AMSTERDAM, Netherlands – The European Commission on Wednesday banned a small Dutch town from building its own fiber-optic network, saying the plan would be unfair to broadband companies — a decision with potentially far-reaching consequences.
It was the first time the EU has vetoed a municipality's plan to build a public network.
In a ruling published Wednesday, EU Competition Commissioner Neelie Kroes said that allowing the city to fund a network would be unfair since Appingedam is "already served by broadband networks and the Commission considered that the aid was not necessary to remedy either a market failure or unaffordable prices for broadband services."
In other cases, the EU has approved plans for government-subsidized nets where no private companies were willing or able to provide broadband.
But it was not clear whether the ruling meant the Commission would ban larger plans for public fiber-optic networks.
Kroes said the Commission would continue to consider projects on a case-by-case basis.
Stockholm, the capital of Sweden, already has a publicly funded network like the one Appingedam wanted to build.
Other European cities, including Vienna, Cologne, Amsterdam and others, are planning or building networks, usually in partnership with private companies.
Appingedam is a town of 5,500 near Groningen in the far northeast of the country. The town planned to spend about $6.3 million to build and maintain a fiber-optic backbone.
It would have then rented capacity on the network to any provider, leaving it up to them to build a connection out to individual homes.
"We're disappointed, but we knew this might happen," said Piet Manning, a member of the town council.
The town's plan was challenged by cable company Essent NV and the former state telecommunications company Royal KPN NV. Both offer high-speed Internet access in Appingedam.
Manning said it was a small consolation that KPN and Essent both began upgrading infrastructure in the area when the town first announced its plan last year.
In the U.S., telecommunications companies have lobbied against municipally funded networks for wireless Internet access, and several states have passed laws against them.