Commision Staff Working Paper: Guidelines on criteria and modalities of implementation of Structural Funds in support of Electronic Communications Endesa Net Factory´s presentation Contact Company: ENDESA NET FACTORY, S.L.U. (referred to hereafter as “ENF”) Address: C/Ribera del Loira, 60. 28042 (Madrid) Spain Contact: Mr. Ramiro Alfonsin Phone: +34 91 213 48 15 Fax: +34 213 48 06 e-mail: [email protected] Why ENF gives its opinion on these EC Guidelines? Endesa Net Factory is a subsidiary company of Endesa Group. Endesa is one of the largest private electrical groups in the world, with a total installed capacity of 42.000 MW and 133.600 GWh distributed capacity and more than 20.5 million customers around 12 countries. ENF fits the main criteria and purpose of the Structural Funds in support of Electronic Communication in Spain. ENF sends the Commission some comments on the Commission Staff Working Paper concerning the application of structural funds in support of Electronic Communications even when ENF is not a regional, nor a local authority (organisations to whom the open call for comments on the Working Paper is mainly destined). Why Power Line Communications technology fits the main purposes of this Structural Funds application? Power Line Communication is a broadband technology that allows the digital transmission of the telecommunication signal through the electric grid (low and medium voltage power lines), providing broadband services to the final users as well as telephony (voice over IP). It is a technology to be applied in the “last mile” (access local loop), so it could help to set a favourable environment for competition at this level. When deploying the telecommunication network, the PLC equipment to be installed in the existing electric grid to offer broadband services consists of: - Head End (HE): To transfer the high-speed communication signal to medium voltage underground cable at a transformer room in a manhole. In some cases, Repeaters (RP) are installed to amplify the communication signal. - Home Gateway (HG): To be installed in a meter room of the building The final user can enjoy the broadband services using a modem (CPE) at home, which has a simple and fast installation. A conventional electrical plug becomes part of the telecommunication network, as a connection point for advanced telecommunication services: Broadband Internet access, telephony, domotics, VoD, etc. PLC can also be deployed in access networks combined with other technologies, such as wireless, satellite, optical fibre, cable, etc. Endesa Page 1/4 Commision Staff Working Paper: Guidelines on criteria and modalities of implementation of Structural Funds in support of Electronic Communications What does ENF know about Electronic Communications? ENF´s PLC acquired knowledge: PLC field tests and Business Plans ENF has been testing and working on the development of PLC technology, which allows transmitting telecommunication services through medium and low voltage power lines. Since year 2000 it has carried out various field trials in four different cities: Barcelona, Zaragoza and Sevilla in Spain, and Santiago de Chile in Chile. The largest of them has been performed in Zaragoza (Spain) and has become an international reference, mainly due to the development of Medium Voltage PLC and the massive use of VoIP. In five months ENF deployed a PLC telecommunications network, providing Broadband Internet and Telephony to over 2000 users in more than 300 buildings connected through 140 transformer stations. For more information about ENF ´s PLC activities, go to www.plcendesa.com Endesa Page 2/4 Commision Staff Working Paper: Guidelines on criteria and modalities of implementation of Structural Funds in support of Electronic Communications ENF ´s comments on the Working Paper... The comments below refer to the contents of the Guidelines text, regarding the structure and index of the document. 1.1 Aims of the document No comments 1.2 Background • Rationale for structural funds intervention PLC means an alternative for the access current technologies (DSL, cable, satellite, wireless, etc.) and could enhance competition in this environment. It can provide telecommunication services such as Broadband Internet Access and Telephony, together with some other services based on Internet protocols and platforms (e-health, videostreaming, tele-surveillance, etc.). PLC networks could also be deployed to provide those rural or less developed areas with these services, in case that financing initiatives are launched to achieve this goal. Under strictly commercial considerations, those areas are not included in Business Plans as target zones where to invest in new deployments of telecommunication infrastructure. PLC networks are deployed on the existing electric network grids and cables (both medium and low voltage installations). Thus, the investments required are not as high as some other alternative networks, which have to be deployed from the very first physical level. In this sense, PLC shows lower CAPEX per user than other different access technologies. Given that the deployments need reasonable investments, in principle, customers normally have to pay affordable prices for the final services. Commercial roll-outs that are operative nowadays around Europe confirm this fact. 1.3 Demand and content No comments 1.4 Financing of Electronic Communications Infrastructure: Criteria for ERDF intervention • Geographical targeting Target areas and zones (rural, difficult accessibility, etc.) The existing electric infrastructure covers all zones and geographic areas, because every home is provided with electricity. Using PLC technology any place having a socket can be potentially provided with telecommunication services. This means that PLC networks can also be deployed in rural or remote areas or in non-favoured zones (from the economic or social point of view) improving penetration rates. Endesa Page 3/4 Commision Staff Working Paper: Guidelines on criteria and modalities of implementation of Structural Funds in support of Electronic Communications Only under funding conditions and financial support, it is reasonable for the companies to invest in the deployment of new telecommunication infrastructure in this kind of areas. It is difficult to think of a private investment in this areas in a free market environment. Objectives 1 and Objective 2 in Spain There are some areas in Spain that are considered in the “Objective 1” chapter, where Endesa has the electricity distribution right. For those areas, where the electric network belongs to Endesa, PLC networks can be deployed to provide the inhabitants with broadband services. A similar initiative is being considered by other Utilities in Spain, that plan to deploy PLC networks covering some areas where they own the electric network. • Technological neutrality In the list of specific technologies that is mention at this point, PLC should be included together with DSL, cable, satellite and wireless, since PLC is a reality today providing broadband services. 1.5 Modalities of implementation From our point of view, the calls for this kind of financed Projects should be destined not only to regional authorities or operators in all the Member States, but also to any other type of company who could demonstrate the ability to deploy a telecommunication network. In every case, there will always be a regional authority in charge of the management of the Structural Funding for the Project. In terms of ownership it must be taken into account that deployments of PLC networks can be carried out over public or private electric infrastructures, so various models of ownership could fit. In this sense, companies like utilities, engineering companies, equipment suppliers, etc. should also be invited to these Open Calls. Local public authorities would play the role of ERDF representatives in the Member States, participating in the submitted proposals compilation and evaluation. The Project scope should not finish at the telecommunication infrastructure deployment. When the main purpose of the project looks for affordable broadband universal services to be provided to the final users, this initial scope (infrastructure deployment) results enlarged. The authorities should think of a sustainable exploitation model of this deployed infrastructure, and this stresses the fact that not only installation and equipment should be the application of the funds. Several different concepts should also be financed during the project, such us management activities, business plans, etc. Financing model could be studied in a case by case basis and could vary depending on the companies carrying out the project, deliverables, equipment, etc. 1.6 The case of GSM mobile telephony No comments Endesa Page 4/4.