State aid: Commission approves German nation-wide scheme to support deployment of Gigabit networks in Germany

The European Commission has approved, under EU State aid rules, a German scheme to support the deployment of very high capacity broadband networks offering Gigabit speeds in Germany. The aid will bring these networks to customers in areas where the market does not provide them, in line with the EU broadband connectivity objectives.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “Europe’s digital transformation depends on high quality networks. These are crucial for connecting the regions in the European Union and contribute to a more competitive and sustainable social market economy. The Commission strongly supports the deployment of Gigabit infrastructure in Europe. The German scheme will allow a real step change for very high speed connectivity in Germany. It will ensure that public money is channelled into the areas that are most in need of better connectivity, while at the same time fostering investment from private operators.”

Germany notified to the Commission an aid scheme to support the deployment of Gigabit networks in Germany. The scheme aims at developing a new, publicly financed very high capacity connectivity infrastructure that will deliver a faster internet for households, companies and public institutions in Germany. The scheme will have an estimated national budget of €6 billion, which will be complemented by contributions to the individual projects from regional and local budgets, for an overall estimated budget of up to €12 billion.

The new networks will be capable of offering speeds of 1 Gigabit per second (“Gbps”) symmetric (upload and download), which are significantly higher compared to those that users in the target areas currently have. The German Gigabit scheme will therefore bring about a significant improvement in connectivity (a “step change”).

The scheme will be available to under-supplied households, companies and public institutions.

In order to prioritise areas which are most in need, with respect to the connection of households Germany will follow a two-step approach when providing support under the scheme.

• In a first step, Germany will focus on the support on the deployment of the relevant Gigabit infrastructure to serve households that have access to speeds of less than 100 Megabit per second (“Mbps”). The implementation of this first step of the scheme will significantly contribute to a reduction of the digital divide between rural and urban areas in Germany.
• In a second step, which will begin as of 2023, support will also be available for the deployment of Gigabit infrastructure for households that already have access to speeds of 100 Mbps, but not to a network which already provides very high speeds up to 1 Gigabit. With the implementation of this second step, Germany aims to make Gigabit networks available for all citizens by the end of 2025.

This two-step approach ensures that the support is channelled first to the most under-supplied areas and that private investment is not crowded out, while at the same time providing households with the connectivity they need in a timely manner. By deploying the Gigabit infrastructure in two steps, the measure also takes into account the current scarcity of construction capacities in Germany and limits the risk of potential construction price increases which could negatively impact otherwise profitable private investment projects in very high capacity networks.

The scheme is in line with the strategic objectives of the Commission’s 2016 Gigabit Communication as it enables public investment in areas where the targets set out in the Communication (i.e. access by households to infrastructure providing 100 Mbps, upgradeable to Gigabit speeds by 2025) are not yet met and no sufficient infrastructure is planned by private investors.

At the same time, the measure protects incentives for private investments, by allowing for transition periods in areas where performing networks have been deployed only recently in order to support the amortization of those recent investments.

The measure also ensures that the supported networks will be open to other operators competing on the new infrastructure, by requiring the provision of wholesale access, including through the physical unbundling of the supported infrastructure.

To avoid duplication of infrastructures, the German authorities will therefore take existing and planned investments by market operators into account in the following way:

• The infrastructure will connect customers that do not have access to certain minimum speeds yet: 100 Mbps download for households; 200 Mbps symmetric (upload and download) or more than 500 Mbps download for companies and public institutions
• In a second step, as from 2023, the same threshold as for companies and public institutions will be applied for households – the new Gigabit networks connecting households in this second step can start operation at the end of 2025;
• The new networks will not be deployed where a very high capacity network is already in place or planned by private investors, such as a fibre networks leading to the customers’ premises or upgraded cable networks.
• Areas where there are two or more networks providing fast broadband (30 Mbps or more) in parallel are also excluded from the scheme.

The aid will be awarded based on open, transparent and non-discriminatory tenders, with all technologies being able to compete for provision of the service. On this basis, the Commission has approved the German Gigabit scheme under the Broadband State aid Guidelines.

Background

The new German nation-wide scheme follows two earlier Bavarian Gigabit projects, which were approved by the Commission in December 2018 and November 2019 and which provided Gigabit infrastructure to households having access to less than 100 Mbps.

Building on the EU’s existing 2020 broadband targets, the Commission has identified in its Gigabit Communication the connectivity needs to build a European Gigabit society, where very high capacity networks enable the widespread use and development of products, services and applications in the Digital Single Market. The Commission has clarified such connectivity needs in its Communication “Shaping Europe’s Digital Future”.

The German Gigabit scheme is in line with the strategic objectives of the Gigabit Communication and corresponds to the Commission’s expectation that households will increasingly need gigabit speeds as the decade progresses, as set out in the Commission’s Communication “Shaping Europe’s Digital Future“.

The existing 2013 Broadband State Aid Guidelines allow for such public investments where a market failure exists and where these investments bring a significant improvement (step change). This is also subject to certain other parameters to protect competition and private investment incentives.

The Commission is currently consulting stakeholders on the 2013 Broadband State Aid Guidelines and more generally on the existing EU State aid rules on public support for the deployment of broadband networks. The public consultation is part of an overall evaluation by the Commission of the relevant rules with a view to assess whether they are still fit purpose or whether they will need to be updated in light of recent technological and market developments. All interested parties can respond to the public consultation until 5 January 2021.

The non-confidential version of the decision will be made available under the case number SA.54668 in the State Aid Register on the DG 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 State Aid Weekly e-News.