MuniWireless

The European Commission has released its 12th report on the EU’s telecom markets, worth almost ‚Äö?ᬮ290 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. No surprise: broadband is the fastest growing segment.The European Electronic Communications Regulation and Markets 2006 (12th report) is one of the most detailed reports I have ever seen on the state of telecoms in the European Union. It’s a must-read, albeit you’ll spend several hours sifting through fascinating little bits of data. They have reports on each country, including the new member states like Estonia, Slovenia, etc.

According to the Commission, consumers have more choice because of more competition, but the national regulators do not evenly apply the rules. The Commission wants an FCC-style regulator that would “rule” over the country regulators. Viviane Reding, EU commissioner for telecommunications, also wants functional separation where the telcos’ services are separated from their network/transport business. Reding singled out Germany, Portugal, Italy and Greece for delaying full implementation of EU rules. Recently, the Commission filed suit against Germany for allowing Deutsche Telekom to exclude competitors from their fiber optic networks.

Here are key points from the report.

(1) Competition drives fast broadband growth. Broadband is the fastest growing segment, with revenue growth estimated at between 7.8% and 8.5% helping to offset the decline in voice revenues. More than 20 million broadband lines were taken up in 2006, an increase of 39% on 2005, 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’s networks and where infrastructure based competition has started to unfold, are seeing the highest growth rates. Infrastructure-based competition and effective regulation continue to be key drivers.

(2) Prices for a 3 minute national fixed telephone call have gone down from around 41.8 ‚Äö?ᬮ-cent in 2000 to 25 ‚Äö?ᬮ-cent today. The prices of domestic mobile services have decreased by up to 13.9% in the past year.

(3) 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.

(4) Mobile markets are maturing. Revenue growth in mobile telephony 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%).

(5) In fixed voice telephony, operators’ revenues are declining. 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.

(6) The Commission’s report also points to some of the most burning regulatory issues that are still unresolved:

‚Äö?Ѭ¢ 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.

‚Äö?Ѭ¢ 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.

‚Äö?Ѭ¢ 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.

‚Äö?Ѭ¢ Inefficient and fragmented management of radio spectrum: Radio spectrum supports services worth over ‚Äö?ᬮ200 billion. An EU-wide approach to managing radio spectrum could generate up to 0.1% of additional GDP growth.

‚Äö?Ѭ¢ 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 1/3 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.

Further Information
The 12th implementation report is published on Europa (here).

See press pack for additional fact sheets and country specific summaries.

Side note — David Deans posted this comment to my article on US broadband policy: Meanwhile, the Global Economic Forum released the “The Global Information Technology Report 2006-2007.” Denmark is number one for the first time, moving up 2 positions from last year and reflecting an upward trend dating back to 2003. The other significant change, the U.S. has moved from first to sixth place, as a result of a downward trend that has been documented in various other independent studies: http://www.weforum.org/gitr

Related posts:

1. Europe’s Digital Divide: gap between countries’ broadband penetration grows
2. EU releases detailed report on European telecom markets
3. Bad news for European broadband: Germany takes over EU presidency