Future of state aid for broadband deployment: European Commission’s evaluation of EU state aid rules

Future of state aid for broadband deployment: European Commission’s evaluation of EU state aid rules

The European Commission (EC) has published the results of its evaluation of the current EU state aid rules for the deployment of broadband networks, which were developed in 2013.

These rules are important as they set out the conditions under which state aid approval is granted for publicly-funded broadband deployment, for example tenders to provide high speed connectivity to rural areas which are not served commercially. The rules shape where publicly-funded networks should be deployed, the process through which public authorities determine who deploys the network, and the obligations that are imposed on the network once it is built.

The EC concluded that the current rules are broadly fit for purpose, but highlighted adjustments are needed to align the rules with the EU’s updated policy objectives post-COVID, in particular the 2030 Digital Compass, which targets 100% coverage of Gigabit broadband and 5G by 2030. The key areas of adjustment include:

  • Changes to “intervention thresholds”. The current rules only allow funding for fixed broadband for areas which do not have access to superfast broadband speeds (speeds of at least 30Mbps). Given the objective to achieve 100% coverage of Gigabit broadband (speeds of 1000 Mbps), the updated thresholds may allow funding to be extended to areas that are covered by networks offering superfast speeds (such as fibre-to-the-cabinet networks), but also require the funded network to deliver a much bigger “step change” in speeds.
  • Introduction of guidelines for mobile network deployment. There are currently no specific guidelines for publicly-funded mobile deployments, but these may become increasingly important given the EU’s ambitious 5G targets, for example to ensure 5G coverage in more rural areas.
  • Introduction of guidelines for “demand side measures”. The EC makes it clear that high take-up of services is key to unlocking the benefits from publicly-funded networks, and that affordability of higher speed services in more rural areas is a potential barrier to this. Demand side measures, such as direct subsidies (voucher schemes) for specific groups of people, are potentially important in supporting this.

These adjustments could have important implications for the funding of network deployment in the EU: it could see public authorities extending funding to overbuild existing fibre-to-the-cabinet networks with “full fibre” networks, and an increase in public funding for mobile networks and demand side measures that have been relatively limited to date. 

Frontier regularly advises operators and public authorities on state aid issues in the telecoms sector.

For more information please contact media@frontier-economics.com or call +44 (0) 20 7031 7000.