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EC backs state aid to fund broadband

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The European Commission (EC) is urging countries to invest in broadband and use all the state aid funding available to ensure that high speed net access is available in rural and remote areas.

It remains adamant that broadband is essential to future prosperity and the creation of jobs. And while competition and open markets are accepted as the best ways to deliver broadband among the 25 member states, there are concerns that rural areas could miss out.

Which is why the EC is urging countries to to "make clever use of all policy instruments" to ensure that broadband is available for all Europeans by 2010.

Eurocrats say that where private investment fails to deliver broadband, state aid should be considered to help fund investment such as public/private partnerships to support the construction of open networks. Although there's plenty of cash sloshing about for state-funded investment, the EU insists that aid can only be used as long as it doesn't interfere with the market.

"Deployment of broadband may be hampered by market failures in rural and remote areas," said Viviane Reding, commissioner for Information society and media, yesterday. "In such cases, well-targeted state aid may therefore be appropriate...but we have to make sure that state aid does not crowd out private initiative, nor distort competition to an extent contrary to the common interest."

Commissioner Danuta Hübner, commissioner responsible for regional policy chipped in: "Where there are genuine market failures, the EU Structural Funds play a vital role in stimulating investments in broadband infrastructure and services, boosting competitiveness and innovation and enabling all regions of Europe to participate fully in the knowledge economy."

Last month the EC gave the green light for plans by the Welsh Development Agency (WDA) to construct an open, carrier-neutral, fibre-optic network to wire up 14 Welsh business parks in North Wales.

As part of the state aid-funded scheme the network would remain in public ownership but would be available to telecoms operators to provide broadband to business users.

Speaking at the time competition commissioner Neelie Kroes said the project was "fully in line with the commission's policy to promote broadband in rural and remote areas". Although the project has been given the thumbs up by the EC, the Welsh Assembly Government is not expected to make a final decision on the project until later this year. ®

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