The relevant conditions for state aid are laid down in general state aid rules which are complemented by broadband specific state aid rules and guidelines, notably the EU guidelines for the application of State Aid rules in relation to the rapid deployment of broadband networks.
State aid for broadband projects can be provided by many different funds such as
- the European Agricultural Fund for Rural Development (EAFRD) which is designed to contribute to improving the quality of life and the management of economic activity in rural areas (1 billion EUR).
- the European Regional Development Fund (ERDF) which has been made available by the EC to strengthen economic and social cohesion in the EU by correcting imbalances between its regions (6 billion EUR).
These two funds form part of the broader suite of European Structural and Investment Funds (ESIF).
Estimated ICT relevant results per ICT theme within the ESIF:
- Research & Development ~5.5 billion EUR
- eGovernment ~ 3.46 billion EUR
- PSI / eCulture / eTourism ~ 0.95 billion EUR
- Support to SMEs ~ 1.8 billion EUR
- R&I processed in SME (including voucher schemes) ~ 5.8 billion EUR
- eInclusion / eAccessibility / eLearning / eEducation ~ 1.22 billion EUR
- eHealth and Healthy ageing ~ 1 billion EUR
- eSkills (lifelong learning) ~ 0.6-1 billion EUR
Handbook for decision makers
A handbook for all stakeholders investing in broadband with public support explains how to design a good project from the start and whom to contact at regional and EU level to obtain advice. It also outlines the minimum conditions for state aid approval.
A grant will always be considered as state aid. It also has the effect of constraining private investment in a scheme. This is because private investors regard the provision of state aid as recognition that market failure exists. This reduces confidence in the returns they could expect from the market in comparison with other opportunities.
The authority can attach a range of conditions and requirements on the provision of the grant, including (but not limited to):
- achieving defined socio-economic outputs that the entity can take responsibility for
- returning part of the grant if the entity achieves greater than anticipated benefits from the scheme (such as excessive turnover or profits). This is known as “claw back”
- transparency of accounts and performance of the entity in relation to the scheme the grant is provided for.
Measures not constituting State aid
Measures to support broadband deployment without constituting State aid include:
- The rollout of an next-generation-access (NGA) networks for non-commercial purposes (i.e. only to satisfy your own needs), under certain circumstances and under this arrangement, it becomes very tricky to use the network to connect your citizens.
- Placing capital, directly or indirectly, at the disposal of an undertaking and such support corresponds to “normal” market conditions (Market Economy Investor Principle, MEIP). Self-assessment, which raises your risk of a legal challenge in case of a complaint, ensures that your equity participation or capital injection presents sufficient prospects of long-term profitability.
The deployment can be viewed as a Service of General Economic Interest (SGEI), which needs to be approved by the European Commission.
Measures constituting State aid but for which no notification is required
Even when the financing of your project constitutes State aid, it will still not require notification if:
- the project fits into a State aid scheme which is already approved
- the total amount of grants (cash and in-kind) for the same eligible costs over any period of three fiscal years does not exceed 200.000 EUR
- if the total amount of loans is up to one million EUR depending on collateral and duration of the loan (the “de minimis” rule).
The revised General Block Exemption Regulation (GBER) exempts from State aid notification aid for broadband infrastructures up to 70 million EUR per project (i.e. passive broadband infrastructure, broadband-related civil engineering works, deployment of basic broadband networks and deployment of NGA networks) if:
- the investment takes place in white areas
- the aid is allocated on the basis of a competitive selection process and the network operator offers the widest possible active and passive wholesale access (including physical unbundling for NGA networks).
For further information on State aid also see: EC blueprint for ICT innovation Vouchers, ICT Innovation Vouchers Brochure, Guide to the implementation of a satellite vouchers scheme.
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