Nieuwsbericht | 20-12-2006
Reference: IP/06/1872 Date: 21/12/2006
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Brussels, 21st December 2006
State aid: Commission opens in-depth investigation into funding of Amsterdam broadband network
The European Commission has opened an in-depth investigation under EC Treaty state aid rules into the investment by the city of Amsterdam in a glass fibre telecommunications network. This investigation will enable the Commission to determine whether the participation by the city, alongside private investors, constitutes state aid and, if so, whether such aid could be found compatible with the EC state aid rules. The opening of an in-depth investigation gives interested parties the opportunity to submit their comments to the Commission on the proposed measure. It does not prejudge the outcome of the investigation. Competition Commissioner Neelie Kroes commented: “There would be no distortion of competition if the city of Amsterdam participates in this project like a private investor. However, at this stage, the Dutch authorities have not provided sufficient proof that this is the case. To ensure fair competition between all operators on the very competitive Dutch market, we have to look carefully into the conditions of this investment”.
Together with private shareholders, Amsterdam is investing in an undertaking which will build a fibre access network connecting 37,000 households in Amsterdam. The project is a first step towards bringing fibre to the home (‘ FttH’) all over Amsterdam (400,000 households). Retail operators can use this network to provide TV, broadband and telephony services. The services offered via the new network will compete with existing offers by cable and telecommunications companies such as KPN and UPC. UPC and VECAI (an association of cable operators) have filed complaints with the Commission.
In May 2005, the Dutch authorities informed the Commission about the project and then proceeded with the investment in 2006. If Amsterdam’s investment has been made under conditions which a private investor would have accepted, the city's investment would not constitute state aid. Although the Commission has repeatedly requested additional information from the Dutch authorities, they have until now not delivered all the information necessary to assess whether Amsterdam actually acted as a private investor would have.
Over the past two years, the Commission has issued a series of state aid decisions concerning the promotion of broadband. In cases of intervention in rural and remote areas, the Commission has generally found that the aid was compatible (e.g. UK - see IP/05/1231, Spain - see IP/05/398, Austria - see IP/05/1333) or that it represented a compensation payment for the provision of a Service of General Economic Interest. The Commission is however more cautious in assessing state funded projects in metropolitan areas, where broadband services are already available at competitive conditions. There is a risk indeed that they could crowd out existing and future investments by market players. For example, the Commission decided to prohibit public funding for the planned construction of a fibre access network in the Dutch town of Appingedam (see IP/06/1013).