[CAnet - news] EU endorses public funding of municipal dark fiber

[There have been a lot news articles recently about municipalities building
their own telecommunications, wireless WiFi and high speed broadband
networks.  I remain very skeptical of these initiatives as I don't believe
the municipalities have the technical and marketing resources to stay
abreast of the rapidly changing technology developments in deploying
broadband or wireless systems.  However I do believe municipalities can make
an important contribution to advancing broadband by providing on a
non-exclusive basis, by providing low cost access to municipal conduit
and/or dark fiber. This allows for a level playing field for any number of
facilities based competitors to provide broadband services to homes and
business.  Private sector competition from multiple providers is the best
way of delivering true high speed broadband. More importantly it also
provides an important revenue source for the municipality as in the case of
Montreal. I am pleased to see the EU has adopted a similar strategy.  Thanks
to Bob Frankston for this pointer -- BSA]

For more information on this item please visit the CANARIE CA*net 4 Optical
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http://www.siliconinvestor.com/readmsg.aspx?msgid=21298534


EC Endorses Public Funding for Municipal Fiber Network in France

Brussels, 3rd May 2005

http://europa.eu.int/rapid/pressReleasesAction.do?reference=IP/05/530&format
=HTML&aged=0&amp...

The European Commission has decided that, the public co-funding of an open
broadband infrastructure in Limousin, France constitutes compensation for
the provision of a Service of General Economic Interest and is not state
aid. The project has a total budget of €85 million and will be co-financed
by EU funds The scheme will enable telecom operators to provide broadband
services to residential users, businesses and public authorities on a
transparent and non-discriminatory basis.

Competition Commissioner Neelie Kroes commented: “I am glad we could agree
that this project does not constitute state aid. This public-private
partnership delivers broadband access to citizens and businesses in
Limousin, harnessing competition in the electronic communications markets
and improving the competitiveness of the region.”

The construction and operation of the broadband infrastructure will be
implemented by means of a ‘public service delegation’ in the form of a
concession under French law. Selected through a public procurement
procedure, the concession holder [FAC edit: effectively, a "LoopCo"] will
provide various wholesale services to retail operators but not services to
end users. To encourage competition, retail operators will, inter alia, also
be able to lease from the wholesale provider so-called ‘dark fibre’ (i.e. a
plain fibre-optic cable with no optical transmission equipment - operators
may add their own equipment and build their own network, retaining complete
control over the fibre). The Commission has taken into account the fact that
Limousin consists mainly of rural and remote areas, and that access to
broadband services offered by existing market operators in Limousin is
insufficient to meet the population’s essential needs.

The Commission has therefore accepted that access to broadband services for
all citizens be qualified as a Service of General Economic Interest (SGEI)
in the region. However, this is only valid for investments linked to the
wholesale provision of network infrastructure and not for retail broadband
services offered to end users. The latter may include many different forms
of services which do not necessarily qualify as SGEI. The Commission
considers that the public co-funding of the infrastructure constitutes
compensation for the provision of an SGEI and hence is not state aid because
the project fulfils the four criteria established by the Court of Justice in
the Altmark ruling (24 July 2003, in Case C-280/00).

According to this ruling, compensation for a public service obligation does
not constitute state aid if the beneficiary is given a clearly defined
public service mission; if the compensation payments are based on objective
and transparent criteria established in advance; if the compensation
(including a reasonable profit) does not exceed the cost incurred in the
discharge of the public service minus the revenues earned with providing the
service; and if the beneficiary is chosen in a public tender or compensation
does not exceed the costs of a well-run undertaking that is adequately
equipped with the means to provide the public service.

The Commission already adopted a similar decision in November 2004
concerning the public funding of a broadband project in the Pyrénées
Atlantiques (see IP/04/1371).

-------------

>From recent study on broadband by City of Ottawa

"Montreal has the reputation across the carrier industry of "getting it
right". All carriers that operate there praise the ease of access and the
low cost of duct rental.

Montreal created an agency called the "Commission des Services Électriques
de la Ville de Montreal" (CSEVM) in 1907 to emphasize urban design and to
adapt to changing technological requirements as the city grew and to
contribute to the beautification of the city's streets and public places. 

The CSEVM has the mandate to operate the whole underground space. It builds,
manages and operates the system of underground conduits. 

Since that beginning the City now has 19.2 million metres of linear
conduits, covering 623 of the city's 2,123 kilometres of streets. It
provides direct accesses to 38,500 private and public buildings through more
than 18,000 access facilities. 

The City operates in the role of standardizing construction, consolidating
demand from various sources and building additional space for the City to
rent out to others. The City shares the capital cost with all and engineers
additional capacity for resell. The City is also very active on retrofitting
duct banks that are filled by adding additional internal ducts to be used.
The primary advantage to the building partners is in cost reduction of duct
construction. 

The end result is that the carriers have only the highest of praise for
Montreal as a territory in which they operate and the costs of duct rental
are $3.65 per metre."

 


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These news items and comments are mine alone and do not necessarily reflect
those  of the CANARIE board or management.



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