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IP/08/1170

Brussels, 17th July 2008

State aid: Commission approves €1.7 million public support to increase broadband availability in Lazdijai and Alytus municipalities in Lithuania

The European Commission has approved under the EC Treaty state aid rules a €1.7 million public aid to help bring broadband to unserved areas of Lazdijai and Alytus district municipalities in Lithuania. The support, which involves EU, national and local public funds, is aimed at narrowing the gap between rural and urban areas as regards access to affordable broadband services. The Commission found that the public support is justified by the benefits to consumers and by the safeguards put in place to preserve competition.

Commissioner Neelie Kroes commented: “Access to broadband is critical for economic success. The Commission has taken account of the sizeable gap in broadband coverage between rural and urban areas in Lithuania. I am pleased that partly thanks to EU funds and EU state aid rules, the rural areas concerned gain access to advanced communication services at affordable prices, which will help to reinforce cohesion and competitiveness".

Connecting rural communities with broadband services in the areas in question has proven commercially unviable because the low population density does not allow network operators to attract enough subscribers to justify their investment on pure market terms. That has resulted in huge differences in terms of broadband availability between Lazdijai and Alytus district municipalities and the rest of Lithuania. With the help of provincial public funds, the measure provides incentives for operators to offer affordable broadband services in the rural areas where such services are not currently available.

The Commission found that the measure contains safeguards aimed at ensuring that public funding will be limited to what is necessary to attract operators. The choice of the network operator through an open tender ensures that any aid will be kept to the minimum. Furthermore, open and non-discriminatory wholesale access would allow several broadband service providers to offer competitive services on the new network.

The Commission concluded that the positive effects of the planned investment would outweigh any potential distortions of competition it might bring about. The scheme is therefore in line with EU state aid rules, that allow aid to facilitate the development of certain economic activities or areas where such aid does not unduly affect trading conditions between Member States (Article 87(3) (c) of the EC Treaty).

Moreover, the scheme is in line with the Commission’s policy to promote widespread and affordable broadband services to all EU citizens. This policy has lead the Commission to approve 38 different measures involving public funding of broadband since 2003, more than half of which concerned rural areas with serious problems of digital divide in the Member State concerned (for more details, see http://ec.europa.eu/comm/competition/sectors/telecommunications/overview_en.html

The non-confidential version of the decision will be made available under the case number N 497/2007 in the State Aid Register on the DG Competition website once any confidentiality issues have been resolved. New publications of state aid decisions on the internet and in the Official Journal are listed in the State Aid Weekly e-News.


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