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The European Union has just agreed on its budget for the years 2014-2020, and it’s the first time that budget has actually been cut. Unfortunately for European broadband projects that were counting on money from a €7 billion ($9.36 billion) central fund, that’s where a huge chunk of the €34 billion in savings came from.

This formed the bulk of the €9.2 billion “digital part” of the Connecting Europe Facility (CEF), a part that got trimmed down to €1 billion in budget negotiations. That remaining billion will now go to a different subsection, to do with nailing down cross-border digital services such as e-procurement and e-invoicing. The whole ambition of using €7 billion in EU funding over the coming seven years to accelerate deployment of fibre-access broadband networks — which was in turn supposed to help businesses take up cloud services – just went bye-bye.

The cut could potentially hit rural areas and small towns the hardest. However, digital agenda commissioner Neelie Kroes, who must be bitterly disappointed as she’s worked on the CEF plans for years, issued a statement in which she said she was still shooting for the goals of having half of Europe surfing at more than 100 Mbps, and the rest on at least 30 Mbps, by 2020:

“It is clear that there can be no support for broadband with a pot of only €1bn, so this funding will be exclusively for digital services. Our 2020 fast broadband targets, agreed by everybody, may be harder to reach but I am not giving up on them. I will keep fighting, and I will support innovations that help roll-out fast broadband to underserved areas.”

Kroes went on to warn that member states would now need to rigidly adhere to her recently-announced 10-point regulatory plan for upgrading Europe’s broadband infrastructure, in order to hit targets:

“National governments will not achieve their own ambitions if they fail to offer this support. And their own support schemes will come under great pressure to serve areas where the market alone will not act.”

European telecoms providers had previously begged the continent’s leaders not to cut the broadband part of the CEF, arguing that such a move would harm the EU’s competitiveness. It should also be noted that the European Parliament still has to approve the budget before it can come into force.

UPDATE (Monday 11 Feb): It looks like there will be a serious fight over this budget in the European Parliament. From a statement issued by several blocs of parliamentarians:

“… We cannot accept a budget based solely on priorities of the past. We must maintain support for future-oriented policies, strengthening European competitiveness and research.”