Thursday, 13 August 2009

Digital Britain report: the Next Generation Fund

As I hinted in my last post on this subject, there is an asymmetry in the make-up of the fund (NGF), in that as proposed it will be levied only on fixed-line operators, yet apparently the fund will (or should be) available to assist all-comers including wireless operators. The proposal would have to be approved by the European Commission from the State Aids perspective and I think the Commission would be likely to have reservations about it because of the competitive distortions it could cause if it is not balanced in relation to the burden of the inputs and the benefit of the outputs.
I raised this at a conference recently and a senior representative of BT said she agreed with me and that BT were also not happy about it. I have also since learned through an industry body that when coming up with the NGF proposal and the decision to impose the levy with respect to fixed lines only, apparently BIS assumed that delivery of the final one-third of next generation access would be through fixed systems, i.e. fibre! If accurate, this is extraordinary, indeed silly, and has come as a nasty surprise to the wireless industry.
BIS is I understand promising to provide more detail on the NGF (and Universal Service Commitment) in September, so hopefully these issues will have been addressed by then.

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