ABERTIS TELECOM COMMENTS ON THE REVISION OF THE COMMUNITY GUIDELINES FOR THE APPLICATION OF STATE AID RULES IN RELATION TO RAPID DEPLOYMENT OF BROADBAND NETWORKS August 2011
CONTENTS 0. Introduction... 3 1. General Questions.... 3 2. Subject of the Aid... 5 3. Areas of Public Intervention... 5 4. General Compatibility Criteria... 6 5. Aid to Next Generation Access Networks...6 6. The Role of the National Regulatory Authorities ( NRAs )... 7 7. Transparency of State Aid Measures... 7 8. Other Points... 7 9. Non-Aid Measures: MEIP and SGEI... 8 10. Final Remarks... 8 2
0. INTRODUCTION abertis telecom, the leading broadcaster network operator in Spain, welcomes the opportunity to express its views on the questionnaire related to the revision of the community guidelines for the application of state aid rules in relation to rapid deployment of broadband networks which is the object of this public consultation. abertis telecom already participated in the consultation launched by the Commission in 2009 on the draft guidelines and welcomed the approach taken by the Commission to summarise in a document its practice and policy in applying the state aid rules of the European Community treaty to state measures that support the deployment of traditional broadband networks, and specially acknowledged the introduction of a number of issues related to the assessment of state measures to encourage the rapid and timely deployment of Next Generation Access (NGA) networks. We consider that the revision is a good opportunity to update the guidelines in accordance with the latest technological developments and the practice of the Commission in the application of the guidelines. 1. GENERAL QUESTIONS Question 1.1 Regarding abertis telecom s involvement in projects of public funding for broadband deployment, we participated in the public procurement procedure launched by the Catalan Government (Spain) for the deployment of the Xarxa Oberta, although we finally did not present a binding offer. We analized several scenarios including both businesses: self-connection and wholesale to carriers. The Xarxa Oberta project implied state aid and was subject to the Commission approval (case N 407/2009 - ES - optical fibre Catalonia (Xarxa Oberta), decision date 11.8.2010). The main challenges faced in this file were related to the difficulty in the identification of some municipalities as white, grey or black areas (for basic broadband and for NGA, which are different cases). There was for some areas lack of information or discrepancies between the data provided by the Spanish authorities (Regional Government and CMT -Telecom s NRA-) and the incumbent and the interpretation thereof. The clearance procedure lasted more than one year (from July 2009 to August 2010), and this made us to have difficulty in preparing our bid (as we had to forecast different scenarios), not being sure if the project would be finally cleared by the Commission or if there would be conditions that may affect our binding offer. Question 1.2 3
We consider that the Commission s policy in the field of state aid to broadband in general is very positive and the Guidelines are able to achieve the Commission s objectives as detailed in section 2.2 of the document. Abertis telecom agrees that the Guidelines strike the right balance between promoting investment in basic broadband and NGA networks and limiting the distortion of competition arising from public intervention. Question 1.3 Regarding the regulatory developments, the Guidelines should fully take into consideration the objectives for broadband development set in the Digital Agenda in assessing the state aid files. Key action 8 of the Digital Agenda calls Member States to use public financing in line with EU competition and state aid rules in order to meet the coverage, speed and take-up targets defined in Europe 2020. The Guidelines should also consider the last regulatory developments concerning NGA networks, in particular Commission recommendation on regulated access to NGA (OJ L 251, 25.9.2010), and the role to be played by the National Regulatory Authorities (NRA) in promoting efficient investment and innovation in new and enhanced infrastructure, taking due account of the risks incurred by all investing undertakings and the need to maintain effective competition. In this respect, there should be a coherent and complementary application of the Guidelines and the recommendation in cases of high speed NGAs financed by state aid and where the holder of the network may become a SMP operator. The Guidelines may consider that whenever the market does not sustain the deployment of NGA infrastructure or there is not enough competition, an adequate solution would be to deploy neutral networks with public and private ownership. These neutral networks could provide wholesale active infrastructure services to carriers thus enabling service availability and assuring the competence. This is relevant in grey and white areas, in which private operators would not be motivated enough to carry out the investments on their own, and Public Administration might want to invest therein to promote social and territorial cohesion. In this situation, a NGA may be deployed jointly by the Public Administration and private investment and the NGA network would be exploited to provide high bandwidth connectivity to the wholesale market under an open access scheme and as a neutral operator, without entering the retail market. This scenario will promote economic development. In addition, with respect to the European Commission definition of NGA network and the scope of the Guidelines, we consider that it should also take into account networks based on evolving technologies, able to provide services delivering speeds higher than those at used at present in access networks. This would include FTTH, DOCSIS 3.0, VDSL and 4G wireless technologies (LTE and others). 4
2. SUBJECT OF THE AID Question 2.1 abertis telecom considers that the distinction between basic broadband and NGA networks is still justified, although it may have to be revised once the objectives of the European 2020 Strategy are met. At present in Spain, according to the NRA CMT, the broadband fixed access technology most sold is still ADSL (classic broadband); there is no significant grow in fiber or cable docsis 3.0 access. Thus, state aid projects in Spain have not still promoted a significant grow in NGA networks. Question 2.2 abertis telecom deems useful to devote specific sections of the Guidelines to the rules and conditions applying to the use of public funding to subsidize specific infrastructure elements or other activities related to broadband network roll-out. These sections would serve as a useful tool to public administrations that may subsidize these infrastructures and to third parties that may become beneficiaries thereof. Question 2.3 We believe that, apart from FTTx ( Fiber To The x ) networks, which comprise FTTH (Fiber To The Home) and FTTN (Fiber To The Node), which includes VDSL and DOCSIS 3.0 cable access, 4G wireless networks like LTE (and its evolution LTE advanced) and evolved WIMAX (IEEE 802.16m), should be considered as NGA networks. This situation should be reviewed periodically according with access networks evolution. In fact, LTE commercial deployments in several North European countries show that wireless technology could be considered as NGA. Thus, Commission should review considering LTE wireless technology a NGA. Question 2.4 We consider that access technology should be viewed from a neutral point of view. What is important to NGA network is the capacity of the connection in terms of available bandwidth and quality of service to users. In fact, Digital Agenda requirements are based in capacity of the user connections. 3. AREAS OF PUBLIC INTERVENTION Question 3.1 We agree with determining a white area as an area with a download speed below 2 Mbps. Likewise, a map of availability with enough detail level should be provided. 5
Question 3.2 Question 3.3 We believe that three years is a suitable period of time. Private operators should present a detailed scheduled investment plan in this period, including concrete areas of deployment. In case private operator does not invest first year, not according with its investment plan, Commission should determine this private operator as not having any intention of investing in that area. 4. GENERAL COMPATIBILITY CRITERIA Question 4.1 We consider that general criteria stated in point 51 are suitable to state aid projects. Question 4.2 We have no experience in the use of existing infrastructures in state aid projects, but from our point of view, the use of existing infrastructures should be specially promoted in case of state aid projects. There is no sense in duplicating infrastructures in such projects. 5. AID TO NEXT GENERATION ACCESS NETWORKS Question 5.1 We have no experience on that. Question 5.2 State Aid should imply wholesale access to carriers from the beneficiary. In public-private partnership projects related to NGAs, abertis telecom considers that if the beneficiary operates the network in the retail market, we agree that it should be obliged to open its passive infrastructure but alternatively, if it only operates in the wholesale market, it should only be obliged to provide active infrastructures services, in order not to penalise in excess the beneficiary as its business plan could be jeopardised and at the same time discourage the roll-out of alternative infrastructures. Question 5.3 Question 5.4 6
abertis telecom considers that NGA should be deployed based on criteria as cost efficiency and technological neutrality. So, multifibre network solutions are not the best option in all cases. Question 5.5 We have no experience. Question 5.6 We consider that the conditions stated in points 75 and 79 are enough, but in any case it should be taken into account what we answered in question 5.2. 6. THE ROLE OF THE NATIONAL REGULATORY AUTHORITIES ( NRAs ) Question 6.1 abertis telecom considers that NRAs should determine in detail NGA areas (white, grey and black), in order to clarify targets of private investment in public and private partnership projects (PPP). Question 6.2 abertis telecom supports the role that NRAs should play to solve disputes between access seekers and the operator of the subsidised network. 7. TRANSPARENCY OF STATE AID MEASURES Question 7.1 We agree that the information is suitable to assure transparency, provided that this information should be complete, accurate and available on time to have enough time to prepare the required bids. 8. OTHER POINTS Question 8.1 abertis telecom considers that the situation of a telecommunication infrastructure operator only providing wholesale services will promote transparency, no discrimination and market competence (please see our answer to 5.2). 7
This model, in our opinion, is the best one to promote cost efficiency, sustainability and neutrality in public and private partnership projects with Public Administrations. Question 8.2 The situation of having public infrastructure assets could be justified in case of existing passive infrastructures, and/or in case of having areas where private operators will not be expected to invest without state aid. In these situations we consider that infrastructure assets could be public, but network operation to provide only wholesale services should be given to a telecommunication infrastructure operator. This operator would provide services to retail operators to better develop the market. 9. NON-AID MEASURES: MEIP AND SGEI Question 9.1 We have no experience on that. Question 9.2 Question 9.3 Question 9.4 State Aid should imply wholesale access offer to carriers from the beneficiary. In public-private partnership projects related to NGAs, abertis telecom considers that if the beneficiary operates the network in the retail market, we agree that it should be obliged to open its passive infrastructure but alternatively, if it only operates in the wholesale market, it should only be obliged to provide active infrastructures services, in order not to penalise in excess the beneficiary as its business plan could be jeopardised and at the same time discourage the roll-out of alternative infrastructures. 10. FINAL REMARKS Question 10.1 8