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EU telecoms reform: Commission continues debate with three studies

European Commission - IP/06/1123   25/08/2006

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IP/06/1123

Brussels, 25 August 2006

EU telecoms reform: Commission continues debate with three studies

The Commission made public today three studies which should serve as “food for thought” in the ongoing review of the 2002 EU telecoms rules. Earlier on 29 June, the Commission published a Communication on the review of the regulatory framework for electronic communications, a Staff Working Paper and an Impact Assessment (see IP/06/874), which include several policy proposals for boosting competition and building a single market for wireless services. The studies published today deal with some of the key subjects of the review process: growth and investment in the EU electronic communications sector, regulatory reform and the state of competition in the electronic communications markets. While the three studies are not binding on the Commission, they are useful contributions to the public debate on the review of the EU telecom rules during the public consultation that will last until the end of October.

"The 2006 Review of the EU telecom rules is of key importance for competition, investment and growth in Europe”, commented Information Society and Media Commissioner Viviane Reding. “This is why I have asked for economic and regulatory views from all over Europe to be taken into account during the whole review process. The studies published today are a welcome contribution to the debate and to our reflections. As we actively engage with stakeholders in reviewing the current framework and await their contributions, I would like to stress again the need to be ambitious with the policy choices ahead. The completion of the internal market for electronic communications, with enhanced cross-border competition, and exploiting radio spectrum resources to their maximum for wireless communications, must be the priority if we want to promote a competitive, knowledge-based EU economy.”

The three studies, commissioned by the European Commission and published today, reflect a broad range of opinions on all aspects of EU telecoms rules. The first study, “An assessment of the regulatory framework for electronic communications: growth and investment in the EU e-Communications sector” (London Economics, in association with PricewaterhouseCoopers) found that the effectiveness of national regulation under the EU telecom rules plays a significant and positive role in attracting investment into the telecoms sector, next to other factors, such as per capita GDP, regional population density and industry structure. The study thus supports the Commission's assessment that “regulatory holidays” would clearly be counterproductive for individual Member States, as well as the EU as a whole.

The second study, “Preparing the Next Steps in Regulation of Electronic Communications” (Hogan & Hartson and Analysys), takes a broad look at key features of the current framework and submits 65 concrete proposals for reform. It finds that a majority of those interviewed consider that the internal market for electronic communications is not yet complete. The study’s recommendations for regulatory reform include streamlining the market review procedure, improving appeal procedures in national courts, and creating the possibility for pan-European service authorisations. It also recommends that structural separation should be a remedy of last resort for national regulatory authorities in ex ante regulation and that the list of ex ante remedies should include organisational and functional separation. The study also looks at the issue, currently under discussion, to give the Commission enhanced powers over remedies to be adopted by national telecom regulators in case of a position of significant market power on a specific electronic communications market. Several respondents suggested that an enhanced Community control over remedies would facilitate greater harmonisation and availability of consistent wholesale products across the EU. Moreover, the study notes that the downside risks for competition and the internal market are greater for “the wrong ex ante remedies” than a “conceptually flawed market analysis” but it recognises that this is primarily a political decision.

The third study, “Experts’ report in relation with the Review of the Recommendation on markets subject to ex ante regulation” (Dr Uli Stumpf, Professor Martin Cave and Professor Tommaso Valletti) covers the work of economic experts on the state of competition on narrowband, broadband and mobile services. Their final report calls for a removal of much of the regulation of retail markets included in the Recommendation on relevant markets of 2003 – a proposal already taken into account in the Commission documents of 29 June (IP/06/874), which comes to the conclusion that, on most retail markets, wholesale regulation on its own can ensure effective competition, and that, therefore, ex-ante-regulation should be removed in relation to retail calls and leased lines markets. The expert report also calls for the removal of the mobile access and call origination market (market 15), a proposal that will be considered and debated further in the course of the ongoing consultation.
The full texts of the three studies can be found as from today at:

http://ec.europa.eu/information_society/policy/ecomm/info_centre/documentation/studies_ext_consult/index_en.htm

A summary of the main policy issues at stake in the Review 2006 is made in Commissioner Reding’s SPEECH/06/422.

On consumer data relevant for the Review 2006, see the survey "E-Communications Household Survey Fieldwork December 2005 – January 2006" – see IP/06/1122 also released today.


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