Last week, the European Council signed an agreement on the next multiannual financial framework.
The European Union (EU) has decreased broadband funding to the Connecting Europe Facility (CEF) to €1bn from the proposed €9.2bn.
The European Commission (EC) said CEF will support the roll-out of high-performing, sustainable, trans-European networks in the fields of transport, energy, and broadband & digital services.
EC said conservative estimates indicate that it could stimulate investment worth over €50bn, touching 45 million households and more than 100 million Europeans, while playing an important role in helping Europe reach its fast and ultra-fast Internet targets.
Last week, the European Council signed an agreement on the next multiannual financial framework (MFF), which lays down the EU's budgetary priorities for the years 2014-2020.
European Commission vice president, Neelie Kroes, criticised the cut saying the funding will have to be exclusively for digital services because a smaller sum does not leave room for investing in broadband networks.
"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 said.
"Nonetheless, we have all agreed on broadband targets for Europe, including fast broadband coverage for all by 2020. Those agreed objectives are now harder to reach, but we should stay focused on that goal.
"I will keep fighting, and I will support innovations that help roll out fast broadband to underserved areas: the Connecting Europe Facility was an important tool to move towards that goal, but not the only one."