WIREDGOV

The European Commission is inviting comments on the application of EU state aid rules to the public funding of broadband networks.

The key issue for discussion is how to adapt the current Guidelines to the objectives of the EU Digital Agenda (see IP/10/581 and MEMO/10/199). In line with the Commission's state aid modernisation package (see IP/12/458), the proposed changes aim to ensure that state aid policy in the broadband sector focusses on facilitating well-designed aid targeted at market failures and objectives of common European interest, streamlining rules and taking faster decisions.

Comments on the draft guidelines should be submitted by 3 September. On the basis of the comments received, the Commission intends to adopt definitive Broadband Guidelines in December 2012.

Commission Vice President in charge of competition policy Joaquín Almunia said: "State aid control should support the Digital Agenda targets while maintaining incentives for commercial investments. We need a dynamic framework for the application of EU state aid rules in this strategic sector that fosters investments. This is all the more important in the present economic circumstances as new investments and more competition can contribute to growth and employment."

In 2011, the Commission launched the review of the 2009 broadband guidelines with a first public consultation on the basis of a questionnaire and conducted an expert report on the implementation of the current rules (see IP/11/493).

Most stakeholders found that the existing rules worked well and required no significant modifications, but considered that there was scope for more clarification. The draft Guidelines therefore aim at clarifying and simplifying the existing rules, for example by easing some conditions for investments in rural areas.

On the other hand, all Commission legislation in this field is harmonised to fully support the objectives of the Europe 2020 growth strategy (see IP/10/225) and one of its flagship initiatives, the Digital Agenda.

As good progress has been made with regard to the objective of connecting all citizens to basic broadband networks, the focus is shifting towards facilitating the roll out of fast networks. Therefore the revised Guidelines propose to include the possibility of supporting ultra-fast broadband networks (with speeds above 100 mbps) under certain conditions.

The revised rules also aim at increasing transparency by asking Member States to publish all information on broadband schemes receiving state support on a central webpage or reducing administrative burden for smaller projects.

Finally, the draft proposes to focus investments on infrastructure elements that are not directly related to the transmission of services, such as ducts or dark fibre (passive infrastructure). Investments into passive infrastructure are particularly expensive.

If such investments are financed through public funds, the infrastructure will be available indiscriminately to all service providers who intend to enter the market. This, in turn, will foster competition, in particular for very high speed broadband networks and contribute to improving broadband services and reducing prices for European consumers. Moreover, it may attract new commercial investors to the sector, such as investment banks or pension funds.

Background

When the current Guidelines entered into force in September 2009, the focus of public intervention was on channelling public funding to rural and remote areas where no broadband coverage was available due to the high costs of building such networks.

State aid rules ensured that public intervention did not crowd out private investment and encouraged the construction of new infrastructures in areas where consumers did not have a choice before. To take account of rapid market and technological changes, the 2009 Guidelines foresaw a revision after three years of application.

The Digital Agenda for Europe (DAE) is a flagship initiative of the Europe 2020 Strategy. It acknowledges the socio-economic benefits of broadband, highlights its importance for competitiveness, social inclusion and employment.

It provides the overall strategy framework defining over 100 initiatives for the digital Europe. Among others, the Digital Agenda also sets ambitious objectives for broadband infrastructure development: namely to bring basic broadband to all Europeans by 2013 and seeks to ensure that, by 2020, (i) all Europeans have access to much higher internet speeds of above 30 Mbps and (ii) 50% or more of European households subscribe to internet connections above 100 Mbps.


Investments in this sector shall primarily come from commercial operators. However, to achieve the DAE objectives, public funding compliant with the EU competition and state aid rules would increasingly be necessary to complement commercial investments in areas where private operators do not plan to invest because of low return of investment.

The new Guidelines will likely to play a continuously increasing role in achieving the Digital Agenda targets, but at the other hand they will ensure that effective competition takes place on subsidized infrastructures, in particular when telecommunication companies receive grants from taxpayers' money.

For more info see: (MEMO/12/396).The draft Guidelines are available at:

http://ec.europa.eu/competition/consultations/2012_broadband_guidelines/index_en.html