The role of State Aid for the rapid deployment of[Catalogue number] The role of State Aid for the rapid deployment of broadband networks in the EU Request No 014 02 of COMP/2016/014

Final Report

Prepared by

The role of State Aid for the

broadband networks

rapid deployment of

in the EU

Competition

EUROPEAN COMMISSION

Directorate-General for Competition Directorate C – Information, Communication and Media Unit 4 – State aid

Contact: Oliver Stehmann

E-mail: [email protected]

European Commission B-1049 Brussels

[Catalogue num

ber]

The role of State Aid for the rapid deployment of broadband networks

in the EU

Request No 014 02 of COMP/2016/014

Final report

LEGAL NOTICE

The information and views set out in this report are those of the author(s) and do not necessarily reflect the official opinion of the Commission. The Commission does not guarantee the accuracy of the data included in this study. Neither the Commission nor any person acting on the Commission’s behalf may be held responsible for the use which may be made of the information contained therein.

More information on the European Union is available on the Internet (http://www.europa.eu).

Luxembourg: Publications Office of the European Union, 2020

Catalogue number: KD-04-20-461-EN-N ISBN: 978-92-76-21332-1 DOI: 10.2763/050506

© European Union, 2020 Reproduction is authorised provided the source is acknowledged. The reproduction of the artistic material contained therein is prohibited.

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Authors of the “Support study”:

Abstract

In this study, we provide an overview of the implementation of broadband State Aid measures across the EU during the period 2013-2019 and, with the aid of case studies, interviews and a survey of stakeholders, assess challenges and best practices in the application of State Aid to support broadband deployment. We draw on data gathered through the study to evaluate to what extent the Broadband Guidelines have been effective in meeting the objectives of boosting deployment of Next Generation broadband (NGA) and facilitating competition while limiting potential negative impacts on private investment.

We conclude that the Broadband Guidelines have made a significant contribution to supporting the deployment and take-up of NGA in areas where the economics of network deployment are challenging, and that aid has largely been efficiently distributed, although complexity and delays in the process have been reported in some cases. Updates to the Guidelines to reflect new EU objectives (for Gigabit-capable connectivity), reference recently adopted legislation, and provide more detailed guidance concerning mapping, tendering processes and wholesale obligations could be useful in any review of the Guidelines.

Resumé

Dans cette étude, nous donnons un aperçu de la mise en œuvre des mesures d'aides d'État accordées en faveur des réseaux de communication à haut débit dans l'UE au cours de la période 2013-2019 et, à l'aide d'études de cas, d'entretiens et d'une enquête auprès des parties prenantes, nous évaluons les défis et les meilleures pratiques dans l'application des aides d'État pour soutenir le déploiement du haut débit. Nous nous appuyons sur les données recueillies dans le cadre de l'étude pour évaluer dans quelle mesure les lignes directrices sur les aides d’État pour le secteur du haut débit ont permis d'atteindre les objectifs consistant à stimuler le déploiement du haut débit de nouvelle génération (NGA) et à faciliter la concurrence tout en limitant les effets négatifs potentiels sur l'investissement privé.

Nous concluons que les lignes directrices sur les aides d’État pour le secteur du haut débit ont contribué de manière significative à soutenir le déploiement et l'adoption du NGA dans des zones où les aspects économiques du déploiement du réseau sont difficiles à appréhender, et que l'aide a été largement distribuée de manière efficace, bien que la complexité et des retards dans le processus aient été signalés dans certains cas. Des

mises à jour des lignes directrices pour refléter les nouveaux objectifs de l'UE (pour la connectivité Gigabit) font référence à la législation récemment adoptée et fournissent des orientations plus détaillées concernant la cartographie, les procédures d'appel d'offres et les obligations du commerce de gros pourraient s’avérer pertinentes dans le cadre d’une révision des lignes directrices.

Kurzfassung

In dieser Studie geben wir mit Hilfe von Länderstudien, Interviews und einer Stakeholder-Umfrage einen Überblick über die Umsetzung der Maßnahmen zur staatlichen Breitbandförderung in der EU im Zeitraum zwischen 2013 und 2019, um die Herausforderungen und bewährten Vorgehensweisen der Förderung des Breitbandausbaus zu beurteilen. Dabei stützen wir uns auf die in dieser Studie gesammelten Daten, um zu evaluieren, inwieweit die Breitband-Leitlinien bei der Erfüllung der Ziele der Förderung des Ausbaus der „Nächsten Generation des Breitbands“ (NGA) und der Unterstützung des Wettbewerbs bei gleichzeitiger Begrenzung potentiell negativer Einflüsse auf private Investitionen, zielgerichtet waren.

Wir kommen zu dem Schluss, dass die Breitband-Leitlinien einen wesentlichen Beitrag zur Unterstützung des Ausbaus und der Inanspruchnahme von NGA in Gebieten geleistet haben, in denen die Wirtschaftlichkeit des Netzausbaus eine Herausforderung darstellt und, dass die Förderung weitgehend effizient gewährt wurde, wenngleich in einigen Fällen von Schwierigkeiten und Verzögerungen im Prozess berichtet wurde. Anpassungen der Leitlinien, um neue EU-Ziele (gigabitfähige Konnektivität) zu berücksichtigen, auf kürzlich verabschiedete Gesetzgebung zu verweisen und detailliertere Hinweise bezüglich Mapping, Vergabeprozessen und Vorleistungsverpflichtungen zu geben, könnten bei einer Überarbeitung der Leitlinien hilfreich sein.

Contents

0 Summaries I

0.1 Executive summary I

0.1.1 Background I

0.1.2 Challenges and solutions II

0.1.3 Costs and benefits of different wholesaling solutions and business models VI

0.1.4 Evaluation of the Broadband Guidelines VIII

0.2 Résumé exécutif XIII

0.2.1 Contexte XIII

0.2.2 Défis et solutions XIV

0.2.3 Coûts et bénéfices des différentes solutions de vente en gros et des modèles commerciaux XIX

0.2.4 Évaluation des lignes directrices sur les aides d’État pour le secteur haut débit XXI

0.3 Zusammenfassung XXVII

0.3.1 Hintergrund XXVII

0.3.2 Herausforderungen und Lösungen XXVIII

0.3.3 Kosten und Nutzen verschiedener Vorleistungslösungen und Geschäftsmodelle XXXIII

0.3.4 Evaluierung der Beihilfen für den Breitbandausbau XXXVI

Figures XIV

Tables XVII

1 Introduction 1

1.1 Background 1

1.2 Objectives 1

1.3 Methodology 2

1.4 Structure 3

2 Overview 3

2.1 Methodology 3

2.2 Schemes, individual aids and projects 4

2.2.1 General information 4

2.2.2 Relevant reporting period 7

2.3 Availability, use and source of funds 15

2.3.1 Overall amount of State Aid available vs aid spent in the reporting period 15

2.3.2 Source of State Aid funds 17

2.4 Where has broadband State Aid been targeted? 18

2.4.1 Last mapping exercise and granularity 18

2.4.2 Type of area targeted by the State Aid 20

2.4.3 Broadband connectivity of the intervention area 22

2.4.4 Objective of the State Aid measure 23

2.4.5 Target infrastructure and network type 27

2.4.6 Target infrastructure: access networks 29

2.5 The tendering process and resulting awards 31

2.5.1 Tendering status 31

2.5.2 Tendering strategies: EU overview 32

2.5.3 Award procedures: technological preferences 34

2.5.4 Award outcomes: Beneficiary type 35

2.5.5 Award outcomes: Average number of bidders per country 37

2.6 What types of access are required? 39

2.6.1 Access required to be provided by the recipients in the context of the tendering procedure 39

2.6.2 Access obligations: differences with SMP regulation 42

2.7 Deployment based on State Aid 44

2.7.1 Coverage: number of households 46

2.7.2 Coverage: technology before and after the intervention 47

2.7.3 Coverage: Average cost per premise passed 49

2.8 Competition in areas served via State Aid 50

2.8.1 Infrastructure competition 50

2.8.2 Service competition 51

2.9 Retail outcomes 52

2.9.1 Speeds 52

2.9.2 Take-up 54

2.9.1 Pricing 55

2.10 Clawback mechanisms 58

2.11 Role of NRA 59

2.11.1 Role of NRA: EU overview 59

3 Challenges and good practices associated with broadband State Aid 62

3.1 Methodology 62

3.1.1 Stakeholder survey 63

3.1.2 Case studies and interviews 66

3.2 Targets and technologies 67

3.2.1 The challenge 67

3.2.2 Evidence concerning the capabilities of fixed and wireless technologies 68

3.2.3 Survey responses 72

3.2.4 Insights from the database and case studies 73

3.2.5 Conclusions and recommendations 75

3.3 Broadband mapping and consultation 76


3.3.2 Survey responses 78



3.4 Identifying a „step change“ 84



3.4.3 Insights from the survey 86


3.5 Timely processes to allocate State Aid 87



3.5.3 Insights from case studies 88


3.6 Tender conditions and awards to SMP operators 91



3.6.3 Insights from survey 97


3.7 Issues concerning open access 99


3.7.2 Insights from case studies 99



3.8 Monitoring and clawback mechanisms 110





3.9 Role of the NRA 114


3.9.2 Stakeholder feedback 115


4 Costs and benefits associated with business models and wholesale access obligations linked to State Aid 116

4.1 Analysis of costs 117

4.1.1 Contestability in a typical State Aid zone 118

4.1.2 Implications of different technological solutions on costs and subsidy needs 119

4.1.3 Implications of a wholesale only business model on costs and subsidy needs 120

4.1.4 Implications of public vs private ownership 121

4.1.5 Impacts of different kinds of wholesale access 125

4.1.6 Impact of permitting cross-subsidisation between different types of area 128

4.2 Benefits associated with different business models, technologies and forms of access 128

4.2.1 Benefits of point to point vs point to multi-point architectures 128

4.2.2 Benefits of physical unbundling compared with virtual unbundling or bitstream 130

4.2.3 Benefits of wholesale only models compared with vertically integrated models 136

4.3 Conclusions on the costs and benefits of different business models and access solutions 138

5 Evaluation of State Aid practice in the context of the application of the broadband guidelines 141

5.1 Effectiveness 141

5.1.1 Impacts on deployment and take-up of broadband 141

5.1.2 Impact of broadband State Aid in reducing bottlenecks to entry through open access 148

5.1.3 Degree to which broadband State Aid has avoided crowding out private sector investment 150

5.2 Efficiency 155

5.2.1 Administrative efficiency 155

5.2.2 Costs in relation to benefits 160

5.3 Relevance 161

5.3.1 Relevance of the objectives 161

5.3.2 Relevance of open access provisions 163

5.3.3 Relevance of the procedural steps and principles 164

5.4 Coherence 164

5.4.1 EU Electronic Communications Code 164

5.4.2 Broadband Cost Reduction Directive 166

5.5 EU value added 167

5.6 Conclusions 168

6 ANNEXES 171

Annex 1: List of schemes and individual aid measures 171

Annex 2: Breakdowns for countries with multiple programmes and/or projects 175

Annex 3: Timelines for the deployment of broadband based on State Aid by country 191

Annex 4: Spain - Operators' participation in the PEBA-NGA scheme from 2013 to 2018 199

Annex 5: Cost and viability modelling methodology 200

Modelling approach 200

Identifying relevant scenarios 205

Outcomes from the scenarios for profitability and subsidy requirements 207

Lessons from the main scenarios 210

Further analyses of the effects of wholesale only vs vertically integrated firms 211

Implications of State Aid award to public vs private actors 214

Impact of different kinds of wholesale access 217

Impact on costs of different technological solutions (FTTH P2P vs P2MP and FMA) 225

Impact of cross-subsidisation on required subsidies 226

7 Case Study: Austria 229

7.1 Executive summary 229

7.2 Programmes and objectives 230

7.3 Mapping 233

7.4 Tender process and award outcomes 235

7.5 Deployment outcomes 240

7.6 Impact on competition 243

7.7 Impact on consumer outcomes 245

7.8 Enforcement action 245


7.10 Conclusions 246

8 Case Study: Estonia 247



8.3 Mapping 250






8.9 Conclusions 261

9 Case Study: Finland 263



9.3 Mapping 266


9.5 Wholesale access types 271







10 Case Study: France 277


10.2 Programmes and objectives: the national « Plan France Très haut débit » 2013-2022 277

10.2.1 Context 277

10.2.2 Objectives of the national plan 278

10.2.3 Technology: a national plan focusing on FTTH 278

10.2.4 Mechanism 278

10.2.5 Budget 279

10.2.6 Programme milestones 280

10.2.7 Stakeholder feedback 282

10.3 Mapping 282

10.3.1 Principle 282

10.3.2 Tools 283


10.4.1 Type of contract 284

10.4.2 Selection criteria: the example of the “Département du Gard” 285

10.4.3 Number of bidders 288

10.5 Wholesale obligations 289


10.6.1 At a national level 290

10.6.2 In the public funding zones (RIP) 291




10.9.1 Main Regulatory measures 295

10.10 Annex: List of public initiative network deployment projects applying for state funding under the Plan très haut débit 296

11 Case Study: Germany 301



11.3 Mapping 310








12 Case Study: Greece 324



12.3 Mapping 332


12.5 Wholesaling 344

12.6 Deployment, competition and consumer outcomes 344




13 Case Study: Hungary 348



13.3 Mapping 350








14 Case Study: Ireland 376



14.3 Mapping 380




14.7 Monitoring and clawback 386




15 Case Study: Italy 388



15.3 Mapping 397








16 Case Study: The Netherlands 425



16.3 Programme “Broadband Rivierenland Region” 426




17 Case Study: Poland 433



17.3 Mapping 437







18 Case Study: Portugal 452



18.3 Mapping 456

18.4 Public consultation 456

18.5 Tender process 457

18.6 Tender outcomes and award 461

18.7 Wholesale access 461

18.8 Monitoring and clawback mechanisms 462





19 Case Study: Spain 469



19.3 Mapping 474








20 Case Study: Sweden 488



20.3 Mapping 491








21 Case Study: United Kingdom 497



21.3 Mapping 501


21.5 Wholesale Access 510





21.10 Role of the national regulatory authorities 515


Sources 517

Figures Figure 2-1: Share of schemes vs individual aid measures 5

Figure 2-2: Overview over number of schemes and individual aid measures by country 6

Figure 2-3: Overview over number of projects by country 7

Figure 2-4: Concluded vs ongoing measures 8

Figure 2-5: Concluded vs ongoing schemes 9

Figure 2-6: Scaled overview of average, maximum and minimum number of households reached per project per country 10

Figure 2-7: Scaled overview of average, maximum and minimum number of businesses reached by projects per country 12

Figure 2-8: Scaled overview of average, maximum and minimum area covered by projects per country 14

Figure 2-9: Share of available aid spent per country 16

Figure 2-10: Share of sources of State Aid funds per country 18

Figure 2-11: Type of area covered by projects across the EU 20

Figure 2-12: Number of projects servicing connectivity types by country 22

Figure 2-13: Number of projects targeting infrastructure and network types per country 28

Figure 2-14: Share of infrastructure types across projects per country 30

Figure 2-15: Total share of infrastructure types across the EU 31

Figure 2-16: Share of beneficiary types by country 36

Figure 2-17: Share of projects in Germany by number of bidders 38

Figure 2-18: Share of projects in Hungary by number of bidders 39

Figure 2-19: Timelines for the start of aid programmes, award, deployment and entry into service 45

Figure 2-20: Number of households passed currently and projected by country 46

Figure 2-21: Average coverage of technologies (% of households covered) in the target area before and after the intervention 48

Figure 2-22: Average costs per premise passed per country 49

Figure 3-1: Type of respondents 63

Figure 3-2: Size of respondents 64

Figure 3-3: Country of origin of respondents 65

Figure 3-4: Structural model of respondents 66

Figure 3-5: Financial/operational model of respondents 66

Figure 3-6: Adequacy of broadband State Aid targets to meet the Gigabit society objectives 73

Figure 3-7 Monthly profit and loss per cluster (FTTH/P2P; 38 € ARPU, 70% penetration) 77

Figure 3-8: Views of stakeholders on the mapping process 79

Figure 3-9: Reasons for concerns over mapping as expressed by stakeholders 80

Figure 3-10: Deployment and competition in low density zones in France supported by State Aid 101

Figure 3-11: Stakeholder views on the reasonableness of access obligations 103

Figure 3-12: Stakeholder views on the costs of access in relation to demand (9 responses) 104

Figure 3-13: Access seekers’ requests for wholesale access (23 responses) 105

Figure 3-14: Access seekers’ view of the suitability and flexibility afforded by wholesale products (29 responses) 106

Figure 3-15: Access seekers’ view over the suitability of the wholesale products mandated in their jurisdictions in the context of State Aid 107

Figure 3-16: Stakeholders perspective on the effectiveness of monitoring and enforcement mechanisms 113

Figure 4-1: Investment decision for broadband deployment 122

Figure 4-2: Expected evolution in downstream bandwidths by technology 129

Figure 4-3: Fixed broadband via fibre, price development over time for different speeds 133

Figure 4-4: Openreach FTTP GEA (VULA) wholesale price per month July 2020 134

Figure 5-1: State Aid spent per rural household (2011-2019) 142

Figure 5-2: Evolution in rural NGA, VDSL and FTTP coverage 2013-2018 143

Figure 5-3: Difference in rural coverage by technology (2013-2018) 144

Figure 5-4: FTTP coverage and take-up, 2018 147

Figure 5-6: Share of State Aid administration costs by category: Greek authorities 157

Figure 6-1: Timeline of deployment dates of projects in Denmark 191

Figure 6-2: Timeline of deployment dates of projects in Finland 191

Figure 6-3: Timeline of deployment dates of projects in France 192

Figure 6-5: Timeline of deployment dates of projects in Greece 194

Figure 6-6: Timeline of deployment dates of projects in Hungary 194

Figure 6-7: Timeline of deployment dates of projects in Italy 195

Figure 6-8: Timeline of deployment dates of projects in Latvia 196

Figure 6-9: Timeline of deployment dates of projects in Poland 196

Figure 6-10: Timeline of deployment dates of projects in Spain 197

Figure 6-11: Timeline of deployment dates of projects in the United Kingdom 198

Figure 10-1: Investment plan 280

Figure 10-2: Example of mapping in the Département Lot et Garonne 282

Figure 10-3: FttH coverage 283

Figure 10-4: Type of arrangement in public funding zones 285

Figure 10-5: Tender selection criteria 286

Figure 10-6: Public initiative FTTH deployments by operator 289

Figure 10-7: Number of FTTH sockets deployed / to be deployed to reach the target of the national plan (millions) 290

Figure 10-8: Number of FTTH sockets deployed / to be deployed for a full coverage (millions) 291

Figure 10-9: Number of FTTH sockets deployed / to be deployed in zones with Public Investment (RIP) (millions) 292

Figure 10-10: Lower Density Zones with Public Investment (RIP) 293

Figure 10-11: Number of BB and UFB subscribers and yearly increase 294

Figure 16-1: Municipalities of the Rivierenland region 427

Figure 16-2: Netherlands coverage by technology combination, 2018 431

Figure 19-1: FTTP coverage EU 28 (2018) 482

Tables Table 2-1: Total, average, maximum and minimum number of households

reached by projects per country (2011-2020) 11

Table 2-2: Total, average, maximum and minimum number of businesses reached by projects per country (2011-2020) 12

Table 2-3: Total, average, maximum and minimum area covered by projects per country 14

Table 2-4: Total State Aid available and spent in the relevant reporting period (2011-2019) 16

Table 2-5: Date of last mapping exercise and granularity 19

Table 2-6: Share of projects covering type of area by member state 21

Table 2-7: Objectives of State Aid measures by country 23

Table 2-8: Objectives of State Aid programmes in Germany by Land 26

Table 2-9: Objectives of State Aid programmes in Poland 27

Table 2-10: Number of projects targeting infrastructure and network types per country 29

Table 2-11: Strategies of broadband State Aid funding per country 32

Table 2-12: Strategies of broadband State Aid funding in Germany by Land 33

Table 2-13: Strategies of broadband State Aid funding in Poland by Region 33

Table 2-14: Preferences in award procedures 34

Table 2-15: Types of beneficiaries by country 35

Table 2-16: Average number of bidders per country 37

Table 2-17: Types of access required to be provided by State Aid recipients by country 41

Table 2-18: Types of access required to be provided by Lander in Germany 42

Table 2-19: Differing requirements to SMP regulation and implementation of measures enabling access per country 43

Table 2-20: Number of NGA providers at the infrastructure level before and after the State Aid intervention 50

Table 2-21: Number of service level providers before and after the intervention per country 51

Table 2-22: Minimum and average actual speeds per country. Where there are significant differences the specific project is indicated 53

Table 2-23: Number of retail broadband lines in the intervention area before the aid and built with the intervention 54

Table 2-24: Prices for national and regional operators involved in the provision of services over networks supported via broadband State Aid – sourced from websites Sept 2019 57

Table 2-25: Presence of clawback mechanisms per country, as reported by the authorities. Shares of projects where a clawback mechanism is present is shown where not the same or all projects in a country 59

Table 2-26: Roles of NRAs by country. Where not the same for all schemes the specific scheme is given 60

Table 2-27: Role of the NRA in Germany 61

Table 2-28: Role of the NRAs in Poland 61

Table 3-1: Selected countries for case studies 67

Table 3-2: An overview of the performance of technologies 69

Table 3-3: Reasons for delays in the application of broadband State Aid as expressed by stakeholders 88

Table 3-4: Operators' participation in the PEBA-NGA from 2013 to 2018 96

Table 3-5: Factors impacting the fairness of the tendering process as expressed by stakeholders 97

Table 3-6: Most and least requested forms of wholesale access by country 106

Table 4-1: Comparison between similar size projects (Public DBO Vs. concession) in France 125

Table 4-2: Expected effects of different approaches 139

Table 7-1: Programmes and objectives 230

Table 7-2: Award process 235

Table 7-3: Tender outcomes 239

Table 7-4: Impact on deployment 242

Table 7-5: Impact on infrastructure and service competition 243

Table 7-6: Take-up of wholesale access 244








Table 9-2: Award process for selected projects 267

Table 9-3: Tender Outcomes: Beneficiaries of State aid by Total Aid Expenditure 269

Table 9-4: Tender outcomes for selected projects 270

Table 9-5: Impact on deployment for selected projects 272

Table 9-6: Impact on infrastructure and service competition for selected projects 273


Table 10-1: Plan France Très haut debit 280




Table 11-4: Average costs (Example Bavaria) 317

Table 11-5: Impact on deployment (Example Thuringia) 319












Table 15-1: Programmes and objectives (ERDF Programs) 389

Table 15-2: Programmes and objectives (EARDF Programs) 391

Table 15-3: Sources of State Aid for ERDF and EARDF programmes 394





Table 15-8: Take-up of wholesale access (All figures to become available in spring 2020). 417

Table 16-1: Current process 428














Table 19-2: Max budget and max % subsidy (PEBA-NGA) 471



Table 19-5: Operators' participation in the PEBA-NGA from 2013 to 2018 480

Table 19-6: Development FTTP Coverage Spain & EU 28 (2018-2013) 482





Table 21-2: Number of Contracts by Procurement Process 503



Table 21-5: Tender outcomes by Beneficiary 509


The role of State Aid for the rapid deployment of broadband I

0 Summaries

0.1 Executive summary

0.1.1 Background

In 2016 the European Commission set out ambitious targets that all households and businesses in the EU should have access to Gigabit-capable infrastructure by 2025.1 The Commission’s Communication also focuses on the need to secure Gigabit connectivity for “socio-economic drivers” such as schools and hospitals, and to support the deployment of 5G in major cities and along highways, to keep Europe at the cutting edge in mobile broadband, the Internet of Things and associated applications.

A significant portion of the deployment of Gigabit capable infrastructure is expected to come from commercial investments. However, cost models prepared by WIK-Consult, the EIB and others illustrate that it will not be possible to meet the targets through private funding alone, and public funding from EU and national sources will be needed to support Gigabit-capable connectivity to a significant portion of households, in rural areas or which are otherwise costly to reach.

In 2013 the European Commission adopted the Broadband Guidelines.2 The Guidelines elaborate on the appropriate procedures to follow and conditions that should be attached to the award of State Aid for the rapid deployment of broadband across the EU. Since the Guidelines were adopted, a large number of Member States have established national or regional State Aid schemes for broadband or introduced individual aid measures.

The European Commission contracted the study team to gather data on State Aid measures introduced between 2013-2018 and to assess challenges and best practices associated with the application of State Aid in the deployment of broadband. We also draw on the evidence gathered through the study to evaluate to what extent the Broadband Guidelines have been effective in meeting the objectives of boosting deployment of Next Generation broadband and facilitating competition while limiting potential negative impacts on private investment.

1 https://ec.europa.eu/digital-single-market/en/news/communication-connectivity-competitive-digital-

single-market-towards-european-gigabit-society 2 https://eur-lex.europa.eu/legal-content/GA/TXT/?uri=CELEX:52013XC0126(01)

https://ec.europa.eu/digital-single-market/en/news/communication-connectivity-competitive-digital-single-market-towards-european-gigabit-societyhttps://ec.europa.eu/digital-single-market/en/news/communication-connectivity-competitive-digital-single-market-towards-european-gigabit-societyhttps://eur-lex.europa.eu/legal-content/GA/TXT/?uri=CELEX:52013XC0126(01)

II The role of State Aid for the rapid deployment of broadband

0.1.2 Challenges and solutions

0.1.2.1 Objectives and technologies

The objectives set by national administrations can have far-reaching consequences for the technologies deployed and competition for State Aid. Objectives can refer to downstream and upstream bandwidths and/or other capabilities. Openness to competition can also be expressed as an objective. Although objectives should in principle be technologically neutral, only those technologies which meet the specifications are eligible for State Aid.

Some countries such as France, Spain and Portugal set more ambitious objectives or targeted State Aid towards very high capacity infrastructure from an early stage, which was mostly delivered via full fibre. Others such as Germany, Austria, the UK, Hungary and Greece, began with more modest objectives, which initially served to support the deployment of FTTC/VDSL infrastructure. Those which set out with more modest objectives have mostly shifted their focus in the award of State Aid towards Gigabit-capable technologies in recent years. However, further subsidies may be needed to ensure that infrastructure is fully future-proof in areas where the initial focus lay on NGA.

As the focus shifts towards Gigabit capable technologies, it is logical that State Aid should focus on subsidising technologies that meet these requirements, as well as being capable of being upgraded to meet future needs, which are likely to include greater symmetry and higher levels of quality alongside higher bandwidths. FTTH technologies (and especially point to point FTTH architectures) have proven to offer the most futureproof solution.3

Where FTTH is not economically viable, even with the support of State Aid, wireless technologies including 5G FWA, could provide an important solution. However, the capabilities and reliability of this technology are likely to remain below that of FTTH,4 making it a solution that is best targeted towards remote areas or households in sparsely populated districts.

3 See for example discussion of end-user needs in the WIK (2018) study for Ofcom: Benefits of ultrafast

Broadband https://www.ofcom.org.uk/__data/assets/pdf_file/0016/111481/WIK-Consult-report-The-Benefits-of-Ultrafast-Broadband-Deployment.pdf. Differences in performance between shared and dedicated infrastructure are also explored in the WIK study for the Commission on the Relevant Market Recommendation

4 See the WIK (2020) study for the Commission in support of the review of the Recommendation on Relevant Markets susceptible to ex ante regulation. https://ec.europa.eu/digital-single-market/en/news/study-future-electronic-communications-product-and-service-markets-subject-ex-ante-regulation

https://www.ofcom.org.uk/__data/assets/pdf_file/0016/111481/WIK-Consult-report-The-Benefits-of-Ultrafast-Broadband-Deployment.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0016/111481/WIK-Consult-report-The-Benefits-of-Ultrafast-Broadband-Deployment.pdfhttps://ec.europa.eu/digital-single-market/en/news/study-future-electronic-communications-product-and-service-markets-subject-ex-ante-regulationhttps://ec.europa.eu/digital-single-market/en/news/study-future-electronic-communications-product-and-service-markets-subject-ex-ante-regulationhttps://ec.europa.eu/digital-single-market/en/news/study-future-electronic-communications-product-and-service-markets-subject-ex-ante-regulation

The role of State Aid for the rapid deployment of broadband III

0.1.2.2 Broadband mapping and consultation

Mapping of existing broadband coverage and the collection of reliable forecasts data for deployment provides an important mechanism to ensure that aid is targeted at areas where it is most needed, and to avoid the crowding out of private sector investment. All Member States awarding State Aid report conducting a mapping exercise. However, the frequency of mapping varies, and concerns have been expressed in some cases about inaccurate mapping (due to insufficiently granular information or a failure to take relevant deployments into account), overlapping mapping initiatives, and/or inaccurate forecasts concerning future deployment zones. Moreover, in at least one case, the target zones for State Aid were amended, and delays were incurred, after commercial operators changed their stated deployment plans.

In order to avoid such issues in future, it is recommended that Member States should (i) clearly link the technologies associated with the mapping exercise to those identified as compatible with the objectives; (ii) provide a consolidated mapping system at least for the purposes of State Aid, and preferably also encompassing mapping requirements needed for the effective implementation of the EU Electronic Communications Code5 – EECC - and any mapping conducted in the EU Broadband Cost Reduction Directive – BCRD.6 Such a mapping system should follow methodological Guidelines to be adopted by BEREC; (iii) include a wide range of stakeholders including municipalities within the consultation process; (iv) cross-check viability of given areas through bottom-up modelling; (v) report regularly on actual deployment in relation to forecasts and setting a deadline after which zones previously identified as grey or black could be open to potential State Aid intervention If private planned investments do not materialize; and (vi) take action to apply penalties in accordance with the EECC in cases where operators knowingly mislead the authorities regarding their deployment plans.

0.1.2.3 Identifying a “step change”

The Guidelines require Member States to demonstrate that State Aid will support a “step change” in network performance as a condition of approval. There have been limited challenges associated with this requirement thus far, as the vast majority of broadband State Aid has been targeted at “white areas”, where existing infrastructure is limited, and any upgrade is likely to involve significant improvements in performance. Thus far, only two Member States have proposed to target State Aid at NGA grey zones (Bavaria in Germany and Spain). As Member States update their objectives to target VHC networks, there may be further cases where proof of a “step change” may be required to justify the award of aid in NGA grey zones. The evolution of wireless technologies to meet NGA standards may also lead to cases in future where State Aid

5 See Article 22 EECC relating to Geographical surveys 6 Such as mapping of existing infrastructure that may be conducted in the context of the Single

Information Point referenced in BCRD article 4

IV The role of State Aid for the rapid deployment of broadband

may be requested to upgrade networks to VHC standards in NGA black zones. The procedure to award State Aid to NGA black zones as set out in the Guidelines has however yet to be tested. The identification of a new category of VHC white and grey areas could be considered in the context of any revision of the Guidelines.

0.1.2.4 Timely processes for the award of State Aid

Data collected on State Aid projects shows a wide variation in the time taken for approved aid to translate into deployed infrastructure, ranging from 2 years or less to 4 or more years. Based on feedback from stakeholders, the primary reasons for delay appear to lie outside the scope of the State Aid regime, and rather relate for example to delays in accessing relevant infrastructure or gaining rights of way. Effective enforcement of BCRD and SMP duct and pole access remedies, as well as additional steps to streamline rights of way may be needed to address these challenges.

However, in some cases, deficiencies in the mapping or award process, communication challenges between different authorities or changes in the criteria or procedures may have been the cause of delay. To minimise these problems, State Aid awarding authorities could usefully avoid unduly burdensome conditions and complex processes in tendering procedures (including those associated with framework contracts), set clear timeframes and expectations for each stage of the process and focus on subsidising future-proof infrastructures to avoid the need for revisions to the mapping, repeated tenders, or subsequent upgrades to the infrastructure. Effective communication and co-ordination between national and regional programmes is also important.

0.1.2.5 Ensuring competition in the award process

The tender procedures and conditions under which State Aid is granted have the potential to influence the outcomes of the process. A core objective is to ensure that all operators with a valid business plan should be able to apply and compete for State Aid on a level playing field.

In practice, the degree of competition achieved in tender processes varies widely across the EU and even in individual countries, where different schemes have been trialled. While tenders for State Aid have attracted three or more bidders for some schemes and countries, for certain schemes a high proportion of tenders have attracted just one bidder.

An analysis of the conditions present in schemes which have attracted competitive bids shows that the following measures may help to support competitive outcomes in the tendering process: (i) Adequate weighting of quality and/or a focus on VHC objectives vs cost; (ii) acceptance of alternative wireless technologies in cases where FTTH is not viable even in the presence of subsidies; (iii) tender districts which are sufficiently large that they combine higher and lower cost areas, but are not so large that smaller

The role of State Aid for the rapid deployment of broadband V

telecommunications operators would not be able to obtain the necessary resources to address them – alternatively approaches which permit bidders to define their own deployment zones (with added weight for high cost premises); (iv) avoidance of unduly burdensome administrative processes or requirements which could have the effect of excluding smaller telecommunications operators; (v) focus on wholesale offers and prices rather than retail offers (potentially with support for wholesale only models); and (vi) effective SMP duct access regulation and where relevant, enforcement of access to utility infrastructure via the BB CRD.

0.1.2.6 Ensuring effective access on State Aid supported networks

State Aid rules require operators receiving State Aid to offer open wholesale access to their networks. The State Aid Guidelines propose that multiple access options should be available including access to ducts and poles as well as passive and active access to the infrastructure.

Data provided by national and regional administrations suggests that, in general, a range of wholesale access have been mandated in the context of State Aid. However, data on take-up is limited, and actual take-up of wholesale access appears to be limited in the few cases where data is available.

A clear conclusion is that data should be collected on the use of different wholesale products on the networks of State Aid recipients (including regionally disaggregated data in cases where the State Aid recipient is an SMP operator or other operator covering both commercial and State Aid zones). As regards the reasons for limited take-up, unfair terms, conditions and/or wholesale pricing may present a challenge in certain circumstances. The lack of consistent standardized wholesale products may also present a barrier, especially in countries with multiple network providers covering relatively limited areas. Common rulesets, standardized wholesale products and the close involvement of the NRA in establishing terms and conditions for wholesale access on the networks of State Aid recipients could help to foster increased competition in State Aid zones.

Take-up may also be low for certain wholesale products because the products require substantial investments to be made by access seekers which may not be viable in less dense areas. The costs of obligations should therefore be weighed against the benefits, as discussed in section 0 below.

0.1.2.7 Effective monitoring and clawback measures

Monitoring mechanisms with the potential to claw-back excess profits or unspent funds are a vital element in ensuring value for money from State Aid contracts. Clawback mechanisms are reported in most countries. However, few countries have reported exercising such mechanisms, in part because some projects are still at an early phase.

VI The role of State Aid for the rapid deployment of broadband

An analysis of the different measures in place suggests that Aid awarding authorities could usefully set out in detail in the contract how clawback mechanisms will be applied, including criteria for the calculation of the funds to be returned, the monitoring process, reporting data to be provided, timing of the clawback and mechanism for recovery. Excess profits and/or mismatches between estimated and actual costs and/or take-up may be relevant factors which could trigger claw-back. While in most cases clawback should lead to a repayment, another approach could be to leave excess profits with the State Aid beneficiary as a “reserve”, which could be used to extend or upgrade the broadband network during following years. Mechanisms can also be applied to incentivise timely deployment. For example, holding a certain proportion of the funds back as a “bonus” allows payments to be linked to deployment speed.

0.1.2.8 Leveraging the experience of NRAs

Under the EECC and in some Member States under the BCRD, NRAs have been given responsibility in a number of areas which have important synergies with State Aid. These include geographic market analyses, SMP regulation of ducts and poles – and in some cases dispute resolution concerning access to utility ducts and poles. NRAs also have extensive experience in the regulation of wholesale access on NGA networks. Stakeholders consider NRAs’ role in broadband State Aid as important, and yet there are many cases where synergies are not realized and NRA’s knowledge is not fully exploited.

Member States should consider consulting NRAs in the definition of broadband State Aid targets and in the design of the tender process. In light of their other relevant duties, NRAs could also take responsibility for mapping, defining wholesale access conditions and monitoring deployment, competition and consumer outcomes in areas funded with State Aid.

0.1.3 Costs and benefits of different wholesaling solutions and business models

The Broadband Guidelines recommend that recipients of State Aid should be required to make available a range of wholesale access products, including duct and pole access, and access to unbundled fibre loops or subloops (or VULA where physical unbundling is not viable), as well as bitstream.7 The Guidelines also propose that preference should be given to wholesale only models in certain circumstances.8

The requirement to provide a wide range of wholesale access offers has been an area of contention in the application of the Guidelines, with some State Aid bidders and recipients of aid claiming that the costs of offering certain forms of access outweigh

7 Paragraph 80(a) Broadband Guidelines 8 Additional weighting is advised to be given to these models in the award criteria, and wholesale only

models may be required when justifying the granting of State Aid in NGA black areas

The role of State Aid for the rapid deployment of broadband VII

their benefits. A question has also been raised about whether favouring certain technologies, business models, or ownership models supports or hinders the business case for NGA networks.

As stakeholders did not provide data about the costs associated with different kinds of wholesale access or business models, and as data on take-up of different forms of wholesale access is also limited (and may be influenced by the terms and conditions under which the wholesale access is offered), it was not possible to rely on the database compiled for this study to assess the respective merits of different solutions.

Costs of different business models and access obligations were therefore assessed on the basis of a bottom-up cost model of an operator deploying in a representative “State Aid zone”, while potential benefits were assessed with reference to literature and case studies. The key conclusions follow.

Although Point to point (PtP) FTTH is the most costly of the technologies considered, and thus may deliver less coverage for the same subsidy levels, these disadvantages are likely to be outweighed by the superior quality that is possible via this technology as well as the greater potential for competition on quality as well as price. The high costs of PtP FTTH could be effectively counteracted by permitting more remote premises to be served through 5G FWA. FTTH is less likely to “crowd out” private investments as there are extensive market failures in Gigabit infrastructures and granting subsidies for FTTH may serve to complement (and level up) private investments that may otherwise have occurred in less highly performing infrastructures.

By excluding retail revenues from the business case, pursuing wholesale only business models could reduce the size of deployment areas or increase subsidy needs compared with support for vertically integrated models. However, wholesale only models may be more supportive of competition and leave more of the value chain for competing commercial investment, reducing the risk of crowding out private investments. Wholesale only models are appropriate especially in the context of public DBO and backbone infrastructure, and can play a useful role under other ownership models as well. The cost benefit equation may however differ in cases where there may be difficulties in attracting ISPs to a rural area, or where strict wholesale access measures are in place and can be effectively enforced.

An examination of State Aid projects shows that there have been successful examples of different kinds of ownership model including private DBO, public DBO and PPP (concession) models. Logically, private DBO and concession models, if based on a competitive tender process may carry a lower risk of displacing private investment – and should in principle result in greater amounts of private capital being allocated than would be the case under a scenario of no State Aid, since the subsidies provide the foundation to leverage private investments. Public DBO models may however be appropriate especially in areas which are of limited interest for commercial investments.

VIII The role of State Aid for the rapid deployment of broadband

As regards wholesale access options, cost models suggest that requirements for State Aid recipients to make available duct and pole access (and explicitly provide for available capacity to support such access) are likely to reduce available revenues and thus limit the deployment area, without significant positive effects on competition – due to the limited viability of replication in State Aid zones. Thus, it may not be proportionate to mandate State Aid recipients to make available additional capacity for the provision of duct and pole access. While physical unbundling is likely to incur costs and thus reduce the scope of deployment compared with the absence of unbundling, this form of access has a positive impact on downstream investments, innovation and price competition. VULA and bitstream are likely to have a less pronounced impact on coverage, but are likely to provide less scope for innovation and price competition, or may (especially in the case of VULA), require detailed intervention to render the obligation effective. Requiring State Aid recipients to provide a mix of physical unbundling and bitstream may offer the optimal solution to balance coverage and competition effects.

0.1.4 Evaluation of the Broadband Guidelines

0.1.4.1 Effectiveness of the Guidelines

The Broadband Guidelines seek to support the effective functioning of the single market. Specifically the Guidelines aim:

- To provide guidance for public broadband investments with a particular focus on NGA and ultrafast networks in areas of market failure

- To avoid crowding out private investments; and

- To promote competition both in the process of attributing aid as well as in the conditions under which the network is operated.

An analysis of outcomes in the years following the adoption of the Guidelines shows that they have been broadly effective in achieving the objectives that were set at the time of their adoption, as discussed below.

Impact of Broadband State Aid on NGA deployment and take-up

The delivery of NGA broadband networks with the support of State Aid is still at an early stage in many countries, and thus the ultimate effects on coverage are not yet known. However, broadband State Aid is expected to have a positive impact on NGA coverage if deployment proceeds as envisaged under the ongoing projects. For the projects for which data was provided, a total of €11.5bln euros of aid has been committed. This has leveraged a further €6bln in private or other complementary investments. Only 3m lines have been reported as being constructed as of October 2019 from data provided by the

The role of State Aid for the rapid deployment of broadband IX

authorities, but this is due to reach 18m lines on completion of the projects, or which 13m are expected to be Gigabit-capable lines based on FTTP technology.9 Once built, these 18m lines could be expected to increase national NGA coverage by 10% from the 185m lines reported as of the end of 2017, and could double the number of rural NGA lines from the 17m lines that were reported at the end of 2017, thereby potentially achieving full NGA coverage in rural areas (if applied to lines not already benefiting from NGA). FTTP coverage in rural areas would increase from 4.7m to 17.7m reaching 54% of rural households. Average aid per line is expected to amount to around €640, with total investments of around €940 per line. Higher increases in rural NGA coverage have been seen in countries where there has been a focus on FTTC deployment. This can be expected due to the lower costs of this technology. However, further investments (and aid) are likely to be needed to ensure that deployments in areas based on FTTC can be upgraded to Gigabit-capable technologies.

It is not possible to draw definitive conclusions about the impact of broadband State Aid on NGA take-up at this time, because NGA deployment in State Aid zones is not complete in many areas, and very little data has been provided on take-up of services over the networks that have been deployed. However, there is a strong relationship between the availability of high capacity broadband technologies and take-up, and interviews suggest that there is the potential for particularly high take-up levels of NGA (up to 60% households) in areas where existing networks are poor, as is the case in most State Aid zones. If these estimates are correct, and if 50% of those benefiting from State Aid supported networks take them up in the period shortly after deployment, then existing deployments should have accounted for around 1.2m NGA subscriptions, while planned deployments should account for around 9m subscriptions, of which 6.5m might be based on FTTH. This could contribute to increasing the take-up of NGA as a proportion of all broadband lines from 55% to 60% and lifting FTTH lines as a proportion of total broadband lines in the EU from 16% to 20%. Over time, and especially as copper networks are switched off and legacy connections are transferred to FTTH, take-up rates on FTTH networks should increase further to reach 90% or more of the households connected by such lines. However, achieving copper switch-off in State Aid zones may in some cases require mechanisms to transfer customers from the incumbent legacy network to a new infrastructure provider.

Impact of Broadband State Aid on competition

In principle, broadband State Aid obligations should result in more comprehensive wholesale access obligations, reducing bottlenecks to competition. These include access obligations on fibre that may not apply (or not on the same conditions) in other areas, and/or obligations to provide unbundled access to fibre, rather than VULA or

9 For the projects for which information was provided, 436,382 lines were reported as being constructed

or due to be constructed on the basis of FTTC/VDSL or FTTC/VDSL vectoring and 2.2m on the basis of FWA technology. No information of the technology type was available for the remaining lines.

X The role of State Aid for the rapid deployment of broadband

bitstream. However, there are indications that patchy implementation in some countries may have held back open access obligations from being fully effective. Barriers may include terms, conditions and prices, a lack of availability of physical unbundling in some cases, and lack of standards rendering the use of wholesale access from multiple firms more challenging. As a result, retail competition in State Aid zones might be less effective than it could be, although figures are not available in most countries.

Degree to which Broadband State Aid has avoided crowding out private sector investment

When granted to FTTH deployments, broadband State Aid is unlikely to have resulted in crowding out of private investments to any significant degree, as various models and projections suggest that there is a high proportion of lines that are commercially unviable and are unlikely to be upgraded to FTTH in the absence of subsidies. Indeed, when effectively implemented and targeted, State Aid can lead to higher levels of private investments, as public support unlocks private financing and investment that may not otherwise have been available. For example, figures provided by national and regional authorities show that the €11.5bln in aid committed for projects notified under the study should in principle be associated with a further €5.9bln in private investments.

It is possible that in some cases, that State Aid awarded to FTTH may have contributed to a displacement of investments in alternative, lower cost, technologies such as FTTC/VDSL or FWA. However, such displacement could be warranted if the lower cost technologies did not meet the objectives of the State Aid scheme and/or if FTTH results in a significant step-change in quality. Moreover, such displacement is unlikely to reduce the total amount of commercial investment, if the tender process is competitive, but rather redirect it to a more highly performing technology. The effective enforcement of clawback provisions may be needed to ensure that public funds do not displace private investment that could otherwise have been expected to be made by the recipient of State Aid in areas where there has been limited competition in the bidding procedure.

0.1.4.2 Efficiency of the measures adopted under the Guidelines

The costs to the authorities of administering Broadband State Aid are limited in relation to the amounts of aid disbursed, and range from around 0.5%-2% of such aid. The costs of notification appear not to be significant. GBER was considered by some authorities to have contributed to reduced administrative costs.

However, stakeholders in some countries have expressed concerns around procedural efficiency, with complexity and delays remaining a concern in some cases.

Notwithstanding the scope for improvements in procedural efficiency, the benefits of State Aid administered in line with the Guidelines are likely to significantly outweigh the costs. This is because there is a variety of evidence to suggest that FTTH itself or higher bandwidths, which should be associated with increased coverage of high

The role of State Aid for the rapid deployment of broadband XI

capacity networks, are associated with increases in GDP,10 as well as supporting the creation and maintenance of jobs in more remote areas.11

0.1.4.3 Relevance, coherence and EU value add

The processes and principles established under the Broadband Guidelines e.g. as regards mapping and consultation, tender processes, monitoring and enforcement remain relevant. However, they could usefully be further elaborated to reflect experience and good practice as discussed in the study.

The provisions in the Guidelines on open access remain relevant, but there may be scope to refine their application in light of experience. Specifically, the case for mandatory duct and pole access obligations (especially those involving requirements for increased duct capacity) could be reconsidered in view of the limited potential for infrastructure-based competition in State Aid zones. The discussion of wholesale pricing practices for Gigabit-capable technologies could also be updated so as to reflect practices common to these technologies in commercial zones (such as co-investment (via IRU) and/or long-term pricing). The objectives of the Broadband Guidelines risk losing relevance in the move towards Gigabit-capable technologies. An update to the Guidelines to reflect VHC objectives could be helpful to ensure the Guidelines remain relevant.

The Broadband Guidelines are internally coherent, as well as being coherent with more recently adopted measures including the EECC and BCRD. In the event of a revision of the Guidelines, there could be scope to make further reference to linkages with these measures e.g. in the context of mapping and associated BEREC Guidelines, the design of remedies, and the need for coherence between the application of SMP and State Aid remedies, noting that remedies under State Aid may nonetheless go beyond those applied to an SMP operator in commercial zones.

10 One study (1 Rohman, I.K. and E.Bohlin (2012), Does broadband speed really matter for driving

economic growth? Investigating OECD countires, SSRN.2034284) of OECD countries dating from 2012 estimated that doubling the connection speed related to an additional 0.3 percentage points to annual GDP growth. WIK, together with Ecorys and VVA also identified a correlation between broadband speeds across the EU and Total Factor Productivity across a number of sectors in the context of a study for the European Commission, and concluded that if past relationships between broadband speed and GDP growth were to be replicated going forwards, an accelerated deployment of FTTP/B infrastructure which resulted in 55% of households using FTTP by 2025 could result in GDP levels 0.54% higher than the status quo.

11 A summary of the benefits of fibre connectivity in rural areas is included in a 2018 study by WIK https://www.ofcom.org.uk/__data/assets/pdf_file/0016/111481/WIK-Consult-report-The-Benefits-of-Ultrafast-Broadband-Deployment.pdf. For example, one study assessing developments in Sweden found significant savings in using digital FTTP-based homecare especially in rural areas. It concluded that even with limited adoption, these solutions could contribute to annual net cost reductions of $0.6m in a rural municipality with 8,000 residents by 2020. Studies of the impact of fibre in countries such as Sweden, Canada and the US have also identified a link between fibre connectivity and employment. Fibre has also been linked with reduced migration away from rural areas and increased employment in those areas, thereby contributing to a more even distribution of economic benefits.

https://www.ofcom.org.uk/__data/assets/pdf_file/0016/111481/WIK-Consult-report-The-Benefits-of-Ultrafast-Broadband-Deployment.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0016/111481/WIK-Consult-report-The-Benefits-of-Ultrafast-Broadband-Deployment.pdf

XII The role of State Aid for the rapid deployment of broadband

The Broadband Guidelines make a significant contribution to adding value at EU level compared with the actions of individual national authorities and regulators. A key benefit is that they have promulgated best practice in the development of tendering procedures, associated conditions and enforcement of State Aid, supporting increased deployment and take-up of NGA and VHC broadband in challenge areas across the EU. The Guidelines should in principle also serve to limit distortions in cross-border competition that could arise if national operators were granted aid in a manner that constitutes preferential treatment. It is notable that, in practice, there has been limited cross-border entry for the deployment of NGA and VHC networks in State Aid zones. However, award to operators which are present at a local or national level may be due to the fact that there are advantages associated with local knowledge and/or an existing customer base when it comes to broadband deployment, and does not necessarily mean that there has been discrimination against cross-border providers.

The role of State Aid for the rapid deployment of broadband XIII

0.2 Résumé exécutif

0.2.1 Contexte

En 2016, la Commission européenne a fixé des objectifs ambitieux afin que tous les ménages et toutes les entreprises au sein de l’EU aient accès à une infrastructure compatible avec le Gigabit d’ici 2025.12 La Communication de la Commission met également l’accent sur la nécessité de garantir la connectivité Gigabit pour les « moteurs socio-économiques » tels que les écoles et les hôpitaux, et de soutenir le déploiement de la 5G dans les grandes villes et le long des autoroutes afin de garder l’Europe à la pointe du haut débit mobile, de l’ « internet des objets » et des applications associées.

Une part importante du déploiement d’une infrastructure capable d’utiliser le Gigabit devrait provenir d’investissements commerciaux. Cependant, les modèles de coûts préparés par WIK-Consult, la BEI et d’autres organismes démontrent qu’il ne sera pas possible d’atteindre les objectifs uniquement par des financements privés, et qu’un financement public provenant de sources européennes et nationales sera nécessaire pour soutenir la connectivité Gigabit d’une partie importante des ménages dans les zones rurales qui sont autrement coûteuses à atteindre.

En 2013, la Commission européenne a adopté lignes directrices sur les aides d’État pour le secteur du haut débit.13 Ces lignes directrices précisent les procédures appropriées à suivre, ainsi que les conditions qui s’attachent à l’octroi d'aides d'État pour le déploiement rapide du haut débit au sein de l’UE. Depuis l’adoption de ces lignes directrices, un grand nombre d’États membres ont mis en place des régimes d’aides d’État au niveau national ou régional en faveur du haut débit, ou ont introduit des mesures d’aide individuelles.

La Commission européenne a requis de l’équipe chargée de l’enquête de rassembler des données sur les mesures d’aides d’État introduites entre 2013 et 2018 et d’évaluer les défis et les meilleures pratiques liés à l’application des aides d’État dans le déploiement du haut débit. Nous nous appuyons également sur les données recueillies dans le cadre de l’étude visant à évaluer dans quelle mesure les lignes directrices ont permis d’atteindre les objectifs consistant à stimuler le déploiement du haut débit de nouvelle génération et à faciliter la concurrence tout en limitant les effets négatifs potentiels sur l’investissement privé.

12 https://ec.europa.eu/digital-single-market/en/news/communication-connectivity-competitive-digital-

single-market-towards-european-gigabit-society 13 https://eur-lex.europa.eu/legal-content/GA/TXT/?uri=CELEX:52013XC0126(01)

https://ec.europa.eu/digital-single-market/en/news/communication-connectivity-competitive-digital-single-market-towards-european-gigabit-societyhttps://ec.europa.eu/digital-single-market/en/news/communication-connectivity-competitive-digital-single-market-towards-european-gigabit-societyhttps://eur-lex.europa.eu/legal-content/GA/TXT/?uri=CELEX:52013XC0126(01)

XIV The role of State Aid for the rapid deployment of broadband

0.2.2 Défis et solutions

0.2.2.1 Objectifs et technologies

Les objectifs fixés par les administrations nationales peuvent avoir des conséquences importantes sur les technologies déployées et sur la concurrence pour les aides d’État. Les objectifs peuvent faire référence aux bandes passantes en aval et en amont et/ou à d’autres capacités. L’ouverture à la concurrence peut également constituer un objectif. Bien que les objectifs doivent en principe être neutres technologiquement, seules les technologies qui répondent au cahier des charges peuvent bénéficier d’une aide d’État.

Certains pays tels que la France, l’Espagne et le Portugal ont fixé des objectifs plus ambitieux ou ont ciblé dès le début les aides d’État sur les infrastructures à très haute capacité, majoritairement fournies par des fibres complètes. D’autres pays tels que l’Allemagne, l’Autriche, le Royaume-Uni, la Hongrie ou la Grèce ont commencé par des objectifs plus modestes qui ont servi au départ à soutenir le déploiement de l’infrastructure FTTC/VDSL. Ceux qui se sont fixés des objectifs plus modestes ont surtout réorienté leurs aides d'État vers les technologies à capacité Gigabit ces dernières années. Toutefois, d'autres subventions pourraient être nécessaires afin de garantir que les infrastructures soient totalement à l'épreuve du temps dans les domaines où l'accent était initialement mis sur l'accès aux réseaux de nouvelle génération.

Au fur et à mesure que l’accent se déplace vers les technologies capables de supporter le Gigabit, il est logique que les aides d’État se concentrent sur le subventionnement de technologies qui répondent à ces exigences et qui peuvent être mises à niveau pour répondre aux besoins futurs, qui comprendront probablement une plus grande symétrie et des niveaux de qualités plus élevés ainsi que des bandes passantes plus élevées. Les technologies FTTH (et en particulier les architectures FTTH « point à point ») se sont avérées être la solution la plus pérenne.14

Là où la FTTH n’est pas viable économiquement, même avec le soutien d’aides d’État, la technologie sans fil, y compris la 5G FWA, pourrait constituer une solution importante. Cependant, les capacités et la fiabilité de cette technologie resteront probablement inférieures à celles de la FTTH,15 ce qui en fait une solution qui convient mieux aux régions éloignées ou aux ménages des zones peu densément peuplées.

14 Voir par exemple la discussion sur les besoins des utilisateurs finaux dans l’étude réalisée par WIK

pour Ofcom (2018): Bénéfices du haut débit ultrarapide https://www.ofcom.org.uk/__data/assets/pdf_file/0016/111481/WIK-Consult-report-The-Benefits-of-Ultrafast-Broadband-Deployment.pdf. Les différences de performances entre les infrastructures partagées et dédiées sont également examinées dans l’étude réalisée par WIK pour la Commission à propos de la recommendation sur les marches pertinents.

15 Voir l’étude réalisée par WIK (2020) pour la Commission à l’appui du réexamen de la recommandation concernant les marchés pertinents susceptibles d'être soumis à une réglementation

https://www.ofcom.org.uk/__data/assets/pdf_file/0016/111481/WIK-Consult-report-The-Benefits-of-Ultrafast-Broadband-Deployment.pdfhttps://www.ofcom.org.uk/__data/assets/pdf_file/0016/111481/WIK-Consult-report-The-Benefits-of-Ultrafast-Broadband-Deployment.pdf

The role of State Aid for the rapid deployment of broadband XV

0.2.2.2 Cartographie et consultation du haut débit

La cartographie de la couverture du haut débit existant et la collecte de données prévisionnelles fiables pour le déploiement constituent un important mécanisme afin de garantir que l’aide est ciblée aux zones où elle est le plus nécessaire, et pour éviter l’éviction des investissements du secteur privé. Tous les États membres qui octroient des aides d’État doivent déclarer avoir effectué un exercice de cartographie. Cependant, la fréquence de la cartographie varie et des préoccupations ont été exprimées dans certains cas concernant l’inexactitude de la cartographie (en raison d’informations insuffisamment granulaires ou de l’absence de prise en compte des déploiements pertinents), le chevauchement des initiatives de cartographie, et/ou des prévisions inexactes concernant les futures zones de déploiement. De plus, dans au moins un cas, les zones cibles pour les aides d’État ont été modifiées et des retards ont été enregistrés après que les opérateurs commerciaux aient changé les plans de déploiement déclarés.

Afin d’éviter de tels problèmes à l’avenir, il est recommandé que les États membres (i) établissent un lien clair entre les technologies associées à l’exercice de cartographie et celles qui ont été identifiées comme compatibles avec les objectifs ; (ii) fournissent un système de cartographie consolidé au moins aux fins des aides d’État et, de préférence, englobant également les exigences de cartographie nécessaires à la mise en œuvre effective du code des communications électroniques européen – CCEE16 – et toute cartographie réalisée dans le cadre de la directive européenne sur la réduction des coûts du haut débit.17 Un tel système de cartographie devrait suivre les lignes directrices méthodologiques qui seront adoptées par le BEREC ; (iii) inclure un large éventail de parties prenantes, y compris les municipalités, dans le processus de consultations ; (iv) vérifier par recoupement la viabilité de zones données grâce à une modélisation ascendante ; (v) faire régulièrement rapport sur le déploiement réel par rapport aux prévisions et fixer un délai après lequel les zones identifiées précédemment comme grises ou noires pourraient être ouvertes à une éventuelle intervention de l’État si les investissements privés ne se matérialisent pas ; et (vi) prendre des mesures pour appliquer des sanctions conformément au CCEE dans les cas où les opérateurs induisent sciemment les autorités en erreur concernant leurs plans de déploiement.

0.2.2.3 Identifier un «franchissement de palier»

Les lignes directrices requièrent des États membres qu’ils démontrent que les aides d’État soutiendront un « franchissement de palier » dans les performances du réseau

ex ante. https://ec.europa.eu/digital-single-market/en/news/study-future-electronic-communications-product-and-service-markets-subject-ex-ante-regulation

16 Voir Article 22 du CCEE relatif au relevé géographique. 17 Comme la cartographie des infrastructures existantes qui peut être réalisée dans le cadre du point

d'information unique mentionné à l'article 4 de la directive européenne sur la réduction des coûts du haut débit.

https://ec.europa.eu/digital-single-market/en/news/study-future-electronic-communications-product-and-service-markets-subject-ex-ante-regulationhttps://ec.europa.eu/digital-single-market/en/news/study-future-electronic-communications-product-and-service-markets-subject-ex-ante-regulation

XVI The role of State Aid for the rapid deployment of broadband

comme condition d’approbation. Jusqu’à présent, cette exigence n’a posé que peu de problèmes, car la grande majorité des aides d’État accordées pour le haut débit ont été ciblées sur les « zones blanches », où l’infrastructure existante est limitée, et où toute mise à niveau est susceptible d’entraîner une amélioration significative des performances. A ce jour, seuls deux États membres ont proposé de cibler les aides d’État sur les zones grises NGA (la Bavière en Allemagne et l’Espagne). Au fur et à mesure que les États membres mettent à jour leurs objectifs afin de cibler les réseaux à très haute capacité (THC), il se peut qu’il y ait d’autres cas pour lesquels une preuve de « franchissement de palier » soit requise afin de justifier l’octroi d’une aide dans les zones grises NGA. L’évolution des technologies sans fil pour répondre aux normes NGA pourrait également conduire à l’avenir à des cas où des aides d’État pourraient être demandées pour mettre à niveau les réseaux aux normes THC dans les zones noires NGA. La procédure d'octroi d'aides d'État – telle qu'elle est définie dans les lignes directrices – pour les zones noires NGA doit cependant encore être testée. L'identification d'une nouvelle catégorie de zones THC blanches et grises pourrait être envisagée dans le cadre d'une éventuelle révision des lignes directrices.

0.2.2.4 Rapidité du traitement d’attribution des aides d’État

Les données recueillies sur les projets d’aides d’État montrent une grande variation dans la durée nécessaire pour que l’aide approuvée se traduise en infrastructure déployée, allant de 2 ans ou moins à 4 ans ou plus. D’après les réactions des parties prenantes, les principales raisons des retards semblent se situer en dehors du champ d’application du régime des aides d’État, et concernent plutôt, par exemple, les retards dans l’accès aux infrastructures concernées ou l’obtention des droits de passage. Pour relever ces défis, il pourrait être nécessaire d’appliquer efficacement les mesures correctives prévues par la directive sur la réduction des coûts du haut début et les lignes directrices sur l’analyse du marché et l’évaluation de la puissance sur le marché (PSM) en matière d’accès aux fourreaux et aux appuis aériens, ainsi que de prendre des mesures supplémentaires pour rationaliser les droits de passage.

Toutefois, dans certains cas, des lacunes dans le processus de cartographie ou d’attribution, des difficultés de communication entre les différentes autorités ou des changements dans les critères ou procédures peuvent être à l’origine de retards. Pour réduire ces problèmes au minimum, les autorités chargées de l’attribution des aides d’État pourraient utilement éviter les conditions indûment lourdes et les procédures complexes dans les procédures d’appel d’offre (y compris celles associées aux contrats-types), fixer des délais et des attentes clairs pour chaque étape du processus et se concentrer sur le subventionnement d’infrastructures à l’épreuve du temps afin d’éviter de devoir réviser la cartographie, de lancer des appels d’offres répétés ou de procéder à des mises à niveau ultérieur des infrastructures. Une communication et une coordination efficaces entre les programmes nationaux et régionaux sont également importantes.

The role of State Aid for the rapid deployment of broadband XVII

0.2.2.5 Garantir la concurrence dans le processus d’attribution

Les procédures d’appel d’offres et les conditions dans lesquelles les aides d’État sont accordées peuvent influencer les résultats du processus. Un objectif essentiel est de faire en sorte que tous les opérateurs disposant d’un business plan valable puissent présenter une demande d’aide d’État et concourir pour l’aide dans des conditions équitables.

En pratique, le degré de concurrence atteint dans les procédures d’appel d’offres varie considérablement dans l’UE et même au sein des différents pays, où différents régimes ont été mis à l’essai. Si les appels d’offres relatifs aux aides d’État ont attiré trois soumissionnaires ou plus pour certains régimes et pays, pour d’autres régimes, une forte proportion d’appels d’offres n’ont attiré qu’un seul soumissionnaire.

Une analyse des conditions présentes dans les régimes qui ont attiré des offres compétitives montre que les mesures suivantes peuvent contribuer à soutenir les résultats compétitifs dans le processus d’appel d’offres : (i) une pondération adéquate de la qualité et/ou un accent mis sur les objectifs de la THC par rapport aux coûts ; (ii) l’acceptation de technologies sans fil alternatives dans les cas où la FTTH n’est pas viable, même en présence de subventions ; (iii) des zones d’appel d’offres suffisamment vastes pour combiner des zones à coût élevé et à faible coût, mais pas au point que les petits opérateurs de télécommunications ne soient pas capables d’obtenir les ressources nécessaires pour y répondre – ou encore des approches alternatives permettant aux soumissionnaires de définir leur propres zones de déploiement (avec un poids supplémentaire pour les locaux à coût élevé) ; (iv) éviter les procédures ou exigences administratives indûment lourdes qui pourraient avoir pour effet d’exclure les petits opérateurs de télécommunications ; (v) se concentrer sur les offres et les prix de gros plutôt que sur les offres de détails (éventuellement avec un soutien pour les modèles de gros uniquement) ; et (vi) une règlementation efficace pour l’accès aux fourreaux de la part des opérateurs disposant d’une PSM et, le cas échéant, l’application de l’accès à l’infrastructure des services publics par le biais de la directive sur les marchés publics.

0.2.2.6 Garantir un accès effectif aux réseaux supportés par les aides d’État

Les règles relatives aux aides d’État obligent les opérateurs qui bénéficient des aides à offrir un accès de gros ouvert à leurs réseaux. Les lignes directrices sur les aides d’État proposent que plusieurs options d’accès soient disponibles, notamment l’accès aux fourreaux et appuis aériens ainsi que l’accès passif et actif à l’infrastructure.

Les données fournies par les administrations nationales et régionales suggèrent qu'en général, une série d'accès de gros a été rendue obligatoire dans le cadre des aides d'État. Toutefois, les données sur l'utilisation sont limitées et l'utilisation réelle de l'accès de gros semble être limitée dans les quelques cas où des données sont disponibles.

XVIII The role of State Aid for the rapid deployment of broadband

La conclusion principale à en tirer est que les données devraient être collectées sur l'utilisation de différents produits de gros sur les réseaux des bénéficiaires d'aides d'État (y compris des données ventilées par région dans les cas où le bénéficiaire d'une aide d'État est un opérateur disposant d’une PSM ou un autre opérateur couvrant à la fois les zones commerciales et les zones bénéficiant d'aides d'État). En ce qui concerne les raisons de l'utilisation limitée, les clauses et conditions abusives et/ou les prix de gros peuvent constituer un défi dans certaines circonstances. L'absence de produits de gros standardisés et cohérents peut également constituer un obstacle, en particulier dans les pays où plusieurs fournisseurs de réseaux couvrent des zones relativement limitées. Des ensembles de règles communes, des produits de gros normalisés et une participation étroite de l'autorité réglementaire nationale (ARN) compétent

Documents

The role of State Aid for the rapid deployment of[Catalogue number] The role of State Aid for the rapid deployment of broadband networks in the EU Request No 014 02 of COMP/2016/014