Transcript Finnish NGA state-aid scheme Antti Kohtala Ministry of Transport and Communications Finland Digital Agenda Assembly, Brussels, 16th June 2011

Finnish NGA state-aid scheme
Antti Kohtala
Ministry of Transport and Communications
Finland
Digital Agenda Assembly, Brussels, 16th June 2011
Penetration rate
Broadband and mobile broadband penetration rates (January 2011)
subscriptions / 100 inhabitants
Broadband
70
Mobile broadband
60
60
53
48
50
43
43
39
40
38
%
37
37
36
34
34
33
32
32
32
30
31
27
26
26
26
26
25
23
23
22
20
18
18
10
0
FI
Mobile broadband 31
DK SE NL AT UK LU DE FR
IE Avg. BE PT
IT
14
16
29 39 32
Broadband
Source: European Commission
www.lvm.fi
16.6.2011
EE MT ES
SI CY LT CZ HU PL SK EL LV BG RO
4
19
8
5
5
4
13
7
3
12
10
5
3
7
3
2
6
5
5
9
7
3
2
4
4
39
24
32
33
32
33
23
27
31
21
22
27
29
24
24
24
21
22
21
16
17
20
19
15
14
2
Broadband access lines
in Finland
3500000
3000000
Access Lines
2500000
Others
FTTH
Mobile
Wireless
Cable modem
Housing company
DSL
2000000
1500000
1000000
500000
01
/0
1
01
/0
2
01
/0
3
01
/0
4
01
/0
5
01
/0
6
01
/0
7
01
/0
8
01
/0
9
01
/1
0
01
/1
1
0
Source: Ficora
www.lvm.fi
16.6.2011
Year
3
In the broadband market the supply is much
bigger than the usage in 2012
Households %
100 %
~99,9%
~97 %
~85 %
80 %
~ 61 %
60 %
Fixed + mobile
supply
~49 %
42 %
40 %
26 %
24 %
20 %
Fixed usage
3%
4%
0%
1 Mbps
2 Mbps
10 Mbps
24 Mbps
100 Mbps
An estimation of the broadband supply on the 1 st Jan 1212 and usage on the 1st Jan 2011
Source: supply/operators, use/Ficora
www.lvm.fi
16.6.2011
4
Incumbent local
operators in
Finland
Population: 5,4 million
Area: 338 000 km2
www.lvm.fi
16.6.2011
5
Some adjustments in communications
policy after 2008



The guiding principle was up to 2008 that telecom operators
provide all communications services on market terms.
In future more specific regulation and public aid will also be used.
Some reasons for the policy change:
 Proper communications services are necessary tools in day-today life.
 Without adequate communications connections citizens cannot
access information society services.
 In terms of broadband Finland is fairly well covered, but
also some new entertainment services, like IPTV will need
high-speed broadband.
 Some telecom operators also have been cutting
back services in the sparcely populated areas.
www.lvm.fi
16.6.2011
6
Regional Broadband Activities


www.lvm.fi
all provinces / Regional Councils (19) have been
responsible to prepare regional broadband activities and
strategies together with local municipalities
in a close cooperation with the national broadband task
force, Ministry of Transport and Communications and
Ficora
16.6.2011
7
100 Mbps to everyone by 2015


Plan of Action approved by the Finnish Government in
December 2008:
“By the end of 2015 all permanent residences shall be within
two kilometres reach of high-speed connection permitting at
least 100 Mbps connections.”
– Telecom operators will build mainly high-speed connections
on market terms. This will achieve a population coverage of
around 95%.
– Extending the coverage to 100% will require that partly
subsidized high-speed connections will be built to around
130,000 households in rural areas.
In subsidized rural areas’ projects
– Telecom operator pays at least one third
– Public aid – two thirds – in rural areas will be provided by
the state, municipalities and the EU.
 State budget 66 million euros
 EU 25 million euros
 Municipalities 41 million euros
– Consumers will at their own expense acquire the subscriber
connection up to the length of two kilometres
www.lvm.fi
16.6.2011
8
Conditions for public aid
(Commission’s approval on May 6th, 2010)







In line with the Broadband Guidelines of the Commission
Only areas where there are no private investment plans to build
commercially based high-speed networks are eligible for support
Technology neutral solutions
The aid will be allocated on the basis of open non-discriminatory
tenders
The selected operator will have to provide retail services to end
users for minimum 10 years
The operator has an obligation to prove that the price charged for
wholesale access or service is reasonable and non-discriminatory
(open access)
A claw-back mechanism in case the operator
generates higher profit than foreseen
www.lvm.fi
16.6.2011
9
Cost shares of stakeholders in
subsidized broadband projects
100 %
8
22
80 %
33
60 %
less than
33
less than
44
less than
58
EAFRD
State aid
40 %
20 %
Municipality
Telecom operator
at least
34
at least
34
at least
34
FICORA
EDTE Centre
FICORA
0%
FICORA = Finnish Communications Regulatory Authority
EDTE Centre = Centre for Economic Development, Transport and the Environment
EAFRD = European Agricultural Fund for Rural Development
www.lvm.fi
16.6.2011
10
Cost shares of
municipalities
8%
(41 municipalities)
22 %
(59 municipalities)
33 %
(242 municipalities)
www.lvm.fi
16.6.2011
11
Projects eligible for public aid
(the last 5% of the population)
RURAL AREA
(”the last 5%
population
coverage”)
BUILT-UP AREA
COMMERCIAL
EXTENSION AREA
High-speed network
projects eligible for public
financing
www.lvm.fi
16.6.2011
12
Maps of eligible areas in
19 regions of Finland
Built-up areas
and
commercial
extension
areas
(no public aid)
www.lvm.fi
16.6.2011
Rural areas
eligible
for public aid
13
Status of the subsidized
broadband projects





Some 800 projects to be implemented in 2010−15
Projects are located in 265 out of Finland’s 340 municipalities
100 projects ready to start this year (calls for tenders by 19 regional
council agencies)
7 pilot projects are already under construction and will be finalized
this year
Some key issues:
– How much is the end-user willing to pay for the subscriber line?
– Marketing of 100 Mbps services
– Is the project economically viable for the operator (willingness to
submit tenders)?
-- typically 20 – 40 % of households will require FTTH
– New models for implementation: cooperative societies, network
operator owned by municipalities
www.lvm.fi
16.6.2011
14
The Ministry of Transport and Communications is also preparing
marketing material and brochures for operators and municipalities
Thank you for your attention!
www.lvm.fi
16.6.2011
15