Commission approves joint UK-Irish project to provide telecommunications connectivity in North West region of Ireland
The European Commission has approved under EC Treaty state aid rules up to €30 million of public funding for a joint initiative by the UK and Irish Governments aimed at providing direct international submarine telecommunications connections to the North West of the island of Ireland. The project is designed to bring the cost of international backhaul connectivity in the region in line with that in major Irish and UK cities and provide the border counties with a resilient and diverse open access network. The Commission found the measure to be compatible with Article 87(3)(c) EC Treaty (that allows aid for the development of certain economic activities or areas, where it does not adversely affect trading conditions), as the project furthers the provision of electronic communications in the region.
Competition Commissioner Neelie Kroes said: "I am pleased to approve a joint project by the UK and Irish Governments that aims to overcome the problems resulting from an international border in a region where citizens and businesses wish to work together. The project should lower the costs of international connectivity for all border counties and act as a catalyst for further investment in the region's telecommunications market."
There is no direct international connectivity in the North West of the island of Ireland. All existing submarine cables are located on the east and south costs of the island. This makes the cost of international backhaul services in the region much higher than in other parts of the UK and Ireland, such as Dublin, London, Belfast and Glasgow (backhaul services are the intermediate links between the core, or backbone, of the network and the small sub networks at the 'edge' of the entire hierarchical telecommunications network).
To overcome these difficulties, the UK and Irish Governments initiated a joint project to build an additional submarine cable that would come ashore on the north coast of the island and terminate in Londonderry/Derry in Northern Ireland. To remove the impact of the border and ensure that the benefits of the project are made available as widely as possible, two locations in the Republic of Ireland would also gain access to the new direct international link, Letterkenny and Monagahn.
The project was notified to the Commission in June 2008. The Commission assessed the measure directly under Article 87(3)(c) of the EC Treaty.
The Commission's investigation found that the company to build the direct international submarine communication link would be chosen by both Governments on the basis of an open tender and will be able to benefit from a maximum state support of €30 million. The successful bidder would offer third parties access to the infrastructure under equal and non-discriminatory conditions and the pricing mechanism for the services offered in Londonderry/Derry, Letterkenny and Monaghan would be based on the wholesale prices offered for the same services in Dublin, Manchester and Glasgow.
The project would contribute to offsetting regional imbalances between the North West and other parts of the island of Ireland due to the existence of a border between the two countries and the region's distance from existing international telecommunications links. By bringing down the costs of international connectivity, the project increases the competitiveness of all border counties and their ability to support cross-border initiatives through the converging effects of the digital economy. The Commission therefore concluded that the measure is compatible with Article 87 (3) (c) EC Treaty, as it facilitates further the provision of electronic communications networks and services in the region.