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.

Digital Britain - Lord Carter's Final Report

One of the many interesting features of Lord Carter's report is the embryonic proposal for a new 'Next Generation Fund' to help subsidise the build out of advanced telecom infrastucture to the 'Final Third' of the UK population. This apparently would be a levy of 50p per month on all fixed lines (that is BT's, Kcom's and Virgin Media's). It would likely be introduced through primary legislation, and whether that would be communications legislation or more general legislation remains to be seen. Clearly a lot of detail needs to be worked out.

However, laudable though may be the objectives for the Fund, I am set wondering about its legality and whether it would be able to satisfy EU State Aid rules and the Treaty, even perhaps the EU regulatory framework.

Why? Well, the proposed structure is very unusual: it would be levied on all fixed operators and collected from all but low income households. It would not be imposed on mobile or other wireless operators or their customers, yet mobile and other wireless operators would be eligible (presumably) to benefit from the Fund by applying for grants from the Fund to help pay for new infrastructure. Many premises have multiple lines and presumably would pay multiple levies. (Compare the TV licence regime for a moment). Legal terms like discriminatory, market distortion and objective justification spring to mind as relevant here.

I shall be pondering this further so watch this space ...