When the EU said that it would review the existing State Aid rules this year, it raised some hopes from a number of frustrated local governments who would dearly love to invest in bringing their (often underserved) territories into the digital century but who fear the inevitable litigation from the current State Aid rules.
The EUs Draft Guidelines on State Aid in Broadband have been released, and unfortunately, as Herman Wagter points outs, there's not a lot to be hopeful about. I really encourage you to read his analysis, it's short and to the point. Furthermore, this post builds on it, so you may feel it comes out of nowhere if you don't read Herman's piece.
I'm not surprised. The EU continues to be schizophrenic on this issue, and it is, I believe, simply because of an ideological posture that pervades everything that the current commission does. What it essentially comes down to is this: for the commission, a hypothetical private venture is inherently better than a certain public venture.
Let's think about it for a minute: the commission has repeatedly said that Infrastructure Competition was the framework it wanted to encourage for FTTx deployment. As I have written in the past, there's a conceptual fallacy in that term in that the inevitable outcome will be an agglomeration of local monopolies in an overwhelminng proportion of the covered territory for evident economic reasons.
But the reason the commission encourages that framework is that they believe (rightly) that without competitive pressure, incumbents in particular are unlikely to deploy a costly infrastructure. That's where the paradox of State Aid rules becomes apparent: public funding of the infrastructure is an alternate means to get the infrastructure in place and furthermore creates a form of competitive pressure for the incumbent even in countries where there is reasonably no player other than the incumbent with the financial backbone to invest.
But the commission does not see this because it refuses to do two things:
b. (re)define broadband as a set measure of service delivered
And this is utterly paradoxical, since you'd thing that either of these would be required to actually define solid State Aid rules. Either you say "as long as you deploy infrastructure and services are provided by private operators, it's OK for a public entity to invest" or you say "you can only invest if the level of service available to your constituents is below these measures exactly".
As it stands, the commission's draft recommendations mix the two and achieve nothing. Status Quo is maintained, and the key objective of promoting infrastructure deployment is missed by a mile.
