EU Approve State Aid for Ultrafast Broadband Rollout in Birmingham UK

The European Commission (EC) has given state aid approval for the UK government to release between £7m-£10m in order to rollout an “ultra-fast” fibre optic based 80-100Mbps+ (Megabits per second) capable broadband ISP network in Birmingham by 2015 and turn it into one of ten large “super-connected cities“.

The project itself is part of the UK governments £150m Urban Broadband Fund (UBF), which announced during March (Budget 2012 Summary) that Birmingham City Council (BCC) would be one of ten large cities to benefit from the extra investment. A further ten smaller cities are expected to be confirmed soon (details).

Under the governments rules this money must only go towards improving “coverage in areas where BT and Virgin Media will not go” or services “beyond what the [Private Sector] will provide“. Similarly the EC stated specifically that the plan was “in line with EU state aid rules, in particular because it will be genuinely open to all operators and will therefore promote competition“.

Joaquín Almunia, EC Vice President for Competition Policy, said:

“Investments in ultra-fast broadband networks contribute to promoting growth in line with the EU’s Digital Agenda. If such networks are built with the help of taxpayers’ money, it is important to ensure thriving competition on the subsidised networks, so that local businesses and citizens can benefit from continuously improving broadband services at competitive prices.”

Birmingham’s plan is expected to focus on two districts (i.e. eastern side of the city) where private operators have “no or very limited investment plans in the next three years“. The EC was also quick to praise the city for ensuring that its plan would also meet their new Draft Broadband Guidelines before they’ve even been implemented.

The EC noted that Birmingham even exceeded some of its own guidelines, such as by promising that open access will be granted for at least 25 years for alternative operators (7 years under the guidelines). Similarly the network will be operated on a wholesale basis, with “all possible” wholesale access products being offered to third party operators and that includes Dark Fibre (high capacity fibre optic cable that has been laid by an operator but is not presently being used [i.e. future capacity]).

Suffice to say that Europe had no problem clearing the plan. Sadly the same cannot be said for the rest of the UK Local Broadband Plans (LBP), which are still subject to EC scrutiny and concern over whether or not the earlier “super-fast broadband” definition of “greater than 24Mbps” (uk government complicates superfast broadband definition) is enough when Europe wants the minimum to be set at 30Mbps for all by 2020 under its Digital Agenda.

At the same time Europe is also conducting a public debate about whether or not it needs to impose stricter rules, which may or may not make access to state aid fairer for smaller ISPs. So far only BT seems to be winning the major contracts and Fujtisu has diminished to bidding on just Cumbria and North Yorkshire. Unfortunately the UK government has set the bar too high for smaller ISPs to get involved.