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We provide for an evaluation of the impact of public subsidy schemes that aimed to support the development of basic broadband infrastructure in German rural areas. Such subsidies are subject to state aid control by the European Commission (EC). While the EC increasingly recognises the role of economic analysis in controlling public aid to companies, there are to date no full retrospective studies performed on state aid control. We do not only analyse whether the aid was effective in solving a market failure — a low broadband coverage in rural areas — but also study its impact on competition outcomes, both on rival firms and on consumers. We adopt a difference-in-differences framework and contrast municipalities that implemented the aid with comparable municipalities that did not, after using a matching procedure to select control groups based on their observable characteristics. We find that the aid significantly increased broadband coverage by a magnitude between 15% and 28%, depending on speed. Moreover, we find that the number of ISPs has significantly increased in the areas receiving aid when compared to the control group by ca. 0.2 entrants. This additional entry significantly decreased average prices — albeit the effect is economically small at 0.3%. Therefore, the subsidies complied with EU state aid rules.