The European Commission has said the government's plan to provide super-fast broadband coverage to 90 percent of the UK can continue using public cash.
The Broadband Delivery UK (BDUK) scheme, which plans to use at least £530m of government money to deliver super-fast (24Mbps or above) connectivity to 90 percent of the UK by 2015 and at least 2Mbps to everyone, had been waiting for the approval to use State Aid cash to fund the rollouts. Under State Aid rules, the EU must be informed, and approve of, any plans to use public money.
"Finally getting the green light from Brussels will mean a huge boost for the British economy. Super-fast broadband is essential to creating growth, jobs and prosperity and the delay has caused frustration within Government," Maria Miller, Secretary of State for Culture, Media and Sport (DCMS), said in a statement on Tuesday.
"Today's announcement means that we can crack on with delivering broadband plans, boosting growth and jobs around the country."
In addition to boosting the headline speeds received in towns and cities, the BDUK scheme is designed to entice infrastructure providers to improve broadband services offered in more remote, rural areas, which are often overlooked in commercial rollouts.
"BDUK, as a national competence centre, will assist local granting authorities in designing and implementing successful broadband support measures in line with EU competition rules," Joaquin Almunia, vice president in charge of competition policy at the European Commission, said in a statement.
BDUK outlined how much cash it was going to spend in August 2011. It subsequently created a framework agreement, aimed at speeding up the allocation of cash once a supplier had been decided for a specific region. BT and Fujitsu are the only companies that made it onto the framework, as they were the only ones able and willing to deliver a local broadband infrastructure project.
However, since the framework was established, only BT has won bids to supply infrastructure. This prompted Almunia's investigation into the use of State Aid funding, after concerns were raised about a possible lack of competition.
Tuesday's green light from the EU removes the last barrier to BT starting to get equipment into the ground.
"State Aid approval means that local authorities can now sign procurement contracts with contractors and begin delivery work on their new broadband infrastructure projects," DCMS said. "Broadband Delivery UK (BDUK) has planned a 'pipeline' of local authority projects which are currently going into procurement at a rate of approximately one a week."
The first projects to go ahead will be Wales and Surrey, followed by Cumbria, Rutland, Herefordshire and Gloucestershire "shortly afterwards", according to DCMS.
In addition to the £530m BDUK broadband investment, the UK will spend another £150m from its super-connected cities fund on delivering 80Mbps-100Mbps download speeds in 10 cities.
Under the rules of the BDUK scheme, the winning bidder needs to match public funding with private investment. This means the £690m of public cash pledged should be doubled, for an eventual total of about £1.4bn.
If it reaches its targets, BDUK will go some way towards fulfilling the goals of the EU's Digital Agenda. This aims to ensure that all European residents have access to broadband speeds above 30Mbps and that at least 50 percent of households subscribe to packages of above 100Mbps by 2020.