Czech broadband money caught in political intrigue

Fiber network server

Fiber network server [Shutterstock]

Nearly two years after the adoption of the new long-term EU budget (2014-2020), the Czech government is still struggling to fulfill conditions that would open the door to half a billion euros of EU cohesion money available to support high-speed internet. reports.

Over the summer, the Czech Ministry of Industry and Trade, in charge of coordination of the country’s national digital policy, found itself under pressure from the Ministry of Home Affairs. The Interior Minister made it clear that his office wanted to play a role in the disbursement of more than €0.5 billion (14 billion Czech korunas) that have been earmarked for the development of high speed internet.

Initially, the entire sum was supposed to be administered by the trade department alone.

But a deal between the two ministers to split the budget is heavily opposed by industry, including the largest business organisations in the country. In a protest lead by the ICT Union, major business organisations in the country, such as the Confederation of Industry and Transport and the Chamber of Commerce, complained that they were being left out of the debate for the national broadband plan, or Next Generation Access networks.

“The Ministry of Interior was so influential that we currently see a brand new national broadband plan for NGA that has effectively beaten a [previous] plan prepared by the industry ministry,” Svatoslav Novák, president of ICT Union, complained.

An initial draft of the national plan was prepared by the Ministry of Industry, which is responsible for the dossier. But in July, a new plan was presented by Home Affairs officials. In this document, the ministry defined itself as a new “national coordinator for development of NGA network”.

This raised doubts about the legality of the process, as the Ministry of Industry and Trade was supposed to be the only one overseeing the dossier.

‘Complex amendment’

Jaroslav Strouhal, the Deputy Interior Minister, downplayed the whole affair. “There has always been only one national plan and that is the one of the Ministry of Industry and Trade,” he told EURACTIV Czech Republic. He added that his ministry filed a so-called “complex amendment” that included modifications made by other stakeholders.

However, this “amendment” prepared by the Interior Ministry in fact appears as a brand new document. It even bears an identical name to the initial draft of the industry ministry.

Business organisations now claim that ministries have not been transparent about the process, saying this behaviour could violate EU rules on transparency.

“The change happened without any prior consultation with us, although it is a basic principle in EU rules for drafting new laws and strategies, especially those related to the EU funding,” Novák of the ICT Union said.

The plan is instrumental to unlocking access to funding available under the Operational program Entrepreneurship and Innovation for Competitiveness (OPPIK). OPPIK is financed by the EU’s Structural and Investment Fund (ESIF) and was approved by the European Commission in April.

And that is the second area where government plans might hit a hurdle. 14 billion korunas (€0.5bn) were initially earmarked to support the development of NGA networks through the OPPIK. Splitting the sum, and shifting a part of it to a different program overseen by the Home Affairs Ministry, may not be easy.

Changes in operational programs must be first approved by the European Commission, which will decide if the arguments presented by the government are well-founded.

Investment in broadband conditional upon clear plan

Building a high-speed internet infrastructure across the EU, including in unprofitable black spots typically located in rural areas, became a priority under the ‘Europe 2020’ strategy for growth and jobs. Broadband infrastructure received significant EU funding as a result.

However, EU money also comes with strings attached. Under the new rules on cohesion funding – adopted for the period 2014-2020 – member states need to comply with certain requirements before the funds can effectively be released. So-called “ex-ante conditionalities” typically require that countries adopt strategic plans and have legislation in place to minismise doubts over the efficiency of public spending.

In the case of the high-speed internet networks, it means that the country needs to have a national broadband plan in place and properly implements all relevant EU legislation such as the 2014 directive on reducing the cost of building electronic communication networks.

Time is running out

And while the ministries squabble, time is running out. If the plan is not ready by 2016, the Czech Republic could lose access to cohesion funding for the development of NGA networks.

“The national broadband plan for NGA network is part of the ex-ante conditionality 2.2 that must be met by 2016,” Michaela Mlí?ková Jelínková, spokesman for the Permanent Representation of the Commission in the Czech Republic, told If that was not the case, ESIF money for broadband could simply evaporate, she warned.

The Czech Republic has a rather weak track record when it comes to spending cohesion funds, due in large part to a lack of a coordination. In the digital area, responsibilities are currently shared between several public bodies, and strategies remain mostly on paper.

These bureaucratic flaws are particularly unwelcome in digital infrastructure, where EU money is badly needed. According to the Digital Economy and Society Index (DESI) published by the Commission in 2015, the Czech Republic ranks among the slowest-performing European countries. While in the connectivity dimension, the country performs slightly above the EU average, in the category of digital public services, the Czech Republic ranked 25th among the 28 EU countries.

In February 2013, EU leaders reached agreement on a €960 billion budget for the EU, covering the next seven years (2014-2020), also known as the the multi-annual financial framework (MFF).

Under pressure from austerity-minded countries - the UK, the Netherlands, Denmark and Finland -, the new MFF represented the first net reduction to the EU budget in history.

Lawmakers in the European Parliament then obtained concessions in return for approving the deal in ‘trilogue’ talks with other EU institutions. The deal reached includes setting up a high-level working group on ways to modernise the EU’s “own resources” of income and concluding negotiations on all the legal bases for the various EU programmes.

The European Parliament said in a statement that its key priorities were secured in the June MFF agreement, including the flexibility to move unpaid funds (payment appropriations) between years and broad flexibility to move commitment appropriations, both between years and between categories of expenditure.

This flexibility is needed to ensure that every EU budget euro is used where it is most needed, deemed especially important during the economic crisis.

Another key achievement for the Parliament was to insert a "revision clause" in the MFF, which will give the next Parliament and Commission a say on amending priorities and means of payment, if needed.

>> Read our LinkdDossier: EU budget 2014-2020: The €1 trillion deal

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