 1374


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