Broadband [EU]

State aid rules broadband networks

These guidelines summarise the principles of the Commission’s policy in applying the State aid rules of the Treaty on the Functioning of the European Union to measures that support the deployment of broadband networks.

The purpose of State aid control in the broadband sector is to ensure that public interventions will result in a higher level or a faster rate of broadband coverage and penetration* than would be the case without public funding, while supporting higher quality, more affordable services and pro-competitive investments.

The guidelines are based on the principle that public interventions in broadband networks should only take place where private investments are not sufficient – therefore in market failure areas (i.e. areas where the market/private sector cannot be relied upon to invest sufficiently). This aims to avoid that public funding undermine private investments in areas where market operators would normally choose to invest or have already invested and thus to protect competition as a key driver for better prices and quality of services for consumers and businesses.

The guidelines follow the principles of the State Aid Modernisation (SAM) initiative of the European Commission, which aims to facilitate well-designed aid targeted at market failures to achieve priorities which can enhance growth, while simplifying the rules for faster decision-making.

Consultation

The 2013 guidelines were produced following a 2-stage public consultation and intensive dialogue with all stakeholders (EU countries, national telecoms regulators, aid granting authorities, telecommunications operators, business associations, consumer associations and citizens), with the aim to frame public interventions in fast moving technology markets and facilitate pro-competitive public investments.

Context

Better, faster broadband is of strategic importance for European growth and innovation in all sectors of the economy, as well as for social and territorial cohesion. The Digital Agenda for Europe (DAE), a flagship initiative of the Europe 2020 Strategy, sets as objectives for broadband infrastructure development, to bring basic broadband to all Europeans by 2013 and ensure that, by 2020, all Europeans have access internet speeds above 30 Mbps download, with at least 50% of European households having internet connections above 100 Mbps download.

In 2016, the DAE was complemented by the Gigabit Communication, which defines as strategic objectives for 2025 100% coverage of all households with download speeds of at least 100 Mbps, upgradeable to 1 Gbps, 1 Gbps symmetric for all main socio-economic drivers, and uninterrupted 5G coverage for all urban areas and all major terrestrial transport paths.

State aid

The broadband sector is very dynamic and generates significant private investment. In order to prevent that public intervention distorts competition in the broadband market, State aid by national, regional, and local authorities or public entities is in principle prohibited. However, in areas where the market does not provide the necessary infrastructure investment, State aid can be permissible if certain conditions are met.

To avoid crowding out private investments, State aid has to ensure that public investment is correcting a market failure. Therefore, public investment should only take place where the market is not providing the desired connectivity and if the publicly funded network offers connectivity significantly beyond the commercial offer. The guidelines include a detailed discussion of the rules to be observed.

Principles and priorities

The guidelines focus on the following principles and priorities.

Mapping and public consultation: to ensure that State aid interventions proportionately address identified market failures, mapping and public consultations are mandatory. Existing broadband infrastructure in geographic areas targeted by the public intervention must be clearly identified to single out areas lacking adequate broadband infrastructure.

The summary of the planned public intervention and the target areas identified based on the mapping exercise must be submitted to a public consultation to verify private investment plans in the target areas.
Competitive selection process: to ensure transparency, equal and non-discriminatory treatment, as well as to minimise the potential State aid involved, aid must be granted to the most economically advantageous offer via an open selection process in line with the spirit and principles of the EU public procurement directives.

Technological neutrality: the guidelines take into account technological advances, acknowledging that different technological solutions exist to provide broadband services. Therefore, selection procedures cannot favour or exclude any particular technology or network platform able to support the delivery of the services aimed for.
Networks able to support download speeds of at least 100 Mbps: to help achieve the EU objectives, the guidelines allow public funding also in areas where there is current or planned private investment, as far as such private investment falls short for the EU objectives. Such public intervention is subject to strict conditions to ensure a pro-competitive outcome.

Step change: to protect private investors, public investment must fulfil a so-called step change: it must make significant new investments in the broadband network and the publicly financed infrastructure must provide a substantial improvement over otherwise existing and planned networks in terms of broadband service availability, capacity, speeds and competition, to the benefit of consumers.

Open access: third-party operators* must be allowed to effectively access the subsidised network. Open wholesale access enables third-party operators to compete with the selected bidder (when the latter is also present at the retail level) and thus strengthens choice and competition while at the same time avoiding the creation of monopolies. When a network is deployed using taxpayers’ money, it is fair that consumers benefit from a truly open network where competition is assured.

Transparency: transparency requirements include obligations regarding the publication of documents, a centralised database for existing infrastructure and results-based (‘ex post’) reporting to the Commission. The purpose of the transparency requirements is to promote accountability of the public authorities granting public support and to reduce asymmetries on the market.

Context

The Commission may again review the guidelines on the basis of market, technological and regulatory developments.

They have applied since 27 January 2013.

Actions to

Reduce the costs of  high-speed electronic communications networks

Directive 2014/61/EU on measures to reduce the cost of deploying high-speed electronic communications networks aims to facilitate and promote the roll-out of high-speed electronic communications networks (ECN) (i.e. fast broadband internet with speeds above 30 Mbps) in the EU. The major obstacle is a financial one, as the costs for deploying physical infrastructure account for up to 80% of the total costs (e.g. digging up roads to lay down fibre broadband).

Broadly speaking, 4 approaches are offered:
promoting the reuse of existing physical infrastructure;
creating the conditions for coordinating civil works and more efficiently installing new physical infrastructure;
equipping newly constructed and majorly renovated buildings with physical infrastructure; and
streamlining the procedures for granting permits for civil works.

The main pillars of the directive are as follows:

Access to existing physical infrastructure

EU countries should ensure that network operators* (telecoms, as well as energy, transport and water) give telecoms operators access to their physical infrastructure.
Network operators are required to give access to their physical infrastructure, on reasonable terms and conditions, including price.

Coordination of civil works

EU countries should ensure that network operators negotiate agreements with telecoms operators in order to coordinate civil works.

If this work is financed from the public purse, network operators have to meet any reasonable and timely request for coordination as long as this will not entail any additional costs and will not impede coordination control. This implies that any incremental costs associated with co-deployment must be recovered, or else the request could be denied.

For negotiating agreement on the coordination of civil works, EU countries shall require any network operator to make available, upon the request of a provider of public communications networks, certain minimum information concerning ongoing or planned civil works: (a) the location and the type of works; (b) the network elements involved; (c) the estimated date for starting the works and their duration; and (d) a contact point.

Transparency

In order to improve the deployment process, EU countries must ensure that the undertakings deploying ECN have access to a minimum amount of information about the existing physical infrastructure, such as:

• location and route,
• type/use of infrastructure,
• a contact point.

Providing such information will ensure that the costs of these projects are kept to a minimum (for example by accessing physical infrastructure that already exists and by coordinating engineering works). The access to this minimum information may be limited for the following reasons:

security of the networks and their integrity;
national security;
public health or safety; and
confidentiality or operating and business secrets.

Permit granting

EU countries have to ensure that all relevant information concerning conditions and procedures for granting permits for civil works needed for the deployment of ECN must be available via a single information point.
EU countries may allow permit applications to be submitted electronically.

Permit decisions should be made within 4 months and any refusal to grant a permit should be fully justified.
Buildings ready to deploy high-speed networks

New buildings and major renovations must be equipped with physical infrastructure (such as mini-ducts) capable of hosting high-speed ECN. Constructions must have an access point and be easily accessible by the providers of public communications networks. This must be done in a technology-neutral way (i.e. the infrastructure should neither require nor assume a particular technology). Exemptions are possible (for example for monuments or holiday houses).

The providers have the right to reach the access point under fair and non-discriminatory terms and conditions.

Out-of-court procedures

EU countries must put in place out-of-court procedures for the timely resolution of disputes arising from the application of the directive.

Penalties

EU countries must lay down rules on penalties in case of non compliance with the national measures adopted pursuant to this directive. The penalties provided shall be appropriate, effective, proportionate, and dissuasive.

Recommendation on toolbox to aid economic recovery from the

COVID-19 crisis

In September 2020, the European Commission adopted a recommendation providing guidance to EU countries on how to develop and agree, by 30 March 2021, a toolbox of common best practices to facilitate the deployment of very-high-capacity fixed and wireless networks by removing unnecessary administrative hurdles, and by the coordinated assignment of radio spectrum for the fifth-generation (5G) networks under investment-friendly conditions, in particular for industrial cross-border cases. Consequently, EU countries should communicate an implementation roadmap (30 April 2021) to the Commission and should report on the toolbox’s implementation (30 April 2022).

It had to become law in the EU countries by 1 January 2016 and the rules had to be applied as of 1 July 2016.

The Commission is currently reviewing this directive, as was announced in the communication on shaping Europe’s digital future.

Shaping Europe’s digital future

Network operators: providers of public communications networks, but also utilities, be it for energy, public heating, water, waste water or transport.

Directive 2014/61/EU of the European Parliament and of the Council of 15 May 2014 on measures to reduce the cost of deploying high-speed electronic communications networks (OJ L 155, 23.5.2014, pp. 1-14)

Commission Recommendation (EU) 2020/1307 of 18 September 2020 on a common Union toolbox for reducing the cost of deploying very high capacity networks and ensuring timely and investment-friendly access to 5G radio spectrum, to foster connectivity in support of economic recovery from the COVID-19 crisis in the Union (OJ L 305, 21.9.2020, pp. 33-41)