European Telecommunications Network Operators’ Association sees EU telco revenue falling 2%

European Union member states must boost investment in telecoms, an industry body has said after revealing that revenue in the sector is expected to have declined for another year, as users switch to services such as Skype to make calls, hurting revenue from fixed-line services.

Total revenue generated by telecoms companies in the EU is expected to have dropped 2% in 2011, following a 1.4% fall in 2010 to EUR274.9 billion, according to an industry body representing 40 telecoms companies.

The European Telecommunications Network Operators' Association said in its annual economic report, to be published Tuesday, that the decline is likely to have been less abrupt in the EU's five largest markets, whereas it was most stark in the Central and Eastern European countries that joined the EU most recently. Since 2005, fixed-line revenue has dropped 28%.

ETNO, which mainly represents former state-owned monopolies in the telecoms industry, said a continuing decline in revenue could hurt spending on Europe's telecoms infrastructure, and called on European authorities to create a supportive environment.

"Looking at the persistent decrease in revenue, we see a high risk in terms of future investment capacity," said Luigi Gambardella, ETNO's executive board chairman, in a statement.

"The sector is committed to doing its best but even with these best efforts, favorable and forward-looking policies are required to allow operators to keep investing and developing new business models."

Total investment in the EU telecoms sector in 2010 amounted to EUR44.5 billion, representing a 2.3% increase from 2009, but this still remains below pre-crisis levels, the association said.

The number of households being equipped with high-speed broadband has increased from 38.7 million to 79.2 million, it added.

Promoting investment in telecoms-in particular the rollout of high-speed broadband-is a key aim for European Commission. After repeatedly rapping companies for failing to invest, EU commissioner for the digital agenda Neelie Kroes last year said the EU would provide EUR9.2 billion to support broadband investment and pan-European digital public services for the 2014-20 period.