Difficulties in rolling out infrastructure

In light of the fact that the demand for dark fibre is currently greater than the supply, it is conceivable that parties other than the existing network owners will roll out optical fibre, either for their own use or to provide others with dark fibre.

It is worth mentioning from the outset that there is no general obligation to share existing ducting, lay jointly or to interconnect one's fibre networks. This entails considerable difficulties for those wishing to roll out their own fibre. This will be discussed further below.

3.6.4.1. New rollout

As described in Section 2.1 above, it is not the fibre cable itself that costs the most in this context, but the rollout process. Rolling out fibre infrastructure is expensive and involves a completely different operation than the one currently run by most operators. An organisation is required with competent staff, machinery and local operation and service personnel, licences and/or permits, and most likely a business concept to work as wholesalers, etc. PTS has observed that most operators would require considerable adaptation and costly investment in order to be able to start rolling out physical

infrastructure, whereas, for example, local energy companies that have access to ducting through their operation have found it relatively straightforward to expand their operation within the electronic communications sector as opposed to operators that do not have any ducting. It should be noted that owners of ducting also encounter other

impediments, such as existing ducting not being present where there is a need for electronic communications infrastructure and another operation needing to be set up alongside the core operation.

However, as described in Section 3.1.3, there are new, smaller stakeholders that have emerged whose business concept is to serve as wholesale fibre suppliers. These stakeholders are concentrating on excavating and laying fibre where they perceive that there is a customer base and thereby potential demand for dark fibre from stakeholders wishing to provide electronic communications services. Besides the problem of achieving profitability in this type of operation, there are also practical problems such as licences, permits and agreements related to excavation and access to land.

A stakeholder wishing to roll out an electronic communications line can use what are known as 'utility easement right', which entail a special statutory right to lay utilities or enter into private property ownership agreements (land contracts) with landowners. The Utility Easements Act (1973:1144) contains provisions on utility easements. Utility easements entail a right, without a time limit, to have a utility on someone else's land, which is determined by the National Land Survey of Sweden following a utility easement formation procedure. Compensation to the landowner is decided in conjunction with this. See Appendix 5 for a brief explanation of utility easements.

The practical application of utility easements currently has a relatively protracted turnaround time for stakeholders in the electronic communications market. This is because utility easement rights represent a kind of compulsory system that limits the rights of landowners in a way that is closely related to expropriation. The legal security aspects thus mean that high demands are placed on investigations and supporting documentation and landowners have an opportunity to safeguard their rights. The length of time that it takes to decide a case varies depending on its complexity, but in any event it may take anything from a number of months up to several years. In general it can be said that those cases that are decided the most quickly are where the landowner and operator have reached an agreement and only want to finalise it through a utility easement order.

Rolling out fixed infrastructure is a costly procedure and it is not financially feasible for most stakeholders to roll out infrastructure on a speculative basis; that is, without a particular given customer base. Under such conditions, utility easements are usually an overly time-consuming way of gaining access to the land, particularly if there are alternative stakeholders that can meet customer needs within a shorter time -frame. On the other hand, utility easements may be a useful tool for large operators planning their rollout well in advance. Similarly, already having utility easements in place is advantageous as these apply permanently and no further licences and/or permits are required for rolling out more fibre in existing ducting.

In order to process rollout cases more quickly than entailed by utility easements,

stakeholders usually seek access to the land directly from the landowner, which is often a municipal authority. Municipal authorities often view utility easements as troublesome, since they involve difficulties in connection with detailed development plans, etc., and they prefer the flexibility offered by property use agreements. A stakeholder usually concludes a framework agreement with a municipal authority, including a general permit to lay fibre in a municipality; it states how this should be done and the amount of the compensation. Then, the stakeholder applies for a permit for the respective link, which is subsequently required and comprises more detailed agreements, such as dates, joint laying etc.

Consequently, each municipal authority decides whether it can/wants to release land for the establishment of infrastructure. Municipal authorities are often unwilling to do this. Rolling out optical fibre entails a great deal of inconvenience in the form of streets being dug up, etc., which can result in the municipal authority opposing the proposed

agreement. However, there are also indications that municipal authorities are sometimes more inclined to permit a municipally owned municipal network. TeliaSonera sometimes also finds it easier than new operators to conclude new agreements.

Municipal authorities can also impose a charge for granting access to this land. This compensation is not regulated; instead it is decided in negotiations between the operator and each individual municipality. For this reason, the charge varies between municipal authorities, and there are examples of charges ranging from SEK 1 per metre per year up to SEK 11 per metre per year. In many municipalities, TeliaSonera has long-term agreements where no charge or a lower charge than that currently offered to other stakeholders is imposed. Here, there are also cases where it is claimed that different operators are offered different terms concerning new agreements.

3.6.4.2. Utilisation of existing ducting

When infrastructure is laid underground, this is generally done by means of ducting in the form of pipes or the like. This means that re-excavation is not required to extend

infrastructure; instead, for example, new fibre cables can be laid in the existing pipes. This considerably reduces the cost in comparison with new excavation work. Consequently, being able to utilise the existing ducting could be a theoretical approach for the party wishing to roll out fibre. A company with its own extensive ducting, such as TeliaSonera, can usually simplify the laying of new optical fibre by utilising its existing ducting. However, others are not entitled to utilise existing, unutilised ducting; instead, this entirely depends on whether the proprietor wishes to sell such access or not. As regards owners of ducting for electronic communications lines, these are the above-mentioned network owners so there are fewer incentives to sell ducting compared with selling dark fibre. Other 'ducting owners', such as power companies, do not seem to be positively inclined to mix different lines within the same ducting.

In order to facilitate the rollout of IT infrastructure, the Government has decided to issue special support for the joint laying of ducting for IT infrastructure when rolling out or rebuilding other infrastructure. This support amounts to SEK 75m and has been

earmarked for projects where the rollout of IT infrastructure is not deemed to have taken place on market terms. This initiative could facilitate the establishment of IT

infrastructure in those areas where central government needs to provide assistance. 3.6.4.3. Problems have also been observed in other contexts

Problems related to the rollout of new broadband infrastructure were previously discussed in the 'Proposed Broadband Strategy for Sweden', published by PTS in

February 2007 (PTSER-2007-7). In this report, PTS noted that access to IT infrastructure is of such importance to businesses, households and other sectors of society that it is crucial for all municipal authorities at a local level to be given the opportunity to take responsibility for ensuring access to infrastructure in similar ways as for roads, electricity and water. This means that municipalities usually do not have to roll out these networks themselves. For this reason, PTS proposes that municipalities be given a social planning responsibility to ensure access to broadband infrastructure and that the Government should consider legislation to give municipal authorities increased opportunities for inter- municipality collaboration within the broadband sector. PTS has also proposed that the

Government quickly investigate the potential for joint laying; that is, several operators being able to roll out their respective infrastructure on one and the same rollout occasion and communications infrastructure being laid during excavation work in conjunction with the rollout of other infrastructure – not only in conjunction with municipal excavation work, but also, for example, when energy companies carry out extensive excavation work to lay power cables and build new roads. PTS has expressed that the Agency is of the opinion that the potential for joint laying would be utilised to a greater extent if there were framework agreements and principles for the distribution of costs in place and if systems were set up through which relevant stakeholders could be informed about planned excavation work well before implementation. This proposal has not yet led to measures to any appreciable extent, for which reason these views still apply.

It should be noted in this context that the Government has already commissioned the county administrative boards to work to ensure that IT infrastructure with high transmission capacity is laid jointly with power line networks and other infrastructure through information campaigns and consultation with the relevant authorities and businesses. PTS considers that increased joint laying would benefit market development. Furthermore, the practical problems associated with the rollout of IT infrastructure were discussed in the report, 'Broadband 2013'.16 For this reason, the report emphasised the

fact that access to IT infrastructure is of such significance that it should be dealt with by the municipalities in the same way as in terms of access to roads, electricity and water, both in outline development plans and detailed development plans. Consequently, the report proposes that this issue be investigated, either through the National Board of Housing, Building and Planning being commissioned to analyse the issue and submit proposals for how the need to plan IT infrastructure should be met in the municipal authorities' outline development plans and detailed development plans or through the Inquiry M 2007:06 Översyn av vissa frågor i plan och bygglagstiftningen [Overview of certain issues in planning and building legislation] being directed to investigate the issue.17

Thus, the overall problems related to IT infrastructure planning and rollout have been focussed upon in several different contexts and concrete measures have been proposed. However, these proposals have not yet led to measures to any appreciable extent.