Government money for a broadband programme

Ministry of Transport and Communications
Publication date 25.11.2008 13.12
Press release

The Cabinet Committee on Economic Policy is recommending state involvement in the funding of a national broadband programme. A public subsidy will account for a maximum of 67% of the investment, with the state providing no more than 33%.

The Cabinet Committee discussed funding for the programme and how the subsidies would be administered at its meeting on 25 November.

A condition of the government financing programme is that the Regional Councils and municipalities (local authorities) act in accordance with the Committee's policy guidelines and that the European Commission approves the subsidy. The Government is seeking a solution where EU Structural Funds would be available to reduce the contribution made by the local authorities.

Public financing will be used if the target levels for the broadband programme cannot be achieved commercially.
A report commissioned by the Ministry of Transport and Communications suggests that fast broadband networks will develop commercially, with around 95% of them available by the year 2015. The need for the public subsidy would then apply to some 4-5% of the entire population

Lindén: Broadband to be a basic service

The Government argued in its cabinet evening session in September that a broadband rate of one megabyte per second should be a quality universal service, available to everyone in the country at a fair price. This would be in place by the end of 2010.

"Information society policy has reached a point where broadband has become something akin to a basic service," says Minister of Communications Suvi Lindén. "That is why everyone needs to be guaranteed access to it - it has to become a universal service."

"In today's information society top quality broadband connections are essential for people's everyday dealings or business and entrepreneurship everywhere in the country. With eservices, the need for faster connections is growing."

The Government also proposed in September that broadband at a speed of at least 100 megabytes should be available to virtually all main places of residence and businesses as well as public administration centres throughout the country by the end of 2015 at the latest, according to demand. The subscriber should never be more than two kilometres away from the public telecommunications network.

Lindén believes that the quality of connections is as important as their availability. If a connection from a trunk network to a subscriber is wireless, fast broadband access must be delivered reliably using mobile technology.

The Communications Minister also alludes to the impact on employment the broadband project will have, both whilst the new connections are being established and after they have started to be used. The six-year network construction project will be the equivalent of around 3,000 person years.

"The push for growth the investment will bring with it will do more to improve employment than is the case during the construction stage. The more efficient telecommunications links will boost demand for goods and services, which in turn will create permanent jobs," suggests Lindén.

An annual investment of 11 million euros

The Government is to participate in the financing of a broadband plan to the tune of 11 million euros a year during the period 2010-2015, i.e. a total of 66 million. The necessary appropriations will be added to the state budget within the spending limits of the Ministry of Transport and Communications.

The action plan extends to a frequency auction trial for one frequency range. For this a separate Act of Parliament will be enacted.

The Cabinet Committee on Economic Policy also adopted a position on the principles for administering the broadband subsidy. The Regional Councils will have a key role to play here.

The Regional Councils, together with the local authorities, telecom companies in the area, and the Finnish Communications Regulatory Authority are embarking on a project to assess how the demand for fast connections will grow and what the needs for development will be for the public telecommunications network by the end of 2009. Given that some of the target levels for 2015 are unlikely to be met commercially, the Regional Councils will draft plans to achieve them.

The plans will be assessed by the Finnish Communications Regulatory Authority. The Government will decide on how subsidies should be allocated among the regions. The Regional Councils will invite companies or consortiums to submit tenders and will grant the local authority/EU Structural Fund subsidy.

Further information is available from:

Aleksi Randell, Special Adviser, tel. (09) 160 28324 or 0400 500 822
Juhapekka Ristola, Director of the Communications Networks Unit, tel. (09) 160 28348 or 0400 788 530