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EU waves through French 2G rural roll-out subsidy

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Europe's Competition Commissioner has given the go-ahead for member states to invest millions in high-speed Internet and mobile networks in disadvantaged areas.

According to reports, Competition Commissioner Mario Monti recently sent a letter to France's junior minister for town and country planning, Jean-Paul Delevoye, stating that, under certain conditions, the French government's plans to build mobile infrastructures in poor and rural regions would not break state aid rules.

"We understand the new infrastructures will be built and funded by the state, which will remain as their owner. As such, this state intervention does not come under [the EU state aid rules]," said the letter. The infrastructure will also have to be offered to all operators at competitive prices in order not to breach EU competition regulations.

The backing for France's plans in this area is likely to prompt greater investment by other EU member governments in broadband and mobile networks, particularly after Regional Development Commissioner, Michel Barnier, also wrote to Delevoye to tell him that the EU would contribute structural funds for such investments in poorer areas.

"I confirm to you my agreement on the use of European structural funds to co-fund some infrastructures to allow the mobile telephone and Internet into regions which are currently deprived of these services," wrote Barnier.

It is thought that the French scheme will see the country's three leading mobile operators receive around €20 million in EU structural funds in order to complete France's second-generation network. The French government will contribute €44 million and the operators will put approximately €100 million towards the cost of the project.

"We want to help mobile operators finance investments that they would not otherwise make," a spokesperson for Delevoye told the Financial Times. He added that structural funds had been used in a similar fashion in Scotland.

The subsidies chime with sentiments expressed in European Commission's eEurope 2005 report. Launched last May, it recommended that member states and the Commission should co-operate to support the deployment of broadband in less favoured areas through structural funds and/or financial incentives.

Around €10 billion has been set aside by the Commission for investment in projects that would reduce the "digital divide", including the upgrading of telecoms infrastructure to support broadband. The Commission is set to shortly issue guidelines on the use of these funds.

© ENN

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