EU Adopts New State Aid Guidelines to Boost Ultrafast Broadband Rollouts

The European Commission (EC) has today adopted revised guidelines on the use of public funding to help deploy “super-fast” broadband (30Mbps+) ISP services to everybody in the EU by 2020. The updated “rules” support a technologically neutral approach and include a greater focus on funding for “ultra-fast” (100Mbps+) services in urban areas.

Europe’s current Digital Agenda strategy, which was established in 2010, aims to make “basic” broadband (i.e. speeds of 0.5Mbps to 4Mbps) services available to all Europeans by 2013 and seeks to ensure that, by 2020, everybody has access to internet download speeds of 30Mbps+ (with 50% or more EU households subscribing to 100Mbps+); these rules also apply to the UK.

Crucially the new rules prevent public funding from being used unless a newly proposed network proves it can deliver a “a substantial improvement over existing networks and not only a marginal improvement“, which forms part of other changes that have also been introduced to ensure that state aid only targets areas where the market has clearly failed to deliver a good service.

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

“To achieve the ambitious goals of the Digital Agenda in promoting very fast broadband connections throughout the EU, we need to achieve the right mix between public and private investment while building a pro-competitive environment. These new rules will allow for well-designed public interventions targeted at market failures and ensure open access to state funded infrastructure.”

The Revised Guidelines (Summary of Key Principles and Priorities)

• Technological neutrality: the new guidelines take into account technological advances, acknowledging that super-fast (Next Generation Access) networks can be based on different technological platforms.

• Ultra-fast broadband networks: to help achieve the Digital Agenda objective of delivering very fast connections (of more than 100 Mbps) to half of European households by 2020, the revised guidelines will allow public funding also in urban areas but subject to very strict conditions to ensure a pro-competitive outcome.

• Step change to connectivity: to protect private investors, the guidelines require that any public investment must fulfil a so-called “step change”: publicly financed infrastructure can only be allowed if it provides a substantial improvement over existing networks and not only a marginal improvement in citizens’ connectivity.

• Reinforcement of open access: when a network is realised with taxpayers’ money, it is fair that the consumers benefit from a truly open network where competition is ensured.

• Transparency: new provisions regarding the publication of documents, a centralised data base for existing infrastructure and ex post reporting obligations to the Commission have been introduced.

In this respect it’s worth pointing out that the EU has already approved Birmingham’s Smart City project, which also aims to roll-out a new ultra-fast fibre optic broadband network. However this hasn’t stopped BT and Virgin Media from taking legal action over the move because of fears that the new network will overlap with theirs.

It will be interesting to see what impact the new rules have on that on-going case, especially since it’s practically quite difficult to deploy any new network without at some point crossing over somebody else’s existing territory in order to reach underserved areas.

The formal adoption and publication of the new guidelines in the Official Journal in all EU official languages is foreseen for January 2013.

The New Guidelines
http://ec.europa.eu/competition/state_aid/legislation/specific_rules.html#broadband