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

Denmark ambitious for 1Gb/s fibre access by 2020

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

Denmark enjoys Europe’s highest broadband penetration rate, the result of excellent cross-platform competition, a populace keen to utilise the Internet and IP-delivered services, and a sympathetic regulatory regime which has effectively promoted access to the incumbent’s fixed-line network. The mobile sector has progressed with all four operators encouraging consumer uptake of data services on upgraded HSPA networks, while recent auctions for 2.6GHz spectrum have paved the way for network operators to deploy mobile broadband services based on LTE during 2011. The fixed-line sector continues to contract, as more people forego fixed phones for VoIP and mobile-only solutions.

Telecom revenue recovered slightly in 2009, having fallen in 2008 in part as a result of unfavourable economic conditions. It is expected to show only moderate growth during the next few years, scaled down somewhat through the effects of regulated tariffs on mobile termination rates and roaming, competition among players, as the continuing decline in voice revenue. Investments in the sector have nevertheless weathered the troubled liquidity markets, having risen steadily year-on-year. Still, the proportion of revenue re-invested in telecoms remains among the lowest in the EU. Pressure to maintain the investment momentum during the next few years will partly come from the government, which is keen to see its broadband strategies realised: its ambitious yet realistic aim is to have all households able to access a 10Mb/s Internet service by 2013, and for at least 80% of households to have a 50Mb/s service. By 2020, the government plans to have 1Gb/s services available to most households. This target will require significant upgrades to existing networks, and a wholesale replacement of the legacy copper network with an FttH architecture. To this end the regulator during 2010 instigated a number of measures to facilitate fibre networks builds (mainly concerned with municipal access to infrastructure such as ducts and private roads).

In the mobile sector, the four competing network operators all secured licenses in the 2.6GHz band at auction in May 2010. The technology-neutral spectrum is suitable for 4G wireless broadband services based on standards such as LTE and WiMAX. Long-term investment by these operators will be encouraged by favourable terms, including the 20-year term and no requirements for geographical coverage or deadlines for rollout. Commercial considerations will encourage early deployment of LTE technology – both TDC and 3 Scandinavia were expected to roll out LTE by the end of 2010 or early 2011. This development will fundamentally shift the focus from mobile voice services to high-end data services, and so help increase revenue and ARPU.

Digital switchover in Denmark was completed in November 2009. There are eight nationwide multiplexers for DTTV, including two for public service TV, while one multiplex has been reserved for mobile TV (DVB-H) and two as an ‘innovation reserve’ to ensure that Denmark is prepared to meet future technological changes. In June 2010 broadcasts using the DVB-T2 standard were begun in Copenhagen. As for the remaining two multiplexers, it has not yet been decided whether the affected digital dividend will benefit broadcasters or be allocated for telcos for mobile broadband applications, though the government’s emphasis on fast broadband networks would require more sub-GHz spectrum to be allocated for the latter.

Key telecom parameters – 2009 - 2011

(Source: BuddeComm based on industry data)

Market highlights:

• Mobile network operators from December 2009 have been allowed to reuse spectrum in the 900MHz and 1800MHz bands for 3G services. This development will significantly enhance network capabilities and allow operators to extend their services to rural areas with lower capex.
• Refarmed 900MHz spectrum will allow a new entrant to enter the market from January 2011, with a licence to run until 2034. With the extension of existing licences to 2019 conditions have become more favourable for further investment in networks and technologies.
• Following the award of 2.5GHz spectrum in May 2010, TDC and 3 Scandinavia both planned to launch LTE services by early 2011. LTE will become a cornerstone of MNOs’ strategy in coming years as they exploit the potential of mobile data services and applications.
• Broadband growth continues solidly despite Denmark having the highest broadband penetration in Europe, with household Internet penetration approaching 80% and broadband penetration approaching 40%.
• The government’s broadband strategy has placed unequivocal emphasis on fibre technologies as the basis for the country’s future infrastructure. Anticipating bandwidth demand from consumers has placed FttH rather than FttC as the key platform. Regulatory measures instigated in 2010 should enable 1Gbs services to be widely available by 2020, placing Denmark ahead of most countries globally for super-fast broadband availability.

This report is essential reading for those needing high level strategic information and objective analysis on the telecom sector in Denmark. 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 in 2010;
• 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.