broadband strategies handbook.pdf - Khazar University

It may be possible to reduce the cost of broadband development by givinginvestors access to rights-of-way along railways or roads, on rooftops, andon other public property. Absent alternative uses for these rights-of-way,their opportunity cost to the public is negligible, and if they are made equallyavailable to all interested parties, their use will not distort competition.Therefore, granting rights-of-way may help to reduce the total investmentcost of broadband development.Granting exceptional tax treatment is also sometimes considered.Good tax practice in general suggests that a particular economic activityshould not be singled out for tax conditions that do not apply to all likeactivities throughout the economy. This means that taxes or duties thatapply only to broadband should be phased out and, conversely, thatexemptions from generally applicable obligations should be avoided. TheHungarian government, for example, took efforts to institute tax incentivesto further the build-out of broadband. Specifically, Hungary’s governmentgrants a tax reduction of 50 percent on profits as a way to support theconstruction of broadband infrastructure. The concessions are availableonly to telecommunications companies if their expected profits exceedFt 50 million (US$250,000) and if they have invested at least Ft 100 million(US$500,000). The tax allowance cannot be applied to Internet serviceproviders (ISPs) if the infrastructure is built in areas where Internet serviceis already provided or where the investment does not contribute tothe growth of infrastructure.Investment in new open and competitive networks, including broadbandnetworks, can also be supported by the actions of national and localauthorities in lowering costs. The European Commission’s 2009 Guidelineson the Application of State Aid Rules, for example, lay down the conditionsfor public financial support on nonmarket terms for broadband deploymentin areas where commercial investments are unlikely to take place inthe foreseeable future. The main objective of the 2009 guidelines is to assistthe actions of national and local authorities. The guidelines are presentedas part of the broadband package, together with the two other broadbandcommitments made by the commission in the Digital Agenda for fast andultra-fast Internet: the Next-Generation Access (NGA) Recommendationto provide regulatory guidance to national regulators and the Radio SpectrumPolicy Program to improve the coordination and management ofspectrum and hence facilitate, among other things, the growth of wirelessbroadband. In the guidelines, the commission recognizes that broadbandnetworks tend to cover only part of the population since they are generallymore profitable to roll out where potential demand is higher and concentrated(that is, in densely populated areas) rather than in areas with less170 Broadband Strategies Handbook