COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS on the Telecommunications Single Market
Date: 2013-09-11
Institutions: European Commission
Subjects: competitiveness, freedom to provide services, innovation, job creation, new technology, regulation of telecommunications, single market, telecommunications industry, trans-European network

EUROPEAN 
COMMISSION 

Brussels, 11.9.2013  
COM(2013) 634 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

on the Telecommunications Single Market 

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COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

on the Telecommunications Single Market 

1. 

POLITICAL AND ECONOMIC CONTEXT 

Substantial progress towards a European single market for telecoms is essential for Europe’s 
strategic interests, and economic progress; for the telecoms sector itself; and for citizens who 
are frustrated that they do not have full and fair access to telecoms services such as internet 
and mobile services.  

The importance of reliable and fast access to the internet will increase with the prevalence of 
cloud computing. This requires the availability of high quality networks, which can only be 
provided by a healthy telecoms sector, making this a strategic interest for Europe.  

Similarly  Europe’s  strategic  interest  is  served  by  having  its  own  capacity  to  deliver  secure 
cloud  computing  services  to  citizens  and  by  retaining  significant  telecoms  equipment 
production capacity. Both depend on a dynamic telecommunication sector willing to invest in 
4G mobile and high-speed fixed access networks.  

The  overwhelming  majority  of  citizens,  business,  government  and  entrepreneurs  are 
increasingly dependent on telecoms connectivity. Today in Europe, however, they are subject 
to  something  of  a  lottery  when  it  comes  to  access  to  these  services,  despite  26  years  of 
progress  in  reforming  Europe’s  national  telecoms  markets  and  creating  the  foundation  for  a 
telecoms single market. 

The internet economy itself occupies an increasing share of GDP, while effective connectivity 
and internet innovations are now essential for productivity growth in all economic sectors — 
from  healthcare,  to  energy,  to  public  services.  Fixing  the  telecoms  sector  is  therefore  no 
longer about this one sector (which makes up just 9% of Europe’s digital economy), but about 
supporting the sustainable development of all sectors.  

A  further  significant  step  forward  in  the  development  of  the  telecoms  single  market  would 
provide a much-needed boost to the economy, by helping promote new sources of economic 
growth  (such  as  the  app  economy,  which  has  generated  794,000  new  jobs  –  nearly  half  as 
software  developers  –  since  2008),  drive  innovation,  create  new  and  sustainable  jobs,  and 
restore Europe’s competitiveness.  

It  is  with  this  in  mind  that  the  European  Council  of  March  2013  asked  the  Commission  to 
information  and 
present  concrete  measures 
telecommunications  technology  as  early  as  possible.  Today's  proposals  address  that 
commitment by the Commission. 

the  single  market 

to  establish 

in 

The  electronic  communications  sector  operates  at  a  global  scale,  with  the  web  (and  the 
services  that  trade  on  it)  going  beyond  the  EU's  borders.  It  is  important  that  the  present 
initiatives  be  seen  in  the  context  of  developments  elsewhere;  and  that  electronic 
communications  and  digital  services  delivery  be  given  due  attention  in  specific  sectoral 
agreements or in trade and investment negotiations with our main partners.  

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2. 

26 YEARS OF TELECOMS REGULATORY REFORM 

In  just  over  a  generation,  thanks  to  the  EU  legal  framework,  Europe's  telecommunications 
landscape has liberalised from static public service monopolies to a dynamic and competitive 
sector. Starting from the 1980s, successive packages of European legislation have unbundled 
networks,  promoted  competition  and  choice,  capped  the  cost  of  mobile  roaming,  given 
consumers important new rights, and encouraged convergent and coherent application of the 
common framework. 

Moreover,  the  application  of  EU  competition  law  has  been  instrumental  in  ensuring  that 
markets  operate  competitively,  bringing  lower  prices  and  better  quality  of  service  to 
consumers throughout the EU. 

These changes in EU telecoms legislation have sought to adapt to the breakthrough shifts in 
ICT:  first  mobile  telephony,  and  then  the  Internet.  Today,  the  telecommunications  sector  is 
the backbone of digital products and services which have the potential to support all aspects 
of our lives, and drive Europe's economic recovery. 

The EU's efforts to promote a sound regulatory environment and to support competition have 
long  underpinned  changes  in  the  sector.  With  breakthroughs  like  the  GSM  and  UMTS 
standards, the EU created the terrain for Europe and its industrial players to lead the world. 
Over time, liberalisation has brought competition, fairer prices and real choices to citizens and 
businesses  within  national  markets.  As  markets  become  more  competitive,  European  and 
global, the regulatory framework needs to evolve as well.  

The existing regulatory framework, put forward by the Commission in 2007 and focused on 
strengthening  European  oversight  and  consistency  of  national  market  regulation,  has  served 
its  objectives  well.  However,  more  recently,  and  looking  beyond  Europe's  borders,  strong 
operators  in  the  USA,  Japan  and  South  Korea  have  invested  heavily  in  providing  fast 
broadband  connections  (fixed  and  wireless).  In  such  a  global  context,  it  is  important  that 
Europe  does  not  fall  behind.  Also,  a  changing  economic  and  technological  climate  and  the 
impact  of  the  economic  and  financial  crisis  have led to fast and accelerating changes in the 
global  telecoms  sector,  including  significant  restructuring.  And  new  demands  and  new 
applications  for  data-driven  services  are  strengthening  the  single  market  imperative,  as  a 
strong position of the European ICT sector (especially telecoms), and broadband coverage, in 
comparison to other countries, are key for the competitiveness of the European economy. This 
is felt particularly at this moment in time when Europe is seeking new ways to grow out of the 
crisis. 

The  telecoms  sector  should  prosper  by  enabling  the  whole  economy  to  prosper;  it  is 
unsustainable  that  it  seeks  to  prosper  by  frustrating  the  connectivity  needs  of  the  wider 
economy, with business models that thrive on scarcity rather than plenty. Therefore decisive 
action is needed now to allow a restructuring of the sector, to avoid being confronted by its 
inevitable further decline. Maintaining the status quo is not an option.  

3. 

BARRIERS TO THE SINGLE MARKET  

The  European  Commission  is  determined  to  maintain  and  further  expand  the  benefits  of 
telecommunications  for  business  and  citizens.  But  despite  all  the  progress  made  so  far,  the 
sector continues to face a range of obstacles, barriers and challenges which together mean that 

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the  full  benefit  of  the  single  market  is  far  from  realised.  A  recent  study  showed  that,  if  the 
internal  market  for  electronic  communications  were  completed,  the  EU's  gross  domestic 
product (GDP) could grow by up to 110 billion euros a year.1 

Overall,  the  telecoms  sector  still  bears  the  legacy  of  former,  national  monopolies,  largely 
operating on national lines. Some large telecommunications companies are present in several 
Member States; but none is present in all. For the most part mobile operators have merely a 
national footprint; for many fixed operators it is even more localised. Those who do operate in 
several Member States must work under separate rules, according to the sometimes diverging 
requirements and remedies of different regulators, and needing distinct authorisations in each 
Member State. In addition, often operators active across several Member States do not behave 
as  truly  European  operators,  and  appear  content  to  run  their  activities  separately  in  each 
Member State. The market includes over one thousand fixed operators, and several hundred 
mobile operators, which, despite often belonging in larger groups, operate on a national basis. 
At  the  same  time  the  sector  is  increasingly  global  in  nature  and  depends  on  scale  to  be 
profitable. 

The  lack  of  a  single  market  also  shows  itself  distinctly  in  pricing.  For  example  the  cost  of 
calling another EU country, or of using a mobile device in another EU country, is often much 
higher  than  domestic  rates,  owing  to  voice  and  data  roaming  charges  and  "international" 
(intra-EU) call rates. Such charges are seen as unfair by many citizens, and also constitute a 
practical impediment to exercising single market freedoms.  

Furthermore,  consumers  are  likely  to  feel  more  confident  to  take  up  offers  from  operators 
established in other Member States, if they know that they can rely on the same set of rules: 
for example rules on transparency, contractual terms, facilitating "switching" of operators, and 
rules  to  prevent  the  blocking  or  throttling  of  online  services,  as  part  of  measures  to  ensure 
access to the open internet. Dispersed national efforts to safeguard consumer rights may be a 
cause for further single market fragmentation. 

Meanwhile differences in the timing, the conditions and the costs of procedures for acquiring 
spectrum chill investment, and make it hard to develop integrated wireless networks between 
countries.  More  timely  and  predictable  spectrum  availability  would  allow  more  widespread 
and affordable broadband connections in Europe, but remains too often locked into regulatory 
structures at national level. 

And  divergent  regulation  of  fixed  networks  often  means  overregulation,  or  regulatory 
uncertainty and unpredictability, making it hard to plan investment in fast, "next generation" 
broadband networks.  

With  more  harmonisation  within  the  Single  Market,  Europeans  would  benefit  from  more 
extensive  fast  broadband  coverage,  and  more  innovative  new  digital  services.  These  fast 
telecommunications  networks  are  also  essential  inputs  for  many  other  sectors,  public  and 
private.  A  strong  and  dynamic  telecoms  sector  is  essential  if  Europe  is  to  exploit  new 
innovations  such  as  cloud  computing,  new  tools  that  use  "big  data",  connected  cars,  smart 
manufacturing,  the  Internet  of  Things,  smart  cities,  modernised  public  administrations,  e-
Health, e-Education, and so on. As such, high-speed networks could become the foundation of 
a thriving European digital ecosystem. 

1 

Ecorys, TU Delft et al., Steps Towards a Truly Internal Market for e-Communications, 2013. 

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In  short,  the  sector  suffers  from  fragmentation  along  national  borders;  a  lack  of  regulatory 
consistency and predictability across the Union; unfairly high prices for specific services; and 
a  lack  of  investment.  Addressing  these  problems  is  essential  to  ensuring  European  jobs, 
productivity  and  growth.  A  competitive  telecoms  single  market  would  help  resolve  such 
problems. 

4. 

TOWARDS A SINGLE MARKET IN TELECOMMUNICATIONS 

A genuine single market in telecommunications means a market where: 

- Consumers can obtain services from any EU operator, without discrimination, regardless of 
where they are based; 

- Operators are able to competitively offer services outside of their home Member State, and 
market to consumers based throughout the EU; 

-  Excessive  charges  for  intra-EU  calls,  or  when  using  a  mobile  elsewhere  in  the  EU,  are 
removed. 

This  is  the  end  goal  towards  which  the  European  Commission  has  for  some  time  been 
working,  resulting  in  the  regulatory  framework  of  today.  It  ultimately  implies  the  gradual 
removal  of  national  barriers  to  cross-border  competition,  including  different  national  sector 
regulations,  different  national  consumer  laws  relating  to  telecommunications  contracts,  and 
different  national  conditions  for  allocating  and  assigning  spectrum.  It  also  implies  a 
framework that is more consistent, stable, legally certain, competitive, with a greater degree 
of harmonisation, and more conducive to investment: ensuring more choice, faster broadband, 
and better cross border services.  

The Commission remains of the view that a genuine single market in line with this vision will 
require  a  single  EU  regulator  responsible  for  interpreting  and  implementing  a  harmonised 
legal framework. It would also require a single system for imposing regulatory remedies, and 
possible further harmonisation of spectrum allocation and assignment.  

It  is  clear  however  that  the  process  of  building  a  single  market  in  telecoms  –  as  in  other 
sectors – is a gradual process depending just as much on the behaviour of market participants 
as on the intervention of regulators.  

The  proposals  put  forward  today  represent  an  important  intermediate  step  towards  that 
ultimate  goal  of  a  fully  integrated  single  market  by  addressing  some  of  the  barriers  whose 
removal  can  help  ensure  the  sector  plays  its  full  part  in  the  urgent  quest  for  growth.  The 
approach is grounded in the existing telecommunications framework and focuses on the cross-
border  issues  faced  by  operators  and  consumers,  and  tackling  obstacles  to  investment.  This 
approach  involves  identifying  specific  changes  to  the  current  framework,  as  intermediate 
steps  that  jointly  create  a  "tipping  point"  to  allow  the  market  to  evolve  towards  a  pan-
European single market.  

In practice, this involves: 

•  addressing  some  of  the  divergences  of  interpretation  between  national  regulators, 
increasing  cooperation  among  them  and  continuity in governance, and strengthening the 
Commission's role; 

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•  addressing the problems consumers face in a fragmented European market by introducing 
certain common consumer standards; removing charges for incoming calls while roaming, 
as  well  as  unjustified  surcharges  for  intra-EU  calls;  incentivising  the  market  conditions 
that  can  lead  to  a  rapid  phasing  out  of  roaming  charges  in  Europe  altogether;  and 
introducing new, common consumer protections, including to safeguard access to the open 
internet; 

•  Offering  new  business  opportunities  to  the  telecom  sector,  making  it  less  complex  to 
invest  in  networks  and  provide  and  guarantee  services  across  borders;  and  harmonising 
essential  technical  "inputs"  (e.g.  spectrum  for  wireless  networks,  access  to  networks  for 
fixed broadband); 

•  Strengthening  the  European  dimension  of  the  current  system  of  national  regulators.  The 
Commission  proposes  as  an  intermediate  step  to  strengthen  the  role  of  the  Chair  of  the 
Body of European Regulators (BEREC), creating a 3-year full time post, to ensure more 
strategic planning and greater continuity.  

At  the  end  of  the  negotiations  on  the  2009  review  of  the  regulatory  framework,  the 
Commission made a formal commitment to act in the area of open internet access. Even since 
then,  and  certainly  since  the  framework  was  originally  designed,  the  importance  of  internet 
access has grown enormously, to the extent that it has become a key part of economic, social 
and  cultural  activity.  As  such  it  has  also  become  the  central  and  most  valuable  service 
provided  by  network  operators  and  internet  service  providers.  There  are  four  reasons  why 
action on open internet access is needed now. First, as it stands there are no effective EU-wide 
guarantees of open access; and there is clear and ample evidence of services being blocked or 
"throttled"  (degraded),  harming  the  interests  of  consumers  and  of  those  content  and 
application  providers  that  face  the  risk  of  being  blocked.  Second,  telecoms  operators  and 
content  and  applications  providers  are  developing  "specialised  services"  whose  social  and 
economic value depends on guaranteed quality – for IPTV, for eHealth applications such as 
high-resolution  medical  imaging,  for  videoconferencing,  for  business-critical  data-intensive 
cloud  applications.  These  innovations  offer  opportunities  for  new  economic  activities,  but 
they  require  a  European  regulatory  framework  which  provides  clear  conditions  for  the 
development  of  these  services,  in  conjunction  with  a  thriving  internet  ecosystem.  Third, 
national  regulators  do  not  currently  have  sufficient  powers  under  the  European  telecoms 
framework  to  intervene  to  sanction  blocking  or  other  unreasonable  traffic-management 
practices, or to maintain the vitality of the open Internet. Fourth, national policy makers are 
starting  to  address  this  issue  with  a  range  of  divergent  approaches,  opening  a  new  risk  of 
fragmentation  within  the  single  market  and  a  new  challenge  for  integrated  network 
management. The draft Regulation seeks to address these issues in a balanced and effective 
manner. 

5. 

ADDRESSING INVESTMENT AND COMPETITION 

The  Recommendation  on  Costing  Methodologies  and  Non-Discrimination  is  the  second 
element  of  this  package,  which  complements  the  proposed  regulation  and  is  intrinsically 
linked with it. It focuses more directly on investment, and on further harmonisation of costing 
methodologies.  The  objective  is  for  Europe  to  step  up  its  investments  in  broadband.  This 
objective is essential to maintain global competitiveness, but investment is held back by legal 
uncertainty, and divergences between regulators. More consistent and predictable regulation 
and a more stable regulatory environment can be reached by (1) further harmonising the costs 
that  incumbents  may  charge  for  giving  others  access  to  their  copper  networks;  and  (2) 
ensuring  that  "access  seekers"  have  truly  equivalent  access  to  networks.  Where  such 
competitive  constraints  and  non-discrimination  are  ensured,  the  prices  for  "next  generation" 

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products would be determined by the market rather than being regulated; while the prices for 
access  to  copper  networks  would  remain  broadly  stable,  and  would  not  artificially  undercut 
those for the networks of the future.  

As it stands, inconsistent application of rules creates legal uncertainty for all market players, 
and  barriers  to  the  internal  market.  Legal  certainty  is  particularly  important  given  that 
investment  in  fast  broadband  networks  incurs  significant  costs,  while  demand  for  the  end 
product remains uncertain.  

The  clarifications  provided  in  the  Recommendation  will  therefore  be  pivotal  to  lift 
uncertainty:  incumbent  operators  and  access  seekers  alike  will  have  clarity  on  the  prices 
charged for network access.  

6.  

ROADMAP TO THE COMPLETION OF THE SINGLE TELECOMS MARKET IN THE MEDIUM 
TERM 

It  is  expected  that  the  medium  term  effects  of  the  proposed  legislation  will  be  increased 
freedom and opportunities for market participants, and a trend towards greater consolidation 
of  the  sector.  Intensified  competition  as  Europe  moves  further  towards  a  real  single  market 
could  be  expected  to  lead,  over  time,  to  a  reduction  in  sector-specific  regulation  based  on 
market  analysis.  Indeed,  one  of  the  results  of  developing  the  Single  Market  should  be  a 
greater tendency towards effective competition on relevant markets, with ex post application 
of  competition  law  increasingly  being  seen  as  sufficient  to  ensure  market  functioning.  Over 
time,  as  a  genuine  single  market  for  electronic  communications  emerges,  the  geographical 
scope of markets will also need to evolve, for the purposes of both sector-specific regulation 
based on competition principles and the application of competition law itself. 

As a further contribution, the Commission will work on a revision of the Recommendation on 
relevant  markets  to  ensure  that,  as  competition  develops,  the  ex-ante  regulatory  burden  on 
operators is reduced appropriately.  

Further steps will be needed to complete the single telecoms market, notably through a greater 
coordination  of  regulatory  remedies.  To  this  end,  the  Commission  will  take  the  necessary 
steps to prepare the ground for the next Commission mandate, both utilising the existing tools 
provided  by  the  regulatory  framework,  and  by  preparing  a  review  of  how  the  existing 
mechanisms  for  ensuring  regulatory  consistency  might  be  further  enhanced.  This  review, 
which will involve a broad public consultation in due time, should also examine the utility of 
a single EU telecoms regulator. The review could also address the level playing field between 
the  rules  that  apply  to  "over-the-top"  online  services  compared  to  telecoms  services;  and 
emerging  issues  around  convergence  between  audio-visual  and  telecommunication  services 
and markets. 

7. 

CONCLUSION 

The Commission's vision is for the EU to enjoy a dynamic and competitive telecoms sector. 
This  would  feature  a  number  of  strong  operators,  active  across  several  Member  States  and 
also outside the EU, alongside a larger number of smaller, more local companies: all of them 
offering  state-of-the-art  infrastructure  or  services.  It  will  provide  the  infrastructure  and 
services needed for a thriving, open digital economy, boosting European digital growth, jobs 
and opportunities. 

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With this set of measures, the Commission reiterates its commitment to the broadband targets 
of the Digital Agenda for Europe, which could be provided by a mix of operators (incumbent 
and alternative, fixed-line and wireless), offering a wide and competitive range of choices of 
high-quality  services  and  content.  Such  broadband  coverage  is  essential  for  new  online 
services to gain critical mass: from smart grids and smart cities to universal cloud computing, 
or  the  Internet  of  Things.  It  would  also  position  Europe  in  the  digital  forefront,  with  the 
modern digital infrastructure for its citizens to exploit the full potential of the internet, and for 
its businesses to compete globally. 

Given  the  above  context,  the  Commission  calls  upon  the  European  Parliament  and  the 
Council  to  examine  and  adopt  the  proposed  carefully  targeted  Regulation  as  a  matter  of 
highest political priority. 

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