State aid: Commission endorses UK National Broadband Scheme for 2016-2020

The European Commission has found that the UK National Broadband Scheme for 2016-2020 complies with EU state aid rules. The scheme aims to connect as many homes and businesses as possible throughout the UK to high speed broadband.

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 announcement supports the Government’s objective of superfast speeds being available to 95% of homes and businesses by the end of 2017.

The decision recognises the NBS scheme as being compliant with EU competition law, and public bodies in the UK will not need to notify the Commission each time they wish to run a broadband procurement. Instead, they just need to demonstrate compliance with the NBS to BDUK. The NBS scheme will run until the end of 2020.

Digital Economy Minister Ed Vaizey said:

"Nine out of ten homes and businesses in the UK can already get superfast broadband and we are reaching thousands more every week. The Commission’s decision will help us to reach more properties more quickly, bringing a welcome boost in broadband speeds to communities across the UK."

In the coming weeks and months, this Decision will be used to support procurements for the remaining funding of the BDUK’s Superfast Broadband Program as well as the £10 million Ultrafast fund for the Southwest.