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Europe sets out fast broadband rules

The European Commission has unveiled its long-awaited broadband package, which aims to standardise the regulation of fibre deployment and spectrum management across the EU
Written by David Meyer, Contributor

The European Commission has set out the rules it hopes will lead to widespread high-speed broadband across the continent, with its recommendations covering issues ranging from spectrum to fibre funding.

The broadband package, presented on Monday, adds specific methodology to the aims set out in the Commission's Digital Agenda in May, particularly for basic broadband across the EU by 2013 and a 30Mbps minimum by 2020. It gives broadband providers some details of regulation for fibre networks, and — as revealed on Wednesday — reserves radio spectrum for mobile broadband.

"Fast broadband is digital oxygen, essential for Europe's prosperity and well-being," digital agenda commissioner Neelie Kroes said in a speech on Monday. "No one doubts that Europe will be better off if we get everyone online. It is, of course, much harder to make tough policy choices and get the major investments needed to realise those goals."

Spectrum in the 800MHz band between 790-862MHz will be reserved by 2013 for providing mobile broadband across wide areas, making it particularly useful for rural areas where telcos say fibre is uneconomical. This spectrum is currently used for analogue TV, but is being freed up as a 'digital dividend' by the switchover to digital services. In the UK, the 800MHz spectrum will be auctioned off by the end of 2011.

"Without such a framework, broadband for all is not feasible," Kroes said. "I am thinking here not only of those in remote or rural areas dependent on wireless access, but also consumers and businesses that increasingly want and require broadband access while on the move.

"The programme would also ensure that spectrum access is used to support innovation in other policy areas and sectors such as transport and the environment. It may seem strange, but improving our spectrum management is linked as well to our ability to cut our carbon footprint, cut traffic jams and keep our society functioning."

The guidance for telcos and national regulators is a bid to avoid the "danger of divergences between member states' telecoms markets", the Commission said in a statement. "Such a situation could lead to market distortions as a result of inconsistent regulation and lead to uncertainty for companies investing in next generation access networks," it noted.

Market-dominant telcos will not be allowed to take so-called regulatory holidays — periods of low or no regulation in the early days of providing a new service — when they deploy fibre. However, in charging other telcos for access to their networks, these dominant players will be able to set their pricing at a level to "fully reflect investment risk", the Commission said.

"Given the potential size of investments under consideration and the currently low returns in many financial asset classes, this is a propitious framework for companies willing to invest," the Commission said. The rules also state that regulation should be adapted to suit the level of competition within specific areas — an urban area might have many rival telcos, which will keep prices down and allow "light-touch regulation", but a rural area could require closer scrutiny to protect consumers.

The Commission's 'recommendations' — which are more prescriptive than the name suggests — promote co-investment in next-generation access (NGA) networks.

They also allow national regulators to decide whether or not to force telcos to open their fibre networks up to rivals, depending on the relevant competitive environment. If there are other fibre-to-the-home (FTTH) or cable networks in the area, a telco may be free to keep its network to itself or only provide wholesale connectivity to rivals. If an ISP is obliged to 'unbundle' its network, allowing rivals to install their own equipment in its exchanges, it may be given more freedom in setting its prices.

The Commission envisions it will take €180bn (£116bn) to €270bn of investment to achieve its Digital Agenda goals. To achieve this, it wants...

...regional and local authorities to better coordinate civil engineering works — these works account for 80 percent of fibre deployment costs — and had encouraged public authorities to directly invest in infrastructure, in line with state aid rules.

Plans have also been announced to make more money available via the European Investment Bank (EIB). According to the Commission, the EIB already lends €2bn a year to broadband projects, and "concrete proposals for [more] will be unveiled by spring 2011". The Commission also wants to make better use of the EU's structural and rural development funds to stimulate broadband rollouts.

BT responded positively to the Commission's new rules, saying it had led the way in its own fibre deployment.

"BT is now investing £2.5bn to roll out fibre broadband to two-thirds of the UK, on an open, competition-ready basis," BT public and government affairs chief Larry Stone said in a statement. "The Commission has already endorsed our approach as the best way to safeguard competition and bring the benefits of a wider range of services provided over next generation fibre infrastructure. This is essential for consumers and businesses and we hope the guidelines will lead to other European markets adopting an equally open approach, based on active wholesale access."

Stone also agreed with the promise of EU funding for rural deployments, noting that the money "can help enable next generation access, with the potential for local partnership and public funding in bringing higher speed broadband to rural areas".

The European Competitive Telecommunications Association (Ecta) welcomed the ban on regulatory holidays "that have held back innovation and choice over the past five years", and said the shift would force dominant operators to open up their fibre networks to competitors.

"However, there is unfortunately a long way to go before consumers will be able to see the results," Ecta chairman Hubertus von Roenne said in a statement. "Setting the correct wholesale price for both legacy copper lines and the new fibre will be fundamental in determining whether consumers reap the benefits of this new Commission Recommendation."

The broadband package followed years of development alongside the EU's 27 telecoms national regulators and the Body of European Regulators for Electronic Communications (Berec), and two public consultations in 2008 and 2009 that elicited 170 submissions. Member states backed the text in a vote held in June.

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