2.5

Since the burst of the Internet bubble, telecom operators have been reducing capital expenditure as part of their consolidation plans. A return to renewed growth for the whole sector requires a revival in capital spending. The rate of investment will be affected by what public policy makers do: the implementation of the new regulatory framework will provide greater legal certainty for investment; the implementation of national broadband strategies will increase access to service; the encouragement of new services and the availability of innovative content will stimulate demand; and the removal of regulatory and technical barriers will facilitate the roll-out of 3G networks. This is why four priority areas for action are identified in the communication: a) Addressing regulatory challenges. Late or incorrect transposition by Member States of the new regulatory framework for electronic communications is holding back competition and creating uncertainty. Infringement proceedings are underway against a number of Member States who have failed to transpose the new measures. Securing full and effective implementation of these rules by both existing and the new Member States remains a top priority for 2004. In addition, the new rules must be applied consistently by national regulatory authorities. The common guidelines due later this year on the remedies that may be imposed on operators with significant market power will be of particular importance. They should help regulators to provide the right investment incentives and to ensure that emerging markets are not subject to inappropriate obligations. b) Increasing broadband coverage in underserved areas. In accordance with the eEurope Action Plan, Member States agreed to publish national broadband strategies and all of the EU15, plus a number of the new accession countries, have now done so. A particular focus should be identifying areas that risk being placed in the slow lane of the information society because of insufficient demand – under operator's profitability criteria - to justify the roll out of broadband services. EU funding may play a role alongside action at a national, regional or local level. Guidelines exist on how structural funds can be used in such areas. The exchange of best practice and innovative solutions will be helped by the creation of a Forum on the Digital Divide later this year. The Commission will report on the national strategies this summer. c) Stimulating demand. While the majority of households in the EU can access broadband, only a fraction of them have chosen to do so. Use rather than roll out is becoming the biggest issue for the broadband market. Experience of countries with the highest levels of broadband take-up show the importance of effective network-based competition to drive down prices and promote innovative on-line services. In addition, action by Member States to stimulate demand can also play a role. They are promoting the use of ICT within more and more key services – local and national government, health and education - and shifting them on-line. This must be accompanied by further steps to address security, digital rights' management and the inter-operability of different services and devices. The mid-term review of the eEurope 2005 Action Plan, due to be completed by the summer, provides an opportunity for further supportive action. d) Successfully launching third-generation mobile communications (3G). The report of the Mobile Communications and Technology Platform (comprised of key sector players) set-out a strategic vision for the future of mobile services, highlighting a range of commercial and regulatory challenges. This converged, data-driven 3G world will be more complex than the voice-based world of GSM. If mastered, this can offer exciting new services and a significant boost to productivity in the Union. The Commission has outlined its approach to the mobile communications sector in its Communication of 30 June (2) and will continue to work with stakeholders to define strategic research priorities in the mobile communications area.