Decisions on public funding in the

broadband sector

Ketill Einarsson

21 May 2014

Please note that any views or opinions expressed in this presentation are strictly personal

and do not necessarily reflect the official position of the EFTA Surveillance Authority

• Own initative

• Complaints

• Notifications

• Co-operation with the

European Commission

What makes the Authority react?

• Pre-notifications

(2 months)

• Notifications (2 months)

• Complaints (12 months)

• Transparency,

predictability and

efficiency

Procedural rules and Best Practice

European Commission

• 130 Decisions (since 2003)

• Mostly notifications

Statistics – Broadband cases

EFTA Surveillance Authority

• 5 Cases (3 Decisions)

• 3 Notifications, 2 Complaints

Broadband cases

• NGA (FTTH/FTTB) network

• Rural areas (white NGA)

• Market consultation

• Mapping and coverage

analysis

• Open tender

• 94 million NOK (11 million €)

The Tromsø case – 2011

March 2011 – Pre-notification

19 April 2011 – Notification

6 June 2011 – Formal request for information

17 June 2011 – Reply from Norway

13 July 2011 – The Authority adopts a decision

Procedure (Tromsø case)

White NGA Area – no plans by private operators

Well-defined objective of common interest

Proportionality

Strict wholesale access obligations

Wholesale pricing requirements

= Balancing test fulfilled

Compatibility (Tromsø case)

“Projects of financial support by the EFTA States

to roll-out high speed broadband networks based

on the newest technology, if carefully designed,

in particular by making use of a public tender

procedure, can benefit from the Authority's

approval under the state aid rules,”

- Ms Oda Sletnes, President of the Authority

Conclusion (Tromsø case)

• “Háhraðanettengingar til allra

landsmanna”

• Administered by the

Telecommunications Fund

• 1 118 White buildings identified

• Later additional 670 buildings

• Tender by the State Trading Centre

Broadband in rural areas of Iceland - 2013

• February 2011 – Complaint received

• October 2011 – An interested party

submits additional information

• 2011-2013 – The Authority gathers

information from the Icelandic

authorities

• 10 July 2013 – Formal investigation

opened (Decision 302/13/COL)

Procedure (Rural areas of Iceland)

• Well-defined objective of common interest

• Aid was the appropriate instrument

• Adequate mapping and coverage analysis

However:

• Questions concerning the expansion of the project

• Wholesale access requirements unclear

Compatibility assessment (Rural areas of Iceland)

(Preliminary views in Decision 302/13/COL)

• “[…] the Authority’s preliminary conclusion is that it

cannot exclude that the lack of a clear and

effective wholesale access obligation with clearly

defined pricing principles gave the network

operator a disproportionate advantage that may

cause distortions of competition.”

= Necessary to open a formal investigation

Preliminary conclusion (Rural areas of Iceland)

• Complaint – Ábótinn ehf.

• Small municipality (172 homes)

• Co-financing by the

Municipality and Landsvirkjun

• Network operated by a ”SPV”

Fjarskiptafélag Skeiða- og

Gnúpverjahrepps

Skeiða- og Gnúpverjahreppur – 2013

• 28 November 2012 –

Complaint received

• Two information requests

• 13 November 2013 –

Positive Decision adopted

• Decision 444/13/COL

Procedure (Skeiða- og Gnúpverjahreppur)

• White NGA area

• Objective of common interest

• Tender procedure

• Technologically neutral

• Passive, neutral and open

Assessment (Skeiða- og Gnúpverjahreppur)

Conclusion (Skeiða- og Gnúpverjahreppur)

“When state resources are used to finance such

projects, it is important to ensure thriving

competition on the subsidised networks, so that

citizens and local businesses can benefit from

continuously improving broadband services at

competitive prices,”

- Ms Oda Sletnes, President of the Authority

• Lease of NATO optical fibres

• Tender procedure – Vodafone

successful

• Míla complained

• In November 2012 ESA found

that there was no aid involved –

market price was paid

Míla v EFTA Surveillance Authority

• Judgment 27 January 2014

• “[Price] was accorded a relative weight of

just 15%. Moreover, […], the remaining

selection criteria appear to reflect public

policy or regulatory considerations. They

do not appear to be criteria that a similarly

situated private operator would consider

relevant when tendering out a lease.”

• The Authority’s decision was

annulled

Findings of the EFTA Court (Míla)

• Two notifications

received this year

• Iceland – Regional

projects

• Norway – Nationwide

scheme

• Increased awareness

Other cases

Consulting with the Authority at an early stage

A proper mapping analysis and market consultation

An open and transparent tender procedure

Clear wholesale access and pricing obligations

Regional projects v nationwide schemes

New General Block Exemption Regulation

Main insights

www.eftasurv.int