War Brewing Over Swedish Broadband Subsidies

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The Swedish government -- at least part of it, but we'll get back to that later -- is trying to get a second round of broadband subsidies off the ground. The proposal calls for about 7.3 billion Swedish kronor (US$1.2 billion) to be invested to improve coverage in sparsely populated areas.

The state will put up 3 billion Swedish kronor, and municipalities, E.U. Structural Funds and operators will add most of the rest.

There are about 145,000 inhabitants and 39,000 establishments in the sparsely populated areas of Sweden without access to broadband, the equivalent of 10 percent of the population and 12 percent of the companies in those areas, according to the government-funded investigation "Broadband to the whole country," which also served up the new proposal.

During the first round, the state invested about 4 billion Swedish kronor between 2001 and 2007. Mistakes where made (competition on equal terms wasn't secured and there was a lack of supervision), but the investment helped Sweden reach a penetration of 28.3 percent, giving it an eighth place in the world ranking, according to the European Commission's 13th Progress Report on the Single Telecoms Market, which was released in March. Pretty incredible considering the fact that Sweden is not exactly a crowded place.

But all kinds of government subsidies attract controversy, even in Sweden. In this case a lot of it has to do with how the first round was used. Forty-two percent of the funding went to TeliaSonera and Teracom (which was on the ropes). The state owns 37.3 percent of TeliaSonera and all of Teracom. It can't be ruled out that the money has distorted competition, according to the Swedish Competition Authority.

There is also the question of how the new round should be used and paid for. Municipalities aren't exactly crazy about having to finance part of it, the National Financial Management Authority doesn't like the idea of using funds from frequency auctions, and urban areas want a piece of the pie as well.

If that wasn't enough, there are reports of a rift within the government itself. Åsa Torstensson, the minister for communications, wants the new round, but the finance ministry under the leadership of ponytail-wearing Anders Borg wants it to go away.

So it will definitely be interesting to see what happens next, but it will be an uphill battle.

There should, of course, be rules deciding what the government can and can't foot the bill for, and to me there are two viable alternatives: a build out of fiber and mobile broadband using frequencies below 1GHz. Together they make a perfect combination.

Fiber is the only technology that is able to keep up with today's broadband demands as well as the future's, and using low frequencies for mobile broadband gives unbeatable coverage. All networks should be open to anyone who wants to offer services, on equal terms.

In the end it all comes down to if broadband access is as much a right as water, electricity and roads, and for my money it is. So I hope that Sweden gets another round of broadband subsidies, which I hope will be used wisely.

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