State aid, public funding, broadband, best practices

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Overview on state aid to broadband

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  • European Commission, DG Competition [Directorate], [Unit]
  • Broadband development has always been a high priority for the EU (Lisbon strategy, i2010, digital divide, etc) Now a coherent strategy is being developed under the umbrella of the Digital Agenda 101 initiatives to be launched. The most important initiatives concentrating on the supply side of broadband development (i.e. promoting investments to infrastructures) are the following: (1) the Broadband Communication that lays out a common framework for actions at EU and Member State to meet the Europe 2020 broadband targets; (2) the NGA Recommendation which clarifies the regulatory framework; (3) the European Spectrum Policy Programme which creates a coordinated and strategic spectrum policy at EU level; (4) the Broadband Guidelines, which channels increased amount of public funding to high-speed broadband (including funds from national governments, regions, municipalities and EU monies). BB COMM: national bb strategies, use EU funds, importance of non-aid measures (mapping of ducts, other infrastructures that could be used for bb development) Sepctrum policy: 800 Mhz shall be available for bb until 1 January 2013
  • European Commission, DG Competition [Directorate], [Unit]
  • European Commission, DG Competition [Directorate], [Unit]
  • European Commission, DG Competition [Directorate], [Unit]
  • European Commission, DG Competition [Directorate], [Unit]
  • European Commission, DG Competition [Directorate], [Unit]
  • Is competition expensive in short term? Yes! Multiple fibre +10% Open access + 20-50% P2P vs PON +10%
  • European Commission, DG Competition [Directorate], [Unit]
  • State aid, public funding, broadband, best practices

    1. 1. Public funding for broadband and State aid rules Norbert Ga ál DG Competition – State Aid Directorate Information, Communication and Media European Commission 07 March 20 1 1 Planning Broadband Investments
    2. 2. EU2020/ Digital Agenda EU2020/ DIGITAL AGENDA EU FUNDS ( ERDF, ERDP, EAFRD, TEN, CIP,… ) NGA Recommendation Radio Spectrum Policy Programme Broadband Guidelines Broadband Communication <ul><li>Main targets </li></ul><ul><li>By 2013 </li></ul><ul><li>100% bb coverage </li></ul><ul><li>By 2020 </li></ul><ul><li>100% coverage of 30 Mbps </li></ul><ul><li>50% coverage of 100 Mbps </li></ul>Main policy documents/ initiatives for broadband infrastructure development <ul><li>Available EU funds </li></ul><ul><li>Direct grants </li></ul><ul><li>Preferential loans </li></ul>
    3. 3. Broadband strategies in the EU <ul><li>Digital Britain (UK) </li></ul><ul><li>2 Mbps for all by 2012 </li></ul><ul><li>90% NGA coverage by 2017 </li></ul><ul><li>Plan Numerique (FR) </li></ul><ul><li>512 Mbps for all by 2012 </li></ul><ul><li>100% NGA by 2025 </li></ul><ul><li>Breitbandstrategie der Bundesregierung ( DE ) </li></ul><ul><li>1 Mbps for all by </li></ul><ul><li>50 Mbps for 75% by 2014 and for 100% by 2018 </li></ul><ul><li>National BB Strategy (S) </li></ul><ul><li>100 Mbps for 40% by 2015 </li></ul><ul><li>100 Mbps for 90% by 2020 </li></ul><ul><li>Plan of Action (SF) </li></ul><ul><li>1 Mbps for all by 2010 </li></ul><ul><li>100 Mbps for 100% by 2015 </li></ul><ul><li>National BB Strategy (EE) </li></ul><ul><li>100 Mbps for all by 2015 </li></ul>
    4. 4. Member States’ strategy <ul><li>Twin objectives are pursued: </li></ul><ul><ul><li>To reach 100% basic broadband coverage </li></ul></ul><ul><ul><li>To support the rapid rollout of NGA networks </li></ul></ul><ul><li>Role of state aid </li></ul><ul><ul><li>Past: small, localized state aid projects from a few Member States (e.g. UK, Italy) </li></ul></ul><ul><ul><li>Now: national state aid schemes are part of comprehensive broadband strategies </li></ul></ul>
    5. 5. Some announcements of state aid for broadband deployment* UK: €1000 million France: €750 million Finland: €150 million Estonia: €75 million Germany: €1000 million Lithuania: €100 million Poland: €300 million Portugal: € 100 million No state aid used Italy: €1000 million * Indicative amounts, end of 2010
    6. 6. The broadband vision “ In a few years' time, broadband access will be so cheap ( and ubiquitous ) that we won't even know if we're online or not.” à la Gerd Leonhard – media futurist
    7. 7. General trends 1. <ul><li>Well-established case practice; </li></ul><ul><li>Consistent and coherent decision making procedure; </li></ul><ul><li>Over 75 State aid broadband decisions since 2003; </li></ul><ul><li>Assessed public funding of more than € 4 billion (generated investments up to € 7-8 billion). </li></ul>
    8. 8. General trends 2. <ul><li>Increased importance of state aid to broadband </li></ul><ul><li>Due to </li></ul><ul><ul><li>Recognition of its importance </li></ul></ul><ul><ul><li>National broadband strategies/ Digital Agenda </li></ul></ul><ul><ul><li>Increased amount of EU funds </li></ul></ul><ul><ul><li>NGA deployment require higher investments </li></ul></ul>
    9. 9. <ul><li>Germany and Spain are the largest contributors to aid </li></ul><ul><li>France spending public funds under SGEI </li></ul><ul><li>Huge public investments will take place in the next years (se Italy, Germany, Poland, etc.) </li></ul>General trends 3.
    10. 10. Why State Aid control is needed? <ul><li>Not to increase bureaucracy, but to : </li></ul><ul><li>Ensure a level playing field for all operators; </li></ul><ul><li>Not to jeopardize/crowd out existing investment of operators; </li></ul><ul><li>Avoid the creation of local monopolies with the help of public funds; </li></ul><ul><li>Inject competition to areas where it was not present before; </li></ul><ul><li>Avoid picking the winner operators; </li></ul><ul><li>Avoid favouring certain technology platforms; </li></ul><ul><li>Accelerating the roll-out of broadband (in particular NGA) networks. </li></ul>
    11. 11. EU State aid rules <ul><li>Not only the presence of infrastructure matters, but also that effective competition takes place </li></ul><ul><li>Aid only to areas where commercial operators unlikely to invest in the near future </li></ul><ul><li>Public funding has to be used carefully in the liberalised telecoms markets to avoid unduly distorting competition </li></ul><ul><li>The ultimate objective is to maximize consumer welfare </li></ul><ul><li>The rules are stipulated in the Broadband Guidelines </li></ul>
    12. 12. Aid measures – notification required <ul><li>Necessity of the measure </li></ul><ul><li>Distinction between “ white ” / “ grey ” / “ black ” areas in terms of broadband coverage </li></ul><ul><li>No credible private NGA investment within 3 years could justify public intervention </li></ul><ul><li>Proportionality of the aid measure </li></ul><ul><li>Detailed mapping and coverage analysis, consultation with existing operators to clearly identify which geographic areas will be covered by the support measure in question; </li></ul><ul><li>Open tender process selecting the most economically advantageous offer to limit aid, to respect equal treatment of candidates and to leave the market to come up with the best solution; </li></ul><ul><li>Technological neutrality not to favour any technology or service provider; </li></ul><ul><li>Use of existing infrastructure to avoid unnecessary and wasteful duplication of resources; </li></ul><ul><li>Open wholesale access to enhance competition and provide more choice for end-users ; </li></ul><ul><li>Benchmarking pricing to avoid excessive/ predatory pricing; </li></ul><ul><li>Monitoring and claw-back mechanism to avoid over-compensation to minimise the amount of aid ex post. </li></ul>
    13. 13. Support for NGA network deployment <ul><ul><li>The definition of a ‘ white NGA area ’: an area where no such networks exist or where they are likely to be deployed by private investors in the near future . </li></ul></ul><ul><ul><li>&quot; Near future &quot; is defined as a period of three years (unless credible and plausible investment plans by private operators): </li></ul></ul><ul><ul><li>Likewise a ‘ grey NGA area ’ is one where one NGA network is in place or is being deployed and there are no plans for a second network being deployed in the coming 3 years </li></ul></ul><ul><ul><li>A ‘ black NGA area ’: more than one NGA network already exists or private investors may be in the process of deploying competing NGA networks </li></ul></ul>
    14. 14. Support for NGA network deployment <ul><ul><li>Apart of the core safeguards common to both basic broadband and NGA networks (mapping, open tender, claw back mechanism etc) the following three NGA-specific conditions should also be met: </li></ul></ul><ul><ul><li>Wholesale access for 7 years with access to passive and active network elements </li></ul></ul><ul><ul><li>MS should consult NRAs when setting wholesale access prices </li></ul></ul><ul><ul><li>Access should support full unbundling of the optical loops and satisfy all sorts of access requests by third parties. Reference is made to the positive effects of the &quot;multiple fibres&quot; architecture </li></ul></ul>
    15. 15. Design of SA measures 1. – how? <ul><li>State aid should be part of an overall broadband strategy </li></ul><ul><li>National, framework programmes </li></ul><ul><ul><li>To save time and speed up investments </li></ul></ul><ul><ul><li>To reflect national specificities </li></ul></ul><ul><li>Active involvement of all stakeholders (commercial operators, NRAs, public authorities, …) in designing SA measures </li></ul><ul><li>High level of transparency </li></ul>
    16. 16. Design of SA measures 2. – how? <ul><li>Thorough mapping of existing infrastructure with regular updates </li></ul><ul><li>Strong and effective “open access” provisions </li></ul><ul><li>Strong and effective national regulatory framework </li></ul><ul><li>Mapping of available existing infrastructure (passive elements, ducts, public buildings,...) </li></ul><ul><li>Avoid favouritism of existing (incumbent) operators </li></ul>
    17. 17. Design of SA measures 3. – what? <ul><li>Adequate fibre backhaul network is essential for any broadband development, </li></ul><ul><li>Passive infrastructure support (aid to ducts, manholes) to accelerate NGA roll-out, </li></ul><ul><li>Granting authorities’ leverage is indispensable to promote pro-competitive architectures (multiple fibre, P2P vs. monofibre, GPON), </li></ul><ul><li>Public ownership shall be focused/limited to passive infrastructure elements. </li></ul>
    18. 18. <ul><li>THANK YOU FOR YOUR ATTENTION! </li></ul>

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