Commissioner Margrethe Vestager, in charge of competition policy said: "Today's decision endorses UK plans to support the roll-out of high speed broadband infrastructure – it aims to bring faster internet to UK consumers and businesses in line with EU state aid rules."
The decision comes just over one month after the UK notified the scheme to the Commission on 21 April 2016. The National Broadband Scheme for the UK for 2016-2020 aims to increase coverage of high speed broadband in the UK by deploying Next Generation Access networks (NGA), i.e. networks that can ensure speeds above 30 megabit per second (mbps).
The scheme will ensure roll-out of NGA broadband to as many UK homes and businesses as possible, in order to extend coverage as far as possible across the UK. It will be valid until 31 December 2020.
The Commission's state aid assessment, based on the 2013 Broadband Guidelines, aims to ensure, amongst other things, that public funding does not take the place of private investment. It also ensures that other service providers can use the publicly funded infrastructure on a non-discriminatory basis. This protects effective competition, which is a key driver for investment and better prices and quality for consumers and businesses.
In this context, the Commission has worked constructively with UK authorities and has concluded that the new UK broadband scheme complies with criteria under EU state aid rules:
- Public money will be spent on underserved areas: The UK can fully fund the investment to roll-out NGA broadband in areas where no NGA infrastructure exists and where no private operator is willing to invest in such infrastructure without state aid in the next three years.
- To further ensure that public investment does not crowd out private investment, detailed mapping and public consultation exercises will be carried out with interested private operators.
- Fair chances for all bidders – big and small, regardless of technology: Aid will be awarded by way of tenders compliant with EU public procurement rules, respecting the principles of technological neutrality and also facilitating bids by smaller operators. This will ensure that the most advantageous offer is selected.
- Fair access to subsidised infrastructure through open access tenders: All interested operators should be able to access the subsidised infrastructure on equal and non-discriminatory terms. Furthermore, various mechanisms are in place to prevent wholesale access prices from being excessive. This will allow several network operators to obtain wholesale access and use the subsidised infrastructure to compete on services to the end consumers. The increase in network capacity is expected to stimulate market entry by service providers and the provision of a greater variety of services.
The scheme is also accompanied by a detailed evaluation plan to assess the impact of the scheme, the results of which will be submitted to the Commission by December 2020.
The Commission approved an earlier scheme in November 2012, the National Broadband Scheme for the UK – Broadband Delivery UK.
As part of its Digital Single Market strategy, one of the Commission's key priorities is to support broadband rollout in underserved areas to ensure a high level of connectivity in the EU. Currently, with 91% of households covered by high-speed broadband (at least 30 Mbps), the UK is well above the EU average (71%) (see Digital Economy and Society Index). However, the UK needs further investment in broadband infrastructure, in particular in rural areas, where the deployment is more costly and often not profitable enough to be spontaneously triggered by the market. Where the market does not provide sufficient broadband coverage or the access conditions are not adequate, public interventions (state aid) may help to remedy such market failure.
The 2013 Broadband Guidelines which entered into force on 26 January 2013 reconcile the aims of, on the one hand, spurring the rapid roll-out of broadband infrastructure with public funds and, on the other hand, minimizing the risk of crowding out private investment and creating monopolies. Hence they support other existing EU and Member States policies in this regard. The Guidelines offer stability and legal certainty for broadband investment.
The non-confidential version of the current decision will be made available under the case number SA.40720 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.