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Comments on Revision of the Guidelines on Public Funding to Broadband Networks

August 2012

Voice on the Net Coalition Europe Kreupelstraat 33 1703 Dilbeek (Brussels) – Belgium

Registration number: 96615638697-36

VON Europe – Revision of the Guidelines on Public Funding to Broadband Networks

Comments on Revision of the Guidelines on Public Funding to Broadband Networks
by VON Europe, August 2012 Preliminary remarks
The Voice on the Net Coalition Europe (‘VON’) welcomes the opportunity to comment on European Commission’s Public Consultation on the revision of the Guidelines on public funding to broadband networks (hereafter ‘the Consultation’). VON would like to stress that the European Commission should continue to rely primarily on market forces to achieve universal service and broadband deployment goals. Targeted public funding should hence only be used to promote broadband deployment and availability in areas where otherwise a roll-out of next generation networks would not be possible. Moreover, VON considers that state aid beneficiaries should be obliged to comply with a set of ‘open access’ requirements on the beneficiaries’ entire networks to safeguard that access to an unrestricted Internet is ensured at both the wholesale and retail levels.

Detailed remarks
VON believes that where state aid is considered, for example for the rollout of next generation networks in rural areas, the conditions for the beneficiaries of state aid should explicitly provide for wholesale access obligations at all levels and for a retail-level non-discrimination principle to safeguard that an unrestricted access to the Internet is ensured at both the wholesale and retail levels. In practice, this implies that measures should be taken to ensure that state aid is conditional upon the obligations that:  wholesale access is provided to ducts, poles and antenna sites, to the passive-layer (i.e. copper, coax, fibre, etc.), and to the transmission layer (i.e. Layer 2 Ethernet), that spectrum-sharing is implemented, and that there is provision of non-capacity constrained backhaul, etc.;  retail level requirements are implemented to ensure fully unrestricted access to third party content, applications (e.g. Voice over IP (VoIP)) and services for all customers; and,  an any-to-any connectivity obligation is being imposed on the state aid beneficiary.

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VON Europe – Revision of the Guidelines on Public Funding to Broadband Networks

VON considers that state aid beneficiaries should be obliged to comply with these obligations on their entire networks, not only on the state aid funded parts, be it the existing copper network or the next generation access fibre based network part, as the state aid funded networks rolled-out in underserved areas interconnect to the rest of the beneficiaries’ networks. The same holds true for wireless networks. VON urges for a set of ‘open access’ requirements on the beneficiaries’ entire networks, both for operators wishing access to the infrastructure and for over-the-top players, to ensure that the obligations listed above are meaningful. Moreover, putting in place such ‘open access’ requirements would be aligned with the Body of European Regulators for Electronic Communications (BEREC) its request to the European Commission to ensure that “subsidised network architecture and infrastructures are constructed as future proof and as pro-competitive as possible” and that “public investment decision[s] (…) reflect the long-term social welfare considerations, in relation to the service provided and the ability of the architecture and infrastructure to enable competition”.1 VON sees a symbiosis between the end-users (including both consumers and the Internet content, application and service providers, as defined under Article 2 of the Framework Directive) and the companies that control the access network infrastructure and provide transmission services at the access network level. Thanks to the continued innovation in Internet content, applications and services – which net neutrality enables and supports – consumer demand for broadband Internet access continues, therefore providing return on network investment for network operators. More specifically, the Internet ecosystem is characterised by a virtuous cycle whereby all actors in the chain benefit:  ‘Over-the-top’ Internet content providers (including users, public services, businesses across the economy, etc.) bring innovative content, information, applications and tools to the global public through the Internet;  These innovations motivate continued and renewed consumer demand for (better, faster) broadband Internet access;  This content-driven demand from consumers provides the return on investment for telecom operators, hence the basis for further investment in Internet-supporting infrastructure; and,

1

See BEREC. (2011). BEREC Response to the EC Questionnaire on the Revision of the State Aid Guidelines. p. 5. Retrieved at, http://berec.europa.eu/doc/berec/bor_11_42.pdf.

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VON Europe – Revision of the Guidelines on Public Funding to Broadband Networks

 Upgrades in Internet infrastructure provide new opportunities for over the top providers to develop new online content, applications and services, thus fuelling the cycle again. These ‘open access’ obligations also impact innovation, as the BEREC remarks in its draft Report on differentiation practices and related competition issues in the scope of net neutrality that:2 “On a long term perspective, the intensity of innovation could well depend on the permanence of the open platform aspects. Dividing the Internet into several separate networks, increasing entry costs, differentiating quality depending on applications, introducing innovation control or sending any signal that makes these perspectives credible may make innovation harder and result in a lower growth of new applications.” A vision which is also shared in the recent UK Communications Committee Report on ‘Broadband for all – an alternative vision’, which emphasises that “the history of the internet suggests that it has enabled new developments, not because it was designed with any of them in mind, but because it offered a very simple, technical capacity for the transfer of information from one place to another which people could then use their creativity and ingenuity to exploit”, and adds that, “what matters for the network, and therefore for policy is not speed per se, but a simple, long-term assurance that, as innovative new applications emerge—some of which may be core public services—everyone (…) will have the ability and opportunity to access an infrastructure which means they can benefit from them”.3 We believe that more generally, DG Competition should ensure that network operators are prohibited from creating barriers to entry to over-the-top players, ranging from blocking, throttling or charging for the fact that their services, applications or content runs over their network, while there is absolutely no evidence of free riding, quite the contrary, as the BEREC considers that “users at the ‘edges’ (i.e. subscribers and over-the-top players) of the Internet each pay for their own connections”.4

2

See BEREC. (2012). Draft Report for Public Consultation ‘Differentiation Practices and Related Competition Issues in the Scope of Net Neutrality’. p. 30 (Paragraph 129). Retrieved at, http://berec.europa.eu/files/news/bor_12_31_comp_issues.pdf. 3 See Communications Committee. (2012). Broadband for all – an alternative vision. Chapter 3, Paragraph 99 & 106. Retrieved at, http://www.publications.parliament.uk/pa/ld201213/ldselect/ldcomuni/41/4102.htm. 4 See BEREC. (2012). Draft Report for Public Consultation ‘Differentiation Practices and Related Competition Issues in the Scope of Net Neutrality’. p. 17 (Paragraph 61). Retrieved at http://berec.europa.eu/files/news/bor_12_31_comp_issues.pdf.

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VON Europe – Revision of the Guidelines on Public Funding to Broadband Networks

More specifically, from VON’s perspective, the fact that some network operators ask subscribers to pay a surcharge to use VoIP applications on mobile phones is a clear abusive practice, notably when considering that: (1) subscribers and content and application providers have both paid for their use of the network and (2) many of the VoIP applications are actually available for free or at a minimal charge. *** We thank you in advance for taking consideration of these views. Feel free to contact Herman Rucic, VON Europe, by phone (+32 (0)478 966701) or email (hrucic@voneurope.eu) should you need further information. * * * About the VON Coalition Europe The Voice on the Net (VON) Coalition Europe was launched in December 2007 by leading Internet communications and technology companies, on the cutting edge to create an authoritative voice for the Internet-enabled communications industry. Its current members are iBasis, Google, Microsoft, Skype, Viber, Vonage, Voxbone and WeePee. The VON Coalition Europe notably focuses on educating and informing policymakers in the European Union and abroad in order to promote responsible government policies that enable innovation and the many benefits that Internet voice innovations can deliver.

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