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Practices

Commission sets out measures to encourage development of fast and ultra-fast broadband

02 November 2010

This article was included in the November issue of Network - the Communications sector newsletter

New measures

The European Commission has adopted three related measures designed to encourage the development of high speed broadband across Europe. The measures were introduced following commitments made in the Commission’s Digital Agenda, whose Vice President, Neelie Kroes said: “Fast broadband is digital oxygen, essential for Europe's prosperity and well-being. These measures will help to ensure that Europeans get the first-class internet they expect and deserve, so that they can access the content and services they want.”

The measures are:

1. A Commission Recommendation on Regulated Access to Next Generation Access (NGA) networks. This aims to stimulate investment in high speed fibre networks by establishing “regulatory clarity” and a consistent approach across Europe.

2. A Commission proposal for a Decision by the European Parliament and Council to harmonise the use of the EU’s radio spectrum.

3. A Broadband Communication designed to ensure that the broadband targets in the Digital Agenda are met.

Background

In March 2010, the European Commission adopted Europe 2020, its strategy for “smart, sustainable and inclusive growth”. One of Europe 2020’s flagship initiatives is its Digital Agenda for Europe. A priority area for action outlined in the Digital Agenda is to increase Europeans’ access to fast and ultra fast internet. According to the Commission, only 1% of Europeans have a fast fibre-based internet connection, compared to, for example, 12% of Japanese and 15% of South Koreans. The Commission has set a target of universal broadband access by 2013; and by 2020, all Europeans should have access to much higher internet speeds (30 Mbps or above) with 50% or more of European households with access to internet connections above 100 Mbps.

High speed broadband requires optical fibre networks. Although many telecoms companies are currently building such networks, many of these projects are moving slowly or being held up by a lack of investment, and regulatory uncertainty.

The three measures are intended to create a clear and supportive environment for Member States to achieve the investment necessary to meet these ambitious targets.

Commission Recommendation

The purpose of the Commission Recommendation is to foster the use by Member States of harmonised principles when regulating telecoms operators, while also safeguarding competition, in the roll-out of fibre-based high speed broadband networks. This is intended to create greater certainty and clarity in Member States’ national regulatory frameworks in order to encourage investment in NGA networks.

The Recommendation includes the following principles:

  • Price regulation for access to fibre networks which reflects investment risk and facilitates attractive returns (but with no regulatory forbearance for dominant players)
  • Availability to national regulators of a range of access remedies from which to select the appropriate combination to drive market entry and infrastructure based-competition
  • Ex ante regulation which reflects competitive differences between individual markets and between rural and urban areas
  • Support for arrangements for co-investment in NGA networks and permission to set lower access prices to the unbundled fibre loop in return for up-front commitments on long-term or volume contracts.

The Recommendation will take effect from publication in the EU’s official journal at which point national regulators will be obliged to take it into account in everyday decision making, as well as in international co-operation (via the Body of Regulators for Electronic Communications). Member States are required (under the Telecommunications Framework Directive) to ensure that their regulators take “utmost account” of such Recommendations and justify (in writing) any departure from them.

Commission proposal on spectrum management

The Commission proposal sets out a five year strategy designed, in particular, to ensure radio spectrum is available across Europe for wireless broadband, both to bring fast access to areas where fibre networks are not feasible and to promote innovative services. The areas covered by the proposal include:

  • Completion by Member States of the process of issuing radio spectrum licences to telecoms operators wishing to use already-harmonised spectrum bands (the 900/1800 MHz, 2.5 GHz and 3.4 – 3.8 GHz bands) for wireless broadband services and opening up of the 800 MHz band to wireless broadband
  • Various measures to encourage efficient spectrum management
  • Increased coordination across the EU in relation to aspects of spectrum policy that have an impact on the use of wireless services and devices across borders (such as medical equipment and entertainment devices)
  • Retention of spectrum for certain policy and research uses, such as the environment, transport and public protection.

The proposal must now be considered by the European Council and Parliament.

Broadband Communication

The Commission estimates that between €180 and €270 billion of investment is needed in order to meet the 2020 broadband targets. The Broadband Communication is the Commission’s strategy and guidance for Member States to generate investment in high speed networks from both the public and the private sectors and includes:

  • A request to Member States to adopt a fully operational broadband plan, to include measures designed to achieve the necessary funding
  • A call for regional and local authorities to reduce their costs relating to the deployment of new infrastructure, and thereby to promote investment (with associated guidance to follow)
  • An announcement of new financial instruments for investing in broadband, to be unveiled by the Commission and the European Investment Bank (EIB) in Spring 2011
  • Promotion of investment by public authorities (in line with State Aid rules) and better use of EU structural and rural funds.

Further UK developments

Since the measures were announced, Ofcom (the UK’s communications regulator and competition authority) has set out two principal decisions designed to promote competition and investment in super-fast broadband services across the UK. These decisions involve: (1) opening up BT’s fibre lines to allow them to be used for competing services; and (2) requiring BT to allow access to its underground ducts and telegraph poles so that competitors can provide services both in areas that they will be able to supply before BT can and in areas where BT has no plans to supply.

Ultimately these measures are all designed to benefit European consumers (in the broadest sense) by:

  • Giving them consistent access to high speed broadband services, regardless of where in Europe they are based
  • Providing a competitive market for such services, so that consumers will always get the best value
  • Allowing consumers to take advantage of the more advanced media applications that are only available using such services.