Commission approves amendment to German State aid scheme to support deployment of Gigabit networks

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The European Commission has approved, under EU State aid rules, amendments to a State aid scheme to support the deployment of very high capacity broadband networks offering Gigabit speeds in Germany.

The scheme was originally approved in November 2020 and was set to expire on 31 December 2025. Following the amendment, the scheme will be prolonged until 31 December 2028, and the budget will be increased by €26 billion. In addition, various changes are introduced to the scheme to bring it in line with the 2023 Broadband Guidelines.

The German scheme

Germany notified the Commission of its intention to amend and prolong the existing scheme, with the aim to deploy fixed broadband networks providing to end users symmetric (the same for download and upload) speeds of at least 1 Gbps (gigabit per second).

Under the amended scheme, aid can be granted for areas where the following conditions are cumulatively met: (i) there is only one network present, providing speeds above 100 Mbps (megabits per second) download but only up to 300 Mbps download and 150 Mbps upload, (ii) the existing network cannot be upgraded through marginal investment to provide speeds of at least 1 Gbps download and 150 Mbps upload, (iii) within the same time horizon, there is no planned investment into a network providing speeds of at least 1 Gbps download and 150 Mbps upload.

In addition, the amendment includes a budget increase of €26 billion, bringing the total budget to €38 billion. The budget increase will be financed, in equal shares, from the general federal budget (€13 billion) and the budgets of states (Länder) and local authorities (€13 billion).

The amended scheme will run until 31 December 2028 and aims to give every household, company and public institution in Germany access to a Gigabit Network by 2030. Aid will be granted to local authorities, which can then (i) deploy and own the Gigabit network themselves and then select an operator to operate the network via an open, transparent, non-discriminatory, and competitive selection procedure, or (ii) tender out both the deployment and operation of the Gigabit network.

The amended scheme will finance the deployment of infrastructure (such as ducts, cabinets, exchanges, and dark fibre) and active equipment for the Gigabit networks. The aid will take the form of direct grants and will cover up to 100% of the eligible costs.

The Commission’s assessment

The Commission assessed the amended scheme under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union, which enables Member States to support the development of certain economic activities subject to certain conditions, and the 2023 Broadband Guidelines, which provide guidance on the assessment of the compatibility of State aid for the deployment of fixed broadband networks and services with EU State aid rules.

The Commission found that:

• The amended scheme has an incentive effect for the rollout of Gigabit networks as the aid is limited to areas in which private operators are not willing to invest due to high deployment costs, which are not balanced by forecasted revenues. The amended scheme will improve the availability of symmetric gigabit connections in the target areas.
• The amended scheme is necessary to address a market failure in its intervention areas.
• The aid is proportionate as the measure is based on (i) thorough mapping of the current broadband networks and (ii) public market consultation processes on future deployment plans that ensure that the public intervention addresses market failure areas without causing undue risks of crowding out private investments.
• The amended and prolonged scheme has sufficient safeguards to ensure that undue distortions of competition are limited and do not adversely affect trading conditions contrary to the common interest. In particular, all private beneficiaries under the amended scheme will be selected on the basis of open, transparent, non-discriminatory, and competitive selection procedures in line with the EU Public Procurement Directives, the principle of technological neutrality will be respected and effective wholesale access will be ensured.

On this basis, the Commission approved the amended scheme under EU State aid rules.

Background

Broadband connectivity is of strategic importance for European growth and innovation in all sectors of the economy and for social and territorial cohesion. The measure notified by Germany also contributes to the EU’s strategic objectives set out in the Gigabit Communication, the Communication on Shaping Europe’s digital future, the Digital Compass Communication, and the Decision of the Parliament and of the Council establishing the Digital Decade Policy Programme 2030.

According to the Digital Decade Country Report 2024 for Germany in 2023, around 75% of households in Germany were covered by fixed very high-capacity networks, which was below the EU average of 78.8%.

The non-confidential version of the decision will be made available under the case number SA.109748 in the State aid register on the Commission’s 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 Competition Weekly e-News

Quote(s)

The revised scheme will bring about a material improvement in the availability of Gigabit broadband networks in underserved areas in Germany. Gigabit networks will at least triple the download and upload speeds of the existing networks. The measure will benefit citizens, businesses, and the public sector, and boost inclusion in the areas concerned, as well as improve social and territorial cohesion in Germany, while ensuring that competition is not unduly distorted.

Margrethe Vestager, Executive Vice-President in charge of competition policy