Eastern Europe’s communications markets enter 2010 more unified than ever, primarily due to enlargement of the EU. The EU’s expansion into Eastern Europe commenced in 2004 when Czech Republic, Hungary, Poland, Slovakia, Slovenia, Estonia, Latvia, Lithuania and Cyprus joined the EU. Bulgaria and Romania joined later in 2007.
The Balkans region is in the process of joining the EU; Croatia and The Former Yugoslav Republic of Macedonia (Macedonia) are EU candidate countries. Albania, Bosnia-Herzegovina, Montenegro, Serbia and Kosovo are potential candidate countries seeking admission to the EU through the Stabilisation and Association Process (SAP), the framework for EU negotiations with the Western Balkan countries designed to ensure stability in the potential candidate country through a swift transition to a market economy as well promoting regional cooperation.
As part of the SAP, the potential candidate countries must align their laws with those of the EU, which includes laws that regulate the telecoms and broadcasting market. In return, potential candidate countries receive financial aid to build public institutions and improve cross-border co-operation
The EU’s influence in telecoms sector policy extends beyond the Balkans to Russia, Ukraine and Moldova, which hold formalised relations with the EU through the European Neighbourhood Policy (ENP) for Moldova and Ukraine and the EU-Russia Common Spaces for Russia. Both foreign relations instruments promote within the telecoms sector, among others, full liberalisation of the electronic communications sector and development of a knowledge-based information society.
Most Eastern European countries will enter 2010 following a year of negative GDP growth due to recent global economic turmoil. Spending on telecom services was largely unaffected given the utility nature of most telecom services although the desire to rein in spending influenced certain consumer segments, particularly in price-sensitive market segments such as prepaid services.
Telecom operators were also impacted through increased borrowing costs and for those with borrowings in foreign denominated currencies, increased risk due to a fluctuating exchange rate environment.
A number of governments, facing fiscal deficits due to a combination of decreased tax revenue and increased expenditure on economic stimulus and social security entitlements, introduced or increased tax rates on certain products and services to improve tax revenue, which included telecom services in some countries.
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