BuddeBlog

BuddeComm’s quarterly publication, Poland – Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in one of Eastern Europe’s largest and most competitive markets. It includes data for the regulator’s 2010 annual report as well as operator data for the first quarter of 2011.

As one of the ten countries which joined the European Union (EU) in mid-2004, Poland was obliged to reform its telecoms market and align its policies with those of the EU. Competition was introduced but the incumbent operator Telekomunikacja Polska (TP) has retained a major share of the overall market, and dominates most sectors. The fixed-line market has contracted due to competition and the trend of fixed-mobile substitution: market revenue fell PLN1.7 billion in 2010 to PLN 5.5 billion and was expected to fall to about PLN5 billion in 2011, with the number of lines falling to 7.4 million from eight million in 2010.

In common with many of its neighbours, Poland has been affected by the recent global financial turmoil through declining demand for its exports, a slowdown of credit activity, and lower foreign direct investment inflows. This slowdown has been reflected in the overall telecoms market, which generated PLN 42.8 billion in 2010, a slight increase on 2009. Nevertheless, overall capex undertaken by telcos recovered quickly, increasing 2% in 2009, year-on-year, and by about 35% compared to 2005. Revenue was expected to show a slight increase to 2012, largely on the back of the mobile and broadband sectors which will compensate for falling fixed-line voice telephony revenue.

The country has a well developed mobile market with high mobile penetration partly attributed to multiple SIM card ownership. There are some 21 mobile operators, including six MNOs and a sufficient number of MVNOs to provide effective competition in the low-cost sector. Competition together with regulatory measures has resulted in the average price of domestic mobile services falling steadily in recent years, including in 2010 a 25% fall in the cost for voice calls, and a 5% fall in SMS messaging charges. ARPU has also fallen due to lower retail tariffs and regulated MTRs and roaming charges.

Given the saturated voice market, MNOs have focused on launching tailored offerings for particular market segments, encouraging prepaid users to migrate to postpaid plans, and marketing mobile broadband services based on upgraded networks.

Poland’s broadband market has developed rapidly in recent years as a result of falling tariffs and large scale take up of services. Growth in largely the result of the phenomenal increase in the number of mobile broadband subscribers, which now makes up the majority of accesses. Overall growth is expected to be steady in 2011 and 2012, with the majority of subscribers being on mobile broadband plans. The FttX sector will also show significant growth in a number of cities, which should reduce the number of DSL customers as these are migrated to fibre networks.

DSL remains the most commonly available fixed-line platform. The incumbent’s market share has steadily fallen as the improving regulatory environment in relation to network access has given competitors alternatives through bitstream access and LLU: in mid-2011 the incumbent had a 37% share of the broadband market by subscribers, while Netia had a 13% share and UPC Polska a 10% share.

The fragmented CATV market is ripe for further consolidation: at the end of 2010 Liberty Global, owners o UPC Polska, bought Aster City, the fourth largest cableco, while in early 2011 Vectra filed to take over part of the cable business of the third largest player Multimedia Polska. In mid-2011 Vectra acquired the analogue cable networks in Bydgoszcz and five nearby towns from Netia.

Key telecom parameters – 2010; 2012

(Source: BuddeComm)

Market Highlights

• ASO has been confirmed for mid-2013, though satellite and digital cable TV remain the most common form of receiving TV.
• The National Broadcasting Council has awarded licences for the final four channels on the first multiplex. All four broadcasters are new entrants to the market, and have established that they would not require investors or funding after receiving their licenses. The move is a major step in the progression to ASO.
• LTE, kick-started in late 2010, can potentially be developed in a number of bands licensed thus far. CenterNet and Mobyland have migrated base stations to LTE using the 1800MHz band, and aim to provide 60% geographic and 75% population coverage. Refarmed existing G spectrum can avoid the costs associated with new spectrum acquisitions, and so cost effectively extend mobile broadband to rural areas in coming years.
• DVB-H mobile TV has not been successful thus far but there is much promise in steaming TV with a number of operators offering services.
• FttX deployments remain low key though the government’s broadband policy has provisioned for network infrastructure access to promote fibre deployments.
• UPC and other cablecos have upgraded their networks to the DOCSIS 3.0 standard, providing up to 120Mb/s. Multimedia Polska, Aster City and Vectra also offer DOCSIS 3.0-based services. The higher data rate should help forestall customer churn to FttX networks as they are built out in coming years.
• Further market consolidation is expected in the cable TV sector as the major operators buy out regional players, and so realise greater scale to help upgrade networks and so fend of churn to fibre networks in coming years.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Poland. It provides further information on:

• Market liberalisation and regulatory issues;
• The impact of the global economic crisis;
• Telecoms operators – privatisation, acquisitions, new licences;
• Mobile data market developments in coming years in light of spectrum auctions and new license awards in 2010;
• 3G developments, regulatory issues and technologies including HSPA and LTE;
• Broadband migration to an FttH architecture;
• Historical and current subscriber statistics and forecasts;
• ARPU statistics and forecasts.

For detailed information, table of contents and pricing see:

Poland – Telecoms, IP Networks, Digital Media and Forecasts

By: John de Ridder

In June, the net neutrality debate took an unexpected turn when the Netherlands leap-frogged the USA to became the first country to legislate for mobile net neutrality. Business models for fixed and mobile networks must shift toward volume charges.

The net neutrality debate has been seen not having much relevance outside the USA because the plight of carriers there was aggravated by unlimited usage. US carriers objected to carrying the extra traffic generated by the likes of YouTube and BitTorrent and others including Google objected to the carriers’ crude attempts to manage traffic by restricting customers’ access to such sites.

The issue came to a head in 2008 when the FCC ordered Comcast, a cable TV and Internet access provider, to cease blocking or downgrading certain users’ access to some peer-to-peer download services.  The FCC’s ruling, however, was subsequently struck down on appeal over the FCC’s authority to implement net neutrality regulations.

US state of play

The FCC rallied and in December 2010 issued a new policy (still to be tested in a federal court) that sets three basic rules for net neutrality [1]:

• Transparency.  Fixed and mobile broadband providers must disclose the network management practices, performance characteristics, and terms and conditions of their broadband services;
• No blocking.  Fixed broadband providers may not block lawful content, applications, services, or non-harmful devices; mobile broadband providers may not block lawful websites, or block applications that compete with their voice or video telephony services; and
• No unreasonable discrimination.  Fixed broadband providers may not unreasonably discriminate in transmitting lawful network traffic.

It is interesting to note that only the first of the FCC’s three rules applies equally to fixed and mobiles providers. But for mobiles, the no-blocking rule applies only to services “that compete with their voice or video telephony services” and mobile providers are not mentioned at all in the third rule because “existing mobile networks present operational constraints that fixed broadband networks do not typically encounter.  This puts greater pressure on the concept of “reasonable network management” for mobile providers”.

But mobiles are under pressure. Free Press wants the FCC to take a close look at Google’s move to curtail access (making them “unavailable for download” via the Android Market) to independent tethering apps. Google says it is doing this in response to requests from wireless carriers. But Google’s Droid partner Verizon says “Google manages what’s available in the Android Market.”

When Verizon acquired massive amounts of spectrum in the 700MHz “C Block” auction back in 2008 it promised to adhere to the FCC’s “Open Access” rules which forbid carriers from trying to “deny, limit, or restrict the ability of their customers to use the devices and applications of their choice.” In the new Report and Order (Paras 134-135), the FCC has hinted that its powers may not be restricted to users of this part of the spectrum. Again, this must be tested in court.

Dutch policy

The Netherlands has gone further. In April 2011, KPN announced plans to charge mobile customers extra for using Skype and WhatsApp (an application that for $2 pa enables smart phone users to send messages for no additional charge). KPN does not reveal much but last year Telstra’s messaging revenues were over $1 billion and over 9 billion SMS were sent from its mobile phones. So, losing voice and message revenues to Skype, Facebook and WhatsApp could seriously dent profitability.

To charge users access to such services, KPN would need to look at the data being transferred, using “deep packet inspection.” Following protests about possible privacy violations, politicians moved quickly to stop the plan. In June 2011, the Dutch parliament passed a bill which will force mobile Internet providers to let customers use Skype and other rival services on their networks without charging extra or giving preferential treatment to their own offerings (and not to place cookies without express permission from the end user). [2]

KPN has responded [Business Week 19 July] saying that from September the cheapest advertised price for one gigabyte of mobile data will be part of a euro50 ($70)/month package, compared with current packages under euro20 ($28) that include unlimited data. This is similar to the moves that US fixed carriers have made by moving towards Australian style monthly caps.

Expect to see mobile handset prices increase and more volume-based charging. The latter makes sense for both fixed and mobile networks and is the next logical move after caps.

[1] FCC (December 2010) Open Internet Rules, Report and Order 10-201.

[2] http://www.physorg.com/news/2011-06-dutch-parliament-mobile-net-neutrality.html

BuddeComm’s annual publication, Finland – Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in Finland. It includes data from the including the regulator’s 2010 market reports as well as operator statistics to Q1 2011.

Although turnover in Finland’s telecom sector fell steadily between 2006 and 2008, aggravated by the impact of the financial crisis, some recovery has been seen since. This which should continue at a slow rate during the next few years: the key operators are committed to increasing investments in mobile and fibre networks, so allowing consumers to make greater use of IP-delivered content. More than half of total turnover is from the mobile sector, the remainder from fixed network operations, where revenue continues to fall in line with lower access and call charges, and lower use by consumers having switched to mobile-only and VoIP solutions.

Finland’s broadband penetration is far ahead of the EU average. The market is dominated by the main telcos TeliaSonera, Elisa and DNA. Wireless networks are provided nationally via MNOs and Digita Oy’s network (based on 450MHz spectrum), as well as regional WiMAX and WLAN networks. Finland’s regulator closely monitors the country’s broadband development, comparing strategies with those of its neighbours Sweden, Denmark and Norway. This is partly to encourage regulatory and competition measures where they have proved successful elsewhere. The structure and prices of regional broadband markets also vary among the Nordic countries, with Sweden and Finland having the most favourable end-user prices regardless of connection speed.

The government’s Broadband Action Plan aims to deliver fibre-based broadband for all citizens by 2015. The Plan would deliver 100Mb/s services nationally, a significant improvement on the minimum 1Mb/s envisaged in 2004. To finance the State contribution the government auctioned frequencies in the 2.5-2.69GHz band at the end of 2009, with some of the proceeds going towards network rollout and the shortfall being met by a tax on telcos based on the number of their broadband subscriptions.

The number of fixed-line broadband subscriptions is likely to remain stagnant to 2012 as a number of consumers switch to mobile-only solutions. However, growth will steadily resume thereafter as fibre-based networks, supplemented by 100Mb/s and 200Mb/s DOCSIS3.0 offers from cablecos, are made more widely available.

The mobile sector has been equally successful, with penetration also above the EU average. Finland has one of the most advanced mobile markets in the world and has been an early adopter of emerging technologies: the country launched the world’s first commercial GSM network, it was the first in Europe to award 3G licences, and it has trailed only Norway and Sweden in launching commercial LTE services. The country has also been at the forefront in utilising sub-GHz spectrum for 3G.

There are around ten major mobile network operators or service operators in Finland, though 98% of the market (by subscribers) is controlled by a triopoly of the established players TeliaSonera, Elisa and DNA. These MNOs host several resellers and MVNOs, while Ålands Mobiltelefon operates a network in the Ålands area. There are several mobile service operators which also provide mobile broadband services, as well as players offering mobile broadband together with fixed broadband services, but without mobile voice services. Market competition as well as regulatory measures have gradually reduction the price of mobile calls and services: indeed mobile call charges in Finland are the cheapest in Europe, while Finnish mobile broadband subscriptions are also among the least expensive.

Finland became the first country in the world to launch DTTV services based on the MHP, in 2001. The switchover from analogue to digital broadcasting was completed in 2007 – digital TV is now broadcasted in five national multiplexers with a varying coverage and channel offering. In 2009 DNA was contracted to build a network to transmit HDTV nationally. In mid-2011 the company was awarded the licence to operate the third DTTV multiplex, bringing total capacity to 11 HD and about 15 SD channels. Multiplex D is primarily reserved for mobile TV.

Key telecom parameters – 2010; 2012

(Source: BuddeComm)

Market Highlights

• Mobile broadband now makes up more than half of all broadband subscriptions. Sector growth has slowed in recent years but consistent development is expected in coming years in the wake of upgraded networks and the wider availability of capable handsets.
• DNA has become the largest cableco following its purchase of Welho in mid-2010. The company has inaugurated a 200Mb/s service to support its commercial HDTV offering. The operator is also an MNO, well position as a quad-play provider.
• The regulator’s auction of spectrum in the 2.5-2.69GHz band in late 2009 cleared the way for network operators to further develop LTE. The long term of the licences (valid until 2029) has meant that operators have been encouraged to invest in network upgrades. DNA launched HSPA+ mobile broadband with this spectrum in 2010, before migrating to LTE in 2011. TeliaSonera launched the country’s first commercial LTE service in late 2010, while Elisa has contracted a hardware provider for its launch.
• The frequency coordination agreement reached between Finland and Russia in 2011 enables Finland to use the 800MHz band for LTE services: mid-2011 the regulator issued trial concessions to operate services in the 791MHz-801MHz band.
• Mobile data is still dominated by SMS, though the new LTE networks will enable customers to make use of a greater range of high-end applications from 2011 onwards. Data traffic doubled in 2010 and is expected to reach 65,000TB in 2012, compared to 16,000 in 2009.
• FttH has thus far made only a small impact in Finland, and is promoted principally by housing associations and local governments. Fibre is largely a preserve of the larger cities, while in smaller centres commercial activity is being stimulated by funds made available through the government’s National Broadband Strategy. The government and regulator have targeted a national fibre or cable network enabling 100Mb/s connections across the country by 2015. The regulator estimated that by 2015 about 94% of connections would be within reach of the network. The cost of connections was estimated at between €2,000 and €3,000 per household, with some more remote areas costing up to €10,000 per household.
• To support the National Broadband plan, TeliaSonera has accelerated its investments in fibre-based broadband while in mid-2011 the provider SSP Yhtiöt, part of the Finnet Group, contracted Alcatel-Lucent to deploy Gigabit Passive Optical Network (GPON) in its network.
• Following the end of analogue TV transmissions, freed 470-850MHz band potentially allows up to 55 channels for mobile TV. The government has licensed a fourth digital broadcasting network dedicated to mobile TV (to Digita Oy). In late 2008 DNA was the first MNO to launch mobile TV in Finland, on Digita’s DVB-H network Operators are experimenting with appropriate business models to attract consumers. Finland’s success in this market would buck the trend seen elsewhere in Europe, where mobile TV has largely failed.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Finland. It provides further information on:

• Market liberalisation and regulatory issues;
• The impact of the global economic crisis;
• Telecoms operators – privatisation, acquisitions, new licences;
• Mobile data market developments in coming years in light of spectrum auctions and new license awards in 2010;
• 3G developments, regulatory issues and technologies including HSPA and LTE;
• Broadband migration to an FttH architecture;
• Historical and current subscriber statistics and forecasts;
• ARPU statistics and forecasts.

For detailed information, table of contents and pricing see:

Finland – Telecoms, IP Networks, Digital Media and Forecasts

Buddecomm’s latest USA Annual Publication, ‘2010/11 Telecoms, Mobile and Broadband in the USA’, details the fixed-line, mobile and broadband markets in the USA. The publication also examines Internet trends and the emergence of new telecommunication services such as VoIP and IPTV. The report also profiles developments in the broader digital economy, including smart energy grids and the nascent e-health, e-government and e-education sectors.

US mobile subscriber numbers increased to over 300 million by early 2011. Although penetration levels are reaching saturation, mobile data revenues increased by around 23% year-over-year to December 2010 and are expected to continue to grow at very high rates between 2010 and 2015. Increases in data ARPU in particular are largely offsetting the ongoing decline in ARPU for voice services.

In early 2011 the US was still trailing its OECD counterparts in terms of broadband penetration, speed and affordability. Nevertheless, the market is currently witnessing significant investment activity in FttH deployments, DOCSIS 3.0 upgrades, mobile broadband network rollout and municipal wireless broadband activity. Despite the growing developments in FttH, WiMAX and 3G networks, broadband service in most regions is still generally limited to one DSL and one cable operator. Strong subscriber and revenue growth rates during 2010 have confirmed VoIP’s position as a widely used telecommunications service in the US.

This report contains overviews, analyses and detailed statistics of the US fixed-line, mobile and broadband markets including their sub-markets such as DSL, cable, FttH, wireless broadband, utilities broadband, the Internet, VoIP and IPTV.

Key Highlights:

• The US mobile industry has shown considerable growth since 1999, reaching over 96% subscriber penetration by early 2011.
• By early 2011 the big-three mobile operators (AT&T Mobility, Verizon Wireless, Sprint Nextel) held around 79% of the market, and the big-four (including T-Mobile) around 90%. In March 2011, however, AT&T announced it had agreed to acquire T-Mobile USA from Deutsche Telecom, a deal which would consolidate AT&T as the dominant wireless provider in the US with the acquisition of a further 33 million subscribers.
• Meanwhile Verizon is expected to increase its market share during 2011/12 following the launch of its iPhone offering in February 2011. The launch came after more than four years during which AT&T enjoyed exclusivity with the hot-selling iPhone. Furthermore, the strong growth of Android will also aid subscriber growth of Verizon, the primary carrier of Android handsets in the US. The Android handsets have also underpinned Verizon’s data revenue growth of around 25% in 2010.
• Following the decisions by AT&T and Verizon to adopt LTE as their 4G platforms, the Sprint-Clearwire WiMAX network appeared to be rethinking its strategy. In August 2010 Clearwire announced plans to conduct trials of rival 4G LTE technology, in the hope of creating a ‘multi-mode WiMAX/LTE network’. Similarly, in June 2011 Sprint revealed plans to deploy LTE technology over a 15 year period.
• By early 2011 cable subscriber numbers surpassed 42 million, with growth slowing from around 12% in 2008 to around 6% in 2010. Meanwhile, DSL subscriber numbers approximated 34 million with growth rates of around 3% being somewhat lower than the previous year of 6%. Hence in early 2011 the US continued to linger at around 14th on the OECD broadband penetration tables, down from 4th place in 2001. In addition, the US ranks around 29th in the OECD in terms of average broadband speeds.
• Nevertheless, by early 2011 many cable operators had achieved their DOCSIS 3.0 upgrade homes-passed goals, with some companies shifting their focus to their hybrid fibre coaxial (HFC) plants.  Similarly, by March 2011 the number of homes passed by FttH was approximately 20.9 million. Of homes passed, over 7 million were receiving television, high-speed Internet and/or telephony services over these networks.
• During 2010 and early 2011 it became increasingly clear that mobile VoIP will become a major segment of the VoIP market over the coming years. For instance, a report released in mid-2011 found that almost 25% of Internet-using American adults were making telephone calls over the Internet via such providers as Skype and Vonage.

For detailed information, table of contents and pricing see:

USA – Mobile, Broadband, Digital Media and Forecasts

The telecoms industry continues to transform and while the economic downturn persists; growth in many sectors of the vast telecoms industry continues. Consumers are still enamoured by mobile technology, with smart phones and improved infrastructure having fuelled the continuing uptake of mobility around the world. The number of Internet users also continues to increase as the penetration of both fixed and mobile broadband becomes more accessible. In addition, people are using the Internet differently than a few years ago, when search services were the primary activity. In 2011, the use of social media has become one of the most popular online activities.

The Internet browsers people like to use has also expanded; while for many years Internet Explorer (IE) was consistently the most popular browser worldwide with around 70% or more market share, this has now changed remarkably. More recent entrants like Firefox and Google Chrome now capture a large portion of this market.

Despite the saturation of the developed markets and economic downturn; mobile subscriber growth continues, mainly due to growth in the emerging markets. China and India offer much potential for future growth due to their large populations and BuddeComm predicts all of the low penetration level countries around the globe will see ongoing massive investments in cheap 2G infrastructure and cheap 2G mobile handsets for the near future. Both large carriers and private investors are showing enormous interest in the opportunities presented by these developing markets.

In 2011 mobile handset sales also continue to grow, although the rate has declined since 2010. Android Operating System (OS) is embedded in smart phones and continues to rise in popularity, overtaking the Apple iOS in terms of global market share.

Operators’ which have focused their attentions on the wireless sector, particularly in the emerging markets; have fared better than others which have continued focusing on saturated or wireline markets. Mobile ARPU levels differ widely between the regions of the world; however on the whole all regions have experienced declines in ARPU over the past few years – and this is set to continue in the current economic environment. International roaming charges and mobile termination rates have finally begun to drop due to both competition and the introduction of regulations/price capping.

The mobile broadband market is gaining momentum and the key reason for this growth is the fact that due to competition and a saturated mobile voice market, the operators have been forced to offer very competitive capped data packages. Non-SMS mobile data is now growing due to both the emergence of smart phones and better wireless broadband technologies. Mobile broadband apps in particular have been enthusiastically embraced by consumers around the world. A stream of new Apps and services are being released in areas entertainment, travel and finance and also m-health; m-education; m-social networking; m-gaming and so on. The key players in this market have emerged over the past couple of years and include both Internet media and mobile industry leaders.

Improved technology solutions have led to a robust VoIP market in recent years and this growth continues despite the economic downturn, due primarily to the fact that VoIP offers a cheaper alternative. While security and reliability concerns still need to be resolved; consumers and business are turning to VoIP in an effort to save costs and there are now millions of VoIP users worldwide. Japan, China and the USA continue to be some of the world’s hottest markets for IP telephony. Over the last couple years, Europe has also become a prime innovator in VoIP services, whether stand-alone, bundled as a triple play offer, or through fixed-mobile convergence packages. Mobile VoIP and international long distance services are also becoming a key area of focus, particularly in Europe and North America.

BuddeComm’s new report, Worldwide Telecoms – Key Statistics for a Changing Sector, provides an important insight into the trends occurring in the global telecoms sector. The report initially provides a summary of key worldwide telecoms statistics and trends, including the number of fixed lines; mobile subscribers; 3G subscribers; text messages sent; Internet users and worldwide broadband subscribers, including satellite services. The report also includes global financial data including worldwide telecoms capital expenditure (CAPEX) and overall telecoms spending and revenue. It identifies the top 25 carriers’ worldwide and top 15 carriers in emerging markets, along with outsourcing market statistics.

In addition, the report further explores the sector of mobile services, which is one of the key drivers of growth in the industry. Insights into the mobile industry include the number of subscribers worldwide; mobile handset trends and global mobile financial statistics. It provides information on mobile broadband trends, smart phones, mobile messaging and mobile apps. The popularity of the Internet continues to rise and this report provides a valuable overview of key trends in this sector such as worldwide users, popular search engines, websites and the growing use of VoIP, social media and gaming.

Examples of key insights:

• Mobile subscribers have grown from less than 500 million subscribers in 1999 to well over 5 billion worldwide in 2011. In comparison there are around 1.1 billion fixed lines worldwide.
• AT&T, NTT and Verizon are the top 3 carriers worldwide in terms of sales, however there are many carriers in emerging markets showing potential.
• The use of VoIP services is becoming more popular and China has quickly established itself as the world’s biggest user of VoIP services.
• Facebook remains the global social media leader and has expanded its offerings beyond just social communication. However while Facebook has managed to capture the largest share of the market in recent years, the industry is not sitting still and new social networks are again emerging such as Google+.
• Telecoms outsourcing has declined as companies focus on restructuring or negotiating existing contracts, rather than creating new deals.
• The messaging industry generates hundreds of billions in revenue each year, with SMS/PSMS accounting for the majority; around 7 trillion text messages will be sent in 2011.
• In 2011, global satellite industry revenue has more than doubled ($168 billion) since 2003 when revenue reached only $74 billion. Satellite services is leading growth in this sector.

For detailed information, table of contents and pricing see:

Worldwide Telecoms – Key Statistics for a Changing Sector