E-Communications : Investment and the Regulatory Framework

The EU regulatory framework for e-communications was adopted by the European Parliament and the Council in 2002, and became applicable from 2003. It has three primary objectives: (1) to promote competition; (2) to develop the single market; and (3) to promote citizens' rights. The European Commission's DG Information Society commissioned London Economics to estimate the level of e-communications investment in the EU and to examine its main drivers as part of a contribution to the Commission's 2006 review of the e-communications framework. This paper outlines some of the findings of that study. The paper provides a description of the process of collecting data on investment in physical infrastructure in the e-communciations sector by country and by sub-sector. It also presents the collected data, showing a decline in overall investment between 2001 and 2003 and a subsequent upturn in 2004. An econometric analysis of the drivers of investment over the period is undertaken, which suggests that better performing regulatory regimes, as measured by an OECD regulatory index, can contribute to higher levels of investment in the sector