The European Commission has launched a public consultation on the regulatory principles to be applied by EU Member States to Next Generation Access broadband networks (NGA). The objective of a common regulatory framework for NGA is to foster a consistent treatment of operators in the EU and thereby ensure the necessary regulatory predictability to invest. The public consultation will be open until November 14th 2008.

NGA optical fibre-based networks enable bitrates several times higher than those currently available on traditional copper wire networks, and are required to deliver high-definition content (such as high definition television) and interactive applications. 

The deployment of NGA is indispensable to deliver new broadband services to European consumers. While a number of operators, both incumbents and alternative operators, have launched large-scale rollouts of new broadband infrastructure in a number of Member States, Europe appears to be still lagging behind other economies, notably the United States and Japan.

"For consumers, whether private or business, to benefit from the competitive provision of services over optical fibre, it is vital that the Commission provides the regulatory guidance the market needs", said Viviane Reding, EU Telecoms Commissioner. "We want to reduce the scope for divergences of regulatory approaches across Europe, in the interest of legal certainty. Uncoordinated or even contradictory action of national regulators as regards Next Generation Networks could seriously damage competition and undermine Europe's single market."

EU Competition Commissioner Neelie Kroes also highlighted that "the deployment of new fibre-networks will shape the competitive conditions of the future. We need an appropriate framework to give European companies fair access to the new networks. We want national rules that will not only encourage the necessary substantial investment in fibre investment but also strengthen broadband competition."

The Commission is consulting on the basis of a draft Recommendation, addressed to the regulators in the 27 EU Member States and suggesting definitions for harmonized categories of regulated services, access conditions, rates of return and appropriate risk premiums.  The Commission will then finalise the Recommendation in the light of comments received and formally adopt it in 2009.

The Commission's public consultation document can be downloaded from the European Commission's Europe's Information Society Thematic Portal. Input to the Commission's public consultation can be sent to: infso-b1ext@ec.europa.eu.

Basic principle for NGA regulation in the EU

The basic principle of the Commission's draft Recommendation is that national regulatory authorities should provide access to the networks of dominant operators at the lowest possible level. In particular, they should mandate access to the ducts of the dominant operators allowing competitors to roll out their own fibre. However NRAs should also impose further physical access obligations (access to unlit fibre) beyond access to ducts where ducts are not available or the population density is too low for a sustainable business model. Access to active elements such as "bitstream" shall be maintained provided lower level remedies do not sufficiently address distortions of competition.

The draft Recommendation provides also a common approach to ensure non-discriminatory access, as well as a methodology for calculating a proper rate of return, including a risk premium. The Commission believes that for NGA, rates of return should be derived in the light of the risks associated with this kind of investment, bearing in mind that the nominal pre-tax weighted average cost of capital for fixed and mobile operators has been roughly 8 to 12% in recent years.