infoTECH Feature

October 13, 2014

European Community Deregulates Fixed Network Voice

There no longer is any reason to regulate European Community fixed network voice services, the European Community recently concluded. For a product that historically has been among the most-regulated of products, that is a huge change.

As much as we might argue that is a helpful thing for suppliers of fixed network voice services, the change also highlights both the amount of effective competition and the declining demand for the product.

In the U.S. market, only about 33 percent of households actually use the public switched network anymore, according to USTelecom (News - Alert).

As of June 2013, incumbent local exchange carriers (telcos) served a total of about 78.5 million switched and VoIP access lines. That is just 44 percent of the 178 million telcos served at the end of 2000.

Traditional switched lines had fallen to 70.5 million by June 2013, or only 40 percent of lines served at the end of 2000.

In eight states, suppliers other than the telco had more wired telephone lines (switched access or VoIP) than the telco, and most of those were provided by the cable TV company.

In an additional 10 states, providers other than the telco had 45 percent to 50 percent of the wired voice connections.

And then there is mobile. The FCC (News - Alert) reports that there were 305.7 million mobile voice connections in the United States as of mid-2013, about double the number of all fixed network voice lines.

Looking at the total voice market (including mobile, telco and cable TV, or other fixed-voice connections), telco market share fell from 60.5 percent to 18.5 percent from 2000 to 2012.

Total telco retail switched access lines have fallen by 60 percent since the year 2000, from 178 million to 71 million.

From the end of 2007 to mid-2013, there were almost 60 million retail switched access lines lost, and the rate of decline was still around 9.5 million per year as of mid-2013.

The EC deregulation illustrates a principle. Among the most-important considerations for any regulatory body is the fundamental health of the industries regulated, the counterpoint to promoting and protecting consumer welfare and interests.

That is a point recently reiterated by the European Commission's Digital Agenda staff.

“Regulation must be targeted and balanced in a way that addresses the true obstacles to effective competition in the sector: an excessive regulatory burden on operators would stifle investment and innovation,” a Commission paper argues.

Some might ask whether such balance always exists, within the EC or elsewhere. 

Edited by Rory J. Thompson

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