Editor’s Note: This Practice Note is based in large part on a discussion paper entitled Extending Open Access to National Fibre Backbones in Developing Countries prepared by Dr Tracy Cohen and Russell Southwood for the 8th ITU Global Symposium for Regulators[i].
Europe has a significant number of FTTH projects initiated by local authorities. One of the largest of these is in the City of Amsterdam. Initial doubts about the viability of the business plan and certain pre-investments led the European Commission to open a formal investigation of the Amsterdam initiative in December 2006. But a year later the Commission concluded that the city was participating in the project on the same terms as a would-be market investor. Therefore, the Commission concluded that there was no improper state aid being delivered.[ii]
Together with other shareholders, Amsterdam is investing in a company building an FTTH broadband access network connecting 37,000 households, with a total equity investment of EUR 18 million. The Amsterdam municipality owns one-third of the shares, two private investors (ING Real Estate and Reggefibre) together own another third, while five housing corporations own the remaining third. The wholesale operator of the new fibre network was selected through a tender procedure and will provide open, non-discriminatory access to retail service providers, which can offer TV, broadband and telephony services to the public.
The City of Amsterdam is but one of many FTTH initiatives in Europe, including those promoted by municipalities and power utilities. According to a presentation by an FTTH Council Europe Board member, in June 2006 84 such projects had been proposed, including by the City of Vienna, Austria; Reykjavik Energy in Iceland; Almere in the Netherlands and Vasteras in Sweden.[iii]
The Stokab system in Sweden is an example of a sharing initiative that was designed to respond to the increasing need for the provision of fibre services in Stockholm. Stokab was founded in 1994 and is owned by Stockholms Stadshus AB, which is in turn owned by the City of Stockholm. Stokab was created in response to the Swedish government’s call to transform Sweden into a true information society. Practically speaking, Stokab initially filled the gap in availability of fibre access services that was created when the historic incumbent refused to provide fibre capacity after liberalization.
Stokab’s core tasks are to build, operate and maintain the fibre optic communication network in the Stockholm region and to lease out fibre optic connections. The company is competitively neutral, providing a network open to all service providers on equal terms. Stokab also helps facilitate the rollout of wireless infrastructure and drives broadband market growth in the Stockholm region. Since its establishment, Stokab has played a pivotal role in making Stockholm a regional ICT hub. Stokab has expanded its network into 27 surrounding municipalities and has co-operated with Nordic and Baltic neighbors on fibre links. The City of Stockholm sees Stokab as a provider of “public service on commercial terms.”
For more information on Stokab, please see the Practice Note on Stokab, a link to which is set out below. There are several sharing initiatives similar to Stokab. These initiatives include the SERPANT Broadband Project in Ireland and the MBC Cooperative in the United States. Links to Practice Notes about both of these initiatives are set out below.
[ii] Under EU state aid rules, investments by public authorities in companies carrying out economic activities can be considered outside of the state aid rules if they are made on terms that a private investor operating under market conditions would have accepted (the “market economy investor” principle).
[iii] Presentation by Ramil Houbby, Board Member of FTTH Council Europe at the One Optical Network Europe Conference, 24-25 September, Cannes, France