European telecom regulation boosts competition and consumer benef...

billion ($730.7 billion) information and communication technology sector, as broadband and mobile revenue kept growing, the EC said. Traditional voice services kept declining but remained the largest revenue source for companies in the fixed market. Investment levels were up 6% over 2004. Merger and acquisition activity rose due to more regulatory certainty. There are nearly 53 million fixed broadband lines, with penetration hitting 11.5% in Oct. compared with 7.3% a year earlier. New entrants’ broadband market share continued to rise, nearing 50% for the 25 EU nations. New players increasingly shifted from resale and bitstream access to local loop unbundling (LLU) as demand for triple-play services rose, the Commission said, and the number of shared access lines tripled last year. In mobile, EU penetration was 93% in Oct. Mobile termination rates began dropping and mobile number portability doubled. But international roaming rates remain a central concern, with more progress needed from industry and regulators, according to the EC. Revenue from traditional telephony services are falling an estimated 1.6% annually. The regulatory picture improved, with most countries almost finished adopting the regulatory framework into national law. The EC noted several concerns, however. Some national regulators aren’t fully independent from govts., and a particularly serious problem remains a lack of effective ways to appeal regulatory rulings. And while national regulators generally have issued rules needed to open markets lacking competition, LLU “does not appear to be working in practice” in several countries, and interconnection and cost accounting problems remain, it said. Despite these and other shortcomings, the Commission said, “most of the necessary work has been done.” Alternative operators said the report paints “a perhaps overly positive picture of the state of implementation in Europe.” Even so, European Competitive Telecom Assn. Dir.-EU Affairs Sandro Bazzanella said e-communications spending has risen since the regulatory framework became law in 2003. The report endorses spurring broadband penetration through infrastructure such as cable and LLU/bitstream. And it pegs appeals as a major issue. Bazzanella said: “The summary emphasizes a light touch role for VoIP regulation, whereas it would have been more helpful for them to have identified the threat of leverage.” Incumbents hail the report for recognizing markets to be more competitive and open, but pan the regulatory framework as not delivering “sustainable infrastructure-based competition” and failing to achieve deregulation. “Despite increased competition, the regulatory framework has led to an increase of ex-ante [pre-emptive] regulatory intervention,” said the European Telecom Network Operators’ Assn. It urged the EC to “seize the opportunity” of an ongoing review of the framework to “engage in a progressive but clear deregulation.”