The European Commission has found a proposal by the United Kingdom to grant around €6 million of public financing for the construction of an ultra-fast broadband network in the city of Birmingham to be in line with EU state aid rules, in particular because it will be genuinely open to all operators and will therefore promote competition.
“Investments in ultra-fast broadband networks contribute to promoting growth in line with the EU’s Digital Agenda. If such networks are built with the help of taxpayers’ money, it is important to ensure thriving competition on the subsidised networks, so that local businesses and citizens can benefit from continuously improving broadband services at competitive prices.” said Commission Vice President in charge of competition policy Joaquín Almunia.
The target areas of the measure are two districts in Birmingham where private operators have no or very limited investment plans in the next three years. This means that in the absence of this project most consumers would only be able to use basic broadband services or very expensive business leased line services.
The Commission’s investigation found that the ultra-fast network of Birmingham was designed in a pro-competitive manner, exceeding in several respects the requirements of the EU Broadband Guidelines. In particular, open access will be granted for at least 25 years for alternative operators, whereas the guidelines require only seven years. Moreover, the network will be operated on a wholesale basis so as to ensure more competition at retail level. Finally, all possible wholesale access products will be offered to third party operators, including dark fibre, which is one of the most pro-competitive wholesale access products.
The project is also fully in line with the requirements of the new draft Broadband Guidelines (published on 1 June for public consultation, see IP/12/550), in particular by offering significant enhanced technological characteristics as compared to existing networks (for instance symmetric speeds). There is expected demand for such qualitative improvements from numerous local SMEs active in the “creative industry”. Moreover, the subsidised network will be operated as a wholesale only network.
Background
The project is part of the UK’s “ultra-fast broadband city” initiatives, under which £100 million was allocated to support the roll out of such infrastructures in large UK cities. These projects support the third objective of the EU Digital Agenda and the Europe 2020 initiative for growth (see IP/10/581 and MEMO/10/199), namely to achieve 50% internet penetration on 100 Mbps networks.1.
The non-confidential version of the decision will be made available under the case number SA.33540 the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.
In 2011 the Commission launched the review of its Guidelines for state aid to broadband networks adopted in 2009. On 1 June 2012 the Commission has started to consult on its new draft Broadband Guidelines (IP/12/550). The proposed changes aim to support the objectives of the EU Digital Agenda. In particular, as good progress has been made with regard to the objective of connecting all citizens to basic broadband networks, the focus is shifting towards facilitating the roll out of fast networks. Therefore the draft revised Guidelines propose to include the possibility of supporting ultra-fast broadband networks (with speeds above 100 mbps) under certain conditions. The Broadband Guidelines aim at fostering investment through well-designed aid targeted at market failures while also promoting competition.
