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IP/01/1778

Brussels, 10th December 2001

Commission publishes working document assessing the performance of industries providing services of general economic interest

A working document produced by the European Commission's services on the performance of industries providing services of general economic interest (telecommunications, energy, post and transport) concludes that prices have fallen but that consumer satisfaction remains limited. Former monopoly service providers retain high market shares. It is not possible, so far, to assess the long-term impact of liberalisation on services of general interest. But, on the basis of available information, liberalisation seems to have had a positive net impact on overall market performance, and on the affordability of universal services, while the provision of these services has not been adversely affected.

Internal Market Commissioner Frits Bolkestein said "This report provides initial evidence of progress in improving the performance of some of the services that everybody needs and in getting better value for money for both industrial and private consumers. But there is a long way to go. I am confident that liberalisation within the Internal Market will lead to further improvements." According to Pedro Solbes, Commissioner for Economic and Monetary affairs "the report confirms that further work is needed in these sectors in Europe. It is only by modernising further our economies that we can increase our growth potential and create employment over the medium term".

The report was produced at the suggestion of the Nice European Council (2000) and complements the Report on Services of General Interest adopted by the Commission on 17 October for the Laeken European Council in mid-December 2001 (see IP/01/1427). It offers a first attempt to evaluate how sectors providing services of general economic interest are performing.

The report is not meant to evaluate the impact of liberalisation although, whenever possible, reference is made to the first wave of effects resulting from the opening up of markets to competition. Future evaluations will be based on a methodology that the Commission will define next year.

Evaluation of consumer satisfaction with the main public services

Social categories Middle-higher

Social categories Middle-lower Sensitive population categories
Electricity
- Overall satisfaction 7/7.5 7 7
- Satisfaction with prices 5/5.5 5 5.5/6
Fixed telephony
- Overall satisfaction 6 6/6.5 7
- Satisfaction with prices 5 5 5.5
Mobile telephony
- Overall satisfaction 6.5/7 7/7.5 7.5
- Satisfaction with prices 5 6 6
Air transport
- Overall satisfaction 6.5/7 7 7/7.5
- Satisfaction with prices 5.5/6 6 5.5/6
Inter-city rail transport
- Overall satisfaction 5.5 6/6.5 5.5/6
- Satisfaction with prices 4.5 5.5 5.0
Urban public transport
- Overall satisfaction 5.5 5.5/6 5.5
- Satisfaction with prices 5.5 5/5.5 5/5.5

Note: All countries taken together, the satisfaction of European citizens questioned about the service in general and its price emerges as follows (rounded average marks on a scale from 0 to 10)

Source: OPTEM, "Qualitative study carried out in the 15 Member States on peoples' attitudes to services of general economic interest", 2001.

Telecommunications

In telecommunications, incumbent operators' market shares have shrunk most in countries where liberalisation started earliest, especially in international calls and mobile telecommunications. However, incumbent former monopolists still maintain high market shares. The entry of new firms into the market has led to more effective competition except for local calls. Prices have fallen by about 3% per year between 1996 and 1998, then by 7.5% between 1999 and 2001, making services more affordable for Europeans of all income levels. Employment in the sector has increased.

Telecom price level 1995-2000 (EU weighted average) (in euros - prices net of taxes for 3 minutes calls)

199519961997199819992000
Local calls0.140.140.110.120.120.11
Long distance calls0.870.850.630.540.440.40
International calls1.681.661.351.211.140.97
Mobile calls---0.860.730.65

Telecoms consumers are fairly satisfied with mobile technology and appreciate falling prices, but remain sceptical overall. They complain about increases in fixed fees such as subscription charges, the complexity of new tariff structures and, in some countries, difficult relationships with suppliers, for example as a result of a lack of transparency in contracts.

Postal services

Europe's postal services offer higher ratios of provision in terms of population and geographic density of the network than the USA. Universal service is a reality in telecommunications and postal services. However, quality indicators give a more mixed picture of the performance of such services.

Universal service in postal services: Access conditions in the EU and the USA

Europe

USA
Collection letterboxes per 10,000 inhabitants17.613
Collection letterboxes per 1,000 sq. km204.538.4
Postal outlets per 10,000 inhabitants3.41.5
Postal outlets per 1,000 sq. km404.5

Energy

In energy sectors, few new firms have entered the market and incumbent operators still enjoy considerable market shares. Electricity prices have fallen, but households have benefited less than commercial consumers. Significant price differences across Europe point to continuing fragmentation in the Internal Market for energy.

Gas prices reflect differing prices at the origin of the supply and divergent conditions in domestic markets. Gas market integration is needed to tackle physical bottlenecks and inadequate national de-regulation. For example, in some countries, access to interconnection capacity remains non-market based. Regulation plus strict application of competition rules could be the key to ensuring fair competition and good market performances in the near future.

Of all the services studied, gas and electricity registered the highest consumer satisfaction ratings for services provided, although satisfaction with electricity prices is relatively low.

Affordability indices for low income households (2001-1996)

Cost of typical annual consumption

TelecomsElectricityGas
200119962001199620011996
AT1.01.30.80.90.60.4
BE0.50.71.01.50.80.8
DE0.50.71.11.30.90.9
DK0.60.80.80.8NANA
ES0.61.21.83.01.72.0
FR0.90.90.81.10.70.8
ELNANA1.01.8NANA
IRLNANA1.01.61.01.8
IT1.22.01.31.21.51.5
NL0.81.30.91.00.20.7
PT3.24.42.84.0NANA
UK1.01.11.21.30.50.7

Percentage of per capita income needed to pay for the different bundles of services. Consumers included in the lower 20% income bracket. Telecom charges have been calculated on the basis of special low income household tariffs

Transport

In the road and railway transport sectors. consumers value quality and do not think they always get it. Consumer satisfaction with railways is generally low. though some Member States are exceptions (e.g. Finland. Denmark. Austria. Spain and Portugal). In urban transport. there are indications that "controlled competition" (i.e. an open tendering process where the successful bidder gets exclusive access to the network for a fixed period of time) performs better than full deregulation or public provision of the service. In air transport. consumers acknowledge that competition has led to significant price cuts.

Annual change in bus and urban rail usage during the 1990s (big EU cities)

Cities without competition

Cities with controlled competition
Koln 4,3%Copenhagen5,3%
Vienna2,3%London 1,7%
Brussels 1,7%Stockholm 1,6%
Stuttgart1,5%Helsinki1,1%
Dublin 1,2%Lyon-0,6%
Hamburg1,0%Average1,8%
Madrid0,8%
Rotterdam0,3%
Paris 0,1%
Munich -0,2%
Barcelona -0,5%
Frankfurt -0,9%
Amsterdam -1,3%
Porto-2,5%
Lisbon-3,9%
Genoa -4,0
Berlin-5,%
Turin-6,3
Average-0,%

Cost of Public service obligation of passenger rail transport* (million euros)

Member State

1997

1998

1999

Revenue per pass/km 1999 (euros)Total aid per pass/km 1999 (euros)
Austria notified aid616 604654 641656 6410.0620.081
Belgium notified aid2092 3282108 3312119 3360.0640.279
Denmark notified aid439 224364 199757 476NA0.140
Finland notified aid43 4041 3839 380.0180.011
France notified aid6063 14606034 14146127 15500.0720.092
Germany notified aid10093 421010372 45219982 45040.1260.137
Greece notified aid311 0464 0530 00.0260.331
Ireland notified aid 133 81136 85180 102NA0.129
Italy notified aid5980 1625690 1665390 1670.4600.131
Luxemburg notified aid11 7164 73182 70NA0.607
Netherlands notified aid762 1541610 2591806 2340.0850.126
Portugal notified aid20 1920 19100 500.0270.023
Spain notified aid1550 2971431 2951395 2340.0420.073
Sweden notified aid895 57997 65824 640.0870.111
UK notified aid2881 28042858 27952506 23990.1340.065
UK (Northern Ireland notified aid16.8 16.612.6 12.515.7 15.5
EU27210.0850.093

Source: European Commission. Energy and Transport Directorate General ;4th Framework Transport Research Programme project PETS (Pricing European Transport Systems. EUR 19967 en)

* The figure for each country corresponds to the total public sector contribution to cover for the cost of the service and the figure below corresponds to the amount of aid notified according to Regulation 1191/69.


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