EU Candidate Countries: Telecom Markets - Final Report

IBM Business Consulting Services (formerly PwC Consulting) was commissioned by the Directorate General Information Society of the European Commission to prepare four reports tracking the development of the telecommunications services markets in the EU candidate countries (Bulgaria, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia, Slovenia and Turkey).

The fourth and final report was released December 16. It makes interesting reading. Lots of work required for NRAs. Here’s a summary:

The retail price data show substantial differences between countries in the degree of rebalancing that has taken place so far. Wholesale prices, as reflected in interconnection charges, range from close alignment with the EU market (eg in Estonia) to a complete absence of published figures (eg Slovakia and Turkey). In several countries retail and wholesale prices are close enough together to deter competitive market entry. There are some important gaps where data are not available on a consistent basis or are not published.

In seven countries, the state still holds a controlling stake in the fixed incumbent operator. Competition is gradually developing in the twelve countries where the fixed market is legally open but the degree of progress varies widely. There is little or no competition in the area of local access in most countries.

The share of the whole market represented by mobile services continues to rise and, in revenue terms, has now exceeded the share of fixed voice services in eight candidate countries. The major drivers for the growth are Internet dial-up and the mobile segment. Mobile penetration varies greatly from as little as 26% to 88% with an average penetration reaching 43% in June 2003. The growth in the countries with above average penetration is mainly driven by pre-paid packages. The level of mobile penetration has a stronger correlation with the level of GDP per capita in EUCCs than does the fixed line penetration.

The slow pace of price rebalancing is reflected in the relatively low monthly rental fees. The prices of national fixed calls are lower than but comparable to prices in EU Member States in nominal terms. The prices of international calls vary greatly and in some countries are much higher than the EU average prices. On the other hand, a positive effect of the competition (either traditional or VoIP telephony) can be observed in this field.

National Regulatory Authorities have been established in all countries.

Fixed-to-fixed interconnection is operational in ten countries and the non-discrimination rules are applied to termination in fixed network in these countries, i.e. the charges for terminating fixed and mobile calls are equal. The level of interconnection charges for termination in the fixed network varies and is very high in several countries. The price of fixed-to-mobile interconnection is less variable and marginally below the level existing in EU. Reference Interconnection Offers for fixed incumbent operators had been published in eight countries and drafts were available in three more.

The availability of carrier selection has increased but was operational in only five countries. All accession countries except one plan to be full compliant in respect of long distance and international by the end of 2003.

The figures relating to Internet penetration vary widely and their reliability and comparability are questionable. The share of broadband access (via ADSL or CaTV networks) is increasing rapidly from a low base but narrowband access still predominates. Assessed prices for dial-up connection to the Internet show great differences between individual countries.