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The European Council has agreed funding of €1bn for the rollout of broadband and improved digital services across Europe, far below the €9.2 first requested by the European Commission.
The funding was first requested in 2011 to boost Europe's broadband infrastructure by ensuring all homes and businesses can access superfast services by 2020.
However, the budget report from the Council agrees only to a €1bn payout. By contrast energy received budgets totalling €5.2bn and transport €23bn. The funding could be reduced further when debated by the European Parliament.
The move was criticised by the vice president for the digital agenda, Neelie Kroes, who said such a low amount could not be used for broadband.
"This funding will have to be exclusively for digital services: because such a smaller sum does not leave room for investing in broadband networks," she said.
"I regret that: because broadband is essential for a digital single market, the rails on which all tomorrow's digital services will run; and this could have been an innovative and highly-market oriented way to deliver it, almost budget-neutral in the long run."
Kroes promised she would continue to fight for more funding for broadband projects but said national governments would have to do more.
"If they do not support that wider policy agenda, national governments will not achieve their own ambitions on broadband and the digital divide," she said.
"They will face far more pressure to set up their own support schemes in areas where the market alone will act; and we risk not being able to build a connected, competitive continent."
Her criticisms were echoed by several industry bodies including the Fibre To the Home (FTTH) Council Europe.
"By reducing the financial envelope down to €1bn for telecommunications there will be no room for the support of fibre infrastructure investments," said Karin Ahl, president of the FTTH Council.
"The decision shows that there still is a lack of understanding of European governments on the importance of future-proof broadband networks."
In the UK, the government has set aside £530m for broadband funding, with BT currently scooping a raft of contracts from local authorities under the Broadband Delivery UK framework.
Dan Worth is the news editor for V3 having first joined the site as a reporter in November 2009. He specialises in a raft of areas including fixed and mobile telecoms, data protection, social media and government IT. Before joining V3 Dan covered communications technology, data handling and resilience in the emergency services sector on the BAPCO Journal.