Wednesday, September 16, 2009

EU Adopts Guidelines for Public funding for Broadband Networks

The European Commission adopted a set of guidelines for public funding of broadband and Next Generation Access (NGA) networks in the European Union. The EC said it expects to see up to EUR 300 billion of investment in both high and very high speed European broadband networks in the coming decade.

In general, the policy position is that investment should be made mostly by private companies. However, the EC believes there is an important role for public investment in achieving the widest possible access to broadband in underserved and non-profitable areas. Public investments should significantly contribute to shrinking the digital divide -- both within and between EU Member States.

The Guidelines make distinctions between different types of areas, including:

  • 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",

  • areas where no infrastructure exists ("white areas"), such as rural areas.

The guidelines include a number of 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 European 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.

See also