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Feb 22 2006

Telecom operators in Europe are investing in new technologies to cut costs and seize new opportunities opened up by the convergence of communication networks, media content and devices. Growing competition, especially in retail markets, is bringing increased consumer benefits and the outlook for innovation and investment within Member States and across borders is positive, says the European Commission’s latest Report on European Electronic Communications Regulation and Markets, issued today. Member States have made good progress in implementing the EU telecom rules of 2002, which is opening up markets to new entrants. The report highlights rapid take-up of high-speed “broadband” internet connections. In the mobile phone sector, while take-up of services is still growing, particularly in the new Member States, there are signs that the voice market is maturing. Meanwhile, revenues from traditional voice services remain the largest source of revenue in the fixed line market, despite a gradual decline.

“The rich economic data of this year’s report will allow the Commission to make a solid assessment of the impact of the EU telecom rules of 2002 as a basis for our review of these rules in the course of 2006”, said Viviane Reding, Commissioner for Information Society and Media. “My objectives in this review process are strengthening investment through infrastructure-based competition; promoting innovation through openness of the rules for new technologies; and completing the single market by making the application of EU rules more consistent across the 25 Member States and by encouraging cross-border communication services.”’

This year’s review of the EU telecom markets takes a snapshot of the situation in the electronic communications sector prior to the review of the framework. It looks at the latest market developments mainly in broadband, mobile and fixed services, the regulatory environment and the consumer interest.

During 2005, operators have started to offer portfolios of services (triple play and even quadruple play), with different combinations of low-cost voice (including mobile), internet access and audiovisual content to attract and retain customers. Increased regulatory certainty has been stimulating cross-border capital investment and mergers/acquisitions. During the year, cross-border investments were driven by economies of scale and we are seeing the first signs of pan-European expansion strategies.

Presenting the Report in Brussels, Commissioner Viviane Reding welcomed the progress made with the opening of national telecom markets, but added that further work was needed. The report shows that competition is already delivering substantial consumer benefits, especially in the broadband and mobile services sectors. Broadband, thanks to competition and investments, has seen significant growth, with a rise of almost 20 million subscriptions to 53 million. Mobile phone penetration has now reached almost 93% and exceeded 100% in eight Member States.

The report shows that some Member States have now introduced virtually all the national laws and regulatory practices required to implement EU telecom rules, and the remainder have made substantial progress. Greece, the last Member State to transpose these rules into its national law, completed the task in January 2006.

This year’s report also stresses the need to cut the cost of using a mobile phone abroad (“international roaming”), to raise public awareness for Europe’s single emergency number and to avoid subjecting emerging internet telephony services to excessive regulation.