BRUSSELS – Despite a relatively positive outlook, Europe’s telecoms sector experienced its lowest growth rates since 2003, sending a worrying signal for future investment in next generation access networks, says ETNO, following the publication today of the European Commission’s annual report on the European telecoms sector. Consumers have continued to benefit in 2008 from lively competition and a wide choice of quality services, notes ETNO.

“Already before the current economic downturn, Europe’s telecoms sector has experienced a continual slowing down of revenue and investment growth rates. These trends send a worrying signal that should not be ignored”, says Michael Bartholomew.

Estimates for 2008 indicate a revenue growth of 0.8%[1] - the lowest growth rate since 2003 – and an investment increase of only 1.5%[2] (compared to 4.1% in 2006). The EC progress report recognises that “the growth path followed by the sector since 2001-2002 downturn may come to a halt.”

The EU telecoms sector can be a key driver of economic recovery as underlined at the recent European Council, in particular through the deployment of high speed broadband access networks. Next generation broadband access networks are essential for consumers to continue benefiting from tomorrow’s innovative services.

However, despite a slight increase in fibre subscribers, Europe continues to severely lag behind the USA and Asia in the deployment of high speed broadband networks[3]. The roll out of next generation access networks entails very risky investment estimated at 300 billion ?. Slowing down revenue in the EU telecoms sector in the context of the crisis makes NGA deployment even more risky and challenging. In its report issued today, the Commission confirms this scenario, suggesting that investment in fibre may be slowed down or redirected to other solutions.

“The European Council recently sent a strong signal that investments in new and innovative infrastructure need to be promoted including through cooperative agreements between investors and access seeking parties to diversify the risk, whilst maintaining strong competition. This political signal to improve conditions for investment now needs to be fully reflected in the EU telecoms rules under revision for the full benefit of Europe’s consumers and economy as a whole”, concluded Bartholomew.

[1] IDATE estimate
[2] IDATE
[3] Europe counts today slightly more than one million fibre subscribers against three in the US and 15 million in Japan.