As a consequence, customers are continuing to pay excess charges and receive limited services in many countries. This is particularly acute when it comes to the availability of critical broadband and business communications services.
The result of this patchwork implementation of the Framework is a stark split in performance: countries at the top of the Scorecard, including the UK (1st), Denmark (2nd) and France (3rd), which have been more pro-active in driving pro-competitive reforms, have seen a wealth of telecoms offers, growth and investment in the sector, and some of the lowest retail prices in Europe. Meanwhile countries at the bottom of the Scorecard, such as Poland (17th and lowest), Greece (16th) and Germany (15th), have struggled in some areas to provide an environment in which competition can flourish, which has a negative impact on both consumers and businesses in those countries.
The ECTA Scorecard is a detailed measure of how effectively EU Member States and their regulators have liberalised national telecoms markets to open them to competition. A clear message from this year’s results is that the actions of Governments and regulators to create a pro-competitive environment for telecoms have real and tangible results. In broadband penetration for example, a critical factor in ensuring European competitiveness on a global basis, there is a strong and significant link between measures taken by regulators to create a sustainable ladder of investment for competition and the take-up of broadband. France, the UK, Netherlands, and Denmark, which have acted to ensure that competition can develop, have all exhibited strong growth with penetration rates already well above the EU average of 15%1. Conversely, Poland, Greece, the Czech Republic and Ireland, where effective and appropriate regulation is less evident, have all lagged behind in broadband take-up.
In the run-up to the publication of proposals by the Commission to revise the European Framework for Telecoms Regulation, the European Telecommunications Communications Association (ECTA) urged telecoms ministers to push through reforms to complete liberalisation. An enhanced role for the European Regulators Group (ERG), and powers for regulators to mandate functional separation were highlighted by the pro-competition group as key measures.
Steen Clausen, Managing Director, ECTA, said, “What we need is a smarter approach to regulation. It is very clear from the Scorecard that even where rules have been applied on paper, they don’t always work in practice. So looking at deregulation when markets are not yet fully open is premature. An enhanced role for the ERG could help to spread best practice more effectively between regulators across Europe. The ERG and Member States should look closely at how this can be achieved. Powers for regulators to functionally separate access from services could also help to better enforce the existing regime.”
Yvan Desmedt of Jones Day, co-authors of the research, said, “The Scorecard clearly shows that in some countries, regulators have applied the Framework relatively rigorously and are reaping the benefits in the marketplace. However in many others, crucial market opening measures are not yet in place. This means that there remains a clear opportunity for Europe to progress by enforcing the Framework effectively and levelling the playing field across the EU. “
Clausen continued, “The European Commission publishes reports year after year that, like the ECTA Scorecard, show that open markets mean lower prices and higher take-up of services. For example, the price for international calls and high speed ‘leased lines’ - critical services for businesses - has fallen by more than one third since markets were liberalised in 19982. Further, there has been a five-fold increase in broadband lines in the past three years3 to 56 million, spurred primarily by competition.”
The conclusions of the Report are threefold: the powers granted to regulators, and implementation of regulation, vary significantly across the seventeen Member States covered by this report; while some countries have made significant strides forward in improving their regulatory environment, the extent of these improvements has been patchy; and new services such as broadband have surged where governments and regulators have taken the necessary action to open markets.
About the 2006 ECTA Regulatory Scorecard
This detailed picture of the regulatory environment in 17 countries across Europe is compiled by assessing 97 criteria selected after consultation with stakeholders, and in line with WTO and EC rules and guidelines. The three main elements of the analysis cover: the institutional Framework including the independence of the regulator, effectiveness of appeals and enforcement; market access principles including fair pricing principles and rules against discrimination; and the application of the Framework in practice, assessed primarily through market data on pricing and the market shares of competitors.
Key findings
There is a strong and statistically significant link between broadband take-up and the effectiveness of appropriate market-opening broadband regulation as measured by the scorecard.
Finland, Sweden and Denmark top the league for the most attractive mobile competitive environments with relatively low retail prices. By comparison, mobile customers in Germany, the Netherlands and Ireland face relatively high prices with little choice.
The UK, Netherlands, Portugal and France offer the communications environment most conducive for business communications services, a key engine for economic growth. Of the big 5 European economies, Germany and Spain currently lag behind.
Many regulators lack the power or confidence to fine companies for breach of telecoms competition rules or to block the incumbent from launching services that undermine competition in the market. By contrast, Spain, Portugal and Greece have relatively effective enforcement powers and have used them.
Slow and complex appeals procedures continue to dog application of the Framework in many countries, delaying the process by up to 3 years in some cases. Sweden faces particular problems with this issue.
Most regulators have yet to tackle the issue of 'discrimination', one of the key barriers to competitors being able to compete on equal terms with former state-owned incumbents. The UK, Italy and France are considered to have made most progress, with functional separation in place in the UK and under consideration in Italy.