A legislative change makes it easier for member states to invest in fixed and mobile networks. The amendment allows the governments to aid network providers of sparsely populated areas.

The European Commission presented a directive for the digitalization of member states in 2021. Brussels wants every European resident and company to have access to 5G and gigabit internet by 2030.

Reaching the target is easy in densely populated areas, where the high concentration of potential customers motivates providers to deliver coverage of 5G and gigabit internet.

Sparsely populated areas are a different story. Providers seldom extend networks to regions with few customers. This means that businesses and residents in some areas currently don’t have access to high-speed Internet.

The European Commission is trying to level the playing field. A new legislative change makes it easier for member states to invest in the network expansions of providers.

State aid

In general, European governments can only provide state aid to companies in exceptional circumstances. The foundation of the European Union is a free market and equal footing for businesses from different member states. Without state aid limitations, companies in rich countries would have an advantage over companies in poorer countries.

To give an example, the Netherlands cannot invest in national providers like VodafoneZiggo and KPN on a whim. The same applies to every other member state and provider. The new legislative amendment changes things. Countries will be allowed to finance network expansions under certain conditions. The rules are expected to take effect in January 2023.

The European Commission shared an online summary of the conditions. Broadly speaking, governments can only invest in network expansions that contribute to high-speed coverage and are unattractive without state support. This applies to both mobile 5G networks and fixed gigabit connections.

Tip: The EU is behind on 5G deployment