EUROPEAN COMMISSION Brussels, 14.9.2016 SWD(2016) 313 final COMMISSION STAFF WORKING DOCUMENT Evaluation of the regulatory framework for electronic communications Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing the European Electronic Communications Code

(Recast) {COM(2016) 590}

{SWD(2016) 305}



Table of contents 1. Executive Summary 2. Introduction 2.1. Purpose 2.2. Scope 3. Background to the initiative 3.1. General description of the regulatory framework and its objectives 3.2.Baseline 4. Evaluation Questions 5. Method 6. State of play: Implementation & Evolution of the Sector 6.1. Implementation of the regulatory framework 6.2. Evolution of the Sector 7. Answers to the Evaluation Questions 7.1. Relevance 7.1.1. Relevance of the current objectives of the regulatory framework 7.1.2. Relevance of regulation areas 7.1.3. Continued relevance of the current objectives against new needs 7.2. Effectiveness

7.2.1. Achievement of the general objective of the regulatory framework 7.2.2. Achievement of the specific objectives of the regulatory framework 7.2.3. Contribution of specific regulation areas to the objectives of the regulatory framework 7.3. Efficiency 7.3.1. General remarks 7.3.2. Efficiency of regulatory areas 7.4. EU added value 7.5. Coherence 7.5.1. Internal coherence 7.5.2. External coherence 8. Conclusions 9. LIST OF ANNEXES 9.1. Annex I Procedural information 9.2. Annex II Results of the public consultation 9.3. Annex III Methodology of the support studies 9.4. Annex IV Legislation covered and correspondence tables 9.5. Annex V Screening of the Directives Screening of the Framework Directive (2002/21/EC) Screening of the Authorisation Directive [(2002/20/EC)] Screening of the Access Directive (2002/19/EC)

Screening of the Universal Service Directive [(2002/22/EC)] 9.6. Annex VI Screening of the BEREC Regulation 9.7. Annex VII The implementation of the RSPP & of the RSD



Table of Figures: Figure 1 Intervention logic summary Figure 2 Fixed broadband subscriptions – operator market shares at EU level, January 2006 – July 2015 Figure 3 Fixed broadband subscriptions – operator market shares, July 2015 Figure 4 Mobile broadband penetration at EU level, January 2009-July 2015 Figure 5 Broadband retail prices, standalone offers Figure 6 Broadband retail prices – bundles including broadband, fixed telephony and tv Figure 7 Decrease of fixed broadband market share of incumbent operators Figure 8 OECD wireless broadband take-up (subscriptions/100 people) Figure 9 NGA performance global comparisons end 2014 Figure 10 Fixed broadband subscriptions – technology market shares at EU level, January 2009-July 2015 Figure 11 Fixed broadband subscriptions – technology market shares at EU level, July 2015 Figure 12 Share of different NGA technologies in total NGA subscriptions at EU level, July 2015 Figure 13 Fixed broadband subscriptions - operator market shares at EU level (% of subscriptions), January 2006 to July 2015 Figure 14 Local Loop Unbundling monthly average total cost (EUR) at EU level, 2005-2015

Figure 15 Household penetration of Cable TV, July 2014 Figure 16 Next generation access (FTTP, VDSL and Docsis 3.0 cable) coverage, June 2015 Figure 17 Fibre to the premises (FTTP) coverage, June 2015 Figure 18 Fixed broadband subscriptions by headline speed, July 2015 Figure 19 Average spectrum assigned for wireless broadband in EU28 Figure 20 Timing of 800MHz spectrum awards Figure 21 Summary of tasks: access regimes for network investment Figure 22 Types of business model in relation to regulatory approach Figure 23 Assessing regulatory models – analytical steps Figure 24 Sequence and structure of tasks in the project Figure 25 Assigned spectrum in harmonised EU band per Member State Table of Tables: Table 1 - Assignment and derogations of the 800 MHz harmonised band Table 2 — General spectrum policy (programme, definition and inventory) Table 3 — Electronic communications services (including wireless broadband) Table 4 - Devices and equipment (including machine to machine) Table 5 - Derogations under Art. 6(4) of the RSPP Decision regarding the 800 MHz band





1.Executive Summary The purpose of this staff working document is to assess the regulatory fitness of the current rules that make up the regulatory framework for electronic communications and to assess whether they have contributed to the achievement of the framework's main objectives. It is also to identify possible redundancies, inconsistencies and potential for simplification. The regulatory framework consists of a set of complementary instruments covering both sector-specific economic regulation and end-user protection rules. It aims to promote competition — mainly through regulated access to the incumbent’s networks and provisions ensuring market entry and efficient access to key resources such as spectrum — in order to maximise end-user benefits. This evaluation, announced in the Commission’s Work Programme, is warranted for two reasons. The first is the legal obligation to periodically review the functioning of the regulatory framework. The second is that there have been a number of structural changes in the sector since the last review in 2009. It draws on the results of a wide-ranging stakeholder consultation, Commission monitoring (e.g. implementation reports, Digital Agenda Scoreboards) and various studies, including those that focus on the evaluation and review of the regulatory framework. The main findings are summarised below. Relevance — Generally speaking, the evaluation has shown that the specific objectives of the framework — promoting competition, realising the single market and protecting consumer interests — remain as valid as before. The single market objective is even more relevant than before. Effective and sustainable competition drives efficient investment and fuels the development of the single market. It ultimately serves the interests of end-users, by encouraging innovation and providing maximum benefit in terms of choice, price and quality. At the same time, connectivity has emerged as the underlying driving force for digital society and the digital economy, underpinned by technological changes and evolving consumer and market demands. It is a key aspect of the Juncker Commission’s political commitment to deliver the digital single market. It is therefore necessary to consider adjusting the current policy objectives and regulatory tools to further support the deployment of infrastructure and wide-spread take-up of corresponding connectivity services in line with future needs. Most regulatory areas remain as relevant as in 2009, if not more so. In particular, this applies to spectrum management, given the role of spectrum as an essential but scarce input for the deployment of current and next generation mobile and fixed wireless networks. This goes hand in hand with access regulation as a way of tackling the problem of the persisting entry barriers in the networks. For instance, market developments are calling into question the relevance of certain specific components of the universal service regulation. However, the concept of a safety net ensuring that all citizens are included in a fully developed digital society is even gaining in importance in relation to the digital single market. Similarly, while specific provisions under the consumer protection objective might have to be adjusted in view of technological, market or legislative changes, the basic end-user protection needs the provisions meet remain relevant, as do their specific objectives. Effectiveness — It is widely recognised that the regulatory framework has been effective in delivering a competitive sector overall. This has generated significant end-user benefits, such as widely available (basic) broadband, a significant decrease in prices and more choice. Access and spectrum regulation in particular, but also market entry provisions, have increased competition. Nevertheless, access regulation has delivered competition more at service than at network level. Also, while investments in very-high-capacity networks have advanced, they have not taken place across all Member States at the pace envisaged in the public policy agendas and corresponding to expected future needs. A significant amount of spectrum has been released for wireless broadband, but progress in spectrum management has not been as good as wished for in the last review. This has resulted in delayed and fragmented network roll-out and take-up. Results in terms of achieving the single market objective are not very impressive. Regulatory consistency has been achieved only to a limited extent, affecting the operations of cross-border providers and reducing predictability for all operators and their investors. The cooperation and consistency tools available have led to a situation in which the best regulatory solutions have not always been chosen, with impacts on end-user outcomes. EU-level consistency checks contribute to the predictability of access regulation throughout the EU, but their influence is significantly restricted with regard to draft regulatory remedies. The lack of consistency in spectrum management has also had negative consequences for end-users, such as delayed 4G deployment in most parts of the EU. The achievements of the framework in protecting end-users and in ensuring a safety net (universal service) are significant, although progress in consumer satisfaction is relatively slow. It is also clear that not all sector-specific end-user protection provisions are still fit for purpose given technological, market and legislative developments. Efficiency — It has not been possible to do a precise cost calculation, but the evaluation has shown that the benefits of the framework — for most operators, end-users and society as a whole — greatly outweigh the costs of implementing it. A certain level of complexity might be necessary to ensure a well judged intervention (e.g. appropriate access regulation). However, several areas have been identified in which the administrative burden could be reduced without making the provisions less effective — in some cases even making them more effective: e.g. longer ex ante market regulation cycles, simplified procedures for analysing very stable markets, streamlining certain overlapping consumer protection provisions. EU added value — The regulatory framework has been instrumental in delivering competition in the single market that, to an extent, would not have been possible or likely at national level. It has brought national regulatory practice in the sector into line with the best models across the EU, with varying success for specific regulation areas. EU action has also contributed to more comprehensive, if not homogeneous, consumer protection than would otherwise be the case. Coherence — Generally speaking, the various instruments making up the regulatory framework have reinforced each other. Two issues would, however, merit specific attention in the review process. They are the coherence between regulation aimed at incentivising competitive network roll-out and the EU financing and State aid rules in the sector, as well as the potential overlaps between certain sector specific provisions and horizontal consumer interest legislation. In conclusion, the regulatory framework has broadly achieved its general objective of ensuring a competitive sector that provides significant end-user benefits. Nevertheless, while its main specific objectives — promoting competition, developing the internal market and promoting the interests of end-users — remain relevant, a review is needed to address the growing need for increased connectivity of the digital single market and to streamline provisions taking into account market and technological developments.



2.Introduction 2.1.Purpose The Commission's Communication of 6 May 2015 on a Digital Single Market for Europe (DSM) is built on three pillars: (i) Better access for consumers and businesses to online goods and services across Europe; (ii) Creating the right conditions for digital networks and services to flourish; and (iii) Maximising the growth potential of our European Digital Economy. The review of the regulatory framework for electronic communications is one of the key actions under the second pillar. The present evaluation is a comprehensive policy evaluation of the current regulatory framework for electronic communications. It has been announced under the Commission's work programme for 2015 as a REFIT item, i.e. as belonging under the Regulatory Fitness and Performance programme and is warranted not only because of the legal obligation to periodically review the functioning of the regulatory framework, but also because since the last review of 2009, electronic communications networks and services have undergone a number of structural changes.

The evaluation follows the guidelines of the Better Regulation Package and assesses the relevance, effectiveness, efficiency, EU added value, and coherence of the Telecoms Package. It follows a Fitness Check model, that is, an evaluation of most of the measures of the 2009 Telecom Package, aiming to identify the cumulative impact of the interventions covered on the three objectives of the framework: promoting competition, the internal market and end-user interests. This evaluation will form a basis for potential legislative and/or non-legislative initiatives addressing the identified gaps and the ambition set out in the Digital Single Market Strategy. 2.2.Scope The evaluation covers the following instruments: the Framework Directive 2002/21/EC as amended, the Authorisation Directive 2002/20/EC as amended, the Access Directive 2002/19/EC as amended, the Universal Service Directive 2002/22/EC as amended, the BEREC Regulation 1211/2009, the Radio Spectrum Decision 676/2002/EC, the Radio Spectrum Policy Group Decision 2002/622/EC, Decision 243/2012/EU establishing a multiannual radio spectrum policy programme (RSPP). The evaluation does not cover Directive 2002/58/EC on privacy and electronic communications, since the evaluation and review of this Directive is linked to the ongoing legislative process of the general data protection regulation (see COM(2012)11 final). A specific evaluation is referred to in the Commission 2015 work programme. The evaluation of the Roaming Regulation 531/2012 is not covered, as the Roaming Regulation is addressed in the recently adopted Regulation (EU) 2015/2120 and is subject to a specific review process provided therein. Regulation (EU) 2015/2120 also amended rules concerning open Internet access which are not part of this evaluation. The Broadband Cost Reduction Directive 2014/61 is not covered either, as it is currently in the process of being transposed by Member States (date of application of most provisions: 1 July 2016). The timeframe of the evaluation covers in principle the period from the entry into force of the revised regulatory framework i.e. from May 2011 till end of May 2016. Wherever longer datasets are available and where they can be useful in showing impacts (i.e. in those regulatory areas with little or no modifications during the 2009 review), 2004 is the starting point – the year when the 2002 package entered into force establishing a distinct set of rules and regulatory principles. Indeed, while the last revision of the package of instruments took place as of 2009, it would be difficult to judge the overall functioning of the framework without looking at the entire package as adopted in 2002. The geographic focus is on the European territory of the Member States to which the Treaty applies. 3.Background to the initiative 3.1.General description of the regulatory framework and its objectives The framework was set up in 2002, consisting of five directives: the Framework Directive (2002/21/EC), the Authorisation Directive (2002/20/EC), the Access Directive (2002/19/EC), the Universal Service Directive (2002/22/EC) and the Directive on privacy and electronic communications (2002/58/EC). The framework comprised (i) sector-specific economic regulation and (ii) rules safeguarding end-user interests, and had the general objective to promote competition via regulated access to incumbents' networks and market entry as a means to make markets contestable, to achieve efficient market outcomes and, in particular, to maximise consumer benefits. Economic regulation was based on the principles of competition law and aimed to take into account the convergence of technologies. The regulatory framework is composed of a set of complementary instruments. The Framework Directive establishes a harmonised framework for the regulation of electronic communications networks and services, associated facilities and associated services, outlining the general principles, objectives and procedures governing this policy area. It also, together with the BEREC Regulation, lays down the overall institutional set up by establishing independent national regulatory authorities (NRAs) responsible for regulation at national level and defines the role of BEREC, composed of NRAs, in advancing a consistent regulatory approach at the EU-level. The Framework Directive is complemented by four directives and several more specific regulations. In particular, the Authorisation Directive harmonises and simplifies the authorisation rules and conditions in order to facilitate their provision throughout the EU, in particular by replacing individual licenses by general authorisations to provide communications services. The Access Directive grants telecom operators rights and obligations to negotiate interconnection of their networks with the view to ensure interoperability of services throughout the EU in the interest of end-users. It also empowers NRAs, among others, to impose adequate regulatory obligations in the areas of access and interconnection in order to ensure competition in the market and contribute to the achievement of the single market. The Universal Service Directive guarantees basic rights for consumers and minimum levels of availability and affordability. On the one hand, it ensures that consumers can fully reap the benefits on a competitive market. On the other hand, it provides a safety net for end-users which are not catered for by the competition on the single market. Finally, the e-Privacy Directive (not included in the scope of this evaluation) covers protection of privacy and personal data communicated over public networks. Prior to 2002 the principal aim of telecom regulation had been to break down monopolies. In 2002, the needs had evolved: the markets were becoming progressively competitive, their contribution to the overall economy moderately recognised, while at the same time technologies (e.g. cable and telephony providers) were converging. Thus the need to move to a case-by-case, competition law based approach as far as access regulation is concerned, to cover within one framework networks and transmission services (but not content), and to complement economic regulation with end-user protection rules. The framework provided also for the progressive removal of regulation as and when competition becomes effective. In the first review of the 2002 package, two Directives – the Better Regulation Directive 2009/140/EC and the Citizens' Rights Directive 2009/136/EC – have provided additional tools to respond to the need to ensure more effective competition, consolidate the internal market and strengthen end-user's rights. As laid down in the review Communication (COM/2006/0334 final), several changes were needed despite significant achievements of the framework in terms of prices, choice, high mobile penetration and growing broadband penetration, etc. In particular there was a need to render spectrum management more effective, to simplify the market review processes, to reinforce end-users' interest and to improve security. There was also a particular need to increase the consistency of regulatory approaches in Member State. A number of regulatory principles how to pursue the objectives of competition, internal market, and citizens' interests have also been added, not least in relation to the promotion of investment and innovation in new and enhanced infrastructures. Particular attention was devoted to the need to apply the principles of the regulatory framework to spectrum management. As referred to above, the Body of European Regulators for Electronic Communications (BEREC) was also established by the 2009 BEREC Regulation to contribute to a more consistent regulatory practice among national regulatory authorities and to advise EU institutions. BEREC started operations in January 2010 and became fully functional in 2011. The intervention logic, setting out the rationale and approach for the working of the package is summarised in Figure 1, below. This includes the general and specific objectives, the activities and inputs required to achieve these objectives, and the outputs, results and impacts that should be achieved through their implementation. Both the general objective and the specific objectives remained unchanged in the 2009 review. In response to the needs identified above, the overarching objective of the regulatory framework for electronic communications was to create a competitive sector, with a view to maximising end-user outcomes/benefits. Competition on the Single Market has indeed been considered to be the main engine delivering diverse, innovative, and affordable services to consumers and businesses. Provisions were also put in place to enable end-users to fully take advantage of the competition created.

The general objective was further broken down in three specific objectives: promoting competition, improving the functioning of the Internal Market and protecting the interests of European citizens. The specific objectives of the intervention were furthermore broken down by the legislator into sub-objectives: - Promoting competition means (1) ensuring that users derive maximum benefit in terms of choice, price and quality, (2) ensuring that there is no distortion or restriction of competition, and (3) by encouraging efficient use and ensuring the effective management of radio frequencies and numbering resources; - Developing the internal market implies (1) removing remaining obstacles at EU level, (2) encouraging the establishment and development of trans-European networks and the interoperability of pan-European services, and end-to-end connectivity, and (3) cooperating with each other, with the Commission and BEREC; - Finally, promoting the interests of EU end-users means (1) ensuring all citizens have access to a universal service, (2) ensuring a high level of consumer protection, (3) promoting the provision of clear information, (4) addressing the needs of specific social groups, and (5) ensuring that the integrity and security of public communications networks are maintained. The first two sub-objectives are inter-related: competition needs to be understood in a Single Market context. As such, provisions aimed at enabling competition (e.g. ensuring access for new entrants to essential inputs, lowering barriers to market entry, etc.) can be seen as serving both the competition and the internal market objectives. At the same time, provisions considered under the Single Market objective have competition as the ultimate objective, too. However, in view of the clarity of the analysis, provisions were grouped under the objective they most serve. This implies that a choice was made for each provision, and that a regulation area is often broken down into provisions which are split between more than one objective. The colour codes in the intervention logic graph above reflect these splits. Throughout most of the text, the provisions are evaluated per regulation area, with the exception of the effectiveness analysis, where beyond regulation area, the evaluation looks at how specific provisions contributed to each objective. Annex V furthermore summarises the evaluation findings per instrument. The choice to conduct the evaluation per regulation area rather than per instrument (or provision by provision) reflects the Fitness Check evaluation model. In addition, provisions belonging to one regulation area are often covered in more than one legislative instrument, therefore an evaluation per area and against the overall objectives of the framework was the preferred option in view of delivering a readable product, reflecting the intervention logic rather than the successive legislative changes. The paragraphs below present shortly the main regulation areas, which constitute the inputs to the intervention logic, together with their corresponding activities. Access regulation: The main tool by which national regulators (NRAs) promote competition and investment in next generation networks under the framework is the system of ex ante regulation, under which NRAs conduct market analyses at regular intervals and apply appropriate remedies (such as access obligations and cost controls) on operators found to have significant market power (SMP). Following the 2009 review of the framework, NRAs were given the additional option of mandating facility sharing in the final (terminating) segment of the network (symmetric regulation). The 2009 review also introduced the potential for NRAs to mandate ‘functional separation’ of SMP operators, i.e. to place activities related to the wholesale provision of relevant access products in an independently operating business entity, in cases where other remedies had failed. The overall flexibility given to NRAs in choosing appropriate regulatory remedies from the available toolbox referred to in the paragraph above required the introduction of co-ordination mechanisms to ensure regulatory consistency on the Single Market. Indeed, the 2002 framework set up an EU consultation mechanism ("Article 7 procedure") to ensure consistent application of the market analysis procedure across the Member States. The consultation mechanism introduced an EU level check on the draft national regulatory measures and entailed a potential veto from the Commission on market definition and the designation of SMP but not on remedies. The consultation mechanism was accompanied with associated guidance (e.g. Recommendation on Relevant Markets susceptible to ex ante Regulation and guidelines for market analysis and the assessment of significant market power) and included a possibility for the Commission to issue Recommendations in order to enhance harmonised application or remedies, subject to consultation with national experts from the Member States. (Under these powers the Commission has issued Recommendations on Next Generation Access, on Costing and Non Discrimination, and on Termination Rates.) The 2009 review further reinforced the mechanism to ensure consistent application of remedies by establishing a mechanism for seeking an opinion of BEREC in case of serious doubts on the remedies proposed by an NRA and empowering the Commission to issue a recommendation to the individual NRAs concerned. Furthermore, the power of the Commission to issue general Recommendations on the harmonised application of remedies was reinforced by empowering the the Commission to issue general Decisions (subject to comitology) if Recommendations were not followed. The important role played by NRAs collectively in these mechanisms also drove the creation of BEREC as an EU body formalising their cooperation. Spectrum regulation: The 2002 framework, developed at a time when mobile telephony was still in the growth phase (and mobile data virtually unknown) gave significant flexibility to Member States in the management of radio frequencies and procedures for the transfer of rights, subject to general principles set out in the legislation. Two bodies were established at the same time to support the co-ordination of spectrum policy: (1) the Radio Spectrum Decision of 2002 established the Radio Spectrum Committee (RSC) which has responsibility for technical measures required to implement the broader Radio Spectrum Policy and (2) the Radio Spectrum Policy Group (RSPG) established under Commission Decision 2002/622/EC consisting of Member State and Commission representatives was established as an advisory group to the Commission. The RSPG issues opinions and reports on Radio Spectrum Policy at the request of the Commission and more recently under an expanded remit also the European Parliament or the Council. The 2009 revision to the electronic communications framework provided significant new guidance on spectrum management, as mobile communications were gaining prominence and spectrum was more and more seen as essential input to compete on the electronic communications market. Importantly, it also paved the way for the 2012 Radio Spectrum Policy Programme (RSPP), which now serves as a roadmap for the development of the internal market for a wide range of wireless technologies and services (i.e. not just for electronic communications), taking into account both Europe 2020 and the Digital Agenda for Europe. However, unlike access regulation, which is subject to the ‘Article 7’ process, there are currently no measures for the EU-level assessment of draft national measures in the field of spectrum policy, and in particular the assignment of rights of use of spectrum.

Numbering regulation: The availability of adequate numbering resources is a crucial pre-requisite for the development and growth of telecommunication markets and services. Under the current regulatory framework, Member States shall ensure that adequate numbers and numbering ranges are provided for all publicly available electronic communication services, via objective, transparent and non-discriminatory procedures. The framework also includes provisions requiring Member States to support the harmonisation of specific numbers or numbering ranges within the Community where it promotes both the functioning of the internal market and the development of pan-European services. The Commission may take appropriate technical implementation measures on this matter. The use of numbers is coordinated at the global level by the International Telecommunications Union – Telecommunications Sector (ITU-T). In addition, CEPT (European Conference of Postal and Telecommunications Administrations)is an international organisation, affiliated to ITU, that coordinates the activities of 48 European countries. Market entry provisions (authorisation, rights of way): The conditions governing authorisation for providing electronic communications networks and services are aimed at the harmonisation and simplification of authorisation rules. In particular, the conditions attached to general authorisations are restricted by the framework. The types of obligations that could be covered in a general authorisation, applying to all operators regardless of their position on the market include provisions concerning administrative charges and contributions to a universal service fund if appropriate, provisions regarding interconnection and interoperability, consumer protection rules, data and privacy protection, enabling of lawful intercept, requirements to provide information to the NRA, restrictions concerning the transmission of illegal content; and environmental and planning requirements. To encourage infrastructure deployments, granting rights of way or access to sites is essential. The framework foresees that competent authorities of Member States, on application, are to grant rights to install facilities on, over or under public or private property to an undertaking authorised to provide public communications networks. The granting mechanism should be simple, efficient, transparent and publicly available procedures, applied without discrimination and without delay (normally within six months of the application). Standardisation: Under the regulatory framework, the Commission is required to establish a list of non-compulsory standards in order to encourage the harmonised provision of electronic communications networks and services and associated facilities and services. Such a list was set up under Decision 2007/176 as amended by Decision 2008/286/EC. The Commission can also ask standardisation bodies (CEN, CENELEC or ETSI) to draw up standards. Member States are furthermore encouraged to use those standards. If compliance with specified standards at EU level is encouraged, this would be done to ensure interoperability in the single market. The Commission is also given the power to adopt implementing measures in order to render specifications and standards compulsory. End-user protection provisions include: obligations to facilitate switching including one-day number portability obligations, sectorial contractual obligations, provisions concerning transparency on tariffs and other conditions, provisions concerning transparency on Quality of Service and potential minimum Quality of Service requirements, the potential for Member States to mandate ‘must-carry’ obligations, etc. Electronic communications services are also subject to obligations concerning security and integrity, while privacy is subject to a separate review. Universal service provisions allow Member States to put in place obligations serving as safety net ensuring that the most vulnerable in society as well as those in more remote areas can receive basic services. At the time of the introduction of the provisions in 2002, phone boxes and physical directories were still in widespread use and the need to have access to telephony services at a fixed location was considered a vital objective, alongside the more forward-looking concern that users needed access to a connection that permitted ‘functional Internet access’. Today’s universal service covers both connectivity and service aspects, as well as the affordability of tariffs and accessibility for disabled users. The provisions permit financing of any ‘net cost’ of universal service obligations either through a levy on operators or through public funds, where such a net cost would otherwise constitute an unfair burden to the designated Universal Service Obligation (USO) operator. Finally, a separate set of provisions is dedicated to the functioning of the national regulatory authorities (NRAs), aimed mainly at ensuring effective and impartial regulatory decisions vis-à-vis market players. Member States should indeed ensure that well-functioning NRAs are in place as they are entrusted all the objectives of the framework and most of the tasks under the framework. The legislation distinguishes, however, between the independent NRA, which must be competent for ex ante market regulation and the settlement of disputes between undertakings, and the NRA in a more generic sense, which can be any national authority (including but not confined to the independent NRA) which is entrusted with one or more of the other tasks under the various Directives. Further to the activities described above under each regulation area, the framework entails also national implementation measures, Commission monitoring and enforcement, etc. The direct results or outputs of the actions specific to the regulation areas described above are: access regulation and remedies (e.g. access products that alternative operators can use to compete with incumbents), spectrum award procedures (e.g. where operators acquire spectrum and band can be reorganised efficiently), rules for flexible use of spectrum (e.g. allowing operators to trade or lease spectrum), numbering assignment plans, authorisation schemes on the ground, out of court dispute bodies, universal service regimes in place, etc. Such outputs are measured, throughout the evaluation, as much as possible quantitatively and/or qualitatively. A set of indicators – result indicators – help understanding the intermediate results, referring to the specific objectives of the regulatory framework – the growth in number of competitors, progress on the single market, and better mechanisms for consumer protection: the actual take-up of access remedies by competitors, the decrease in the number of regulated markets, the number of new entrants resulting from spectrum auctions, the spectrum used in harmonised bands, the consistency of regulatory approaches applied across Member States, the number of cross-border operators, the actual use of services covered under universal service obligations, the use of the European emergency number 112, the number of actual switching and porting transactions, etc. At a higher level, the impact on the sector's competitiveness as well as the overall consumer outcome indicators (innovation, choice, affordability) are measured by another set of indicators, such as: the market share of incumbents, Next Generation Access (NGA) rollout, price and performance available. While investment in enhanced networks is not a primary objective of the framework, network rollout is considered an important element for consumer outcomes. 1.1.Baseline The European Electronic Communications Regulation and Markets 11th Report offers a good overview of the situation across Member States at the end of 2005, before the last review of the regulatory framework was carried out. The main findings can be summarised as follows: the take-up of broadband stood at 11.5% in 2005, with new entrants having a combined market share of roughly 50% of those subscriptions. Mobile penetration had reached 92.8%, growing faster in the "new Member States" which joined in 2004. In 2005 it was estimated that there were around 15 million subscribers to 3G services. Prices were in general falling rapidly, except for the prices for calling from fixed to mobile networks and prices for roaming, which remained high. Mobile number porting (retaining the number, which stimulates competition) had doubled during 2005 (a total of 24.5 million customers had retained their number while changing provider until then). The fixed markets, despite already decreasing revenues were at the time still an attractive market for new entrants, with a value of 85.8 billion EUR in 2005. Among the 18 markets susceptible of ex ante access regulation, the markets for international fixed telephony and access and call origination on mobile networks were slowly becoming more competitive (regulation had been lifted for those markets in over six Member States). In total, 29 markets from the total of 450 (18 markets x 25 Member States) were deregulated. Network competition was still rather limited, with only 8.3% of subscribers using direct access from a new entrant (a cable line, an unbundled line, etc.). Overall, the market showed how the framework had started to deliver its objectives. However, it is also important to note that competition mainly came from cable infrastructure, which was not regulated. Indeed, the countries where direct access from new entrants was significantly higher were those with strong cable presence (UK, Denmark, etc.). As noted in the impact assessment carried out in view of the 2009 review since markets were fully opened up to competition in 1998, users and consumers had benefited from more choice, lower prices and innovative products and services. Overall growth in revenue terms in the sector had continued to be strong, outpacing the growth of the EU economy. On average, for the same telecoms services, consumers spent almost 24% less in 2005 than in 1996, and as prices had gone down about 35% in the same period, this implied an increase in use of electronic communications services. Despite these positive developments, several changes were called upon in 2005. In particular there was room for significant improvement in the way that spectrum was managed, in that a mismatch could be observed between spectrum regulation and market requirements in wireless communication services impairing the efficient use of spectrum. Changes in spectrum regulation were necessary so that the full potential of spectrum to contribute to innovative, diverse and affordable services to the European citizen and to strengthen the competitiveness of European ICT industries could be realised. As regards other areas, and in particular access regulation, the 2009 review discussed potential changes in view of further stimulating investments and concluded that the principles and flexible tools in the regulatory framework, when applied fully and effectively, offer the most appropriate means of encouraging investment, innovation and market development. In 2005, aggregate investment – measured in terms of capital expenditure - rose to more than € 45 billion, representing an increase of 6% over 2004. It was the third consecutive year of increased year-over-year investment levels since 2003. The steady nature of this overall increase suggested that the investment cycle had improved and that the sector was considered a more attractive growth opportunity because of its broader structural characteristics. Moreover renewed emphasis on investment was accompanied by rising capital market valuations of the sector over time. There was nevertheless a need for the Commission and NRAs to provide guidance on how the rules should be applied, so as to increase predictability for stakeholders. There was also a concern about the administrative burden related with market analyses and notification procedures (Article 7). The Commission had identified furthermore several detailed areas where consumer protection could be improved, as well as needed updates to the universal service regime. Notably, the need to ensure security of services and networks (preferably through dedicated legal provisions) had become prominent not only for the sector itself as for all the part of the economy which relied on ICT. The major technological and market changes anticipated for the next ten years were: migration to ‘all Internet Protocol (IP)’ networks, growing use of wireless communications and wireless access platforms (e.g. 3G, Wi-Fi, WiMAX and satellite), deployment of fiber in the local access network, and the transition to digital TV. Far-reaching impacts on existing network architectures, services and consumer devices were expected, leading to new and innovative services for users, starting with ‘triple play’ services.

4.Evaluation Questions The following questions were set out under the five different evaluation criteria and form the main basis for the evaluation: Relevance Are the original (general and specific) objectives of this regulatory framework still relevant? To what extent do the original objectives of the regulatory framework - to promote competition, to develop the internal market, and to protect the interests of EU citizens still correspond to the needs and problems within the EU and in relation to the emerging needs of the sector? Looking at the global objectives and the structural changes in the sector, are there new objectives that the framework should pursue? How relevant is the regulatory framework to stakeholders and to EU citizens? Are all the regulation areas still relevant in reaching the objectives identified as being still relevant? Effectiveness To what extent can these high level results and evolutions be attributed to the working of the framework? How do these trends compare internationally? Have the objectives of the framework been met? Looking at the electronic communications sector, how have competition, the internal market and consumer interest evolved? What are the main outputs and results per regulatory area? How has each regulation area contributed to the attainment of the objectives of the framework? What have been the major constraints on the effectiveness of each regulation area? Are there any areas that are more or less effective than others, and, if so what lessons can be drawn from this? Efficiency Do the provisions of the framework allow for an efficient implementation by Member States? Do the provisions create overly burdensome obligations for operators or regulators, as main stakeholders of the framework? How do the results compare to the costs at a general level/for the main stakeholders? EU added value

Could similar results have been achieved at national/regional level, or did EU action provide clear added value? Coherence Is the regulatory framework internally coherent? Do certain regulation areas complement and reinforce each other? Have any contradictions, overlaps, or conflict been detected? How is coordination ensured between the various regulation areas of the framework? To what extent is this framework coherent with other EU policies which have similar objectives? Have any potential conflicts or gaps been detected? What are the other policy areas with which coordination and complementarity are particularly important? 5.Method The evaluation was coordinated by the EC's Directorate-General Communications Networks, Content and Technology with the support of a Steering Group (with representatives of Commission Directorate-Generals Agriculture and Rural Development; Competition; Informatics; Economic and Financial Affairs; Education and Culture; Employment, Social Affairs and Inclusion; Energy; Environment; Eurostat; European Political Strategy Centre; Financial Stability, Financial Services and Capital Markets Union; Internal Market, Industry, Entrepreneurship and SMEs; Legal Service; Migration and Home Affairs; Joint Research Centre; Neighbourhood and Enlargement Negotiations; Justice and Consumers; Mobility and Transport; Regional and Urban Policy; Research and Innovation; Health and Food Safety; Secretariat-General; Taxation and Customs Union; and Trade). The Group steered and monitored the progress of the exercise, ensuring the necessary quality, independence and usefulness of the evaluation. The evaluation took place between March 2015 and June 2016 and drew from the following main data sources and methods. Evidence gathering Dedicated studies Three dedicated, independent studies support the findings of this fitness check: Support for the preparation of the impact assessment accompanying the review of the regulatory framework for e-communications Regulatory, in particular access, regimes for network investment models in Europe

Substantive issues for review in the areas of market entry, management of scarce resources and general consumer issues Literature review Several studies related to the specific regulation areas were reviewed and an extensive literature review was carried out. A list of the studies used is included in Annex III. Stakeholder consultations The main stakeholders of the regulatory framework are electronic communications providers (of which incumbent operators and alternative operators often have different views and interests when specific competition related policy areas are concerned), national governments (including Spectrum Management Authorities) and National Regulatory Authorities. Citizens and businesses including SMEs are grouped together under the "end-user" category. Other industries connected to electronic communications are affected by the framework while not being subject to it: Over-the-Top players, equipment manufacturers, broadcasters, etc. The stakeholder consultation was designed to reach a wider range of stakeholders including both those who have been engaged in implementing the Directives and those who have experience of requirements to comply with the Directives at different geographical levels. It included: –Targeted consultation - addressing selected stakeholders in all Member States through specific evidence gathering visits to the Member States dedicated to the evaluation and review of the framework have been conducted during 2015-2016. –A wide range of stakeholders have been invited to submit written contributions – within and outside the public consultation (see below). All Member States have provided contributions, with National Regulatory Authorities having submitted a detailed analysis of the current provisions of the framework. These submissions have fed the evaluation findings (not just the main conclusions but also the provision by provision screening of the directives presented in Annex V) and are briefly presented in Annex II. –Public consultation: In accordance with Better Regulation Guidance a 12 week on-line public consultation covering all policy areas and evaluation questions was undertaken on the EU Survey website between September and December 2015. The questionnaire was only available in English but replies in all EU languages were accepted. It gathered a total of 244 replies from stakeholders in all Member States as well as from outside the Union. An initial summary report of the findings was published in 3 March 2016 and the full report of the public consultation was published on 20 April 2016 (Annex II).The consultation elicited both consolidated contributions from umbrella organisations and individual contributions from various stakeholders. The analysis of the responses was done using stakeholder mapping rather than statistics-only, in order to avoid bias and given that operators formed the majority of respondents. Its results were fed throughout the document. The summary can be found in Annex II. The variety of views collected thanks to those consultations contributed to the independence of the evaluation. Implementation reports The findings of this evaluation also build on the implementation, monitoring and screening exercises run by the EC's Directorate-General Communications Networks, Content and Technology (DG CONNECT) on a regular basis. Annual reports are issued by DG CONNECT covering market and regulatory developments in electronic communications – Electronic Communications Implementation Reports, Digital Agenda Scoreboard, Digital Economy and Society Index. Beyond the data which is published in these reports, DG CONNECT databases were used – partly collected via Communication Committee surveys. Further data collection drew on exercises ran by other EC Directorate Generals, e.g. DG Justice Scoreboard, Consumer Markets Scoreboard, Eurobarometer and other dedicated studies. Collation/Triangulation of evidence As explained above, the evaluation was done per regulation area rather than per Directive, while a separate exercise covered the Directives provision per provision. A summary of the findings of the screening of the Directives is presented in Annex V. In the absence of an extensive macro-economic model, the overall contribution of the regulatory framework was estimated mainly via international benchmarking. A full quantification in order to produce a meaningful model would have implied an extensive ex post data collection exercise – including detailed information on topology, demographics, legacy infrastructure, etc. – which seemed unjustified and disproportionate vis-à-vis the efforts which would have had to be required from various stakeholders (Member States and operators mainly). Moreover, a credible counter-factual situation would have been hard to establish, with the exception of few regulation areas, which on the other hand are linked to impacts which are difficult to quantify. The evaluation of the specific regulation areas, including their contribution to high level outputs was supported by the dedicated studies and done mostly based on qualitative analysis (case studies, panels, interviews), with quantitative analysis for key policy areas such as access and spectrum regulation. The methods used depended to a large extent on the nature and aim of the provisions/regulation area analysed: while for certain policy areas the interest is to maximise (measurable) outputs such as the level of competition or the rollout of high performance networks, for other policy areas the focus is to measure relevance in order to sustain a necessary level of consumer protection, for which in depth qualitative analysis was required. The robustness of the findings depends on the sources available per regulatory area. Whereas all regulation areas were covered by the dedicated studies, the depth of the analysis per area is variable. In any case evidence could be triangulated, thanks to the various implementation reports and pre-existing specific studies per area. Attention was paid also to what extent the evidence corresponds to the response obtained in the public consultation, as mapped per category of stakeholder. Moreover, the findings of the evaluation are building on the experience (and data sets) formed throughout the Commission internal monitoring and enforcement exercises. This triangulation is contributing to the robustness and the independence of the findings provided in this evaluation.

Limitations The evaluation faced some limitations in the collection of data, whose impact was mitigated to a maximum possible extent: A limitation in the evaluation was the relatively limited set of quantitative analysis and modelling – linking outputs, results and impacts, and the lack of complete datasets, in some areas of regulation. For instance, given the multiplicity of factors influencing NGA rollout (e.g. topography, population density, legacy factors, etc.) few of the correlations yielded positive results. Moreover, in spite of the abundance of outcome indicators monitored throughout the years, due to factors such as changing technologies, changing market structures, it has been difficult to obtain comparable data sets covering the entire period evaluated. In the absence of reporting requirements imposed by the regulatory framework on Member States and operators regarding administrative costs and burdens, the efficiency conclusions are qualitative, rather than based on actual calculations. The evaluation takes into account the inherent limitations of the findings of public consultations. Firstly, as in all surveys, the answers received reflect the views of a self-selecting sample of relevant stakeholders and not those of the entire population who has a stake in this domain. Secondly, stakeholders' views convey an individual rather than a holistic perspective. This limitation was partly mitigated by stakeholder mapping. The wide area of regulation concerned, and the diverse nature of the rules in question, make it challenging to assess the various instruments making up the regulatory framework in the same exercise. An overall model aggregating the impacts into an overall contribution of the framework could not be delivered given resource constraints as well as lack of appropriate datasets. Based on the elements above, the evaluation has been carried out on the basis of the best available data. Whenever reliable quantitative data is lacking, this is indicated as appropriate and possibly counter-balanced with qualitative data and considerations. 6.State of play: Implementation & Evolution of the Sector This section summarises the current situation on the state of implementation of the 2009 regulatory framework for electronic communications as well as the monitoring arrangements that are in place. 6.1.Implementation of the regulatory framework The successful implementation of the 2009 revised regulatory framework (in force as of May 2011) has suffered to a certain extent from delays in its transposition across Member States. Non-communication infringement cases had to be opened against 20 Member States despite bilateral exchanges and sharing of best practice in the Communications Committee (COCOM), which gathers the representatives of authorities responsible for electronic communication. While no case led to a judgment of the Court, this has undoubtedly delayed the materialisation of benefits stemming from those reforms. Generally speaking, once transposition measures had been put in place, implementation has been relatively less problematic. Priorities defined by the Commission for enforcement have included in particular structural issues. The functioning and the independence of the national regulatory authorities, as well as the EU consultation procedure involving national regulatory authorities and the Commission, which aims to consolidate the internal market for electronic communications (the Article 7 procedure) as well as the revised consumer protection rules have received particular attention. The defined priority areas often correspond to the requirements strengthened in the 2009 framework, such as independence and timeliness of market reviews. Spectrum enforcement has also gained in importance over the years, not least in view of delays in the implementation of Commission spectrum harmonisation or, more recently, of the 2012 Radio Spectrum Policy Programme. Issues around the authorisation and establishment requirements imposed more or less explicitly by national authorities continue to raise issues of conformity with the regulatory framework or, indeed, the TFEU. An area of concern for some years had been the imposition of specific 'telecom taxes' on providers of electronic communications, deemed by the Commission in contradiction with the EU rules on administrative charges. The Court of Justice has however not accepted the interpretation of the Commission in this area. Exchanges via the 'EU Pilot' system have often been successful in preventing infringements in a number of cases, for instance. Roughly three quarters of the cases on which investigations are launched are successfully resolved at that stage. However, implementation issues have not decreased over the years. The Commission monitors the correct application of the provisions contained in the EU regulatory framework, also via contacts with stakeholders and complaints received from EU citizens. The most important evolutions in the sector – both in terms of market and regulatory developments – are presented in annual implementation reports. Due to limited monitoring arrangements with Member States, monitoring and data collection is challenging in areas such as network deployment or the scope of services and bundles available in the Member States. 6.2.Evolution of the Sector The high level developments of the sector, as presented by the latest annual implementation reports available – the 19th monitoring report on the electronic communications market and regulations as well as the Digital Economy & Society Index – are summarised below. It is important to read them against the main technological changes and trends which took place. The expectations formulated at the last review have been largely met by the evolutions during the past ten years: the migration to "all IP" has progressed throughout (although it is completed in only one Member State), the wireless developments have exceeded expectations with 4G as the main current technology, transition to digital TV completed in all Member States but one, fiber to the local loop has been deployed across the EU, triple-play (fixed-line telephony, internet, TV) and even quadruple-play (triple-play plus mobile) services are across several Member States, the norm. The successive reports also note that bundled offers have become increasingly popular throughout the EU, though at very different paces. During the last reporting period (one and a half years), the average penetration of bundled offers (subscriptions/population) in the EU has increased by five percentage points from 36 % to 41 % (July 2014). The most common bundle combination was fixed voice with broadband services, although in some countries a significant number of end-users tended to bundle more services together, including mobile and/or internet protocol TV (IPTV). Other trends which have become visible during the past (more recent) years are: (1) the remarkable growth of online (Over-the-Top) services, including challengers to traditional communications services, e-commerce, e-government, digital (video) content, cloud services, and the emergence of the Internet of Things / Machine-to-Machine services, all leading to a rapidly increasing demand for bandwidth in both fixed and mobile networks; (2) the convergence of fixed and mobile networks at supply level, i.e. the increased reliance of mobile services on fixed networks, in particular through the backhauling of mobile networks, WiFi access points and low-power wide area networks solutions.

Concerning the evolution of competition, the market share of the incumbents in the fixed broadband market stood at 41% in 2014 (a drop from 56% in 2004). In the fixed voice telephony market the market share of incumbents dropped from 65.8% in 2004 to 51.5% in 2013. The above results are in line with main goals of the regulatory framework, namely the safeguarding of competition and promotion of efficient investments in new and enhanced infrastructures (Article 8 of Framework Directive). Reasons for this decline of the market share of incumbents vary. In some Member States, such as Romania, there has been substantial infrastructure new-build; in several others, this decline is attributable to a large extent to the rise of cable; in yet others, it reflects the strong influence of regulated wholesale access. However, the decrease in incumbents' market share has slowed down significantly over the past few years and significant differences persist among the Member States with the incumbent's market share ranging from 23% in Bulgaria to 69% in Luxembourg as can be seen in the table above. Telecom network CAPEX in Europe was 43 bn EUR in 2013. CAPEX figures have remained relatively stable over the last four years despite the fact that in the same period NGA coverage increased from 29% to 68%. Mobile CAPEX spending represented 59% of total spending. However, the capital expenditure/revenue ratio is a better measure of assessment of capital expenditure. In a context of declining revenues in the sector, there has been an increase in this ratio, from 11.7% in 2009 to 14% in 2013. In other words, telecom operators increased the proportion of their investment through the period. During the past years, telecom revenues in the EU have gone down: from 246 billion euro in 2010 to 230 billion euro in 2014, a decrease of 6%. At the same time the US progressed from 220 billion euro to 266 billion euro - surpassing Europe despite the lower population in the USA. There have been large increases in emerging markets such as China and India, which are in a significant growth phase due to the still relatively low take up of telecom services. In Europe, while the effect of regulated reduction of termination rates cannot be ignored, decreasing revenues probably show how voice services have continued to lose importance, while the growth in mobile data services was remarkable (36% from 2010 to 2014), though however not monetised in a similar proportion. Other factors might explain the decreasing revenues in the past years, for instance the rise of Over-the-Top players (online and free communications services) or external factors such as a stagnant macro-economic environment. A study on future trends and business models in communications services shows that there is a significant difference between their impact on decreasing revenues on fixed revenues as opposed to their impact on mobile revenues. The rising popularity of online providers has had no statistically significant impact on fixed revenues. However mobile revenues, which are currently the largest share in the telecom revenue mix, are largely influenced by the popularity of OTT communication platforms, as well as by the level of mobile termination rates, and the average GDP per capita. Other sources provide even higher figures, estimating that in 2014 alone instant messaging services on mobile phones would have carried more than twice the volume (50 billion versus 21 billion per day) of messages sent via a short messaging service (SMS). Average revenue per user of the top seven mobile operators in the EU would have gone down 34.8% between 2006 and 2013, with a 5% decrease in investment. It is expected that OTT messaging will dominate messaging towards 2020 approaching 90% of the total messaging market, and that OTT Voice and Messaging will continue to affect revenues from traditional telecommunication services. In terms of network rollout fixed broadband coverage in the EU stands at 97% of homes (from 86.9% in 2005), with an average take-up rate of 72% (from 24.9% in 2005). NGA coverage (at least 30 Mbps) is at 71% of homes, with a take-up rate of 30% of homes passed with an active subscription. However, NGA deployments still focus mainly on urban areas, with only 27.8% of rural homes covered (overall fixed-line broadband coverage in rural areas is 90.6%). NGA deployments differ greatly also among Member States: from 36 to 44% in Greece and Italy to 100% in Malta and over 95% in Lithuania, the Netherlands and Belgium. In terms of uptake, the spread is even broader with penetration rates of 2.6% in Croatia, 4.2% in Greece, to 57% in Malta, 51.3% in Belgium, and above 40% in the Netherlands, Bulgaria and Lithuania. Substantial gaps can be noticed within most Member States also between rural and urban NGA penetration rates. Regarding ultrafast broadband, i.e. above 100 MB/s, the figures are more conservative, with only 25% of EU homes having access to networks offering such download capacity, and only 10.8% of EU homes having an active subscription. Moreover, according to recent estimates conducted by WIK and IDATE, it seems that several Member States will miss the Digital Agenda for Europe (DAE) broadband target of 50% of homes with a subscription of at least 100 MB/s. As regards mobile broadband, household coverage was 97.6% in 2015 and the take-up rate is 75% of the population (from 13% in December 2008, see figure above). After a late start, LTE is running now at full scale and its coverage is increasing – from 8.3% in 2011 to 85.9% in 2015 with ten Member States reaching more than 90% of the homes. 4G services have been launched in all Member States. LTE deployments too have focused so far on urban areas, as only 36.3% of rural homes are covered. The prices of electronic communications services, including broadband prices, dropped significantly in the EU. Despite a stabilisation in prices between 2013 and 2014, broadband prices in the EU28 have fallen significantly between 2012 and 2015, especially in the 30-100 Mbps speed category. The prices of offers with speeds over 100 Mbps declined in recent years, closing the price-gap to the 12-30 Mbps offers.

However, broadband access prices remained dispersed across Europe: the minimum prices (calculated on Purchasing Power Parity) vary between €11 and €69 for a standalone offer with a download speed between 30 and 100 Mbps. The minimum prices were the lowest in Lithuania (€11), Bulgaria (€13) and Romania (€13) and the highest in Cyprus (€69), Luxembourg (45€) and Malta (€42). In Italy, Greece, Cyprus, Slovenia and Croatia, fast broadband (at least 30Mbps) is still rare, representing less than 10% of all subscriptions. The average minimum price of standalone offers of 30 to 100Mbps decreased from €41 in 2009 to €28 in 2015. This trend can also be seem when assessing the price data for bundled offers, typically comprising broadband, fixed telephony and TV services. In 2015, the minimum prices of triple play bundles including broadband access (with a download speed between 30 and 100 Mbps), fixed telephony and television vary between €24 and €66 in the EU. The minimum price was the lowest in France (€24), Bulgaria (€26) and Finland (€27) and the highest in Cyprus (€66), Malta (€62) and Croatia (€61). Prices have decreased over time, with the average minimum going down from €76 in 2009 to €45 in 2014. High-speed triple play offers have very low price premium over 12-30Mbps services These differences create inequalities across the EU: the correlation between fixed broadband take-up and the relative price of broadband access is negative, so broadband take-up tends to be lower in countries where the cost of broadband access represents a higher share of the income. Moreover, the Digital Agenda Scoreboard data show how only 49% of homes in the lowest income quartile have a fixed broadband subscription as opposed to 89% in the highest income quartile, and the overall average of 70%. Overall, communications represented 2.5% of the final consumption expenditure of EU households in 2014, down from 2.9% in 2002, while for instance the share of expenditure devoted to housing, water, electricity, gas and other fuels has increased from 20.8% to 24.4% in the same period. Prices for communications services decreased every year between 2006 and 2015 at an average rate of 1.44%. The above figures on prices have to be seen along with the growth in consumption of telecoms services and digital services, which has significantly increased over the last few years. For instance, the percentage of individuals using the internet frequently, i.e. every day or almost every day jumped from 22.6% in 2004 to 67.4% in 2015; 29.2% of individuals used the internet to make phone or video calls, up from only 2.9% in 2004. The various regulatory developments captured by the implementation reports will be discussed below, under the assessment of each regulation area. 7.Answers to the Evaluation Questions This section summarises the main findings in relation to the analysis of each of the questions set out in section 4. Most questions are dealt with individually, although a few have been combined, where there are significant overlaps in information justifying a unified approach. Where appropriate, the views of stakeholder groups collected during the stakeholder consultation are presented below. Annex II presents a more systematic overview of the responses, per stakeholder group, to the evaluation questions raised in the public consultation. 7.1.Relevance The section below evaluates to what extent the general specific objectives of the regulatory framework for electronic communications and its regulation areas (its main blocks of provisions) are still relevant and/or if new objectives have developed that should be pursued. 7.1.1.Relevance of the current objectives of the regulatory framework In a post-liberalisation era, the general objective of the 2002 regulatory framework for electronic communications was to promote a competitive internal market, aiming at delivering diverse, innovative, and affordable electronic communications to consumers and businesses. The 2009 review provided additional tools to respond to the need to ensure more effective competition, consolidate the internal market and strengthen consumer rights and therefore did not change the three main specific objectives of the framework. To what extent are the original specific objectives of the framework - to promote competition, to develop the internal market, and to protect the interests of EU citizens - still relevant? To what extent do they still correspond to the needs and problems within the EU and in relation to the emerging needs of the sector? The competition objective Where conditions exist for the creation of a competitive market, this is the best option to deliver end-user benefits, including connectivity. Effective and sustainable competition drives efficient investment and fuels the development of the internal market. It ultimately serves the interests of end-users, by inducing innovation and providing maximum benefit in terms of choice, price and quality. As shown in the stakeholder consultation, the regulatory community shares that view, based on their experience with implementing the regulatory framework so far. While the achievements of the framework in terms of service - but also to some extent infrastructure competition are undeniable, as discussed below in section 7.2.2., a lot remains to be done to improve consumer choice, in particular with regard to access to high-speed connectivity throughout the entire European Union. The figures presented in section 6.2 show that investment has been uneven across the EU and clear gaps have begun to emerge between and within different countries in the path to upgrading broadband networks to provide ultrafast speeds and meet increasingly demanding quality parameters. At the same time, it is essential that consumers have attractive service offers, and wherever possible, choice so that take-up follows investments and that the digital society is actually realised.

The public consultation showed that some Member States, the European Telecommunications Network Operators' Association (ETNO) and the large majority of the incumbents go as far as suggesting, via the public consultation conducted in light of the review, that investment should be made an explicit objective, next to competition, given the significant network rollout and upgrade needs in the coming years. This would imply amending the regulatory framework, among others access regulation, to favour dynamic efficiency gains over static ones. In areas where infrastructure competition is not viable, competition would be "for the market" rather than "in the market". Many other stakeholders including alternative operators and consumer associations stresson the other hand that competition would not survive outside the regulatory framework and that the latter should not favour investment at the expense of competition (and thereby also at the expense of the consumer outcomes that go along with competition). Furthermore, pursuing the competition objective should take into account the new internet based services or Over-The-Top (OTT) players which are currently outside the scope of intervention of the regulatory framework (though there are divergences of approach as to the dividing line) and which would have partly disrupted the business models of "traditional" electronic communication providers. For many stakeholders who participated in the public consultation (virtually all traditional operators and some authorities) all competition should occur within a level playing field between "traditional" and "new" service providers. Regardless of these nuances and with the necessary modulations to achieve fit-for-purpose and sustainable outcomes, pursuing the competition objective remains as relevant as ever. The single market objective The single market objective is becoming even more relevant in the Commission's priority concerning the Digital Single Market. The regulatory framework is expected to help deliver connectivity in support of the Digital Single Market. Indeed, as modern economies increasingly depend on electronic communications for their daily operations in a digital single market, seamless provision of connectivity across borders is becoming a prerequisite. In other words, the further pursuit of the Single Market is necessary to ensure that the entire EU is "levelled up" in terms of connectivity. Many services cannot flourish or can even not be provided at all across the EU unless the connectivity conditions are sufficiently harmonised everywhere. The extraordinary growth potential of the so-called Internet of Things services on a potential market of 500 million consumers depends on a rapid and coordinated rollout of 5G networks, which in turn depends on coordinated spectrum release and on consistent policy on license free spectrum. As an illustration, the relevance of ubiquitous connectivity in the single market further increases as a consequence of the evolution of mobile connected ‘things’ including cars, which presents additional challenges for roaming and the cross-border use of numbers. Moreover, many online businesses such as e-commerce, e-trading the profitability of which is largely scale-based, cannot develop unless there is high quality, widespread connectivity in place across the EU. Electronic communications is a strategic sector which directly contributes €168.62 bn of European value added and 1.06 million jobs (around 1.3% GDP and 0.47% of total employment in 2012), with a labour productivity per person of more than 144 thousand euros (the highest rate within the ICT sector) and supports a wide range of other high-tech manufacturing and digital services (the ICT sector constitutes 4% GDP and 2.76% of EU jobs, with a labour productivity rate 44.45% higher than total labour productivity) as well as the economy as a whole. Poor connectivity would thus imply a GDP loss. Similarly, providing online services of public value (e-government, e-health, e-learning etc.) in a situation where some parts of the EU do not benefit from sufficient connectivity and up to date electronic communications services, would result in an increasing digital and social divide. However, significant bottlenecks remain in the provision of electronic communications services across the EU, as discussed below in section 7.2.2. As the public consultation shows, while for some stakeholders, such as the European Consumer Organisation BEUC or operators focused on national markets, the lack of an internal market in the electronic communications sector as such may not be a central concern, business end-users seeking to procure telecom services across multiple sites and countries have perceived the considerable relevance of this issue. In short for business end-users and particularly multi-national corporations, the current ‘spiders-web’ of networks and services presents significant challenges. Amongst other issues, business users cite long and unpredictable provisioning times, patchy availability of high bandwidth (Ethernet) connectivity outside cities, as well as a lack of transparency and consistency in ‘quality of service’ measures as key issues affecting their ability to support their respective core businesses . As expressed in the public consultation, a lack of an effective internal market also affects equipment manufacturers and multi-national telecom providers, which seek to replicate business models in multiple markets. Some cross-border providers also highlight that the impact of fragmentation does not only affect business services, but also impedes their ability to make consistent offerings in residential broadband markets and delays the ‘time to market’. Most importantly, a lack of effective internal market eventually affects businesses at large (irrespective of their size) and citizens too. The consistency exercises and exchange of best practice enabled by the various institutional provisions introduced by the 2009 review have, to a certain extent, resulted in the promotion and proliferation of "best in class" regulatory models and examples concerning the access regime that would yield the best possible outcomes in terms of competition and NGA. However, lacking binding power, they have failed to ensure harmonisation of certain regulatory solutions/remedies, to the detriment of the achievement of the single market but also limiting the effect of promoting best practice regulatory models. The case of the termination rates is an illustrative example of the strengths and limits of the procedure aimed at ensuring consistency. The implementation of the Commission's 2009 Termination Rates Recommendation has led to significantly lower termination rates across the EU followed in most cases by lower prices for end-users, as confirmed by internal monitoring exercises. However, a small number of deviations from the recommended approach remain (for mobile termination: Germany, the Netherlands, Finland; for fixed: Belgium, Cyprus, Germany, Finland, the Netherlands, Poland). Other examples of areas where the need for greater consistency was recognised relates to the imposition of non-discrimination remedies and price controls (costing methodologies), where the Commission issued a recommendation. Similarly, BEREC issues its guidelines and common positions in view to achieve greater consistency of measures implemented by European NRAs. These recommendations and guidelines remain however non-binding, and albeit contributing to increased consistency (as revealed by the analysis of the measures in place in Member States), they are not an instrument to ensure it. It follows that further simplification and effective harmonisation, with the necessary built-in flexibility, appears necessary to ensure that the most appropriate remedies are applied leading to a quicker realisation of the overall objective of seamless, affordable connectivity across the EU. The objective of promoting the interests of end-users As electronic communications services and connectivity as the basis for all e-services are becoming so important in modern societies, ensuring access for all, as well as allowing end-users to benefit from the intensified competition in the sector, is increasingly essential. For this reason, the objective of promoting the interests of end-users, including by ensuring universal access to connectivity or by other forms of safety nets, remains highly relevant, with certain components becoming even more central. However, while the objective of protecting end-users remains relevant, the relevance of the specific provisions which are aimed at achieving it should be examined in view of market, technological and regulatory developments. For instance, certain elements which form part of the current universal service arrangements might have become redundant (e.g. payphones). The relevance of each regulation area is discussed below. Finally, it cannot be ignored that despite improvements in market performance registered through the Consumer Market Scoreboards from 2010 to 2016, consumers evaluate the sector still below the average of the services markets covered by the Scoreboard, as discussed below. It should however be noted that the market performance indicators are relative to the many (29) services covered in the Scoreboard, including, not only utility and network industries but also recreational services. At the same time, successive Special Eurobarometer surveys more specifically dedicated to electronic communications services evaluate the sector as average. In any event, it remains relevant to pursue consumer interests explicitly, not only as a matter of outcome of competition on the Single Market. 7.1.2.Relevance of regulation areas Are all the regulation areas still relevant in reaching the objectives identified as being still relevant? How do the main stakeholders perceive this relevance? The section below discusses the relevance of the regulation areas evaluated, linking them to the objectives of the framework (competition, single market, end-user protection). The relevance of access regulation is to be seen in relation to its importance to ensure competition on the market. The rationale behind the imposition of access regulation relies on the presence of bottlenecks in the networks that cannot be easily replicated by access seekers to an incumbent's network. In the EU, many NRAs have found that incumbent operators have still Significant Market Power in the provision of ‘wholesale local access’s services and typically also access used for the provision of business services. This is even more important in areas where no second infrastructure is present (no infrastructure competition), such as rural areas where due to lower density, the business case is not strong enough to support more than one network and where telecom networks are effectively natural monopolies. 2011 2012 2013 2014 2015 Incumbent market share fixed broadband (% of subscriptions) 43 % 42 % 42 % 41 % 41%

Access regulation is imposed by national regulators in each of the 28 EU Member States and key fixed access markets are regulated in accordance with EU principles, to different degrees, in each of the 28 EU Member States. In many EU markets, access seekers relying on access regulation make electronic communication markets more competitive. The importance of access regulation for entry and competitiveness of access seekers can be demonstrated by excluding the share of cable providers (which typically have their own exclusive infrastructures and do not rely on access to the incumbents networks) from the market share of new entrants. While the EU average market share of cable providers has been growing steadily (currently standing between 18 and 19%, with a few Member States like Belgium, the Netherlands and Malta where cable presence is more important), it still represents less than a third of the combined market share of new entrants, the vast majority of which rely to various degrees on access to the networks of incumbents. Similarly, the importance of access regulation is even augmented, if the above market share calculation would not take into account Member States such as Bulgaria, Romania, the Czech Republic, and the Baltic states, where the competition comes from newly built "leapfrog" infrastructures, and is not based on Local Loop Unbundling. It follows that access regulation remains one very relevant regulation area of the regulatory framework - of high relevance to both the competition and the Single Market objectives. A vast majority of stakeholders in all Member States and over 70% of the respondents to the public consultation confirm that access regulation remains a sine qua non condition for ensuring competition on the market. Spectrum management is as relevant as network access regulation to the extent that spectrum is an essential input for electronic communications services. Spectrum is a core enabler for the deployment and development of current and next generation mobile and fixed wireless networks (e.g. 4G) across the EU. The demand for powerful mobile technology has grown over time in the EU. While 3G networks in 2005 covered 40% of the EU population, they reached 77% in 2008, 95% in 2011 and 98% in 2015. Mobile Internet use over 3G rose from 12% in 2011 to 43% in 2015. 4G technology, with its vastly improved data rates, reached only 31% of the EU population in 2011 (when 3G provided for 96% population coverage), before climbing to 77% in 2014, and reaching 84% coverage in 2015. In addition to affecting deployment, the manner in which spectrum is allocated and the conditions attached to spectrum assignment and usage, are also major determinants of mobile competition, which in turn influence quality of service, prices, speed of roll-out and take-up of mobile broadband. With the deployment of 3G and 4G, spectrum has been exploited much more intensely, as illustrated by the increase in the use of mobile broadband services in the EU. As a European Parliament report points out, “the tremendous expected increase of mobile data traffic in Europe - from 0.98 Exabytes per month in 2015 to 7.23 Exabytes per month in 2020, with a CAGR 2015-2020 of 49.2 percent (Cisco, 2016) - represents a substantial challenge to the current spectrum allocation and assignment that must be addressed through better spectrum management and governance policies”. This point has also been strongly supported by the respondents to the public consultation. Responses to the public consultation acknowledge the importance of wireless connectivity and wireless broadband, and its link and complementarity to a very high capacity fixed connectivity. Industry is supportive of a more co-ordinated approach and looks for additional certainty in investment and possibilities to develop throughout the EU new wireless and mobile communications including 5G. Member States generally underline the achievements in the field of technical harmonisation, and the need for additional coordination to be bottom-up and voluntary; some of them call for a better balance between harmonisation and flexibility. There is widespread recognition of the importance of more flexible access and use of spectrum in the future from both operators and public authorities, although disagreeing about how to realise this. The importance of spectrum management is therefore increasing together with the rise of the mobile connectivity demands – for both "core" electronic communications services and services belonging to the so-called "internet of things" (machine-to-machine communications, M2M). The need to tackle spectrum management at EU level is thus directly linked to the need to support the Digital Single Market. There is also a need to support a European lead in 5G roll-out, by spectrum rules which are fit for purpose. 85% of the respondents to the review public consultation confirmed that the regulatory framework is particularly necessary in the area of management of scarce resources, and there is large consensus amongst incumbents and alternatives, large and small, and BEUC that further harmonisation at EU level would be beneficial. Spectrum regulation continues to have a significant impact on competition and the Single Market. The need for provisions concerning the management of numbers is increasing with the rise of M2M services which are expected to drastically increase the demand for numbers, often for cross-border use. Number management impacts competition as well as, increasingly, the Single Market. The public consultation showed a high level of consensus that to cope with the numbering needs of M2M in the future, a clear framework for extra-territorial use of numbers is necessary to ensure sufficient numbering resources. As far as the relevance of market entry provisions is concerned, the situation is uneven. The provisions on rights of way have been quite relevant in the period of transition from state monopoly to competition in the electronic communications markets, i.e. in the aftermath of the abolition of the special rights of the state owned incumbents. It ensured that alternative operators may deploy their networks under the same transparent conditions as former monopolists and in a timely manner, and put an end to discrimination in favour of state owned incumbents. In view of the transition to high-speed networks, and notably mobile services provisioning via the latest technologies requiring more granular network topologies, these provisions today fully retain their relevance. The relevance of the provisions concerning authorisation remains unchanged, as confirmed by the respondents to the public consultation (61% of those who responded to the relevant question consider that regulation is important in the area of authorisation, in particular in view of simplifying the current rules). Market entry provisions are key elements to support competition and the Single Market. As far as the functioning of the national regulatory authorities (NRAs) is concerned, the need for impartial, transparent and timely regulation was essential in the context of liberalisation. The need for an impartial and independent referee remains as relevant on liberalised markets as it has been in the past. This role is not questioned in the public consultation; on the contrary, the public consultation showed overall support for strengthening NRAs' independence. The relatively high number of issues which arose in the implementation of the provisions – matched by an intensive monitoring and enforcement activity by the Commission – shows their persisting relevance and importance, both preserving and advancing competition on the Single Market and for ensuring that consumers fully reap the benefits of market developments. As far as the role and functioning of other important institutional players is concerned, BEREC must, in accordance to the provisions in force, pursue the objectives of the framework and in particular ensure a consistent application of the framework in order to contribute to the development and better functioning of the internal market. Against this objective and its increasing number of tasks, BEREC's relevance is increasing, even though there was no consensus in the public consultation on the way to reflect this increase in regulatory terms. Similarly, the capability of the Radio Spectrum Policy Group (RSPG) to deliver high-level strategic advice at the right point in the process to support forward-looking decision making of the Commission and of the other EU institutions will be increasingly important, against a background where spectrum policy's relevance is increasing. The public consultation showed that a common EU approach to governing spectrum access is welcomed by respondents in order to enable technologies to be used seamlessly, but that respect for spectrum as a national asset is required. Some respondents promoted a stronger role of the Commission. Some respondents disagreed and stressed the national character of spectrum policy. Standardisation is aimed at ensuring interoperability of services (including emerging services) and to improve freedom of choice for users. The voluntary and market-driven approach to standardisation has been supported by most stakeholders in the public consultation. It remains therefore of crucial importance for both effective competition and the functioning of the Single Market as well as to promote the interest of end-users. It can be argued that the relevance of standardisation efforts is increasing with the diversification of new services. The concept of universal service as a safety net is a tool to ensure that all citizens (including low-income and disabled or elderly users, for instance) are included in the digital society. While the objective of the provisions/regulatory area is just as relevant as ever, some of its components have lost relevance in the context of market and technological developments (e.g. the non-use of 88% across the EU28 regarding public payphones). Moreover, the need to impose certain services has disappeared as they are provided by the market (e.g. every country without a universal service obligation regarding comprehensive directories or directory enquiry services noted the availability of commercial competitors in the market). This is clearly reflected in the public consultation. The relevance of sector-specific end-user protection rules has been looked at in the light of the development of EU horizontal consumer legislation and of the technological and market developments which implies that the definition of electronic communications services as a triggering factor for regulation may have become irrelevant. Moreover, horizontal rules might render some of the sector specific rules unnecessary, as discussed further in the coherence section. For example, some contract provisions (Art. 20 Universal Service Directive) are overlapping with information requirements in contracts in Article 5 of the Consumer Rights Directive covering aspects such as characteristics of services, identity of trader, tariffs or contract duration; additionally general contract rules are also set out in the Services Directive; the provisions on "Out-of-court dispute resolution" (Art. 34 Universal Service Directive) are partially overlapping with out-of-court complaint and redress mechanisms provided for under the Directive on alternative dispute resolution for consumer disputes (Directive on consumer ADR) and under the Regulation on online dispute resolution for consumer disputes (Regulation on consumer ODR). However, other (sector-specific) rules remain relevant as they are specific to how traditional communication services are provided (e.g. relying on the use of public resources, such as numbers). Therefore, certain rules, such as those on switching or portability of numbers are still warranted. Over 60% of the respondents to the public consultation, including industry and users' associations, share the view that regulation is still necessary in the area of consumer protection. The relevance of the European emergency number 112, which is linked to ensuring access to emergency services to all citizens across the EU, in still very much valid. The Commission yearly monitoring of the implementation of 112 reveals the implementation of a reliable access to emergency services by the electronic communications providers. However caller location solutions, access for disabled end-users implemented in Member States seem to be below what is technically feasible to ensure quick and accurate relief. A large majority of respondents to the public consultation agree with the significant relevance of the scope and requirements of the current regulation of access to emergency services. It remains therefore necessary to further pursue the provisions regarding 112. As regards the relevance of 116 services, i.e. harmonised services of social value, their importance is recognised in principle, as confirmed also by the public consultation organised in the framework of the review. This is in spite of a limited effectiveness, in particular a slow take up with only two of the five short numbers reserved in wider use 8 years after the entry into force of the provisions and a low level of awareness revealed by Eurobarometer studies carried out in 2011 and 2012. The relatively modest take-up of the scheme suggests that the scope of the scheme should be limited to already assigned numbers. Over 75% of the respondents to the public consultation support the relevance of the provisions concerning security and integrity of networks and services, which is increasing as networks and services are gaining prominence in the economy and the society as a whole. The digitalisation of services, including commercial and public services is leading to a situation where breaches have more impact on both companies and individuals. For instance in 2014 (the last year for which statistics are available), Member States reported to ENISA under Article 13a (3), last subparagraph, a total of 137 "major incidents", i.e. incidents meeting the minimum thresholds in terms of either duration or percentage of users affected. Such incidents significantly affected in comparable percentages fixed telephony, mobile telephony, fixed Internet and mobile Internet. Mobile Internet outages affected most user connections compared to the other services, with an average of 1.7 million user connections affected per reported incident, i.e. on average about 13% of the user base. The current provisions regarding must-carry and access to electronic programme guides form part of a set of measures intended to protect general interest objectives such as media pluralism, freedom of speech and cultural diversity in the process of liberalisation of electronic communications markets. These general interest (or end-user protection) objectives remain relevant in an increasingly digital society in which linear digital television is still the predominant means for citizens to receive and enjoy audio-visual content and space for policy intervention might be further justified to foster the findability of content of general interest. This is shared by most respondents to the public consultation, even though there is no consensus as to how rules should be adapted to new market and technological realities. 7.1.3. Continued relevance of the current objectives against new needs

Looking at the global objectives and the structural changes in the sector, are there new objectives that the framework should pursue? It follows from the above analysis that, in general, the specific objectives of the regulatory framework still correspond to the needs and problems within the EU as well as to the needs of the sector. The question arises however whether the current objectives provide regulators with sufficient guidance in the environment where the role of the sector as provider of connectivity services and enabler of wider digital economy is continuously increasing. The mandate of the Juncker Commission includes the creation of a Digital Single Market, "expected to deliver up to EUR 250 billion of additional growth in Europe, to create hundreds of thousands of new jobs, notably for younger job-seekers and a vi