2010 Austria - Telecoms, IP Networks, Digital Media and Forecasts

Austria prepares regulatory unbundling measures for fibre network access

BuddeComm’s annual publication, Austria - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets a key central European market.

Although Austria’s telecom market has been progressively liberalised since the early 1990s, the incumbent Telekom Austria has remained the dominant player in all sectors despite Austria having one of the most competitive markets Europe. In the mobile sector, all four network operators are international players, with mobilkom austria having a particularly strong presence in central and eastern Europe. T-Mobile and Orange have the full resources of their parent companies at their disposal, which will help them secure the required technology upgrades for their networks during the next few years. A small number of MVNOs has aided competition, though most resellers are owned and operated by the MNOs in a bid to secure market share in the no-frills segment.

More than 70% of the population uses the Internet, and broadband household penetration at 58% (or about 87% if mobile broadband is taken into account) is above the EU average, largely the result of effectively competing cable and ADSL platforms. The number of fixed lines continues to fall as a result of consumer substitution for VoIP and mobile-only solutions. Together, TA and UPC Austria provide around two-thirds of all fixed broadband connections, with a substantial portion of the remainder provided by a small number of regional cablecos.

Although local loop unbundling was mandated in 2001, Telekom Austria was initially slow to implement its provisions, with the result that competition in the DSL sector fell far below that in other European markets. Amendments to the Telecommunications Act in June 2009 have addressed similar concerns with Austria’s future All-IP NGNs, aiming to provide improved access to existing infrastructure, both telecoms and other infrastructure such as electricity poles and sewage systems. However, the regulator’s proposal that Telekom Austria provide access to its copper network to alternative operators via a virtual unbundling access product – while making it easier for these companies to offer services – nevertheless excludes fibre networks and so does not establish rules to encourage competition in this sector. The EC has appealed to the regulator to ensure full fibre unbundling of TA’s network as soon as it is technically and economically possible.

Telecom revenue has fallen steadily since 2006, in recent years aggravated by unfavourable economic conditions. It is expected to be stable in 2011 and to show only moderate growth to 2013, being hampered by the effects of regulated tariffs on termination rates and mobile roaming, competition among players, as well as the continuing decline in voice revenue. Nevertheless this will be countered by increasing revenue anticipated from mobile data services, and stability in the market for bundled services.

Investments in the sector have also been affected by the troubled liquidity markets, having fallen steadily year-on-year. In common with other European markets, pressure to maintain investment momentum during the next few years will come from mobile operators: the auction for licences in the 2.6GHz spectrum band will enable them to develop their plans to deploy LTE technology, and so establish networks better able to manage bandwidth. This in turn will allow them to capitalise on high-end mobile data applications and services, and so generate higher ARPU.

Digital switchover in Austria progressed earlier than in most other EU countries. Analogue broadcasting was shutdown in Vienna/Lower Austria towards the end of 2007, with other areas achieving ASO sequentially by region. By early 2010 most households had switched to DVB-T, while a few could receive it but were still provided with analogue signals by their local cableco. During the switch-off phase additional space was made available for a further six multiplexes – by mid-2010, 95% of households could receive the channels bundled on MUX A and 87% were within the coverage area of MUX B. Further expansion of the MUX B platform coverage area is not currently planned, while a fourth multiplex (MUX D) has been reserved for mobile broadcasting.

Key telecom parameters – 2009 – 2011

(Source: BuddeComm based on industry data)

Market highlights:

• The 900/1800MHz ranges currently reserved for GSM services are likely to be opened up for additional 3G use when the frequency allocations held by mobilkom austria, T-Mobile and Orange expire at the end of 2015, 2017 and 2019 respectively. This is in line with similar developments elsewhere in Europe where regulators are keen to refarm 2G spectrum to further develop the 3G sector.
• Fibre deployment remains insignificant outside Vienna and a few other major cities. Nevertheless, Telekom Austria has made considerable progress with its national ‘FiberCities’ project, having rolled out FttH to about 150,000 households in Klagenfurt and Villach, providing speeds of up to 1Gb/s. This network complements the company’s VDSL2 strategy in rural areas using existing fibre backbone infrastructure. About 4,000 mobile base stations will also be connected to the network to support the company’s future LTE projects. FttH trials in Vienna are expected to start during the first quarter of 2011.
• All MNOs have advanced plans for LTE roll-outs, with T-Mobile as early as October 2009 having reached data rates at over 130Mb/s. In June 2010 the operators tested LTE in Vienna and Innsbruck using the 2.6GHz band using equipment from Huawei, while H3 has contracted NSN and Orange Ericsson. Mobilkom austria (also with Huawei) demonstrated LTE in July 2010 in Vienna. The technology should see commercial launched during 2011.
• The satellite TV sector is particularly strong in Austria, with the Astra system the market leader: about two thirds of digital TV households are Astra subscribers. Among DTH households, digital satellite has an 89% market share, compared to 39% for digital cable networks. The market has sufficient room to expand, with Austriasat introduced as a new competitor in late 2010.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Austria. 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 new spectrum auctions and 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.
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Data in this report is the latest available at the time of preparation and may not be for the current year.