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Broadband Futures – Australia / EU

  • August 20th, 2010
  • Posted by 7thmin

computer-map.jpgProgress towards an integrated broadband communications network in Europe brings up comparisons with Australia, where the future of broadband has been fought-over, in the election campaign.

EU MOVES ON FIBRE NETWORKS

“High speed fibre networks are the new generation of broadband infrastructures in Europe. In order to give citizens and businesses across Europe access to fast broadband Internet, very large sums of private and also public money will need to be injected in the coming years. Investors therefore need to know the rules of the game…”.

That declaration by the EU Telecoms Commissioner, Viviane Reding, sets out current main lines of thinking on the broadband communications resource in the complex European Union market.

The European Commission took a formal step last year (12.6.09) with a Draft Recommendation seeking common regulation for broadband across the 27 member countries and over 500-million population.

The character of fibre networks, as a break-through technology for carrying vast amounts of data including full screen images (projected capacity in Australia, minimum 100 megabits p.s.), projects the debate into the area of very high capital costs.

Enormous returns are in the offing, sometimes compared with the coming of railways, electricity, or the telephone, but you have to find very large amounts of money.

DEBATE IN AUSTRALIA

All this has created a major sub-plot in debate leading up to the Australian elections tomorrow (21.8.10).

The Labor government has proposed a spend of A$40-billion over four years plus, to deliver the infrastructure directly to homes and businesses, to as much as 95% of the population, as a national enterprise built on state investment (i.e. government will build it); revenue then to flow from subscribers and competition among service providers.

(A comparable effort would be the realisation of the Menzies Liberal government plan in 1953, to deliver television to more than 80% of Australians – under strong urging from its Country Party partners in coalition. It was achieved mainly through building an extensive system of microwave repeater stations, and providing the regions with Australian Broadcasting Commission stations, using high powered transmitters and clear channels. The scheme created problems later on for broadcast policy and regulation, by taking over the designated FM radio band on VHF, to get the number of frequencies that it needed).

In 2010 the Liberal Party in Opposition says that on  broadband, it would opt for a much lesser state capital outlay than proposed by the government; about one-sixth the amount, aimed at providing large-scale augmentation of existing systems – wireless, copper wire, cable.

Government money would set up a main trunk cable network and provide for infrastructure in remote areas; private providers would be expected to invest heavily, to pick the eyes out of the main urban markets. The system would provide high functionality, especially in terms of broadband use as it is currently practiced.

Main differences against the government proposal: not a deliver-to-the-door scheme; far less capacity in terms of bit speed (overall, 7 versus 100+ Mbps); hence not at all the same in terms of imagined transmission of images for many future purposes, (e.g. proposals of government for e-medicine services to remote areas).

COMPARING WITH EUROPE

The European Union’s insistence on access for private investors and operators, and competition (within its regulatory model, not “sauvage”), chimes more with the Opposition approach in Australia.

Conditions in much of Europe, with denser population and often friendly topography, might make a private sector participation in the roll-out of the fibre network much more viable. Yet, with its diversity of culture and languages, and even in terms of wide geographical spread over the European continent, the EU is not without tasks similar to Australia – where the main populations are concentrated in small percentages of a huge area to be served.

Its larger vision for future uses of broadband, carrying massive data, and openness also to public investment, chimes with the current government approach in Australia.

The comparison with Europe can be useful for checking out models and possibilities, and so for thinking out goals for the country.

Australia’s main trading and business partner, the EU, is also a competitor, and it is working towards a high-capacity, integrated system.

Which option is better in the competitive stakes: the drive for the National Broadband Network, vastly expensive, but big-scale in capacity; or the leaner hybrid built on far lesser capacity with  much less public outlay?

EUROPEAN MODEL


European Commission statement on 12.6.09:

A previous public consultation held during the last quarter of 2008 confirmed general support for the objective of the Commission to achieve a common regulatory framework for NGA in order to foster timely investment in very high speed networks while ensuring that the competitive structure of the market is maintained. In the light of comments from stakeholders, the revised draft Recommendation includes mechanisms to allocate the investment risk between investors and operators seeking access to NGA networks.


Statement in full:

The European Commission has launched a public consultation on its revised proposals for the regulation of Next Generation Access (NGA) broadband networks, in the form of a draft Commission Recommendation. A previous public consultation held during the last quarter of 2008 confirmed general support for the objective of the Commission to achieve a common regulatory framework for NGA in order to foster timely investment in very high speed networks while ensuring that the competitive structure of the market is maintained. In the light of comments from stakeholders, the revised draft Recommendation includes mechanisms to allocate the investment risk between investors and operators seeking access to NGA networks. The draft Recommendation forms part of the European Broadband Strategy that the March European Council invited the Commission to develop by the end of 2009. The public consultation will be open until 24 July 2009. The Commission plans to adopt the Recommendation, taking account of comments received, before the end of 2009.

EU Competition Commissioner Neelie Kroes stated: ” For consumers and businesses to be able to reap the benefits of competitive very high speed broadband services, we need a common pan-European regulatory approach to NGA broadband networks. This consultation will help to ensure that the Commission Recommendation gives the necessary legal certainty to encourage large scale investment in new fibre infrastructure for very fast broadband internet services while safeguarding effective access to NGA networks for competitors.”

EU Telecoms Commissioner Viviane Reding said: “High speed fibre networks are the new generation of broadband infrastructures in Europe. In order to give citizens and businesses across Europe access to fast broadband Internet, very large sums of private and also public money will need to be injected in the coming years. Investors therefore need to know the rules of the game. The aim of the planned Commission Recommendation on next generation access is to provide legal certainty for all players by providing national regulators across Europe with clear guidance on the regulatory approach to be taken. I call on all stakeholders to contribute actively to the new public consultation in order to help us achieve the right balance between effective competition in the broadband market and giving the right incentives for sustainable investment in Europe’s high speed networks.”

The revised draft Recommendation would include mechanisms to allocate investment risk between investors and access seekers. In particular, to foster market-driven investment outside densely populated areas, the draft Recommendation defines conditions under which co-investment schemes could be deemed pro-competitive. Under the draft Recommendation, deployment by the dominant operator of multiple fibres could justify less stringent regulatory obligations. The competitive advantage of having multiple fibres in the ground is that it allows immediate and undistorted infrastructure competition.

The revised draft Recommendation endeavours to develop a pan-EU common regulatory approach, which telecoms regulators would adapt to national market conditions. The approach proposed by the Commission aims at driving infrastructure-based competition where it is possible and efficient, while ensuring a seamless migration from copper to fibre-based networks.

The Commission organised a first public consultation on a draft Recommendation on the regulated access to Next Generation Access Networks in 2008 (see IP/08/1370 ). The consultation confirmed the need to provide guidance on how the current regulatory framework should apply to NGA investment, in order to avoid Single Market distortions and create legal certainty for stakeholders. It also confirmed general support for the proposed balance between investment incentives and the protection of broadband competition. However, there were also calls to consider alternative mechanisms to diversify the specific risk of NGA investment as a way to foster investment in fibre.

The March 2009 European Council called for cooperation between investors and operators to be authorised so as to diversify the risk of investment in NGA, whilst ensuring that the competitive structure of the market and the principle of non-discrimination are maintained.

Background

Broadband access is currently regulated by national telecoms regulators. The objective of the Commission’s Recommendation will be to foster the application of consistent access remedies on dominant NGA operators.

See also MEMO/09/274 .

The Commission’s public consultation document can be found at:
http://ec.europa.eu/information_society/policy/ecomm/library/public_consult/index_en.htm

Input to the Commission’s public consultation can be sent to:
[email protected]


Reference

EC, Brussels, “Broadband : Commission consults on regulatory strategy to promote very high speed Internet”, 12.6.09. IP/09/909

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