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Candidate Countries: telecommunications services sector

Report on the telecommunications services sector in EU candidate countries

The telecommunications services market in the EU has been entirely liberalised by law and the European Commission routinely monitors the development of the market as part of its ongoing efforts to ensure that liberalisation has been effective. The ten accession countries (which are scheduled to join the EU on 1/5/2004) and the three remaining candidate countries are all committed to liberalising their telecommunications markets.

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 work has been done with the full cooperation of the national authorities.

The 4th and final report of the series has just been released. It is intended to help those interested in the state of the markets in the accession countries; whether as service providers, investors, potential investors, consumers, policy makers or as regulators.

The first three reports had shown countries making a good start in allowing market entry on a competitive basis, particularly in the five countries which had scheduled complete liberalisation in 2001 or 2002. With the exception of Turkey, all the other countries chose 1/1/2003 as the date for complete liberalisation. This last report presents how effective each country has been so far, in implementing market opening policies.

The main part of the report is split into 13 sections in which data for all countries are presented side by side. This is followed by a country-by-country overview. Except where stated otherwise, the information was collected with the help of the local National Regulatory Authorities and/or Ministry representatives. The reference date for most of the data is either 30 June 2003 (for status indicators) or calendar year 2002 (for cumulative indicators).

A downloadable version of the report is available on Europa

Summary of the 4th Report

The situation described is one of transition towards integration with the EU internal market. 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.