Public Funding and Broadband: Distortion of Competition or Recognition of Policy Failure?

Several local or regional authorities around Europe are currently deploying alternative telecom infrastructure or are seriously thinking of doing so. This is an interesting phenomenon. Only a few years ago, the European Union was adopting legislation liberalizing the telecommunications sector on the premise that private sector investment will deliver much better services and innovation to European consumers than state owned monopolies. Is this assumption still valid or do these projects demonstrate that there may still be some parts of the value chain where public sector intervention is necessary? The article describes a number of cases of publicly funded broadband projects that have been notified to the European Commission and the Commission’s assessment of these cases. The article divides these cases in two main categories that of publicly funded infrastructure projects and that of publicly funded end to end broadband services and discusses the Commission’s approach with regard to each category of projects. Finally the article highlights the evolution in the Commission’s thinking and provides some comments on these decisions as well as some suggestions for a different approach.