SKL terminates broadband cooperation - why?

IT&Telekomföretagen is very concerned that SKL is terminating the agreement "Principles for municipal broadband initiatives" with the Swedish Competition Authority and the Swedish Post and Telecom Authority.

In 2010, the Swedish Association of Local Authorities and Regions, the Swedish Post and Telecom Authority (PTS) and the Swedish Competition Authority entered into an agreement on principles for how municipalities should act in their various roles in the broadband area. The agreement essentially states that municipalities should enter the market only when commercial conditions are lacking and, when municipalities operate broadband networks, they should act at the lowest possible level in the value chain. It also states that municipal companies should take competition into account when entering broadband projects to minimize market disruption. All of this is in line with fundamental principles of EU law and the government's stated objective in the broadband strategy that it is the market that should primarily drive broadband expansion.

It may also be added that the agreement came about partly as a result of the then new rules in the Competition Act on anti-competitive public sales activities. The idea was that the principles would guide Sweden's municipalities to avoid coming into conflict with the Competition Act, which is based on the premise that there is a great risk that competition will be distorted when public actors sell goods and services in competition with private companies.

It can be concluded that the agreement has largely fulfilled its function, i.e. to ensure rapid expansion throughout the country. The pace of broadband expansion has been high in recent years. In 2015, the number of fixed broadband connections with a transmission speed of at least 100 megabits per second increased by six percentage points compared with 2014, and amounted to two thirds of all households and businesses in the country according to PTS's measurement as at October 2015. An important factor behind the strong growth in high-speed connections is the expansion of fibre networks. Today, 61% of Swedish households are connected to fiber, which is an increase of seven percentage points in one year. Another ten percent of households are within 50 meters of a fiber-connected building and could therefore be connected to fiber networks without significant investment.

For this expansion to be implemented in all parts of the country, Sweden's municipalities need to have clear broadband strategies that promote effective competition. In many of Sweden's municipalities, collaboration between private operators and municipalities in accordance with the agreement between SKL, PTS and KKV has worked well. Unfortunately, this is not a comprehensive description of the actions of all Sweden's municipalities. There are municipalities where, for example, permit processing takes a long time and where municipal companies receive special treatment. Recently, we have also seen examples of municipalities that have chosen to completely exclude private actors from investing in the municipality in order to promote their own municipal broadband operations. This is obviously very problematic, and we have seen too many examples of how this action has delayed and made it difficult for municipal residents to gain access to a long-awaited fiber connection.

There are thus obvious obstacles to development. However, it is our overall impression, which is also shared by the PTS and the Government, that the market is functioning well, which has also resulted in a high rate of expansion in Sweden. Operators are investing around SEK 10 billion a year and, apart from the difficulties faced by some municipalities, the main problem is simply keeping up - being able to meet the high demand that exists. The impression is therefore that the agreement, which has now been terminated, has had precisely the desired effect.

But now SKL has chosen to unilaterally terminate the agreement. The primary reason seems to be that an OECD report claims that "municipal investments in broadband networks have very positive effects". The justification for the decision, however, does not explain what, in the now terminated agreement, SKL believes has worked worse or what in this model would have in any way inhibited broadband expansion.

IT&Telecom companies view this with great concern. A prerequisite for achieving broadband penetration according to the government's target for 2020 of 100 Mbit to 90% of the population is precisely collaboration between private and public actors. Something that the government, headed by IT Minister Kaplan, very clearly supports, i.e. that it is the market that should primarily be responsible for the expansion and that the public sector should step in where the market does not exist. To terminate a collaboration without stating what the problem is or what the alternative would be, jeopardizes the upcoming expansion and may have major negative consequences for the possibilities of achieving the national broadband goals.

IT&Telekomföretagen will seek dialog with SKL and other parties to clarify how a new collaboration can be formed where private and public actors can best work together to achieve the common goal of fast and robust broadband coverage throughout the country.