Brussels, 28 November 2001

Commission adopts 7th Report on liberalisation of telecommunications in
the Member States

The European Commission today adopted a Communication examining the
state of implementation by EU Member States of the current European
regulatory framework for telecommunications. The key conclusion of the
Report is that, against a generally pessimistic macroeconomic
background, the telecom services sector is buoyant, the national
regulatory authorities continue to make progress with liberalisation,
but that, on the eve of the adoption of a new framework, a number of
regulatory bottlenecks remain. The continuing divergences in
implementation under the current framework indicate that a strong
transparency mechanism and better co-ordination between National
Regulatory Authorities are a pre-requisite for a level playing field and
a single European
market for telecoms services in the future.

Presenting the Report, Erkki Liikanen, Commissioner responsible for
Enterprise and the Information Society, and Mario Monti,
Commissioner responsible for Competition welcomed the positive
indications concerning market growth and price reductions. They called
on Member States to ensure that the remaining bottlenecks are removed
immediately, to ensure continued growth in        telecommunications
markets and to allow this sector to fulfil its potential in helping to
overcome recent more negative general economic trends.

Negotiations between the European Parliament and the Council on the
Commission's proposals for a new regulatory framework are at a crucial
stage. The success of this new framework depends on the full and
coherent implementation of the current EU rules on harmonisation and
liberalisation  of telecommunications. This Report demonstrates that
implementation of these rules has
contributed so far to the growth in the sector over the last few years,
and that competition has continued to encourage lower tariffs, greater
choice and more advanced services.

Growth: The combined EU market will expand to an estimated €218 billion
in terms of revenue by  end 2001, representing growth of 9.5%. This is a
fall of three percentage points over actual growth in 2000, but a slight
increase over the rate of 9% forecast in the last implementation report.
The fastest expanding segment is again mobile services, with revenue
growth of an  estimated 22.3% and 36% more subscribers this year, and
with an average penetration rate of  73% in August 2001.

Choice: The whole population of twelve Member States can now choose
between more than five operators for long distance and
international calls. For local calls, in six Member States the whole
population has a choice of more than five operators, with a rapid
increase in the use of carrier pre-selection, in addition to the heavy
use already made of carrier selection via access codes.

Price: Competition between these operators is bringing prices down
overall. Incumbents' long distance calls are down 11% in price since
last year and down 45% since 1998 for a three-minute call in Europe, and
by 14% since last year and 47% since 1998 for a ten-minute call. The
report  contains abundant data to show this overall downward trend, for
both residential and business  users and for all call types except
local.

Advanced services: The average level of internet penetration in EU
households was around 36%  in June 2001.

The Report shows nevertheless that there are still some regulatory
bottlenecks that need to be  addressed in order to ensure that fully
integrated and liberalised telecommunications markets are completed.

One key issue is local loop unbundling, which was mandated by the Lisbon
Summit to overcome a competitive blackspot and to speed up the
development of affordable high speed internet access.  There are some
positive aspects: Implementation is clearly a major priority for
national regulatory authorities,  Unbundled lines are actually being
provided in 13 Member States,  But overall the situation is very
disappointing:  The number of unbundling agreements
varies widely across the Member States  The number of lines actually
unbundled is still relatively small (just over 640,000)

Shared access to the local loop is only available in 4 Member States,
and the number of lines is limited to a
few hundred.

Above all, the Report expresses concerns that incumbents are continuing
to develop their own broadband services (especially DSL) in the absence
of effective competition. For the situation to change, national
regulators need to provide
hands-on monitoring and set binding deadlines with credible penalties.
Regulators also need to act to ensure that wholesale DSL is offered to
new  entrants on non-discriminatory terms.

The other regulatory bottlenecks identified in the Report include:

Interconnection, including the cost of terminating calls in mobile
networks and the provision of flat rate  interconnection for calls to
the internet;

Continuing high prices, lengthy delivery times and absence of cost
orientation for leased lines, particularly at  speeds required for
broadband and e-commerce rollout;

Persisting tariff distortions and price squeezes in certain instances;

The full functioning of carrier selection and pre-selection;

The disparate roll-out of rights of way;

The monitoring of consumer issues and the protection of data and
consumers' interests.


The Report can be consulted at:



http://europa.eu.int/information_society/topics/telecoms/implementation/index_en.htm

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