Policy Challenges
Relatively little full "infrastructure competition" has emerged in the fixed-line networks,
except in very densely populated areas, where cable networks were already present, or where
local authorities have been active. One of the key questions in light of the future connectivity
needs is whether the current framework sufficiently promotes investments in the very highcapacity networks needed in the future, and sufficiently rewards the most farsighted network
investments. At the same time, network investments should not be an objective per se, but
rather the adoption and use of high-speed services by European end-users, who should benefit
in terms of choice, price and quality. In addition, the difficult questions of how to cover the
less densely populated areas and how to realise long-term public-interest objectives will need
to be addressed. As regards fixed-line networks, the main regulatory tool is ex ante wholesale
market regulation in order to enable market entry on competitive terms in both services and
networks markets. It will be necessary to examine, inter alia, the extent to which this regime
effectively drives investment in areas with different population densities, infrastructure
presence and other economic characteristics; whether, in areas where infrastructure
competition is very unlikely, competition to roll out the first very high-capacity network could
be facilitated; and whether, in areas where infrastructure competition is conceivable,
incentives for the highest capacity roll-out or upgrades should be enhanced for both historic
incumbents and alternative operators. This could be done for example through a simplification
of wholesale access products in the light of technology developments, a concentration of
regulatory incentives on the highest-capacity NGA networks, or implementation of best
practice regarding access to available passive infrastructure (e.g. ducts, poles). It would also
be important not to affect the pro-competitive positive effects of the liberalisation, which have
been achieved over the past years. The question whether universal service obligations can
play a role must also be addressed, while recognising very different national situations.
Regulatory fragmentation is also an unresolved issue. Although telecom markets have become
more integrated, progress is slow and the provision of connectivity to business and consumers
remains highly divergent across the Union. This is particularly the case for radio spectrum
which is a vital building block for the deployment of wireless broadband services, especially
mobile broadband. In light of the EU objectives beyond 2020, the Commission intends to
evaluate the EU regulatory framework for spectrum management with regard to (a) the
efficiency of allocation of spectrum throughout the internal market, to facilitate innovation
and to underpin it with the benefits of economies of scale; and b) the authorisation of the use
of radio spectrum for electronic communications and how it responds to the new connectivity
needs and challenges. There has been an explosion in the demand for wireless connectivity for
the purposes of Internet access, mobile, nomadic and fixed wireless data and new services
within communications, transport, healthcare, and energy sectors. Spectrum supply is crucial
for the Digital Single Market; spectrum-enabled services today are worth approximately €500
billion per annum – and up to approximately €1 trillion by 2023.
However, many European citizens, especially in rural areas, are still deprived of access to
wireless broadband services. Industry investments in fourth generation technologies started
later than in some other developed regions, mainly due to delays in the granting of
authorisations to use spectrum. Although the great majority of Europeans (79%) are now able
to access 4G networks, this is still a paltry 27% in rural areas. As stressed by the Commission
in the recent Digital Single Market Communication, electronic communications markets
predominantly remain national, regional or even local in scope, which forces operators to
develop national strategies even when offering comparable wireless services in several
Member States.
Significant differences remain with regard to approaches to spectrum governance and
strategies to make spectrum available which cannot be justified solely by differing national
circumstances. These differences may hinder investment and innovation in business,
restricting the full potential for economies of scale in an EU-wide market for today's and
tomorrow's spectrum-enabled services.
In addition, telecoms operators compete with services which are increasingly seen by endusers as substitutes for traditional electronic communications services such as voice
telephony, but which are not subject to the same regulatory regime. The review of the
telecoms rules will have to look at ways of ensuring a level playing field for players to the
extent that they provide comparable services. The level-playing field discussion calls for a
balanced assessment: on one hand it is necessary to evaluate to what extent we still need
sector-specific rules for electronic communications services and on the other hand to assess
which rules, if any, should, in light of public interest objectives apply also to market actors
other than traditional telecoms operators.
Other technological and economic developments are likely to profoundly change the
functioning of the electronic communications sector and to raise new challenges, and may
also need to be reflected in revised rules: to facilitate their development, to recognise their
effects on the functioning of markets that are currently regulated, or to address new
bottlenecks that they engender – the increasing convergence of fixed and mobile networks,
the migration to "all-IP" networks, the increasing "virtualisation" of networks, the rise of
machine-to-machine (M2M) communications.
The changing market and technological environment calls also for the assessment of the
current institutional framework. The role of bodies in which the Member States' authorities
are themselves represented – such as the Body of European Regulators for Electronic
Communications (BEREC) or the Radio Spectrum Policy Group (RSPG) - will need to be
assessed against their capacity to contribute to a consistent and predictable regulatory
environment supporting the connectivity ambition set out in the Digital Single Market
strategy.
Potential benefits from a European market with genuinely common rules
Although telecom markets have become more integrated, progress is slow and the provision
of connectivity to business and consumers remains highly fragmented and divergent across
the Union. This is particularly the case for radio spectrum which is a vital building block for
the deployment of broadband services. A recent study for the European Parliament assessing
the achievements and failures of the current framework has shown that Europe's telecoms
sector remains fragmented along national lines. This lack of integration represents a
significant missed opportunity. It is estimated (Business communications, economic growth
and the competitive challenge, WIK-Consult, January 2013), for example, that the indirect
benefits which could be achieved from policies fostering a consistent regulatory approach for
business communications alone amount to € 90 bn per annum.