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Brussels, 7th February 2006

Telecom liberalisation: EU rules help to free up markets but much remains to be done

Regular economic analysis by EU Member States and the European Commission of competition in electronic communications markets and Commission scrutiny of draft national rules are paving the way to free markets, regulated solely by competition law, says a progress report published by the Commission today. Regulation in this sector applies only to operators whose significant market power could prevent the full benefits of telecoms liberalisation from getting through to consumers. Wherever a market analysis has found tangible signs of sustainable competition, regulation has been trimmed back or removed altogether. However, much remains to be done. As of 30 September 2005, sixteen EU Member States had found no effective competition on one or more of the 18 electronic communications markets defined by the EU and had taken steps to boost competition on the markets concerned. Five Member States had found only partial competition on one or more of these markets and had imposed remedies where it was lacking. But nine Member States had yet to notify the Commission of their analyses of any of the 18 markets. Of the analysed markets (152 out of 450), 123 were not competitive, 19 fully competitive, and 10 partially competitive.[1]

“Regulatory consultation, consistency and transparency across the EU pave the way to a level playing field in electronic communications”, said Information Society and media Commissioner Viviane Reding. “Companies can be sure that a single set of rules is applied in a similar manner across the EU, thereby giving them the confidence to invest EU-wide. Ultimately, consumers will reap the benefits of choice in e-communication services and products and competitive pricing”.

“The Commission helps consumers to benefit from a Single Market for electronic communications by ensuring that regulation in this sector is conditional upon a comprehensive economic analysis, in line with competition law principles”, added Competition Commissioner Neelie Kroes .

Consultation builds consistency

The Commission report shows that in its first two years the Community consultation mechanism on the competitiveness of electronic communications markets has helped to bring about more consistency, mainly with regard to where and when regulatory remedies are imposed on operators. As to the choice of remedies for market failure, the Commission cooperates closely with national regulators to ensure that these are appropriate and as consistent as possible, but recognises that the details of the chosen remedies may still vary from one Member State to another. The report also finds that the consultation mechanism has enhanced transparency for market players.

Vetting competitiveness

The Community consultation mechanism, set out in Article 7 of Directive 2002/21/EC, is at the heart of the e-communications regulatory framework that entered into force on 23 July 2003. The framework takes a dynamic approach insofar as it requires national regulatory authorities (NRAs) to perform regular competition-law based analyses of their domestic markets and to remedy market failures such as excessive pricing or denying a competitor access to the network.

Getting the remedies right

Proposed remedies must be drawn from the regulatory toolkit provided in the framework and must undergo an EU-wide consultation. The mechanism also empowers the Commission to comment upon, or in certain cases to reject, these proposals. Overall, the systematic and EU-coordinated assessment of competition on the relevant markets guides the de-regulatory process until competition law alone will suffice to tackle market failures.
With the insights gained though the Community consultation mechanism, the Commission will explore how to further streamline the procedures for all parties involved and how to update the list of markets susceptible to regulation, so as to keep pace with technological progress and market developments. This work will be part of the forthcoming review of the regulatory framework for electronic communications, including the review of the Recommendation on relevant markets. The Commission will also consider to what extent the opening up of former monopoly electronic communications markets driven by this type of Community consultation mechanism could serve as a model for other EU network industries, such as transport, energy and postal markets.

The report can be consulted at:

See also MEMO/06/59

Figures and graphics available in PDF and WORD PROCESSED

Electronic communications markets

1 Access to the public telephone network at a fixed location for residential customers.

2 Access to the public telephone network at a fixed location for non-residential customers.

3 Publicly available local and/or national telephone services provided at a fixed location for residential customers.

4 Publicly available international telephone services provided at a fixed location for residential customers.

5 Publicly available local and/or national telephone services provided at a fixed location for non-residential customers.

6 Publicly available international telephone services provided at a fixed location for non-residential customers.
7 The minimum set of leased lines.
8 Call origination on the public telephone network provided at a fixed location.
9 Call termination on individual public telephone network provided at a fixed location.
10 Transit services in the fixed public telephone network.

11 Wholesale unbundled access (including shared access) to metallic loops and sub-loops for the purpose of providing broadband and voice services.
12 Wholesale broadband access.
13 Wholesale terminating segments of leased lines.
14 Wholesale trunk segments of leased lines.
15 Access and call origination on public mobile telephone networks.
16 Voice call termination on individual mobile networks.
17 The wholesale national market for international roaming on public mobile networks.
18 Broadcasting transmission services, to deliver broadcast content to end users.

[1] Further details on the situation per Member State can be found in the annex. At the end of January 2006, 5 more Member States had notified at least one market (CY, ES, IT, LU, LV)

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