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

Sweden’s three LTE operators to provide near national coverage by 2012

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

Sweden’s telecom market increased 1% in 2009 and an estimated 1.5% in 2010. In this respect, the country has bucked the trend commonly seen elsewhere in Europe where the telecom sector revenue has slid in line with falling GDP. The market has continued the trend for consumer migration to mobile voice and data services at the expense of fixed-line telephony.

More calls are now made via mobile networks than the fixed network, while there are as many mobile broadband subscriptions as there are via the copper network. The value of the fixed-line sector has fallen since 2005 under the impact of cheaper mobile call rates and the wider use of mature and commercialised VoIP services. More than a third of the population only use mobile phones for calls, having ditch fixed-line telephony altogether.

Sweden was the first country in Europe to develop a broadband policy, as early as 1999. The country now has one of the highest broadband penetration rates in the region, and ranks among the top countries within the OECD. DSL is the principal medium for broadband access, while cable also has a significant footprint and fibre networks have expanded rapidly. Given this excellent infrastructure, WLAN, BPL and satellite technologies have only a niche presence.

Broadband growth in Sweden has been driven by some of the lowest access prices in Europe, and strong government support. Overall Internet revenue increased by an estimated 4% in 2010, largely due to the growth in the number of subscribers since broadband ARPU has fallen in response to pricing competition among players.

Sweden is one of the world’s leading countries for fibre deployment. This has been encouraged by the high proportion of the population which live within the greater areas of the three largest cities, many of whom live in apartment buildings. These were among the first areas to be covered by fibre, given the cheaper infrastructure costs incurred.

A large proportion of Swedes also live in small towns and villages, many now being served by muni fibre as operators extend their networks to these areas. Operators have been able to bear the additional cost of building networks in semi-urban environments because uptake among customers is sufficiently strong, while in the more rural areas Swedes have been able to perform much of the civil engineering themselves.

The country was the first in the EU to develop widespread local access fibre infrastructure. Numerous networks open to a range of content and service providers have been built by organisations other than telcos, including municipalities, regional governments, housing associations and local utilities. Municipal and local area networks have quadrupled in reach since 1999.

Mobile penetration in Sweden far exceeds the EU average. Market saturation has led to slower subscriber growth in recent years (the increase in the number of subscribers since 2008 has been entirely through 3G). This has been mirrored by greater consumer uptake of mobile data services made possible by significant network investment, particularly in HSPA and LTE networks: sector investment reached about €180 million in 2009 and an estimated 200 million in 2010.

In addition, consumers are moving to mobile telephony for the majority of calls – in 2007 for the first time, total revenue from services in mobile networks exceeded fixed telephony revenue, while in the first half of 2010 the volume of mobile outgoing call minutes overtook fixed minutes for the first time. In addition, a third of all broadband subscriptions are for mobile broadband services provided by MNOs.

Sweden also has one of the most developed digital TV markets in the Nordic region. The government awarded multiplex licences as early as 1998. Multiplex ownership is separated from content broadcast over them: Teracom built, owns and operates the digital TV multiplex. When the DTTV network was launched in early 1999, Sweden was only the second country in Europe to have the system. The five-stage phased analogue switch-over process was completed by late 2007, ahead of schedule.

Key telecom parameters – 2009 – 2011

(Source: BuddeComm)

Market highlights:

• Over half of all TV homes in Sweden have a cable TV connection. Com Hem, the country’s leading cable broadband and TV operator, was put up for sale by its owners at the end of 2010. The company’s profitability and growing subscriber base will make this one of the key transactions in the sector in 2011. Around 95% of the operator’s network, passing some 1.76 million homes, can provide a 100Mb/s service, which should shield it from customer churn to the growing reach of fibre networks
• The planned auction of the 800MHz frequency band in early 2011 will provide 15-year national licences free for mobile broadband services. Given that the 800MHz band is suitable for wide-area coverage in sparsely populated areas, the regulator has imposed coverage requirements on one of the licences for areas with poor broadband access. This will go some way to meeting the objectives of the government’s Broadband Strategy programme. Sweden is also among the leading EU countries to assign 900MHz spectrum for 3G use.
• Mobile data use has grown considerably since 2007, and is set to grow more rapidly during the next few years at TeliaSonera’s LTE network expands to 28 or more of the principal cities. In addition, Net4Mobility (the joint project of Telenor and Tele20) launched commercial LTE offers in late 2010 and expected to cover 99% of the population by the end of 2012, providing speeds of up to 80Mb/s in rural areas and up to 150Mb/s in urban areas. Data traffic is expected to pass 50,000TB in 2012, compared to 13.7 in 2009.
• Swedish municipal broadband has successfully adopted the ‘stadsnätt’ urban area network model, by which a city builds and administers fibre infrastructure which is then rented at cost price to service providers which set up their own transmission equipment. In Stockholm more than 30 organisations have built their facilities through the municipality’s open fibre network, operated by Stokab. The model has been adopted elsewhere in Europe, notably in the Netherlands, in a bid to extend fibre deeper into the regions.

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