Romania - Telecoms, IP Networks, Digital Media and Forecasts

Publication Overview

This report provides a comprehensive overview of trends and developments in Romania’s telecommunications market. The report analyses the mobile, broadband, digital TV and converging media sectors. Subjects include:

• Market and industry analyses, trends and developments;
• Facts, figures and statistics;
• Industry and regulatory issues;
• Infrastructure;
• Major players, revenues, subscribers, ARPU, MoU;
• Internet, VoIP, IPTV;
• Mobile voice and data markets;
• Broadband (FttH, DSL, cable TV, wireless);
• Convergence and digital media;
• 3G subscriber and mobile ARPU forecasts to 2015;
• Broadband market forecasts for selective years to 2020.

Key developments:

New EU roaming tariffs come into effect; RCS&RDS upgrades mobile broadband speeds; regulator reduces fixed-line and mobile termination rates for 2012; Orange and Vodafone have licences extended; Ministry of Defence encouraged to release 800MHz and 2600MHz spectrum for commercial LTE; Orange extends HSPA+ network; regulator issues guidelines on MVNO market entry; Cosmote reports fall in revenue in 2011; regulator prepares auction for 4G frequencies; Regulator proposes 2012 auction for national and regional BWA licences; government secures €84 million EU funding to extend broadband to unconnected areas of the country; UPC Romania extends 120Mb/s Business Fiber Power to 13 cities; low rural PC use poses brake for broadband take-up; Weakened currency contributing to decline in telecom market revenue; OTE declines to buy government’s share in RomTelecom; regulator’s H1 2011 market data; operator data to end-2011; market developments into 2012.

Companies covered in this report include:

Vodafone Romania, Orange Romania, Cosmote Romania, DigiMobil, Telemobil, UPC Romania, RCS&RDS, DigiTV, Boom TV, Dolce; GTS Telecom, Romtelecom, SN Radiocomunicatii.

Researcher:- Henry Lancaster
Current publication date:- April 2012 (10th Edition)

Executive Summary

Tender for LTE licences in 2012 a key step to developing mobile broadband

BuddeComm’s biannual publication, Romania - 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 more prominent emerging markets. It includes the regulator’s market report to June 2011, operator data to the end of 2011 and market developments into 2012.

One of the newest members of the European Union (EU), Romania experienced rapid economic growth in the years leading to and immediately after EU ascension. This growth was halted by the global financial crisis: real GDP contracted by 7.1% during 2009, though economic recovery was evidenced during 2011 and IMF anticipated growth of 2% for 2012, which remains higher than the EU average.

Continuing economic difficulties and the necessity to impose unpopular measures (including increases in the sales tax and a sharp reduction in public workers’ salaries) led to the resignation of the Romanian Prime Minister and cabinet in early 2012. The new Prime Minister, heading a Democrat Liberals government widely seen as corrupt, pledged to continue with economic reforms, though these may be undermined if a new government is formed after the November 2012 elections.

These difficulties have affected the telecoms sector, where revenue has fallen steadily in recent quarters. This has been mirrored by lower investment in the sector.

Nevertheless, on a general level EU accession has led to a liberalised fixed-line market which has encouraged competition. The regulator has also imposed a number of measures, in both the fixed-line and mobile sectors, to reduce interconnection rates and so lower prices for consumers.

There remain considerable growth opportunities in the broadband sector, mainly due to the poor infrastructure in rural areas and relatively low PC penetration. The number of Romanians which have never used the internet is far higher than the European average. To address poor broadband connectivity the government planned, by 2015, to extend broadband services to 90% of the estimated 3,600 broadband ‘white spaces’. Funding is being provided from public sources as also from the EU which has contributed some €84 million thus far.

Romania’s competitive mobile market is served by MNOs utilising a mixture of 2G and 3G technologies, while investment is continuing to upgrade networks with LTE and HSPA+. The tender for four LTE licences in the second half of 2012 will be a crucial step to enabling Romania’s MNOs to develop mobile broadband. The concessions for the use of frequencies in the 800MHz, 900MHz and 2600MHz bands will provide some diversity for operators to extend networks in both rural and urban environments.

Key telecom parameters – 2010; 2012

(Source: BuddeComm)

Market Highlights

• The underdeveloped mobile content and applications market holds significant growth potential in coming years: mobile content and application usage is low, while increasing mobile broadband affordability and improving handset and network capabilities will encourage development and uptake.
• RCS&RDS has upgraded its mobile broadband network in a number of cities, and is expected to expand its network to rural areas during the next few years.
• The regulator’s proposals for awarding licences in the 2500-2690MHz and 790-862MHz bands should lead to rights to use spectrum in late 2012, with operators able to deploy services from early 2013. The move will greatly improve rural broadband availability given the poor fixed-line infrastructure in these areas.
• RomTelecom’s steady fall in revenue since has placed further pressure on the company to reduce its workforce, improve operations and increase efficiency. The company has successfully reduced operating expenses since 2010 though competition from RCS&RDS and UPC Romania will continue to threaten its market share in most sectors.
• CATV remains the most popular broadcasting platform in Romania. Although programming is offered by over 500 providers, the market is dominated by UPC Romania and RCS&RDS, which represent over 60% of total CATV subscribers. The number of subscribers has fallen steadily since 2008, threatening future revenue.
• In the DTTV sector, ASO was set back to 2015 but during 2011 the Audiovisual Council has progressed with issuing digital TV licenses: the first multiplex will be granted by the end of 2012, the next three in 2013 and the last in late 2015 once analogue broadcasting has stopped.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Romania. 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;
• 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.

Data in this report is the latest available at the time of preparation and may not be for the current year.

Table of Contents

• 1. Key Statistics
• 2. Telecommunications Market
  • 2.1 Economic background
  • 2.2 Overview of Romania’s telecom market
• 3. Regulatory Environment
  • 3.1 Overview
    • 3.1.1 EU regulatory framework
    • 3.1.2 Revised NFR
  • 3.2 Regulatory authority
    • 3.2.1 National Authority for Management and Regulation in Communications (ANCOM)
  • 3.3 Telecom sector liberalisation in Romania
    • 3.3.1 Privatisation
    • 3.3.2 Access
    • 3.3.3 Interconnect
    • 3.3.4 Carrier selection and carrier PreSelection
    • 3.3.5 Number portability
• 4. Fixed Network Market In Romania
  • 4.1 Overview of operators
    • 4.1.1 RomTelecom
  • 4.2 Alternative operators
    • 4.2.1 RCS&RDS
    • 4.2.2 UPC
    • 4.2.3 GTS Telecom
    • 4.2.4 SN Radiocomunicatii (Radiocom)
• 5. Telecommunications Infrastructure
  • 5.1 National telecom network
    • 5.1.1 RomTelecom
    • 5.1.2 Alternative operators
  • 5.2 International infrastructure
• 6. Internet Market
  • 6.1 Overview
  • 6.2 Romania’s emerging internet society
  • 6.3 E-government
    • 6.3.1 Infrastructure
  • 6.4 E-health
• 7. Fixed Broadband Market
  • 7.1 Overview
  • 7.2 Fixed broadband statistics
  • 7.3 Cable modems
  • 7.4 Asymmetric Digital Subscriber Line (ADSL)
  • 7.5 Local Area Networks (LANs)
  • 7.6 Fibre-to-the-Home (FttH) networks
  • 7.7 Wireless broadband
    • 7.7.1 WiFi
    • 7.7.2 WiMAX
  • 7.8 Mobile broadband
• 8. Digital Media
  • 8.1 Overview of digital media
  • 8.2 Business models – bundled services
• 9. Digital TV
  • 9.1 Digital Terrestrial TV (DTTV)
  • 9.2 Broadband TV (IPTV)
  • 9.3 Cable TV (CATV)
    • 9.3.1 UPC Romania
    • 9.3.2 RCS&RDS
  • 9.4 Satellite-based digital pay TV developments
    • 9.4.1 DigiTV
    • 9.4.2 Focus Sat/UPC
    • 9.4.3 Digital Cable System (DCS)/Max TV
    • 9.4.4 Boom TV
    • 9.4.5 Dolce
• 10. Mobile Communications
  • 10.1 Overview of Romania’s mobile market
  • 10.2 Mobile statistics
  • 10.3 Regulatory issues
    • 10.3.1 Third Generation (3G) licences
    • 10.3.2 450MHz licence awarded
    • 10.3.3 900MHz band
    • 10.3.4 2.5GHz band
    • 10.3.5 Mobile Number Portability (MNP)
    • 10.3.6 Mobile Termination Rates (MTR)
    • 10.3.7 Roaming
  • 10.4 Mobile technologies
    • 10.4.1 Third Generation (3G) mobile
  • 10.5 Major mobile operators
    • 10.5.1 Vodafone
    • 10.5.2 Orange
    • 10.5.3 Cosmote Romania/Cosmorom
    • 10.5.4 DigiMobil
  • 10.6 Mobile Virtual Network Operators (MVNOs)
  • 10.7 Mobile voice services
    • 10.7.1 Prepaid services
  • 10.8 Mobile data services
    • 10.8.1 Short Message Service (SMS)/Multimedia Messaging Service (MMS)
    • 10.8.2 General Packet Radio Service (GPRS)
    • 10.8.3 Enhanced Data for GSM Evolution (EDGE)
    • 10.8.4 Evolved High Speed Packet Access (HSPA+)
    • 10.8.5 Long-term Evolution (LTE)
    • 10.8.6 Broadband wireless data service (1x EV-DO)
    • 10.8.7 Mobile TV
  • 10.9 Mobile content and applications
    • 10.9.1 Orange World
• 11. Forecasts broadband – 2010 - 2013; 2020
  • 11.1 Scenario 1 – stronger broadband subscriber growth
  • 11.2 Scenario 2 – slower broadband subscriber growth
  • 11.3 Notes on scenario forecasts
• 12. Glossary of Abbreviations

• Table 1 – Country statistics – 2011 (e)
• Table 2 – Telephone network statistics – 2011
• Table 3 – Internet user statistics – 2011
• Table 4 – Internet subscriber statistics – 2011
• Table 5 – Broadband statistics – 2011
• Table 6 – Mobile statistics – 2011
• Table 7 – National telecommunications authority
• Table 8 – Telecom market revenue (RON) – 2006 - 2012
• Table 9 – Revenue change for telecom services – 2006 - 2010
• Table 10 – Cost of local loop unbundling and shared access – 2006 - 2009
• Table 11 – Wholesale lines available, by type – 2008 - 2010
• Table 12 – Network interconnection rates – 2006 - 2009
• Table 13 – CS and CPS providers, fixed network – 2008 - 2011
• Table 14 – CS and CPS lines – 2008 - 2011
• Table 15 – Fixed number portings – 2008 - 2011
• Table 16 – Fixed number portings as share of total lines– 2008 - 2011
• Table 17 – Fixed-line market share by traffic – 2008 - 2010
• Table 18 – Fixed-line market share by subscribers – 2008 - 2011
• Table 19 – Fixed-lines, by operator – 2008 - 2011
• Table 20 – RomTelecom revenue – 2005 - 2011
• Table 21 – RomTelecom fixed-line telephony subscribers – 2006 - 2011
• Table 22 – Fixed lines in service and teledensity (by population) – 2000 - 2012
• Table 23 – Fixed-line teledensity (by household) – 2006 - 2012
• Table 24 – Total international Internet bandwidth – 2000 - 2011
• Table 25 – Internet penetration among businesses by employee size – 2004 - 2010
• Table 26 – E-education usage by individuals – 2007 - 2011
• Table 27 – E-education usage by businesses – 2009 - 2011
• Table 28 – Online purchases by individuals – 2005 - 2011
• Table 29 – Uptake of e-government services by businesses – 2004 - 2011
• Table 30 – Uptake of e-government services by individuals – 2004 - 2011
• Table 31 – Internet users, subscribers and penetration – 1999 - 2013
• Table 32 – Fixed broadband providers by access type – 2008 - 2011
• Table 33 – Broadband subscribers by access type – 2008 - 2012
• Table 34 – Proportion of fixed broadband subscribers by access type – 2008 - 2011
• Table 35 – Fixed broadband subscribers and penetration rate – 2002 - 2012
• Table 36 – Internet access revenue – 2008 - 2012
• Table 37 – Fixed broadband subscribers by data speed – June 2011
• Table 38 – Cable broadband subscribers by access type – 2008 - 2010
• Table 39 – RomTelecom broadband subscribers – 2005 - 2011
• Table 40 – FttH broadband subscribers – 2008 - 2012
• Table 41 – Fibre broadband subscribers by type – June 20112
• Table 42 – WiFi hotspot locations – 2008 - 2012
• Table 43 – Mobile broadband connections – 2008 – 2012
• Table 44 – Bundled service subscribers by type – Jun 2011
• Table 45 – Digital TV subscribers by platform – 2009 – 2012
• Table 46 – IPTV subscribers – 2008 – 2013
• Table 47 – CATV subscribers, analogue and digital – 2008 – 2013
• Table 48 – UPC Romania – homes passed – 2006 - 2011
• Table 49 – UPC Romania – subscribers by service type – 2006 - 2011
• Table 50 – Satellite TV subscribers – 2008 – 2012
• Table 51 – Dolce subscribers – 2007 - 2011
• Table 52 – Overview of spectrum allocations – 2012
• Table 53 – Mobile subscribers (active SIM) and penetration rate – 1997 - 2013
• Table 54 – Mobile traffic – 2009 - 2013
• Table 55 – Mobile market revenue – 2008 - 2013
• Table 56 – Overview of mobile services by operator – 2012
• Table 57 – Mobile number portings – 2008 - 2011
• Table 58 – Mobile number portings as share of total lines– 2008 - 2011
• Table 59 – Vodafone subscribers and voice minutes – 2008 - 2011
• Table 60 – Vodafone ARPU – 2008 - 2011
• Table 61 – Vodafone revenue – 2009 - 2011
• Table 62 – Orange subscribers – 2007 - 2011
• Table 63 – Orange annualised ARPU, data ARPU as proportion to total – 2008 - 2011
• Table 64 – Orange mobile revenue – 2008 - 2011
• Table 65 – Cosmote Romania financial data – 2006 - 2011
• Table 66 – Cosmote Romania subscribers – 2006 - 2011
• Table 67 – Cosmote Romania ARPU – 2006 - 2011
• Table 68 – Zapp subscribers – 2009 - 2010
• Table 69 – Ratio of prepaid to postpaid subscribers – 2000 - 2013
• Table 70 – Vodafone prepaid subscribers – 2005 - 2011
• Table 71 – Cosmote Romania prepaid subscribers – 2008 - 2011
• Table 72 – Total MMS messages sent – 2008 - 2013
• Table 73 – Total SMS messages sent – 2005 - 2013
• Table 74 – Forecast fixed broadband subscribers – higher growth scenario – 2010 - 2013; 2020
• Table 75 – Forecast fixed broadband subscribers – lower growth scenario – 2010 - 2013; 2020

• Chart 1 – Telecom market value (RON) – 2006 – 2012
• Chart 2 – Wholesale lines available, by type – 2008 - 2010
• Chart 3 – Fixed lines in service and teledensity – 2000 – 2012
• Chart 4 – Fixed broadband subscribers and penetration rate – 2002 – 2012
• Chart 5 – Cable broadband subscribers by access type – 2008 – 2010
• Chart 6 – UPC – subscribers by service type – 2006 – 2011
• Chart 7 – Mobile subscribers (active SIM) and penetration rate – 2000 – 2013
• Chart 8 – Vodafone subscribers and voice minutes – 2008 – 2011
• Chart 9 – Vodafone ARPU – 2008 – 2011
• Chart 10 – Vodafone revenue – 2009 – 2011
• Chart 11 – Orange subscribers – 2007 – 2011
• Chart 12 – Orange annualised ARPU, data ARPU as proportion to total – 2008 – 2011

• Exhibit 1 – The EU regulatory framework for communications
• Exhibit 2 – Access, the local loop and unbundling – an overview
• Exhibit 3 – Overview of digital media