According to the European Commission's European Electronic Communications Regulation and Markets Report, retail telecommunication prices have dropped significantly, while the market is now easier than ever for new companies to enter.
Fixed-line services in particular saw prices decreasing, the EC said, with revenues declining 1.6 percent per year and more new players entering the market.
"However, the rate of growth of subscribers using alternative operators has begun to slow and this is possibly the result of win-back campaigns by incumbent operators and also by the increasing attractiveness of bundles of services such as voice, Internet and television," the EC noted.
The EC report also found that mobile penetration has reached more than 92 percent on the continent, with 15 million mobile users now connecting over 3G. Broadband subscriptions have continued to increase, growing by 20 million subscriptions to reach 53 million in 2005.
Quadruple and triple-play services are now starting to become a reality, the report said, and are "expected to boost consumer demand and contribute to the current migration from dial-up to broadband."
However, Europe believes the telecommunications industry is not yet sufficiently competitive to be allowed to self-regulate. The EC said that if it steps aside, certain segments of the population could find themselves excluded from telecommunications technology.
Roaming fees in particular have attracted Europe's ire. The EU believes consumers are paying too much for roaming and is expecting to introduce new regulation on the issue next year. The EC is now soliciting e-mail comments on the subject from interested parties.
Jo Best of Silicon.com reported from London.