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Brussels, 28 June 2004

Network services: opening to competition improves performance, cuts prices and ensures quality

The performance of network services of general economic interest (SGEI) in terms of prices, employment, productivity, service quality, affordability, accessibility and consumer satisfaction is good and improving, although there are wide variations between sectors and between Member States, according to a European Commission report. The report shows that the impact of opening up SGEI to competition has been positive and has, in real terms, reduced prices to end users, who generally support the introduction of competition. However, in some Member States delays in market opening and in removing legal and technical barriers to new entrants have held performance back. Service providers are continuing to meet or exceed their universal service obligations and access to services at affordable prices for the less well off is also improving, albeit unevenly. The report covers electricity, gas, telecommunications, postal services, air, road and rail transport in the 15 “old” Member States. New Member States will be covered in future reports starting in 2005.

Internal Market Commissioner Frits Bolkestein said: “More competition, combined with an uncompromising commitment to universal service, is gradually helping to achieve the excellent and affordable services that are crucial to the well-being of European citizens. The most efficient providers in an open and competitive market can be either publicly or privately owned - it is the services they provide that matter.”

Economic and Monetary Affairs Commissioner Joaquin Almunia said “EU rules to open up these markets have increased competition, cut prices and improved productivity, without compromising service quality, access to services or affordability. This improves the EU’s competitiveness and increases citizens’ welfare”.

The main conclusions of the report are:

Entry of new operators has cut prices and boosted productivity

From 1996 to 2003, telecommunications and electricity prices have increased by less than the consumer price index. Price changes for rail transport and postal services were in line with those of consumer prices generally. Prices of gas and road transport increased almost twice as fast as the consumer price index but for gas, that appears to have been due to increases in the source price. Between 1996 and 2001, the average annual growth of labour productivity per hour in network industries outpaced the corresponding figure of 1.65% for the economy as a whole. In telecommunications and air transport improved productivity went hand in hand with increased employment.

Quality and accessibility are ensured

Universal services seem to have been maintained everywhere, but special tariffs or free supplies for less advantaged consumers remain rare, though there are exceptions.

Consumer satisfaction

Consumers are by and large satisfied with SGEI but satisfaction is relatively lower in the railways and local transport sector. In most cases, network services have become more affordable for citizens, including low income consumers (see also IP/04/807).

The full text of the report and a detailed annex are available at:
The Commission adopted on 12 May 2004 a White Paper setting out its general policy approach to fostering the development of high-quality services of general interest (see IP/04/638).

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