Eu Reports Lower Prices in Telecom: is it Only Due to Regulations?

European consumers continue to benefit from lower prices and innovative services as a result of good progress in the implementation of Europe’s telecom rules. However, for consumers and providers to reap the full benefits of Europe's internal market, more competition and a more consistent and speedy application of remedies and regulators that are more independent are necessary.

A point emphasized on the European Commissions 12th report on the EU's telecom markets, recently issued.

David Quirk, CEO of C21 , said: We would add that an important impact on prices comes from the fast adoption of VoIP services by the European consumers and businesses. C21 Communications is a VoIP solution provider and exclusive distributor of Topex products (softswitches, media gateways and fixed mobile convergence equipments) in the UK.

The opening of telecom markets to competition is certainly one of the EU’s success stories as can be seen by the downward trend in tariffs and better services.

However, whilst 2.3% growth of the sector and 5% additional investment are good, they are not good enough in times when Europe’s competitiveness is a stake," commented Viviane Reding, EU Commissioner for Telecommunications.

“This is why this years reform of the EU's telecom rules must focus regulation on those key bottlenecks where competition is still not effective.

In a sector where technology transcends national borders, regulators should pave the way for pan-European economies of scale that are in the interests of both operators and consumers."

The Commission report takes a snapshot of Europe's telecom markets, worth almost 290 billion in revenues, just prior to the reform of the EU telecom rules. It includes individual chapters covering the situation in each EU Member State.

Highlights of this years report:
Lower prices and more consumer choice

Prices for a 3 minute national fixed telephone call have gone down from around 41.8 percent in 2000 to 25 percent today.

The prices of domestic mobile services have decreased by up to 13.9% in the past year.

Moreover, more than 31.4 million mobile customers (up by 6.3 million) made use of their right under EU law to keep their number, when changing subscription from one operator to another.

Of all Member States, Spain has the highest number of consumers choosing to do this (9.21 million).

For fixed-line telephones, more than 15 million customers in the EU also switched operators in this way (compared to 7 million in 2005).

In Sweden, it is already possible for consumers to retain their number, when switching to VoIP services.

Mobile markets are maturing

Revenue growth was 4.6% in 2006. With 478.4 million mobile phones in use, penetration in Europe is now at 103% of population (up from 95% in 2005). Penetration is highest in Luxembourg (171%), Italy (134%) and Lithuania (133%).

Fixed voice telephony: operators' revenues decline

Revenues decreased by between 4.5 and 5.1% in 2006. Competition continues to drive the market shares of the incumbents down; they are now on average at 65.8% of retail revenues in the EU25.

Competition drives fast broadband growth

Revenue growth was between 7.8% and 8.5% in 2006. More than 20 million additional broadband subscriptions were taken up in 2006, bringing penetration in the EU25 to 15.7%.

The Netherlands (29.8%) and Denmark (29.4%) now have the highest broadband penetration rates in the world topping South Korea while seven Member States have higher broadband penetration rates than the US.

Countries where regulators have imposed access obligations on the incumbent operator networks and where infrastructure based competition has started to unfold, are seeing the highest growth rates.

Lack of a level-playing field for operators

The Commissions report also points to some of the most burning regulatory issues that are still unresolved:
• Lack of truly independent national regulators: in particular in Poland and Slovakia. In other Member States, political influence over the day-to-day work of the national regulator continues to be cause for concern.

• Delays in imposing remedies to competition problems: in some cases (Italy, Portugal, Greece and Germany) caused by lengthy legal appeals against the decisions of national regulators.

• Very different remedies for similar competition problems: Broadband bitstream-access offers remain inconsistent across the EU, and call termination charges vary significantly from country to country.

• Inefficient and fragmented management of radio spectrum: Radio spectrum supports services worth over 200 billion. An EU-wide approach to managing radio spectrum could generate up to 0.1% of additional GDP growth.

• Incomplete deployment of the 112 emergency number: In 2006, the Commission had to start infringement proceedings against 13 Member States.

Cross-border competition, economic growth and consumer benefit could be enhanced substantially if the EU moved from 27 different national systems to a more consistent regulatory approach throughout Europe.

Market players already generate today around a third of their revenue in Member States other than their own.

The Commission will address these issues with the reform of the EU Telecom rules, planned for summer this year.