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

Switzerland’s regulated fibre-based NGN an example to Europe

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

The telecom market was worth an estimated CHF18 billion in 2009, showing a negligible 0.5% increase year-on-year compared to a near 8% increase between 2006 and 2007. This has reflected the lower consumer spend resulting from the continuing economic turmoil which has resulted in lower consumer spend on many discretionary telecom services. In addition, revenue has been hit by the continuing effects of falling prices resulting from competition and regulatory measures.

The major operators have maintained their investments in the sector, with the lion’s share being directed to upgrading mobile networks with technologies such as MSPA and, since late 2009, LTE, as also in broadband infrastructure, although the liquidity crisis coupled with and lower operator revenue during the past two years have reduced the cash available. Overall investment fell 14.3% in 2008, year-on-year, and was expected to have fallen by a further 5% in 2009, though figures for both 2010 and 2011 should show a rebound as the liquidity crisis eases and consumer confidence – and higher spending on telecom services – returns.

Overall telecom revenue has been propped up by the broadband and mobile sectors. Mobile tariffs remain above the average EU prices, while local fixed-line calls are also comparatively high. In addition, mobile networks operators in Switzerland do not have to contend with regulated voice and data roaming tariffs, as do their EU counterparts, and so have been able to charge their customers higher rates for these services. There is little prospect that Swiss mobile customers will secure relief from this regulatory anomaly in the near future.

Switzerland has one of the highest Internet penetration rates in Europe, supported by excellent cross-platform infrastructure with near-comprehensive DSL availability and a well-developed cable TV market, a legacy of network builds in the late 1980s. The fibre sector has become increasingly prominent, largely through the competitive pressure which the main cableco UPC has placed on Swisscom.

As UPC has incrementally increased its broadband offerings from 30Mb/s to 100Mb/s – in the process enabling it to test broadcast Switzerland’s first 3D TV programming – Swisscom has been pressed to maintain investment in its VDSL and FttH infrastructure. The build-out of the latter has been greatly facilitated by a number of cooperative deals with municipal and regional utilities, themselves the fruit of regulatory efforts to ensure that costs are kept to a minimum through shared infrastructure. In addition, operators have agreed on uniform technical standards, the laying of multiple fibres (at least four) in every building (the multiple fibre model, much copied elsewhere in Europe), and principles of access on equal terms and conditions. These developments will help propel Switzerland as a real leader in fibre deployment in coming years, while the country’s regulatory approach to fibre network access and wholesale charging will remain an example of an efficient and fair access regime.

Market highlights:

• Swisscom retains a lead in the fixed network voice market but competitors will continue to capture market share through VoIP and cable telephony offerings. In addition, the multiplicity of bundled offers from UPC and other providers, including a number of free call minutes, will further lower the number of Swisscom’s PSTN lines in coming years, thus placing further pressure on the company’s revenue.
• Competitor access to Swisscom’s lines through LLU has been more tightly regulated in recent years, with the result that the number of affected lines has grown rapidly since 2009. However, the investment commitment by Swisscom and regional utilities in building a fibre-based national infrastructure may reduce further investment by ISPs in equipping exchanges. The focus for both the regulator and operators has since shifted to NGN access.
• The regulator’s 2009 spectrum review included releasing digital dividend spectrum in the 790MHz to 862MHz range for mobile services from 2015, as also enabling LTE services in the 2.6GHz band. The spectrum awards will significantly expand mobile broadband to rural areas that cannot be served economically by fixed-line networks, and so help shift the few customers dependent on WiMAX and satellite services to mobile networks.
• UPC has become one of the top players in Europe for network infrastructure, with its 100Mb/s Fiber Power offerings being a market leader in Switzerland. This has prompted Swisscom to commit up to CHF2 billion in fibre infrastructure alone to 2015 in a bid to keep in competition and avoid customer churn.
• Digital switchover in Switzerland has progressed well, with analogue services in German and many French speaking regions having ended. The national digital transmitter network, completed at the end of 2008, had made its possible to receive DVB-T signals throughout the country. With analogue TV transmissions to close by the end of 2010, sub-1GHz spectrum will be made available for mobile broadband and other uses ahead of many other European countries.

Switzerland – key telecom parameters – 2009; 2011

(Source: BuddeComm)

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