State aid for broadband Internet development in Lithuania TAIEX Multi-beneficiary Workshop on TAIEX Assistance within Chapter 10 – Information society and Media, 12 April 2016 Ieva Žilionienė Director of Strategy Department RRT

Lithuania’s situation in 2008 Situation: Major cities: Effective competition Developed infrastructure High penetration Rural areas: No effective competition No investments, no infrastructure Low penetration Need: in rural areas of Lithuania, there are: 1,1 million inhabitants; settlements – little towns/villages; Governmental, educational, healthcare institutions, libraries, public internet access points, local activity groups, businesses, in total ~ institutions/enterprises. Statistics: basic BB coverage in 2008 – 80% of population, but: in cities - 100% coverage, in rural areas – only 39%.

Lithuania’s response Public intervention: construction of BB infrastructure in rural areas Better conditions for operators to start provision of services to end- users Reduced “digital divide” between urban/rural area

Demand-side measures in favour of broadband – tax incentives, computer literacy courses, development of e-services – have been in place in Lithuania for several years; yet these measures did not solve the problem on BB supply side. Without further public intervention, reducing the "digital divide" between rural and urban areas seemed not possible. Although ex ante regulation has facilitated broadband deployment in urban and more densely populated areas, it was unlikely it would lead to sufficient private investments for the provision of broadband services to underserved (rural) areas. Public intervention: justification

Lithuania‘s response: RAIN projects 1st phase: “Rural areas information technologies broadband network RAIN”, (RAIN-1 project): Design and construction of ~ 3400 km of fiber optical lines, 467 rural townships connected to broadband infrastructure and to 51 municipality; Value of the project - 21 million euros, financed by ERDF/LT. 2nd phase: “Development of Rural areas information technologies broadband network RAIN”, (RAIN-2 project) Design and construction of ~ 5800 km of fiber optical lines, 982 rural towhnships connected to broadband infrastructure; Value of the project – 60 million euros, financed by ERDF/LT. State Aid Scheme SA „State aid N 183/2009 – Lithuania: Development of Rural Area Information Technology Network“

Part of overall Information Society strategy of Lithuania aiming to reduce digital divide caused by geographic and economic conditions and to develop information society. Implemented by public institutions: the Ministry of Transport and Communications of Republic of Lithuania together with public company “Placiajuostis internetas”. RAIN network is owned by the State and managed by state-owned non-profit legal entity which provides only wholesale services to ISPs. RAIN infrastructure is made available to all e-communications operators on non-discriminatory, equal terms. Operators use the network to provide retail broadband services to end users. Financed by the public funds: 85 % ERDF (European Regional Development Fund) and 15 % national budget. Total value of the project – 60 million euros. RAIN project: intervention logic

The State-owned backhaul network infrastructure is constructed only in „white areas“ where it doesn’t exist The selected network topology ensures technological neutrality, as alternative platforms are able to utilise the network as a backhaul connection to offer its own services to end users The selected solutions promote development of a competitive environment, as end user is allowed to freely choose the service provider and services Tarriffs of the wholesale service, determined by the Ministry of Transport and Communications, are set at a level that ensures that retail BB services in the targeted areas are provided at a price similar to urban areas The built infrastructure may be employed by all operators, ensuring open access to it, and technical solutions allow ensuring this principle RAIN project: key principles

RAIN infrastructure The infrastructure built during RAIN-1 and RAIN-2 projects is used by 51 operator, it reached ~ inhabitants – 1/3 of Lithuania‘s population.

Benefits of RAIN project

Benefits of RAIN project: „Spin-off“ projects “Development of broadband network infrastructure in rural areas”, (PRIP) Design and construction of 485 km of fiber optical lines, connecting rural 440 entities - biggest farms, agricultural institutions and organizations, production and processing enterprises, rural associations, thus connecting them to broadband internet infrastructure – to the lines already constructed by RAIN project. Value of the project – 6 million euros, financed by EARDF/LT. Will be continued in : plans to construct 340 km fiber optical lines, to connect 400+ entities.

Benefits of RAIN project: „Spin-off“ projects “Libraries for Progress” Project : Libraries as a platform for Digital Access and Skills: establishment of Public Internet Access in all public libraries in Lithuania, training of librarians („train-the-trainer“) and organising of digital skills trainings for local communities. Value of the Project - 27 million euros. RAIN project enabled the implementation of such nation-wide project aimed at development of broadband public internet access in all libraries of Lithuania - more than 800 libraries were connected to fiber lines infrastructure.

Acknowledgement of RAIN project  RAIN-2 Project – Winner of European Broadband Award 2015, as best project in the category on socio- economic impact and affordability  RAIN-2 Project – one of 12 EU best-practice examples, presented in European Commission‘s „Guide to broadband investment“.

Make such intervention part of your overall Digital Agenda/Strategy. Huge attention to detailed mapping and coverage analysis, in order to clearly identify „white areas“, the actual demand and scope of intervention. Consult with stakeholders, in timely and transparent manner - operators, National Regulatory Authority, National Competition Council, etc.  Plan direct investments in line with supportive actions: legal/regulatory environment for private investments, mapping, QoS monitoring, etc. Use insights, experience which is already gathered and tested by others:  Study methodological guidelines:  “Investing in digitally driven growth“, 2010;  „Guide to Broadband investments“, 2011;  „EU Guidelines for the application of State aid rules in relation to the rapid deployment of broadband networks“, 2013;  „Guide to High-Speed Broadband Investment“, 2014, etc.  Learn from experience of other countries. Our experience: lessons learned

Thank you for your attention! Thank you for your attention!