Thursday, December 21, 2006

Let the spin begin

Just in time to ensure a Blue Christmas for economic self-determination in Amsterdam, the European Commission is opening a state aid investigation into the Amsterdam fiber project. Recall that the capital structure of the project is 1/3 municipality, 1/3 ING, and 1/3 housing corporations - which I have expected would provide a shield under the Market Economy Investor Principle. However, the investigation seems to focus on the period before this structure was agreed:

"In May 2005, the Dutch authorities informed the Commission about the project and then proceeded with the investment in 2006. If Amsterdam’s investment has been made under conditions which a private investor would have accepted, the city's investment would not constitute state aid. Although the Commission has repeatedly requested additional information from the Dutch authorities, they have until now not delivered all the information necessary to assess whether Amsterdam actually acted as a private investor would have."

For those hostile to the project, it's now time to make the lobbyists and spinmeisters get out and earn their Christmas bonuses.

UPDATE: Mega-uber value readers seem to be divided over this one. One writes in to say that it's precisely the effectiveness of the cable lobby's spin machine which has brought this outcome about in the first place. On the other hand, two others have written in to make their case for the glass being half full, noting that today's announcement is not accompanied by any obligation to halt buildout of the network during the investigation. Moreover, they note that the text of the announcement makes explicit that Ms. Kroes does not consider that a muni network funded under MEIP, in the absence of unacceptable state aid, has a distorting effect on the market. This is the positive and more significant message to take away.

UPDATE 2: Vincent Dekker from Trouw, EuroTelcoblog's telecom journalist of the year, has it on the record from Ms. Kroes' own spokesperson that a stop order on the project is not involved here.

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