State aid revisited ? : Guidelines for municipal infrastructure deployment

In May 2009, the Commission of the European Union (CEU) initiated a discussion about terms and conditions under which (local) governments can get involved in the implementation of municipal broadband networks (CEU, 2009). With the Community Guidelines for the Application of State Aid Rules in Relation to Rapid Deployment of Broadband Networks (in short: Broadband Guidelines), the CEU has taken a step forward in more clearly delimiting the geographical and the product market for the rollout of next generation access (NGA) in municipalities in Europe. As the document identifies the relevant competition-related aspects of municipal fibre networks, it stops short in defining appropriate public policy objectives and open fibre access on the wholesale basis and retail basis. This is troublesome as the experience in the Netherlands has shown that competitive service level entry can be hampered if open access is not defined. In addition, there is a threat that vertically-integrated market structures will emerge in next generation access markets. Functional separation can be considered as an instrument to warranty a competitive and open market structure.