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IP/08/1573

Brussels, 23 October 2008

Telecoms: Commission calls on Belgian telecoms regulator to impose more effective regulation on fixed telephone calls

The lack of effective competition and high tariffs in the Belgian markets for fixed voice calls could result from an ineffective implementation of telecoms regulation. Measures taken by the Belgian telecoms regulator, the 'Institut Belge des services postaux et des télécommunications' (BIPT), have not yet led to competitive prices for fixed line calls. In a letter made public today, the European Commission invites BIPT to ensure that wholesale remedies are properly enforced and asks for a new market analysis to be carried out within one year. BIPT should also revise its price control obligation imposed on Belgacom, the telecoms incumbent, to allow Belgian customers to make cheaper calls as soon as possible.

“In Europe’s telecoms markets, remedies not only need to be effective but must also be swiftly enforced to improve competition and safeguard the interests of consumers”, said Viviane Reding, EU Commissioner for Information Society and Media. “Although the Belgian retail calls markets have all the conditions to be competitive, leading to choice and affordable prices for Belgian consumers, the overall retail prices for fixed telephony in Belgium are one of the highest in the EU. This is simply not acceptable for Belgian consumers. The European Commission will keep a very close eye on the Belgian market. We ask the Belgian telecoms regulator to come back to us on this issue within a year's time."

In a letter sent to the Belgian telecoms regulator BIPT, the European Commission endorsed BIPT's finding that Belgacom is still dominant on the Belgian fixed line calls markets and therefore subject to ex-ante regulation.

However, the Commission notes at the same time that the wholesale line rental obligation, which was imposed on Belgacom by BIPT in 2006 and which allows alternative operators to use Belgacom's networks, has not been implemented so far. The Commission also notes that the carrier (pre-)selection obligation, which allows consumers in Belgium to choose their preferred provider to supply their telecoms services, was imposed as early as 2000 and should have led, together with Belgium's high broadband penetration, to effective competition in the fixed telephony market.

Against this background, BIPT imposed a price control obligation on Belgacom which appeared to be ineffective so far to reduce call tariffs, in particular for fixed to mobile calls, to a competitive level. Therefore, the European Commission invites BIPT in its letter made public today to strengthen its efforts to ensure the full compliance of Belgacom with wholesale remedies and to rigorously monitor market developments. In the meantime, BIPT would need to modify the current retail remedies to address the issue of high prices. In particular, the remedies should ensure that consumers benefit from cost reductions resulting from decreased wholesale interconnection charges.

BIPT is also asked by the Commission to carry out a new analysis of the market within one year to check whether existing wholesale remedies would enable the deregulation of retail markets.

Background:

The markets notified by the Belgian regulator (the retail local and national calls for residential and non-residential markets) have been removed from the list of regulated markets designated by the Commission (IP/07/1678). BIPT, therefore, has put forward arguments in support of its view that there are high and non-transitory barriers for alternative operators to enter these markets. BIPT believes that the structures of these markets are not competitive enough and that the application of competition law alone would not adequately address the market failures concerned. BIPT consequently concluded that the calls markets should still be regulated, despite the fact that there are alternative operators which provide call services (such as carrier pre-selection and Voice over Broadband).

The Commission's letter made public today is sent under the "Article 7 procedure", contained in the EU's Framework Directive on the telecoms markets (MEMO/08/620). This procedure requires national telecoms regulators to notify regulatory measures to the Commission. When these measures concern market definitions and Significant Market Power analyses (e.g. when one or more players is/are dominant), the Commission has the possibility to require the national regulator to withdraw the measure. When the measures concern regulatory remedies, the Commission may make comments which the national telecoms regulator should take into account.

For further information:

The text of the Commission letter is available at:

http://ec.europa.eu/information_society/policy/ecomm/implementation_enforcement/article_7/commission_decisions/index_en.htm

On the Article 7-procedure see:

http://ec.europa.eu/information_society/policy/ecomm/implementation_enforcement/article_7/index_en.htm

Annex

Belgacom's market share on markets for national calls services

Belgacom's market share on markets for national calls services
2003
2004
2005
2006
2007
Residential – in volume
89 %
76 %
67 %
69 %
65 %
Residential – in value
87 %
73 %
65 %
66 %
66 %
Business – in volume
73 %
68 %
71 %
74 %
75 %
Business – in value
70 %
71 %
75 %
78 %
80 %

Source: BIPT, October 2008

Residential composite OECD basket of fixed call charges

[ Figures and graphics available in PDF and WORD PROCESSED ]







Residential composite OECD basket of fixed call charges




[Graphic in PDF & Word format]









[Graphic in PDF & Word format]

Business Composite OECD basket of fixed call charges

Comparison of costs for 3-minute local calls in EU countries[ Figures and graphics available in PDF and WORD PROCESSED ]

Source: European Commission 13th Progress Report on the Single Telecoms Market, March 2008

Comparison of costs for 10-minute local calls in EU countries

[ Figures and graphics available in PDF and WORD PROCESSED ]


Source: European Commission 13th Progress Report on the Single Telecoms Market, March 2008
















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