The Government proposes EU-required amendments to the Act on Broadband Construction Aid - funding only for fixed connections

On 21 October 2021, the Government submitted to Parliament a legislative proposal for amending the Act on Broadband Construction Aid. The most significant amendment is that in the future, aid could only be granted for constructing fixed connections. At the same time, the name of the act would be changed from the current Act on Broadband Construction Aid to Act on Fixed Broadband Construction Aid.

The broadband aid scheme is governed by the EU Commission's General Block Exemption Regulation, which includes provisions on such things as the conditions under which broadband infrastructure can be supported. The Commission has amended the Regulation, and the amendments entered into force on 3 August 2021. Changes to the EU State Aid regulation must be implemented nationally by 3 February 2022, at which time the Act would enter into force.The proposed amendments to the Act on Broadband Construction Aid would continue its compliance with the General Block Exemption Regulation and the European Union's State Aid rules.

The amended General Block Exemption Regulation now has separate criteria for provision of aid for fixed and wireless networks. According to the Regulation, aid cannot be provided to 5G networks in areas where 4G or 5G networks already exist. In Finland, 99.9 per cent of the population has access to 4G networks. Therefore, Finland could not grant aid for the construction of 5G connections in the future, which is currently possible under the present Act.

The amendments would also further specify the preconditions for granting the aid. The Government also proposes more detailed regulations on how to perform the market analysis for a broadband project. The analysis results are used for confirming the areas eligible for aid and for ensuring that the aid does not interfere with competition.

The preparation phases assessed the possibility of submitting a pre-notification to the Commission as an alternative to implementing the General Block Exemption Regulation. However, the comprehensive assessment indicated that it is highly unlikely that the Commission would accept the continuation of the current aid scheme under the conditions of the old General Block Exemption Regulation. In addition, the pre-notification procedure would slow down the utilisation of the funding from the EU recovery instrument and the attainment of its goals.

The minimum speed of eligible connections would increase

The requirements for the minimum speed of eligible connections have been increased in the General Block Exemption Regulation. According to the regulation, the minimum download speed for eligible high-speedbroadband connections is 300 megabits per second and the minimum upload speed 100 megabits per second. The minimum speed of an eligible connection is laid down by a government decree which is proposed to be changed.

Municipal contributions belong to the scope of national regulation, and no changes are proposed to them.

What next?

The proposal submitted by the Government to the Parliament will now undergo a preliminary debate in the plenary session, the time of which is stated on the Parliament's website (in the "Tulevat täysistunnot" section, in Finnish). After the preliminary debate, the proposal will be considered in a committee reading. The proposed Act should enter into force on 3 February 2022.

In the budget proposal for 2022, the Government proposes EUR 15 million for the broadband aid scheme. It seeks to make high-speed broadband connections available for 30,000 households. The proposed appropriation is a part of the funding applied for from the EU Recovery and Resilience Facility.

What is the broadband aid scheme?

Finland continued its broadband aid scheme in accordance with the Government Programme at the start of 2021, during which the latest Act on Broadband Construction Aid entered into force. The scheme is aimed at areas where no commercial broadband will be made available before 2025.

The scheme is funded by EUR 5 million from the 2021 budget. Under the current regulations, aid can be granted in a technology-neutral way, i.e. also for the construction of 5G connections until 2 February 2021. In addition, Finland has applied for EUR 50 million from the EU's recovery instrument to support broadband, which would complement the national broadband aid scheme from 2022 onwards.

Regional Councils will organise tendering for project areas on the basis of which network builders are selected. The network builder selected through the tendering process may apply for aid from the Finnish Transport and Communications Agency Traficom.

More information:

Maija Ahokas, Director of Unit, tel. +358 (0)295 342 390, maija.ahokas(at)gov.fi, Twitter @mmaija

Aino Koskinen, Senior Specialist, tel. +358 (0)295 342 224, aino.koskinen(at)gov.fi