Reding: Telecom competition serves consumers

Competition between different platforms and between new players and incumbents in the telecoms sector causes difficulties for some companies but in the end consumers are the ones who profit, says the EU Information Society Commissioner.

On 20th February 2006, DG Information Society published its 11th report on European electronic communications regulation and markets, at a time when the telecommunications sector is facing important technological and economic changes. While the number of telecommunication companies is significantly increasing, many companies are slimming down in order to meet growing pressure from their competitors and to free revenues for reinvestment. Different technologies, such as broadband internet, cable and satellite TV, music and video delivery services, are converging, leading to new competition from neighbouring sectors. 

The Commission thinks that consumers benefit from this competition, which Commissioner Reding says is the main driving force behind lower prices, the fast spread of high-speed internet and the availability of an increasing number of online multimedia services. According to the report, the electronic communications market in the EU is now worth 614 billion euro, with the biggest share of 44,4% held by carrier services. 

At the end of 2005, there were 53 million broadband lines in Europe, almost 20 million more than one year earlier. The Netherlands, Denmark, Finland, Sweden and Belgium are among the best broadband performers worldwide: they have higher penetration rates than the US or Japan and are quickly catching up on the world leader, South Korea. Greece, the last country to have transposed the EU regulatory framework for telecommunications, also has the lowest broadband penetration rate of just over 1% – less than a third of the average of the countries who joined the EU on 1 May 2004. 

For fixed operators, voice telephony is still the most important source of income. Under growing pressure from new players on the market, the incumbent’s market share is constantly decreasing, but with shares between 71% for local calls and 59% for international calls, they still dominate the market. Consumers have benefited from this competition, which has led to a decrease of the average national call charge for a 3-minute phone call from 42 cents in 2000 to 25 cents in 2005. 

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