2010 Czech Republic - Telecoms, Mobile, Broadband and Forecasts

One of the ten countries that joined the European Union in May 2004, the Czech Republic enjoyed the following period of rapid economic growth. However despite holding a strong macroeconomic position, characterised by low inflation, low interest rates and a conservative banking sector, the Czech Republic was affected by the global financial turmoil due to weakening demand for its export products as well as decreased risk appetite among global investors.

Like many sectors of the economy, the country’s telecoms market underwent reform to align itself with that of the EU. This included full market liberalisation although the delay in implementing effective regulation to ensure fair competition has forced many struggling alternative operators to merge. Conditions are expected to improve as the regulator continues to gain experience in ensuring fair competition.

The Czech fixed broadband market continues to experience significant growth on the back of infrastructure-based competition, with the Czech Republic maintaining its unique status in Eastern Europe of possessing a sizeable fixed wireless broadband market. A technology upgrade by a major cable operator has allowed it to offer connections of equivalent capability to that of fibre.

Over half of the population receives TV services digitally. Take up of IPTV services is growing on the back of more affordable broadband access while analogue switch-off continues on a regional basis in the Free-to-Air broadcasting market. Digital satellite TV services are widely available from a number of competing platforms and the only major cable TV operator has commenced regular broadcasts of 3D programming.

The Czech Republic possesses a well-developed mobile market, with SIM card penetration levels in excess of 100%. With mobile voice markets saturated and opportunities for new mobile subscriber additions minimal, the three established mobile network operators have focused on improving Average Revenue per User levels, which have fallen due to competition and tariff regulations issued by the regulator. Strategies include encouraging take up of mobile broadband services and expanding into offering fixed-line voice and data services, initially focusing on the business market but later expanding into the residential market.

Market highlights:

• Healthy infrastructure-based competition is evident in the fixed broadband market. Despite strong competition from the incumbent’s DSL offering, cable, fibre and wireless have maintained their respective proportion of the growing fixed broadband market due to technology upgrades such as DOCSIS 3.0, allowing speeds of up to 120Mb/s.
• Internet society-based services are becoming increasingly popular, with an estimated one-third of the population using e-government services and one in ten registered for the government’s electronic healthcare record system, which allows patients to easily access and control usage of their health care records.
• Despite contracting in 2009, the broadcasting market is expected to turn around as advertising spend mirrors the growth path of the overall economy. Digital TV continues to make inroads into the overall broadcasting market, ahead of an analogue switch-off target date of 2012.
• Mobile broadband has grown faster than the fixed broadband market and the overall mobile market, highlighting its importance as a growth opportunity. Mobile operators have broadened product portfolios through acquisition of fixed-line operators to compete head-to-head with the incumbent.

Czech Republic – key telecom parameters – 2009 - 2010

(Source: BuddeComm based on industry data)

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