Although the EU's Telecom Rules have led to significant benefits for citizens and enterprises alike, important challenges remain for national and European regulators, says a report published by the Commission.

The report presents the results of 600 draft regulatory decisions sent to the Commission by National Regulatory Authorities. The Commission's review mechanism of national regulatory decisions, an important part of the EU Telecom Rules, has led to more coherent market analyses, greater transparency and has ensured that regulation only exists in markets which need it to be competitive. However, the Commission's report also found that, in a number of cases, the solutions which national regulators impose in order to remedy a lack of competition vary, leading to the risk of a fragmentation of the internal telecoms market to the detriment of consumers and operators with pan-European business activities.

“Close Cooperation between the European Commission and national regulators is crucial for building a truly dynamic and fully functioning single telecoms market,” said EU Telecoms Commissioner Viviane Reding. “By overseeing the day-to-day implementation of the EU Telecom Rules, the Commission has been able to create more legal certainty for companies wishing to invest EU-wide. Although this has improved competition throughout the EU and benefited consumers by lower prices and more choice, we must now remove the remaining inconsistencies to level the playing field in Europe and to promote the development of pan-European operators and services.”

"The current EU Telecom Rules are based on competition law principles and regulatory obligations can only be imposed by the national regulators following a market analysis on undertakings with significant market power. This approach has opened up telecoms markets to competition, lead to more choice for consumers and allowed them to benefit from decreasing prices in many areas," added Competition Commissioner Neelie Kroes.

To consolidate the internal telecoms market, national regulators must submit their market analyses to the Commission before adopting final decisions. This Community consultation mechanism is also known as the Article 7 procedure.

Most regulators have analysed all the 18 most relevant markets in the Telecoms Sector, as identified by the Commission. Today's Commission report shows that the first round of notifications resulted in a large degree of consistency in the markets analysed, and in the assessment of market power. However, despite similar market situations regulatory remedies may vary across different Member States, which could fragment the internal market.

At present the Commission may require a national regulator to withdraw a decision because the market definition and/or market analysis is incompatible with EC law. However, it can only comment on remedies proposed by national regulators.

The notifications received by the Commission so far show that in certain markets, competition could develop without regulatory intervention. In particular, the Commission points out that most retail regulation is no longer necessary because effective wholesale regulation should safeguard consumer interests. The Commission report also found that some wholesale markets could be deregulated further, while other markets continue to require specific targeted regulation for the foreseeable future.

In line with the Commission's strategy for better regulation, the Commission intends to make use of the forthcoming reform of the EU Telecom Rules (scheduled for the end of October) to further minimise the administrative burden for market players and regulators and to take measures to complete the internal telecoms market.