IP/05/1333

Brussels, 24 October 2005

State aid: Commission endorses public funding for broadband in Kärnten, Austria

The European Commission has authorised, under EC Treaty state aid rules, a broadband initiative by the Austrian Land of Kärnten. The scheme will enable citizens and businesses to have access to fast Internet connectivity in areas which do not currently have it. Although the scheme also supports advanced broadband services for professional users, the Commission concluded that the aid was not likely to distort competition significantly within the EU.

Competition Commissioner Neelie Kroes commented: “I am pleased to endorse the public funding for the ‘Broadband for Kärnten’ project. Citizens and businesses in Kärnten will have access to fast Internet connections, boosting the economic development of this region”.

Broadband is not currently available in the target areas in Kärnten because they are mainly rural and geographically remote, making them unattractive for commercial investment by broadband providers. Moreover, while basic broadband services (defined in this scheme as between 384 Kbit/s and 1Mbit/s) may well suit residential customers, businesses and other professional users have higher bandwidth requirements and generally seek advanced broadband services (defined in this scheme as between 2 Mbit/s and 10 Mbit/s). “Broadband for Kärnten” co-funds the provision of both basic broadband services for residential users and advanced services for businesses (mainly SMEs) and other professional users, at prices similar to those in urban areas, in specific geographic regions which are not currently served.

The Commission has found that the aid granted is compatible with EC Treaty rules that allow state aid to facilitate the development of certain economic activities or of certain economic areas where such aid does not affect trading conditions to an extent contrary to the common interest (Art. 87 (3) (c)) In particular, the Commission has taken into account the fact that the subsidies are provided only to the extent necessary to develop the use of broadband services in the target areas. The Austrian authorities have implemented a number of safeguards (such as selecting service providers through open tendering; wholesale access provision; repayment mechanism) to ensure that the aid amounts are kept to a minimum and that the scheme does not distort competition unduly.

The Commission has already adopted similar decisions recently concerning the public funding of broadband projects in the UK (see e.g. IP/04/1371, IP/05/646) and in Spain (see IP/04/626). The measure is in line with Community priorities in the eEurope 2005 Action Plan (see IP/04/626) and the i2010 initiative (see IP/05/643).