Statement by six National Competition Authorities on the telecommunications market
Competition as the engine for Europe
With its latest “Competitiveness Compass,” the European Commission has presented an important action plan for implementing the vision for Europe set out in the Letta and Draghi reports. The important role of competition as a driver of productivity, investment and innovation is emphasized. Strengthening competitiveness is a key parameter for the European economy. The European Commission has formulated ambitious goals for growth, resilience and Europe's technological sovereignty. Competition is a key factor in achieving these goals.
Competition is a basic prerequisite for future viability
Competition is not an obstacle, but a pillar of the European economic order. It enables innovation, investment, affordable prices and choice for consumers. Competition is a prerequisite for dynamic development, especially in the telecommunications sector, which was liberalized at the end of the 1990s through sector-specific legislation and its own institutions. Nevertheless, there is a growing number of voices in the political debate that portray competition as a brake on growth. In this view, competitive rules are sometimes misinterpreted as an obstacle to consolidation, efficiency gains and the formation of “European champions”.
Misunderstandings surrounding the Draghi report
Examples from the telecommunications industry are often used to argue that strict competition rules have fragmented the industry and slowed down investment and innovation. However actually a lenient merger control can harm consumers and weaken investment and innovation. The reality of the telecoms market is more complex than the debate about “more consolidation” suggests. While companies have lost revenue shares due to new digital services, new business areas have emerged at the same time. The basic prerequisite for both is an efficient infrastructure. This is not created by size alone, but by competition and the associated investments and innovations.
To emphasise this, six European competition authorities from medium-sized EU economies (Belgium,Ireland, Czech Republic, Portugal, the Netherlands and Austria) have published a joint statement on the importance of competition in the telecommunications sector. This position is also supported by the Telecommunications and Postal Services Division of the Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR).
Austria as an example of differentiated and successful competition enforcement
Austria's competition enforcement shows that high-quality networks, fair prices and functioning competition are possible with a differentiated approach. Inter-modal competition between mobile and fixed network services works, as data from the RTR Internet Monitor shows. Thanks to forward-looking regulation, sector-specific ex-ante regulation could be withdrawn in many areas and replaced by the ex-post review of general competition law and merger control - without jeopardizing the opening of the market. The further development of a single European telecoms market remains a key challenge. Despite a common legal framework, there are still considerable differences between the member states - in expansion projects, in the handling of data or in consumer protection regulations. Such differences - however justified they may be in individual cases - also have an impact on the creation of a European single market for telecommunications. As a rule, these markets are national markets and must be examined and assessed accordingly from a merger control perspective.
"The statement often made that there are 170 telecom providers in Europe and only 3 in the USA is simply wrong. Nevertheless, the narrative is repeated reguarly. What is true is that competition in the USA is less intense overall and this is felt by consumers in particular. Competition is essential for quality and price. Domestic consolidation from three to two empirically eliminates price and quality competition. This would make a mockery of all the regulatory successes of the last 20 years. That cannot be the EU's goal. The Draghi Report has many good ideas, but the telecommunications sector is obviously not its strong point," explains Klaus Steinmaurer, Managing Director of the Division Telecommunications and Postal Services of the Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR).
"The Austrian Ferderal Competition Authority focuses in particular at Small and Medium-sized Enterprises, the many hidden champions of our Austrian economy. We must not jeopardize their competitiveness through lax merger enforcement against companies that already have market power. As a rule, anti-competitive mergers do not bring any broad economic benefits, and the AFCA is examining this. Possible mergers in the mobile telephony sector must therefore be examined very carefully, both at European and national level," explains Natalie Harsdorf, Director General of the Federal Competition Authority.
European regulatory policy is at a crucial turning point in 2024/25. The competition authorities are committed to promoting competitive markets in the interests of fair prices, innovation and investment in all sectors of the economy, especially in sectors that are crucial to industrial competitiveness, such as the telecommunications sector.
Conclusion: Competition is not a stumbling block - it is Europe's strength
Europe is at a crossroads. The impetus to realign industrial policy must not lead to competition being dismissed as a nuisance. Especially in strategically important sectors such as telecommunications, a differentiated, fair and future-oriented policy is needed. Competition is not an obsolete model - it is the foundation for sustainable growth, innovation and willingness to invest.
European regulatory policy is at a decisive turning point. The competition authorities are committed to promoting competitive markets in the interests of fair prices, innovation and investment in all sectors of the economy, especially in sectors that are crucial to industrial competitiveness, such as the telecommunications sector.
Previous investigations by AFCA and Division Telecommunications and Postal Services of the Austrian Regulatory Authority for Broadcasting and Telecommunications (RTR)
In 2016, FCA and the regulator investigated the impact of the merger between Hutchison 3G Austria and Orange Austria on the mobile telecommunications market. Both authorities found in 2016 that there had been significant price increases up to the end of 2014. According to FCA, prices for existing customers rose by an average of 14-20%.
For prepaid tariffs, the increases were as high as 20-30%, for contract tariffs (postpaid) 13-17%. RTR calculated price increases of 50-90% for new customers in 2013 and 2014 for typical smartphone use and 22-31% for classic use without mobile internet.
- Press Release 14.3.2016 BWB and RTR present reports on the telecom sector inquiry: BWB Bundeswettbewerbsbehörde
In 2021, AFCA and RTR held a joint press conference on the topic “Austrian mobile communications market - is competition in danger?” due to the expiry of the access obligation in favor of MVNOs (mobile network operators without their own network infrastructure) and a public discussion about their value and contribution.
- Press Release 28.01.2021 AFCA and RTR press conference: “Austria’s mobile telecommunications market - Is competition at risk?”: BWB Bundeswettbewerbsbehörde
Close cooperation and collaboration between AFCA and the regulator
In October 2023 AFCA Division Telecommunications and Postal of RTR signed a cooperation agreement for digital markets. In addition to enabling a deeper understanding, the aim of the agreements is also to strengthen regulatory instruments through the use of synergies. As a result, the challenges of the digital age and the associated complex issues can be dealt with and answered more efficiently.