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News article21 December 2022Representation in Cyprus

State aid: Commission approves €12 million Cypriot scheme under the Recovery and Resilience Facility to support access to high-speed broadband services

The European Commission has approved, under EU State aid rules, a €12 million Cypriot voucher scheme, made available in part through the Recovery and Resilience Facility (‘RRF'), to help households access high-speed broadband services.

EU and Cyprus flags

The scheme is aimed at fostering the digitalisation of the country and will also contribute to the EU's strategic objectives relating to the digital transition.

The Cypriot scheme

The scheme, which will run until 30 June 2025, will be partially funded via the RRF, following the Commission's positive assessment of the Cypriot Recovery and Resilience Plan and its adoption by the Council. The scheme supports the take-up of broadband services over the existing infrastructure, ensuring a wide availability of high-speed broadband services to citizens.

Under the scheme, the aid will take the form of vouchers to households not having a subscription to a connection providing at least 100 megabits per second (Mbps) download speed. The scheme will cover part of the set-up costs and the first 12 months of subscription to broadband services providing at least 200 Mbps download speeds.

The scheme will benefit approximately 82,000 households. All broadband service providers capable of providing the eligible services will be eligible under the measure.

The Commission's assessment

The Commission assessed the scheme under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union, which allows Member States to support  the development of certain economic activities or of certain economic areas under certain conditions.

The Commission found that:

  • The scheme is necessary to address a market failure, namely the slow take-up of eligible broadband services by households in Cyprus. Even though networks able to provide the high-speed broadband services are widely available in Cyprus and despite households' growing needs for performant connectivity, data shows that the take-up of such services by Cypriot households continues to be relatively low.
  • The measure has an incentive effect, since connectivity and access to broadband services would not be facilitated to the same extent in the absence of public support.
  • The scheme has sufficient safeguards to ensure that undue distortions of competition are limited and that the aid does not have undue negative effects on competition and trade in the EU. In particular, the measure is proportionate as it is limited to the minimum necessary and in time. In addition, the scheme is technologically neutral, ensuring equal treatment of broadband services providers capable of providing the eligible services. Furthermore, the measure covers part of the costs of subscribing to new high-speed connections or of upgrading existing connections.
  • Cyprus carried out a market assessment and a public consultation that show that the design of the measure prevents conferring a disproportionate advantage on one or more specific service providers to the detriment of others, also in the light of the wholesale access obligations provided by the relevant national regulation.

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

Background

All investments and reforms entailing State aid included in the national recovery plans presented in the context of the RRF must be notified to the Commission for prior approval, unless covered by one of the State aid block-exemption rules.

The Commission assesses measures entailing State aid contained in the national recovery plans presented in the context of the RRF as a matter of priority and has provided guidance and support to Member States in the preparatory phases of the national plans, to facilitate the rapid deployment of the RRF. At the same time, the Commission makes sure in its decisions that the applicable State aid rules are complied with, in order to preserve the level playing field in the Single Market and ensure that the RRF funds are used in a way that minimises competition distortions and do not crowd out private investment.

Broadband connectivity is of strategic importance for European growth and innovation in all sectors of the economy and for social and territorial cohesion. The scheme contributes to the EU's strategic objectives set out in the Gigabit Communicationthe Communication on Shaping Europe's digital futurethe Digital Compass' Communication, as well as the Digital Decade Policy Programme recently adopted by the European Parliament and the Council.

The Cypriot scheme adopted today is consistent with the revised Communication on State aid for broadband networks (‘Broadband Guidelines') that was adopted on 12 December 2022 and that will enter into force the day following its publication in the Official Journal of the European Union, which is expected in January 2023. The revised Broadband Guidelines consolidate the assessment framework for State aid measures aiming to incentivise consumers and business to use broadband services, including connectivity vouchers.

For more information

The non-confidential version of the decision will be made available under the case number SA.102977 in the State Aid Register on the Commission's competition website once any confidentiality issues have been resolved. The State Aid Weekly e-News lists new publications of State aid decisions on the internet and in the Official Journal.

Details

Publication date
21 December 2022
Author
Representation in Cyprus