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Brussels, 8th June 2006

State aid: Commission endorses public funding to bridge broadband communications gap in Latvia

The European Commission has endorsed under EC Treaty state aid rules a broadband initiative by the Latvian authorities. The measure will bring broadband communications to regions of the country where broadband is not widely available at the moment so as to allow citizens and businesses to exploit the benefits of broadband technology. The Commission concluded that the aid was not likely to cause undue distortion of competition within the Single Market and was therefore compatible with EC Treaty state aid rules (Article 87).

Competition Commissioner Neelie Kroes commented: “I am pleased to endorse public funding for the deployment of broadband networks in regions of Latvia where broadband is not widely available at the moment. This project will allow citizens and businesses to reap the full benefits of the information economy. The project is fully in line with the Commission’s policy to promote broadband in rural and remote areas and with the EU’s state aid rules”.

More particularly, the measure promotes, by means of direct grants, investment in broadband infrastructure capable of providing retail broadband services (at a minimum speed of 256kbps downstream - with a possibility to upgrade to 2Mbps - and at least 128kbps upstream) in rural and remote areas of Latvia that are currently not served by broadband providers. The Latvian authorities expect that the development of broadband in rural and remote areas, which are currently characterised by low levels of economic activity, below-average per capita income and high unemployment will significantly improve the living conditions and contribute to the economic development of these disadvantaged areas.

EC Treaty state aid rules (Article 87(3)(c)) allow subsidies for the development of certain economic activities or of certain economic areas provided there is no overall negative effect on competition. The project pursues a clear cohesion objective and is expected to be co-financed by EU structural funds. Moreover the measure is in line with Community priorities outlined in the eEurope 2005 Action Plan (see IP/04/626) and the i2010 initiative (see IP/05/643).

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