Single European Telecoms Market 2008 progress report - briefing

26 March 2009
by eub2 -- last modified 26 March 2009

Europe leads the world in mobile phone services with the number of subscriptions in 2008 at 119% of the EU population (up 7 percentage points from 2007), well ahead of the US (87%) and Japan (84%). This is a finding of today's European Commission progress report on the single telecoms market. Despite the economic crisis, the EU's telecoms sector (worth about 3% of EU GDP) continued to grow in 2008 with revenues estimated at above EUR 300 billion, up 1.3% compared to 2007 and outperforming the rest of the economy (up by 1% only). Consumers gain the most from the sector's competitiveness: they pay less while getting better value for money. Average mobile phone bills have fallen from EUR 21.48 to EUR 19.49 in 2008 and 75% of European consumers now have internet connections of 2 megabits per second and above (speeds allowing, for example, TV over internet), thanks to EU action. However, the Commission's report also warns that without better European coordination, the benefits of a single telecoms market could be jeopardised by inconsistent national regulation.

What is the objective of the 14^th Progress Report on the Single European Telecoms Market 2008?

The 14^th Progress Report on the Single Telecoms Market gives a snapshot of the EU’s telecoms market and the main regulatory developments that took place in 2008. It is based on facts and figures from national telecoms regulators and market players, verified by experts from the European Commission.

How is the report compiled?

The European Commission monitors developments in each Member State on a daily basis and assesses, among other things, the implementation of the EU telecoms rules. On top of this, experts are sent to the Member States each year on a fact-finding exercise where they discuss developments taking place with national telecoms regulators, ministries, telecom operators, consumer organisations and any other relevant players.

How has the telecoms sector been affected by the financial and economic crisis?

In 2008, the EU's telecoms sector continued to grow, at 1.3% in real terms, which compares to a 1% real increase in GDP for the economy overall. The sector is withstanding the current sharp deterioration in the economic climate relatively better than other sectors thanks to the stability of cash flow for most operators, but, like the rest of the economy, telecoms companies are now facing difficulties in accessing credit which will inevitably affect their capacity to invest.

The prices of most standard communications services have continued to fall and the electronic communications sector has continued to have a dampening effect on inflation. Overall, the average European consumer of electronic communications services was better off in 2008 than the year before. Revenues are continuing to grow and in real terms the sector is growing faster than the economy. However, the increasingly challenging environment makes it necessary to adopt a regulatory approach that will enhance predictability and certainty and create a level playing field in the EU's single market.

Why is telecoms regulation necessary?

Telecoms regulation has led to market liberalisation and competition, with significant progress leading to a reduction of regulation in areas where competition is functioning well. However, there are still problem areas where regulation remains necessary. In the fixed sector, for example, incumbent operators still have considerable reach and the market shares of alternative providers remain very low. The same applies to the broadband sector. Moreover, there are areas where inconsistent application of EU directives in the Member States has led to discrepancies which hinder the proper functioning of the Single Market. This includes for example discrepancies in Mobile Termination Rates and number portability.

What is mobile broadband?

Mobile broadband is high speed internet over a mobile phone network. While access to the internet can take place through a mobile phone, mobile operators have been successful in encouraging take up of USB dongles or datacards which enable users to connect their laptops to the Internet even when they are on the move. Take-up of mobile broadband has increased significantly over the past year.

Can I get further information on the terms used in the report?
A glossary of terms has been prepared and is available in the annex of this Question and Answer.

Commission Single Telecoms Market Progress Report, FAQ, and fact sheets on each EU country

For more information, see the Commission's eCommunications website

Annex

Glossary of telecoms terms

Bandwidth	The capacity of a communications link or the difference between the highest and lowest frequencies available for network signals. The greater the bandwidth, the more information can be sent in a given amount of time. In general a digital channel occupies less bandwidth than an analogue channel of the same quality.
Broadband	A term usually used to describe a "fast" Internet connection, capable of supporting real-time voice and video streams. Broadband internet access is much faster than dial-up internet access. It is similar to the difference between a brand new sports car and a horse-drawn carriage. Fixed broadband is the service that is provided by a fixed telephone operator or cable provider. It is offered at a physical location such as a home or office. On the other hand, mobile broadband is a service offered by a mobile operator, using the mobile network. This enables a user to access the internet from a laptop or mobile phone from any location.
Better regulation	An EU strategy aimed to ensure that regulation is used only when necessary, i.e. simplifying existing legislation or improving new Commission proposals, with the help of impact assessments and public consultations.
Bit stream access	Virtual access to the local loop (see explanation below) by third parties, to provide broadband services for customers.
Connection speeds	The majority of internet connections in Europe are between 2-10 megabits per second. 2 megabits is generally the minimum speed required for services like TV over Internet. While 10 megabits per second and above allows users to take advantage of advanced applications like streaming TV.
Data card	Data cards, or dongles, can be plugged into a laptop to allow a user to wirelessly surf the internet over their mobile connection
DSL	DSL (digital subscriber line) is a technology that provides digital data transmission over the wires of a local telephone network. DSL can be used at the same time and on the same telephone line as regular telephone, as it uses high frequency, while regular telephone uses low frequency.
Digital Dividend	Radio spectrum to be freed following the transition from analogue to digital television by 2012. The switchover releases a significant amount of airwaves, as a single analogue channel can fit up to 8 digital TV programmes. The released spectrum could be used, inter alia, to provide new multimedia services such as mobile TV and wireless access to broadband communications.
Fibre to the home / fibre optic networks	These are high-speed networks which allow very high download speeds as well as high upload speeds.
Functional separation	This requires an incumbent operator to separate its network infrastructure from the units offering services on top of this infrastructure. Overall ownership remains unchanged. Functional separation obliges an operator to supply all other operators with infrastructure under non-discriminatory conditions, and prevents traditional incumbents from unfairly discriminating against new entrants.
Incumbent telecoms operator	Former state-owned monopolies or operators that historically occupied the majority of their respective telecoms markets.
Infrastructure based competition v service-based competition	Infrastructure based competition is competition among telecom operators that physically own networks. This could be a fixed operator competing with a cable operator or two operators which have similar networks competing against each other. Service-based competition takes place when service providers use the networks owned by other operators to offer services to their customers.
Infringement proceedings	Member States of the EU are responsible for making sure EU rules are put in place. When they fail to do so, it is the role of the European Commission, as guardian of the EU treaties, to launch an infringement proceeding in three parts, which proceed only if the Member State fails to react by implementing the rule in question: a letter of formal notice; a more detailed reason opinion; a case before the European Court of Justice.
Leased line	A phone line which connects two locations, and is rented from a telecommunications provider by other companies to build their internal/private network (telephone and data).
Local loop	The wires or radio links carrying the main fixed public telephone network from the local telephone central office into the subscriber's home or office. Local loops are usually owned by incumbent operators and are enormously expensive for new entrants to replicate, therefore giving incumbent operators a huge advantage.
Mobile termination rates	The fee that mobile network operators charge each other to connect calls made from other fixed or mobile networks to their networks. For example, a person using operator A calls a person using operator B. Operator B delivers the call and operator A must pay mobile termination rates to operator B.
“Net freedoms” for citizens	The citizen's freedom to (1) access the (lawful) content of their choice; (2) use applications of their choice; (3) attach any personal devices (PDA etc) to the network; (4) obtain information about the prices of different digital services; and (5) distribute their own lawful content.
Next Generation Networks	Future networks, where normally one network transports all information and services (voice, data, TV and all sorts of interactive web services).
Broadband penetration / take- up	Measures the number of broadband connections in a country as a proportion of total population. Not to be confused with broadband coverage, which measures the proportion of population that has access to such connections. While broadband penetration measures the competitiveness and attractiveness of broadband offers on the market (and is therefore a good indication for a sound regulatory environment), broadband coverage measures the percentage of the population that has the possibility to connect to high-speed internet services.
Public broadcaster	A broadcaster who is usually governed by the law of a single Member State and can decide at national, regional or local level on the content of radio, television, web and potential other electronic media outlets. Public broadcasters receive some or all of their funding from the public i.e. directly from individuals through voluntary donations, license fees, or indirectly from state subsidies, like taxes.
Radio spectrum	Range of radio waves which can be used to transmit music, conversations, pictures and data invisibly through the air, sometimes over thousands of kilometres. Radio spectrum is a finite national asset but the airwaves are indifferent to national borders. Countries have to work with their neighbours and near-neighbours to ensure that transmissions in one nation do not interfere with transmissions in another – consumers expect their radio devices to work (legally) in all countries.
Remedy	An obligation that regulators impose on operators to make competition more effective within a market.
Right of way	Operators' rights to build the physical infrastructure for their networks, such as masts or underground ducts for cables.
Roaming	When a consumer uses his/her phone subscription in a foreign country.
Service neutrality	This extends the concept of technology neutrality, stating that any telecoms service can be offered on any radio frequency band. Regulators should encourage service neutrality.
Structural dominance	To hold the dominant share of a market, i.e. to possess a majority of the infrastructure used to deliver telecommunications services.
Technology neutrality	This principle states that any available technology (past, present or future) could be employed to provide a certain service. The market should be left to decide which technology should be used for a particular purpose.
TV over internet (IPTV)	Digital television services that, instead of being broadcast or transmitted through cable networks, is delivered through high speed internet networks. Internet-based TV services offer video-on-demand and TV programmes over the Internet using a broadband connection, some over TV, some on your computer.
Unbundled access to the local loop	Access to the local loop (whether wireless or wired and usually owned by incumbent operators) for third parties. This enables new competitors to offer broadband services.
Universal service	The practice of providing a basic set of telecommunications services to residents of a country at an affordable price. The minimum level required by current EU legislation includes (1) access to a publicly available telephone services that provides internet access; (2) access to a comprehensive directory and directory enquiry service, including both fixed and mobile subscribers; (3) availability of public payphones and (4) ensuring access to and affordability of the same services for users with disabilities and special social needs.
VOIP – Voice over Internet Protocol	VoIP is the result of convergence in telecoms. It is the ability to make use of data transmission (for example Internet) to make a phone call. This can be done either through a laptop for example or in some cases even by using a normal phone.

Source: European Commission

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Single European Telecoms Market 2008 progress report - briefing