Next Generation Fund

The BIS consultation on Proposals for a Next Generation Fund, issued on 7 January 2010, poses in all 23 questions on how best to deploy the funds generated through the proposed new Landline Duty and contributed to the special pot known as the Next Generation Fund ('NGF').
The stated principal objective of the NGF is to support the roll-out of next generation access (NGA) infrastructure to at least 90% UK of households by 2017. In particular, on the basis of the working assumption that the market itself is likely to provide NGA to up to 70% of the population, the NGF would be targeted at securing the remaining 20% of the overall aim of 90% national NGA coverage by 2017.
The Consultation Document canvasses a range of different options for delivery of NGA using the NGF. The commercial considerations and financial implications, as well as the potential impact on market competition, are discussed in some detail and reflected in the questions posed by the Government.
Of particular note is what the document says about technology neutrality. Here, rightly or wrongly, there is an evident bias towards using the NGF to support fixed-line infrastructure. Whereas the Digital Britain report, in floating for the first time the concept of the NGF, suggested that all operators would be eligible to benefit from the NGF, the Government is now clearly stating that a straightforward technology-neutral approach may not be appropriate in determining how the funds should be disbursed – "We need to consider whether that approach still applies in the context of NGA. Whilst other technologies might in due course match the expected performance, we believe that fixed line solutions, based on fibre are likely initially to be the most appropriate".
Some wireless operators, whether mobile or planning WiMax roll-out, may disagree with this analysis and its impact on the use of the NGF. The Government may be taking a rather static view of the service possibilities afforded by wireless networks, given the dramatic pace of their evolution. Be that as it may, it is issues like this that are likely to feature in discussions the Government are having with the European Commission in regard to obtaining State Aid approval for the NGF. In this connection, the European Commission is also likely to take an interest in the Landline Duty and how this is structured, and the competitive implications overall of both the imposition of the Duty and the potential beneficiaries of funding from the NGF.
In terms of Wholesale Access and competition, Ofcom have previously been seen to be embracing the concept of Active Access (based on wholesale products that use network owners' physical infrastructure and electronic equipment) as opposed to Passive Access (based on renting network owners' physical infrastructure and combining this with wholesale customer's own electronics). The Consultation is, however, careful enough to query again whether active line access is the right approach to achieve fixed access competition and whether or not such active access remedies should be applied in areas that receive subsidy from the NGF, but of course these are very much today's questions. As the NGF is to last until at least 2017, no doubt correspondents will bear this in mind in responding to the consultation questions.
The BIS consultation on the NGF closes on 1 April.