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EU Says Telecom Market Deregulation Benefits Consumers, Creates Jobs

Posted on: Tuesday, 21 February 2006, 09:00 CST

EU says telecom market deregulation benefits consumers, creates jobs

BRUSSELS, Feb. 20 (Xinhua) -- Efforts to liberalize the telecom markets in the European Union (EU) member states paid off, with new jobs created, phone charges falling and companies investing more in innovation, says a European Commission report published Monday.

Europe's information and communication technology (ICT) market is worth more than 614 billion euro, with the telecom sector accounting for 44 percent of it, the report shows.

"ICT accounts for a quarter of all the economic growth in Europe,and is crucial for our economy," EU Information Commissioner Viviane Reding said while presenting this year's review of the EU telecom markets in Brussels.

"Liberalization has led to over-proportional growth in the economy of the sector over the last eight years," she said.

Since the deregulation of Europe's telecom markets started eight years ago, an influx of new players has helped the price of traditional fixed-line voice calls to fall by 1.6 percent a year across EU countries, the report says.

The averaged penetration of mobile phone services reached almost 93 percent in October 2005. In addition, 24.5 million mobile customers had used an EU-imposed rule allowing them to keep their mobile numbers when they switch mobile phone operators.

"This report highlights that the opening up of the market after eight years of deregulation is a success story," Reding said. "It is a good example for energy and transport markets to follow."

Despite widespread press reports of big telecom firms conducting layoffs, the commissioner insisted that more jobs were created in the sector.

New companies are entering the market and creating new jobs, she said, citing the example of Italian broadband provider Tiscali, which had just five employees in 1998 but more than 4,200 in 2004. These new jobs more than offset losses elsewhere, she said.

The new competition is forcing incumbent operators to change the way they do business, which is benefiting consumers, she said.

There are now four times as many fixed telephone operators than there were in 1998, Reding said.

"Good regulation drives competition, competition drives innovation and investment, investment drives consumer choice," she said.

Competition and investments in broadband, for example, have led to a sharp rise in the number of subscriptions to 53 million in 2005.

And mobile phone penetration in eight member states is more than 100 per cent, with consumers often having several SIM cards to take advantage of a range of offers.

But there are still some areas of concern, not least the high cost of international mobile phone calls, the so-called roaming charges, Reding said. She said she will put forward a new proposal aimed at reducing the cost of roaming in May.

Other areas that still need more work include number portability and access to directory services, the commissioner said, adding that she would also be looking at ways of improving the cross-border market through encouraging investment in pan- European projects.

The report says dominant telecom firms still has a strong control over fixed line and mobile markets, such as Deutsche Telekom.

Reding said she had sent a letter last week to the German government warning against its attempts to exempt Deutsche Telekom ' s fiber optic cable investment from regulation.

She said that the European Commission would continue to use its powers to ensure that there was no return to the old monopoly days.

Source: Xinhua News Agency - CEIS

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