Explanatory Memorandum to COM(2013)147 - Measures to reduce the cost of deploying high-speed electronic communications networks - Main contents
Please note
This page contains a limited version of this dossier in the EU Monitor.
| dossier | COM(2013)147 - Measures to reduce the cost of deploying high-speed electronic communications networks. |
|---|---|
| source | COM(2013)147  |
| date | 26-03-2013 |
Contents
1.1. Objectives of the Proposal
The objectives of the proposed Regulation are to reduce the cost and enhance the efficiency of deploying high-speed electronic communications infrastructure by scaling up existing best practices across the EU, thus improving the conditions for the establishment and functioning of the internal market in an area supporting the development of virtually all sectors of the economy.
In fact it is widely agreed that civil engineering works constitute the dominant part in overall network deployment costs[1], regardless of the technology used, with estimates as high as 80% for certain technologies.
Providing a number of directly applicable rights and obligations applicable across the various steps of infrastructure deployment can lead to significant cost reductions. Barriers to investment and market entry can be lowered by allowing for more intensive usage of existing physical infrastructures, enhanced cooperation on planned civil works, streamlining permit granting procedures and by removing obstacles to high-speed-ready in-building infrastructure.
This initiative therefore addresses four main problem areas: (1) inefficiencies or bottlenecks concerning the use of existing physical infrastructure (such as, for example, ducts, conduits, manholes, cabinets, poles, masts, antennae, towers and other supporting constructions), (2) bottlenecks related to co-deployment, (3) inefficiencies regarding administrative permit granting, and, finally i bottlenecks concerning in-building deployment.
As each problem area is linked to a specific step in the rollout process, tackling these problems areas together will result in a set of coherent and mutually reinforcing actions. A study estimates that if measures were taken to address the identified set of problem areas, the potential Capex savings to operators are in the range of 20–30% of total investment costs[2], i.e. up to 63 billion € by 2020[3].
In order to maximise synergies across networks, the regulation is addressed not only to electronic communications network providers but to any owner of physical infrastructures, such as electricity, gas, water and sewage, heating and transport services, suitable to host electronic communications network elements,
1.2. General context
According to the 2010 report on the Single Market,[4] telecommunications services and infrastructures in the EU are still highly fragmented along national borders. A more recent report on the cost of non-Europe in the electronic communications sector [5] has shown that the untapped potential of the Single Market corresponds to a yearly amount of 0.9% GDP, or 110 billion euros.
High-speed broadband infrastructure is the backbone of the Digital Single Market and a precondition for worldwide competitiveness, i.a. in the field of e-Commerce. As recalled in the Single Market Act II Communication,[6] a 10% increase in broadband penetration can result in a 1-1,5 % increase in the GDP annually and 1,5% labour productivity gains,[7] and broadband-induced innovation in companies creates employment and has the potential to generate 2 million extra jobs by 2020.[8]
A significant fraction of this untapped potential can be found at the level of network infrastructures: different regulatory approaches to network roll-out increase the cost of access to national markets, prevent the exploitation of economies of scale at services and equipment level and hinder the development of innovative services which could emerge on very high-speed networks running in a seamless fashion across borders. While the deployment of access networks often involves provisions and procedures administered at local level, such measures, including local secondary legislation may indirectly affect the freedom to provide services and justify Union intervention[9]. Furthermore, based on Article 114 of the TFEU, the Union has previously legislated, in order to foster local network infrastructure deployment, through unbundling of the local loop[10]
The Union cannot afford to leave citizens and businesses outside the footprint of such infrastructures and has subscribed to ambitious broadband targets of the Digital Agenda for Europe: by 2013, basic broadband for all Europeans, and by 2020, (i) access to speeds of above 30 Mbps for all Europeans, and (ii) subscription of internet connection above 100 Mbps for 50% or more of European households. These goals will only be achieved if the infrastructure deployment costs are lowered across the EU.
1.3. Political background
The Digital Agenda for Europe is a flagship initiative under the Europe 2020 Strategy aimed at delivering sustainable economic and social benefits from a digital single market based on fast and ultra-fast Internet and interoperable applications.
It identified in particular the need to lower the costs of broadband deployment in the entire Union territory, including by achieving proper planning and coordination and by reducing administrative burdens.[11]
The European Council of 1 and 2 March 2012 called for action at the Union level to provide better broadband coverage, including by reducing the cost of high-speed broadband infrastructure.[12]
The Communication 'Single Market Act II: Together for new growth' identified the initiative as one of 12 key actions that will boost growth, employment and confidence in the Single Market and generate real effects on the ground[13]. In the Single Market Act II, adoption of the Commission proposal is foreseen for the first quarter of 2013. The European Council of 13 and 14 December 2012 called on the Commission to present all key proposals by the spring of 2013.[14]
2.1. Public consultation of interested parties
The Commission services held a public consultation from 27 April to 20 July 2012, inviting interested parties to give their views on five sets of questions, covering the entire chain of network deployment, from the planning phase to the connection of end-users.[15]
Over a hundred written replies were submitted by different types of stakeholders from 26 countries across the EU and EFTA. The largest categories of respondents were electronic communications providers (27) and their trade associations (14) as well as public bodies, including central (22, including 6 National Regulatory Authorities (NRAs)) and local authorities (9). Other utilities (7) provided their input mainly via trade associations. Equipment manufacturers (5) and engineering and ICT trade associations (6) also replied.
In general terms, the respondents favourably received the Commission's intention for an initiative to address civil engineering costs for broadband roll-out across the single market. A majority of the respondents confirmed existing inefficiencies and bottlenecks as well as the potential for cost reduction. The existence of problems and the need for action were clearly admitted by stakeholders. Several solutions were proposed, some very ambitious and some more moderate.
In addition to the public consultation, the Commission services established an Internet discussion platform for crowdsourcing ideas of interested parties.[16]
The Commission services have maintained regular contacts with major stakeholders, both public and private, across the sectors concerned.
2.2 Studies and other sources of information
The Commission services commissioned two studies, respectively, by Deloitte on cost reduction practices with regard to broadband passive infrastructure roll-out,[17] and by Analysys Mason to support an impact assessment to accompany the present proposal.[18]
Furthermore, the Commission services drew upon additional information sources, studies and national best practices (including of Germany, Spain, France, Italy, Lithuania, The Netherlands, Poland, Portugal, Slovenia, Sweden and United Kingdom)[19]. Detailed information was also collected by the responsible Commission services via the National Regulatory Authorities.
2.3 Assessment of the impact of the proposed Regulation
The Commission services have carried out an impact assessment.[20] Four policy options were chosen for further analysis:
Option 1: Business as usual: maintaining the current approach of monitoring, enforcement and guidance.
Option 2: Promote efficiency gains within the telecom sector: recommending measures towards a more coherent and harmonised application by National Regulatory Authorities of the regulatory framework for electronic communications.
Option 3: Enable efficiency gains across sectors: proposal for a Regulation aiming at unlocking the potential of cross-sector cooperation (two sub-options, 3a and 3b, foresee, respectively, a Regulation only and a combination of a Regulation and a Recommendation).
Option 4: Mandate efficiency gains: proposal for legislation complementing the current regulatory framework to mandate measures going beyond option 3, such as infrastructure atlases, cost-oriented infrastructure access, mandated cooperation in civil engineering works even when not financed by public means, and installation of high-speed-ready infrastructure also in old buildings.
The analysis of the options focuses in particular on the costs and benefits incurred by direct stakeholders, the expected effects on network investment and broadband rollout, and broader macro-economic analysis of effects on consumer welfare, growth, competitiveness, and the Single Market.
The Impact Assessment Report concludes that option 3a is the best option available, given its effectiveness towards the identified objects, costs-benefits analysis, efficiency and coherence of exploiting the cost reduction potential with general EU policy objectives, in accordance with proportionality and subsidiarity principles.
For the choice of the proposed instrument, see section 3.4, below.
3.1. Legal basis
The proposal is based on Article 114 of the Treaty on the Functioning of the European Union. This is justified by the objectives of the proposal, which seek to improve the conditions for the establishment and functioning of the internal market.
Furthermore, as confirmed by case law, this article confers on the legislature of the Union the discretion, depending on the general context and the specific circumstances of the matter to be harmonised, as regards the harmonisation technique most appropriate for achieving the desired result, in particular in fields that are characterised by complex technical features.[21]
3.2. Subsidiarity
The proposed European intervention to reduce the cost of deploying high-speed electronic communications infrastructure is justified by the subsidiarity principle.
The subsidiarity principle pursues two aims. On the one hand, it allows the Union to act if a problem cannot be adequately settled by the Member States acting on their own. On the other hand, it seeks to uphold the authority of the Member States in those areas that cannot be dealt with more effectively by Union action. The purpose is to bring decision-making within the Union as close to the citizen as possible.
The proposed Regulation focuses on the definition of specific directly applicable rights and obligations in order to facilitate the planning and execution of physical infrastructure rollout and civil works, including ancillary provisions to ensure transparency of relevant information and coordination of administrative procedures. In addition to this, it provides requirements for in-building physical infrastructure for new buildings and major renovations.
The envisaged measures build on existing best practice in several Member States, such as those concerning the re-use of existing physical infrastructures in Lithuania and Portugal, transparency of existing infrastructure in Belgium and Germany, co-deployment in Finland and Sweden, the streamlining of rights of way and administrative procedures in the Netherlands and Poland, and high-speed broadband infrastructure in new buildings in Spain and France[22]. Some Member States have introduced measures that to some extent go even beyond the ones proposed, such as the one-stop-shop in Greece. The proposed Regulation is without prejudice to such more detailed provisions set out by national law.
The proposed Regulation is also without prejudice to any specific regulatory measure, including the imposition of remedies on undertakings having significant market power, taken by the national regulatory authorities under the Union regulatory framework for electronic communications.
The proposed measures are necessary at the level of the Union to improve the conditions for the establishment and functioning of the internal market, in order to:
– remove barriers to the functioning of the Single Market caused by the patchwork of rules and administrative practices at national and sub-national levels, which impedes the development and growth of European companies, has a negative impact on European competitiveness, and creates barriers to invest and operate cross-border, and thus obstructs the freedom to provide electronic communications services and networks as guaranteed under existing Union legislation. As an illustration, scattered and non-transparent regulatory approaches to network rollout increase the cost of access to each national market. Such fragmentation constitutes an obstacle for multinational companies as well as national companies, willing to reach economies of scale at European level in the face of increasingly global competition. It also hinders the development of innovative services which could emerge on very high-speed networks running in a seamless fashion across borders.
– stimulate ubiquitous broadband coverage, which is a pre-condition for the development of the Digital Single Market, thus contributing to the removal of an important obstacle to the completion of the Single Market while at the same time contributing to territorial cohesion. These goals will only be achieved if the infrastructure deployment costs are lowered across the EU;
– turn into reality the significant untapped potential of cost-reduction and facilitation of broadband rollout, including by scaling up existing best practices across the EU whenever available.
– streamline the efficient planning and investment processes on a large scale, thus facilitating the development of pan-European operators.
– ensure equal treatment and non-discrimination of undertakings as well as of investors, in line with 'those objectives and tasks closely linked to the subject-matter'[23] of several instruments already provided for in the EU law, in particular concerning the electronic communications sector[24] but also concerning other sectors (e.g. utility companies seeking to make profit from their physical infrastructure, synergies in setting up smart grids).
Several arrangements have been made for this proposal to comply with the principle of subsidiarity.
– Firstly, Member States may maintain or adopt more detailed provisions further specifying or complementing the obligations provided for in the proposed Regulation, e.g. with regard to access to existing infrastructures, coordination of civil works and co-deployment.
– Moreover, while the tasks created by the proposed Regulation are assigned by default to the independent NRA under the electronic communications regulatory framework, in view of its expertise and independence, Member States may appoint different competent bodies in accordance with the domestic constitutional system of attribution of competences and powers[25], at an optimal level of aggregation, where valuable efficiencies may be ensured in view of the tasks assigned. This applies to all of the tasks foreseen under the regulation: the information point on permit granting, transparency and dispute resolution.
– Secondly, with regard to transparency of existing physical infrastructure, while a number of Member States have put in place different mapping initiatives, in the form of GIS (Geographic Information Systems) applications covering in some Member States not only the electronic communications infrastructure, but also physical infrastructure of other utilities, this proposal does not require Member States to undertake such a mapping exercise. Neither does it require that data is aggregated or stored at a point of single contact. The obligation imposed upon Member States is to make available such data at a single information point, which could be made by providing hyperlinks to other locations. Similarly, the proposal does not impose any general obligation of pre-notification of planned civil works. It rather enables electronic communications providers to require this information from network providers, in view of deploying high-speed electronic communications networks.
– Thirdly, with regard to permit granting, this proposal does not affect the procedural autonomy of the Member States to allocate competences internally. While information on different permit granting procedures must be available and applications submitted via the contact point, its role is limited to dispatching the different permits and coordinating the permit granting process. Furthermore, the different deadlines are only harmonised by default, while Member States are allowed to keep or introduce their specific deadlines, without prejudice to other specific deadlines or obligations laid down for the proper conduct of the procedure which are applicable in accordance with national or EU law.
– Lastly, with regard to in-building equipment, the proposed regulation allows Member States to adjust the obligations provided by the Regulation to the national and local particularities, by exempting categories of buildings, such as single-dwelling buildings or renovations from its scope of application, in full compliance with the principles of subsidiarity and proportionality.
3.3. Proportionality
The proposed measures are also justified on grounds of proportionality.
The proposed cost reduction measures focus on increasing coordination and transparency, and on harmonising minimum tools, enabling the relevant stakeholders to exploit synergies and reduce inefficiencies in the rollout. Also, while the proposed measures aim at reducing barriers to access to physical infrastructures, they do not unduly impair ownership rights and preserve commercial negotiation in the first place.
The proposed measures do not impose specific business models. They also leave open the possibility for Member States to adopt more detailed provisions, and thus will rather complement than affect on-going national initiatives. In contrast, they will allow Member States to build on their current measures and select the organisation of any existing or new measure which best suits their particularities, without necessarily imposing further costs.
While the proposed regulation affects ownership rights to some extent, this is done in respect of the principle of proportionality.
The proposal enables commercial negotiations for access to the physical infrastructure, without mandating access at pre-defined or cost-oriented terms and conditions. It provides for indicative reasons where the refusal to grant access may be deemed reasonable, such as the technical suitability of the physical infrastructure to which access has been requested to host any of the elements of electronic communications networks, the lack of availability of space to host the elements, or network integrity and security.
While it provides for dispute resolution in case of unreasonable denial of access, it takes into consideration several parameters in setting the price for access, such as the impact of the requested access on the business plan underpinning the investments made by the network operator, in particular in case of recently built physical infrastructures used for the provision of high-speed electronic communications services.
With regard to transparency of existing physical infrastructure, the proposal concerns infrastructure which is suitable for high-speed network deployment and not any physical infrastructure in general. It also allows Member States to provide for general exemptions for infrastructures which are technically unsuitable. Furthermore, the proposal seeks to make available information at the lowest cost. For this reason, it includes gradual obligations, allowing organising access to already available information and resorting to surveys only when this information is not readily available with public authorities or the electronic communications providers.
Concerning co-ordination of civil engineering works, the proposal does not limit the economic freedom of undertakings – in particular, it does not mandate co-deployment by parties that have not chosen this commercial model, unless publicly financed. On the contrary, it seeks to enable commercial co-deployment arrangements, by enabling a better dissemination of information on future civil engineering works.
With regard to in-building physical infrastructure, the obligation to equip buildings with high-speed-ready physical infrastructure is limited to new and majorly renovated buildings. This is because in these cases the cost is incremental, compared to the high cost of retrofitting existing, unequipped buildings with passive infrastructure and likely to be compensated by the higher value of the asset. Moreover, the proposal further reduces the scope of application of this obligation to major renovations necessitating a building permit. General exemptions by the Member States for proportionality reason are also foreseen.
3.4 Fundamental Rights
The impact on fundamental rights of the proposed measures has been analysed.
While the obligation of network operators to meet all reasonable requests for access to their physical infrastructure could restrict their right to conduct a business as well as their property right, the adverse effect in this respect is however mitigated by the provision that such access should be granted on fair terms and conditions, including price. Furthermore, this limitation must be considered justified and proportionate to the aim of reducing the cost of deploying high-speed electronic communications networks since it would reduce the need to perform civil engineering works, which account for almost 80% of the cost of network deployment. With regard to the obligation on network operators to provide minimum information on existing infrastructures, safeguards as concerns the right to privacy and the protection of business secrets are provided through the provision of exemptions for the purpose of operating and business secrets.
The obligation on undertakings performing civil works fully or partially financed by public means, to meet any reasonable request for access in view of deploying elements of high-speed electronic communications networks, could restrict their right to conduct a business as well as their property right. However, any such obligation would only apply if it would not entail any additional costs for the initially envisaged civil works and if the request to coordinate is filed as soon as possible and in any case at least one month before the submission of the final project to the competent authorities for permit granting. Furthermore, this limitation must be considered justified and proportionate to the aim of reducing the cost of deploying high-speed electronic communications networks since it would allow electronic communications network operators to cover only part of the cost of the civil engineering works.
The obligation to equip all newly constructed buildings, with a high-speed-ready in-building physical infrastructure could have an impact on the property rights of the owners of the property concerned. This limitation must be considered justified and proportionate to the aim of reducing the cost of deploying high-speed electronic communications networks since it would exclude any need for retrofitting buildings with physical infrastructure.
The right of a provider of public communications networks to terminate its network at the concentration point in view of accessing the high-speed-ready in-building physical infrastructure, could have an impact on the right of property of the owners of private property concerned. Such restrictions are however limited by the obligation on the public communications network providers to minimise the impact on the private property and to cover any costs incurred. Furthermore, this limitation must be considered justified and proportionate to the aim of reducing the cost of deploying high-speed electronic communications networks since it would allow electronic communications operators to achieve economies of scale, when they deploy their networks.
The right of public communications network providers to access any existing high-speed-ready in-building physical infrastructure could affect the property rights of the holder of the right to use the in-building physical infrastructure. This restriction is however limited since such access would have to be granted on reasonable terms and as it would only apply in cases where duplication is technically impossible or economically inefficient.
The right to an effective remedy for the parties concerned by the limitations outlined above are guaranteed by the possibility of referral to a competent national dispute settlement body, which should be without prejudice to the right of any of the parties to refer the case to a court.
3.5. Choice of instrument
The Commission proposes a Regulation as it presents the guarantee of a comprehensive, directly applicable solution, including for all permits necessary to rollout networks. It ensures the rapid availability of cost reduction tools, in keeping with the momentum of the targets in the Digital Agenda for Europe due to be achieved by 2020.
Contrary to a Directive, which would imply granting additional time for transposition by Member States, the regulation will rapidly install the basic rights and obligations for network deployment throughout the single market. Moreover, a directive would by its nature allow a significant degree of differentiation in the implementation of those rights and obligations hence perpetuating the emerging patchwork. In contrast a directly applicable legal instrument will reduce existing and prevent further fragmentation, by focusing on removing a selected number of barriers to the development of a single market for electronic communications networks, building on best practices but leaving organisational issues very much to the discretion of Member States. Providers need to be granted a set of directly applicable rights in relation to all phases of planning and rolling out a network, which they can invoke before the national courts, not only against Member States, but also against other private parties, such as owners of infrastructure.
Having in mind that the core of the proposal is the definition of rights and obligation directly applicable across the Single Market, a Regulation rather than a Directive appears to be the preferable legal instrument since it has clear advantages in terms of efficiency and effectiveness and creates a level playing field for citizens and business, with greater potential for private enforcement[26]. Accordingly, a directly applicable Regulation, unlike a Directive that requires national transposition, better guarantees the immediate impact needed in order to contribute to the Digital Agenda objectives on broadband availability by 2020.
The considerable advantages of the cost reduction measures, both in terms of economic benefit as in societal advantages, far outweigh any administrative burden.
3.6. Structure of the proposal and main rights and obligations
Article 1 – Objective and scope
– Article 1 specifies the objective and scope of the Regulation.
Article 2 – Definitions
– This Article contains definitions in addition to those contained in the EU regulatory framework for electronic communications.
Article 3 – Access to existing physical infrastructure
– Article 3 establishes a general right of network operators to offer access to their physical infrastructure and an obligation for network operators to meet reasonable requests for access to their physical infrastructure in view of deploying elements of electronic communications networks under fair terms and conditions.
– A dispute settlement body is foreseen to review any refusal or dispute on terms and conditions – this function would be entrusted, by default, to the National Regulatory Authority (NRA).
Article 4 – Transparency of physical infrastructure
– Article 4 provides for a right to access a set of minimum information concerning existing physical infrastructure(s) as well as planned civil works.
– This is accompanied by an obligation for network operators to meet reasonable requests for in-site surveys of specific elements of their physical infrastructure.
– Dispute resolution regarding in-site surveys or access to information would be entrusted to a dispute settlement body, by default the NRA.
Article 5 – Coordination of civil works
– This Article contains a right to negotiate coordination of civil works.
– In addition, it imposes an obligation for undertakings performing civil works financed by public means to meet reasonable requests for civil works coordination agreements on transparent and non-discriminatory terms.
Article 6 – Permit granting
– This Article contains a right to access, by electronic means and via a single information point, any information concerning the conditions and procedures applicable to specific civil works as well as a right to submit applications for permits by electronic means via that point. The information point facilitates and coordinates the permit granting process and monitors compliance with deadlines.
– In addition it sets a general maximum deadline if a deadline is not provided in national or EU legislation as well as a right to receive a timely decision in relation to applications for permits.
Articles 7-8 – In-building equipment
– Article 7 establishes an obligation to equip new buildings, as well as buildings that undergo extensive renovation, with high-speed-ready in-building physical infrastructure, and an obligation to provide new multi-dwelling buildings, as well as old ones that undergo extensive renovation, with a concentration point located in or outside the building.
– Article 8 constitutes a right for electronic communications network providers to terminate their network equipment at the concentration point of buildings, a right for electronic communication operators to negotiate access to any existing high-speed-ready in-building physical infrastructure and, in the absence of high-speed-ready in-house infrastructure, a right to terminate their network equipment in the private premise of the subscriber provided that it minimises the impact on the private property and at its own costs.
Articles 9 – 11
– These Articles contain final provisions, including the designation of competent bodies and an obligation for review of the regulation within three years after its entry into force.
The proposed Regulation has no implications for the budget of the Union.