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Legal advice / Broadband and state aid

What can local governments legally do to ensure fast internet access in rural areas?

A lack of fast Internet access in rural areas is a problem that has been growing for years. The market is failing to provide this essential facility to areas that are less densely populated, causing a digital divide between rural areas and urban areas. Although EU state aid rules can be complex and difficult to interpret and apply in practice, they certainly leave room for governments to ensure that nobody is left without access to an essential facility such as fast Internet. In order to avoid falling behind, it is important to make full use of the possibilities that do exist.

If a local government suspects shortcomings in its broadband network, it should ask itself the following questions before taking any actual steps:

1. Which level of quality and coverage of broadband and internet access do we want to achieve in a particular area and when do we want to achieve this?

One possibility is to meet the aforementioned European Goals for broadband:

  • By 2020: 100% coverage of at least 30 Mb/s and 50% coverage of at least 100 Mb/s;
  • By 2025: 100% coverage of at least 100 Mb/s.

2. What are we prepared to do to achieve this goal?

  • Do we want to intervene in the market and if so, which way is favourable? Possibilities are subsidies, soft loans, guarantees to market players, co-investment or own investment.
  • Which budget is needed for these plans and which budget do we actually have available?

 

3. Who do we need to help us with the answers to these questions and to realise our goals?

After a local government identified a problem with internet access in their area, caused by old infrastructure, and chose a solution, they may try to get approval from the European Commission for state aid (above €200.000) to ensure fast internet for everyone. In order to be successful, the requirements of the state aid rules have to be complied with.

For example, a market consultation is required in order to assess whether the market can achieve these goals in the near future by itself and is actually willing to. State aid may never undermine incentives of commercial investors. A local government should also be able to make sure that they can offer their citizens an acceptable minimum quality of internet for everyone. After this research and consultation, a notification to the Commission can be made.

At Legal ICT, we are experienced and specialised in helping local governments through the process of state aid approval regarding broadband. We recently helped the Rivierenland Regio in the Netherlands to receive permission from the European Commission for the construction of a passive (fiber or equivalent) broadband network.

Would you like to know more about what governments can legally do to ensure sufficient broadband coverage and quality? Please be referred to our Broadband Factsheet, or contact us.

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