Data and mobile sector drive growth of communications in the EU

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Competition in the electronic communications sector in the European Union is increasing and the benefits for customers are becoming more visible both in terms of prices, in terms of service quality and innovation, concludes the European Commission’s annual report .

The document analyzes the evolution of the sector in 2004 and the impact of the new regulatory framework, which has already been implemented in most countries, recognizing many improvements in terms of competition and identifying some points that require additional work from local and community regulatory authorities.

According to this document, the growth drivers of the European communications market have been «innovation in terms of mobile and broadband communications, as well as traditional fixed telecommunications services», in a period when the sector surpasses a set of issues related to cost and debt reduction, it refers.

Together, the various factors contribute to an estimated growth of 4.6 percent in the communications sector this year, a figure above the estimated growth for the GDP of 25: the growth of fixed data services and mobile services that are expected to contribute. grow 11.5 and 7 percent respectively.

By areas, the report says that in broadband, one of the main drivers of the growth of electronic communications, the number of lines in the EU has grown 72 percent over this year to reach 29.6 million lines, or 6, 5 percent of the population. The interest of incumbent operators in boosting these services is highlighted, as compensation for the drop in fixed revenues and the importance of the entry of new operators, responsible for an environment of greater competition.

The report says that new entrants already have a share of 43.7 percent, 2.2 percent more than last year and reiterates the predominance of DSL technologies that control 78 percent of the offer.

The EC recognizes that competition in broadband and specifically in copper (where DSL technology is based) is weak and admits the need to carry out measures that create better conditions for new operators in this field. Even so, the number of unbundled lines, which allow competition in terms of infrastructure, went from 1.8 million in July 2003 to 3.8 million in July 2004. In terms of broadband penetration, Portugal is rate of 6.4 percent, one tenth below the average for Europe of 25.

Dynamism and competition in furnitureWith regard to mobile services – the second major contribution to the sector’s growth in 2004 – the EC found a penetration rate of 83 percent for Europe to 25 countries and 87 percent for Europe of 15. In number of users the report points to a total of 379 million, foreseeing new growth that in the future should be based on advanced value-added services.

Also in terms of furniture, the EC recognizes greater dynamism in the market and a more intense competitive environment that is reflected in a reduction in the average share of dominant operators, which went from 46.6 percent last year to 43.2 percent this year.

The report highlights the various declines in mobile termination rates over the course of this year, showing some concern regarding international roaming charges, warning that it will continue with investigations in this area.

Regarding third generation services, the EC reports that 30 of the licensed operators are already offering commercial offers and another 21 are in the pre-commercial phase. Among these there are expected to be 2.6 million subscribers, but network coverage is expected to reach 43 percent of the European population by the end of the year.

The document also mentions key concerns that the EC will try to resolve or streamline in the future. At the level of national regulatory authorities (NRAs), there is a concern that in some situations there is not yet complete independence from political power, as well as the weak coordination between the new legal framework and legislation in countries, in certain aspects.

The response and decision timings of the NRAs are also a cause for concern because they are too long. In the same way, the EC analyzes complaints and issues that arise all over the European area concerning rights of way, the provision of universal service and the rights to use radio frequencies by mobile operators.

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