Liberalising networks benefited Europeans, Commission says

The market opening of network industries, such as telecommunications, transport and energy has benefited consumers by putting pressure on service providers to keep their costs and prices down, according to a report by the European Commission.

The report goes on to say that delays in liberalising postal services, railways and the energy sector, in particular, have stifled performance in some member states. It also criticises governments for failing to remove technological and legal barriers to market openings. 

The report praises the EU regulatory framework for the telecommunications sector, the implementation of which, it says, has “stimulated investment and the take-up of new services, such as broadband”. In addition, the report says, prices that consumers are paying for telecommunications have decreased by 40% in real terms over the past decade. The report attributes the lion’s share of this growth to the growth in labour productivity, which grew, between 1993 and 2003 in the EU15, “at a considerably faster pace in communication services (average annual growth rate of 7.6%) than in the the economy as a whole (1.8%)”.

“Electronic communications,” the report says, “are the major success story of liberalisation but even here further improvements could be made, not only through better coordination of regulators but also by removing unnecessarily restrictive regulation (e.g. in radio spectrum allocation) that not only hinders market integration but can be an obstacle to the development of innovative services and technologies.” 

The report deplores, however, the raise of energy prices, which, it says, is “the notable exception” in a field of generally falling prices. The report goes on by saying that “the current level of energy prices partly reflects the situation on world markets for oil and gas but is also in part attributable to a lack of competition”. It concludes: “Lower-income groups are particularly badly affected by high energy prices and Member States may need to take steps to alleviate this problem, for example by helping low-income households to improve their energy efficiency and to take advantage of increased competition by switching to cheaper suppliers.” 

The ‘horizontal evaluation of the performance of network industries providing services of general interest‘, is an annual exercise by DG Economic and Financial Affairs, covering telecommunications, postal services, electricity, gas, air, road and rail transport. 

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