September 17, 2009 / 1:42 PM / 10 years ago

EU seeks to close digital divide with broadband aid

BRUSSELS (Reuters) - The European Commission unveiled guidelines Thursday specifying how public funds can be used to help companies roll out high-speed broadband networks, and help EU countries benefit from new technologies.

Under the rules, state aid would be easier to obtain for projects in so-called grey areas where broadband infrastructure does not exist such as rural regions, and more difficult for “black areas” or cities with more than one network operator.

The EU executive has pledged to make high-speed Internet an important element of its economic recovery plan to drive growth in the 27-nation bloc and hopes to achieve 100 percent broadband coverage in the European Union by 2010.

“While this investment should be made mostly by private companies, there is an important role for public investment in achieving the widest possible access to broadband in underserved and non-profitable areas,” Competition Commissioner Neelie Kroes told reporters.

“Public investments in line with the present guidelines will significantly contribute to shrinking the digital divide — both within and between European Union member states,” she said. Industry operators were generally positive on the state aid guidelines.

“We see a potentially crucial role for the state wherever private investors are not rolling out fiber networks which can be continually upgraded and are open to competition,” said director Ilsa Godlovitch from the European Competitive Telecommunication Association (ECTA).

She said it was equally important not to crowd out private investments where open networks are being built. ECTA members include BT, Bouygues Telecom, SFR which is jointly owned by Vivendi and Vodafone, and AT&T.

The bigger operators could stand to gain from the new rules as they expand their networks, said Michael Bartholomew, director at European Telecommunications Network Operators’ Association (ETNO), which represents 41 telecoms operators in 34 European countries.

“Realistically, I would imagine the larger operators could be the largest beneficiaries simply because they have the resources available to make these kind of investments in rural, outlying areas where there is no competition,” he said.

The Commission said 200-300 billion euros ($295 billion to $443 billion) would be needed in coming years for building NGA networks.

It said recipients of state aid would have to allow competitors access to its networks and not favor any particular technology.

Additional reporting by Niclas Mika; Editing by Dale Hudson and Rupert Winchester

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