FTTH Business Guide - AWT.be

In September 2009, the European Commission formally adopted guidelines on the
application of EC Treaty state aid rules to the public funding of broadband
networks. The guidelines set out the basis for past practice and how the rules will
be applied in the future. The aim is to boost investments in NGA networks, while
allowing public support for deployments in areas with market failure.
One of the key ideas introduced in this document is that of geographically
differentiated regulation. The guidelines define white (unserved), grey (private
monopoly served) and black (multiple private infrastructures) areas for NGA
networks. As a rule of thumb, state aid is acceptable for white areas, possibly
acceptable in grey areas, and not allowed in black areas.
The document also refers to the principle that public investment in a private
venture under market conditions is not considered to be state aid – this is known
as the Market Economy Investor Principle (MEIP). This rule was applied when the
Commission approved the Citynet project in the Dutch city of Amsterdam.
From the point of view of an FTTH network project, early consideration should be
given to the following factors:
� Is there a market failure? The key test at a basic level is that of duplication:
would the FTTH project duplicate equivalent assets already provided by the
private sector?
� Procurement – private sector partners should be selected through rigorous
advertising and procurement procedures with clearly defined criteria.
� Profit share – public/private venture should share profits in the same
percentage as funds are provided by the partners.
54 www.ftthcouncil.eu