Brussels, 17/09/2009 (Agence Europe) - On Thursday 17 September, the European Commission adopted guidelines to clarify the rules governing funding of broadband networks. The guidelines aim to encourage deployment of high speed networks, with public support if necessary.
“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”, said Competition Commissioner Neelie Kroes in a speech on 17 September. She went on to add that she expected investment of about €300 billion to be made throughout Europe for the development of high speed and very high speed networks. The commissioner stressed that most of the investment should come from the public sector.
The guidelines provide a “clear and predictable framework for stakeholders and will help member states to accelerate and extend broadband deployment”, a Commission press release states. Among other things, they authorise public aid for the development of next generation access networks, to promote investment in this strategic sector without creating undue competition distortion. The guidelines are based not only on 40 individual decisions taken by the Commission in this field over the past five years but also on consultation held in May and June this year.
Public funding may be directed to areas where private operators do not invest, for example in scarcely populated areas (see, for example, the Commission's decision on German aid for internet infrastructure in rural areas, EUROPE 9778). The guidelines make a distinction between competitive areas (“black” areas), where no state aid is required (or, by extension, allowed) and the areas which are unprofitable or under-served (“white” and “grey” areas), in which state aid is justified. Where state aid is deemed acceptable, this must be accompanied by crucial safeguards such as detailed mapping, open tender, open access obligation or technological neutrality and claw-back mechanisms as laid down in the guidelines in order to promote competition and avoid the crowding out of private investment.
The guidelines take into account the current development of next generation access networks, or NGA networks. They differ from the more traditional broadband networks, such as ADSL or cable, by allowing far greater output thanks to the use of technology such as optical fibres. The Commission is currently working on a recommendation on the subject of this technology, which will give a more precise definition of the rules applicable to this market in order to encourage private investment. According to the Commission, although the same principles will govern state support for NGA networks, the development of these networks “will be different from traditional broadband. Black, white and grey areas [Ed: which define areas where state aid is allowed] may not be as easy to define as with traditional broadband”. A further precaution will therefore be imposed on member states wishing to give state aid to the development of NGA networks. This precaution will mean taking into account not only existing infrastructure but also concrete investment projects in this field by telecommunication operators. In certain specific conditions, the Commission explains, the deployment of an NGA network may be considered as a “service of general economic interest”, allowing derogation to the rules limiting financial support by the state. Conditions to be met are: 1) - a clear public service remit; 2) pre-determined compensation criteria; 3) compensation not exceeding the costs incurred when providing the public service; and 4) the choice of beneficiary must be made in an open tender or, in the absence of such a tender, compensation should not exceed the costs of a well-run company. These conditions - known as “Altmark” - have been developed in line with European Court of Justice case law, further to the case bearing the same name in 2003 (EUROPE 8511).
The Commission points out that investment in favour of broadband networks is also an essential part of the European plan for economic recovery, especially given the €1.02 billion allocated under the European Agricultural Fund for Rural Development (EAFRD), so that broadband internet may be developed in rural areas. (C.D./transl.jl)