2011 Czech Republic - Telecoms, IP Networks, Digital Media and Forecasts

Publication Overview

This report provides a comprehensive overview of trends and developments in the Czech telecommunications market. The report analyses the mobile, Internet, broadband, digital TV and converging media sectors. Subjects include:

  • Market and industry analyses, trends and developments;
  • Facts, figures and statistics;
  • Industry and regulatory issues;
  • Infrastructure;
  • Major players, revenues, subscribers, ARPU, MoU;
  • Internet, VoIP, IPTV;
  • Mobile voice and data markets;
  • Broadband (FttH, DSL, cable TV, wireless);
  • Convergence and digital media;
  • 3G subscriber and mobile ARPU forecasts to 2015;
  • Broadband market forecasts for selective years to 2020.

Key developments:

Wireless broadband remaining popular; Vodafone launches VDSL2 services; RIO Media building one of the largest FttH networks; BPL in Prague a success through SmartCity Platform; total broadband subscriber base approaches three million; T-Mobile, O2 and Vodafone alliance to promote m-payment services; T-Mobile extends HSPA+ coverage to most of the population; Telefónica and T-Mobile sign six-year 3G network sharing agreement; mobile market revenue grew 1.9% in 2010 to CZK45.2 billion; Telefonica approaches 66% 3G population coverage through network sharing deal with T-Mobile; Vodafone looks to upgrade half of its 3G network with 21.6Mb/s HSPA+ by March 2012; regulator decides to close analogue NMT network; mobile ARPU continues to fall; Telefónica launches joint network monitoring centres for operation in Germany and Slovakia; First DDTV multiplex reaches 100% coverage; ASO on CT1 and CT2 nears completion; Ceske Radiokomunikace buys CDG to control three muxes; SkyLink bought by M7 Group; DVB-T2 trials underway; CRa merges with majority shareholder MCCH; VOLNY transfers DSL subscribers to O2 and sues for CZK4 billion; stagnant economy since 2008 affecting consumer spend on telecom services: telecom revenue falls 4.8% in 2010; recovery in 2011 with GDP to grow 1.6-2.2%; regulator’s 2010 annual report and market update to September 2011; operator data to September 2011.

Companies covered in this report include:

Telefónica Czech, T-Mobile, GTS Czech, Èeské Radiokomunikace, T-Systems Czech Republic, BT, ÈD-Telematika, ÈEZ ICT Services and UPC Èeská republika, Vodafone Czech, MobilKom, DigiTV, CRa, CDG, Nej TV, RIO Media.

Researcher:- Henry Lancaster
Current publication date:- December 2011 (10th Edition) 

Executive Summary

Anticipated GDP growth expected to slow down decline in telecom revenue in 2012

BuddeComm’s quarterly publication, Czech Republic - Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in one of Europe’s most dynamic markets struggling to overcome larger economic difficulties. It includes the regulator’s 2010 annual report market data and updates to September 2011, as well as operator data to the third quarter of 2011.

The Czech economy has been affected by the global financial turmoil due to weakening demand for its export products. The Czech National Bank (CNB) estimated that the economy will have stagnated for four years before showing some recovery by the end of 2011: the economy is roughly at the level it was at the end of 2007. The recovery process is jeopardised by inflationary pressures caused by a growth in costs for oil, food and raw materials, counteracted by the strengthening Czech currency. The CNB predicted that the Czech GDP would grow 1.6% year-on-year in 2011, though the Finance Ministry has suggested a 2.2% growth. Nevertheless, telecom sector revenue fell by nearly 5% in 2010, year-on-year, and though a brighter economic forecast promises higher consumer spend, regulatory measures will continue to dampen revenue for operators.

The Czech Republic joined the European Union (EU) in 2004, and thereafter the country’s telecoms market was reformed in common with EU Directives. This included full market liberalisation, which resulted in alternative operators being able to launch services competing with the incumbent, then known as Cesky Telecom and since branded as Telefónica O2 CR.

The fixed broadband market continues to show significant growth in the wake of falling prices. Fixed wireless broadband remains popular, having shown initial growth while nascent DSL and cable networks were being built: wireless broadband usage is among the highest in the EU. The fibre-to-the-home (FttH) sector is also experiencing rapid growth, while broadband access has laid the foundation for a developing internet Society, with a range of online services and activities taking place.

The Czech Republic’s media market is evolving under the weight of digital TV and convergence trends, with over half the population receiving TV services digitally. The uptake of IPTV services is growing on the back of more affordable broadband access while the cable TV market has undergone consolidation to create a major player with sufficient size to compete effectively against Telefónica O2 CR. Analogue switch-off is continuing on a regional basis before the process is completed at the end of 2012. Digital satellite TV services are widely available from a number of competing platforms.

The well developed mobile market has among the highest SIM card penetration levels in Eastern Europe, far above the EU average. With mobile voice markets saturated and opportunities for new mobile subscriber additions minimal, the three established mobile network operators have focused on developing ARPU, which have fallen as a result of market competition and regulatory measures: strategies include migrating prepaid users to contract plans and encouraging take up of mobile broadband services. To this end considerable investment has been made in upgrading HSPA networks across the country. MNOs have also expanded into offering fixed line voice and data services.

Key telecom parameters – 2010; 2012

Sector

2010

2012 (e)

Broadband:

Fixed broadband subscribers (million)

2.30

2.79

Fixed broadband penetration rate

22%

26%

Mobile broadband subscribers (thousand)

505

760

Subscribers to telecoms services:

Fixed-line telephony (million)

2.05

1.85

Mobile phone (million)

14.33

14.60

Mobile SIM penetration (population)

139%

144%

(Source: BuddeComm)

Market Highlights

  • T-Mobile has expanded its HSPA+ coverage, reaching 43% of the population (97 cities and larger municipalities, as well as some 230 smaller towns) by mid-2011. National coverage is expected by 2013, delivering capable mobile broadband to rural areas.
  • The regulator’s decision to switch off analogue mobile services based on the NMT system will allow the spectrum to be reassigned. Telefónica stopped using NMT for voice services in 2006, instead using the band to support for CMDA data transfer for mobile broadband.
  • Despite difficulties in other European markets, Telefónica, T-Mobile and Vodafone are developing a DVB-H mobile TV network in the Czech Republic based on trials undergone since 2008.
  • The alliance among MNOs to promote m-payment services, using a joint ‘Plat mobilem’ (Pay by Mobile) logo, should rapidly expedite market developments in coming years given the propensity for Czechs to use cash rather than credit cards for most purchases.
  • Vodafone CR launched VDSL2 services in mid-2011, delivering up to 25Mb/s to a third of the population.
  • In 2010, total revenues from electronic communications fell 4.8% year-on-year to CZK126.5 billion. The largest fall was in the mobile sector, which fell 7.9% to CSK74.4 billion. Nevertheless, overall investment in networks and telecoms services increased 4.1% in 2010 to CZK 15.02 billion. Respectable growth in GDP expected for 2011 and 2012 promises some recovery in consumer spend and telecom sector revenue.
  • With the switch to DTTV progressing, the first multiplex now reaches nearly 100% of the population, the second multiplex covers over 89%, the third over 85% and the fourth 25% (concentrated on Prague, Plzen, Brno and Ostrava).

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

Table of Contents

  • 1. Key Statistics
  • 2. Telecommunications Market
    • 2.1 Overview of the Czech Republic telecom market
  • 3. Regulatory Environment
    • 3.1 Background
      • 3.1.1 EU Regulatory Framework
      • 3.1.2 Revised NFR
    • 3.2 Regulatory authority
      • 3.2.1 Czech Telecommunications Office (CTO)
    • 3.3 Telecom sector liberalisation in the Czech Republic
    • 3.4 Privatisation
      • 3.4.1 Ceske Radiokomunikace
      • 3.4.2 Telefónica O2 CR
    • 3.5 Interconnect
    • 3.6 Carrier selection and carrier preselection
    • 3.7 Number portability (NP)
    • 3.8 Access
  • 4. Fixed Network Market
    • 4.1 Overview of operators
    • 4.2 Telefónica O2 Czech Republic
    • 4.3 Ceske Radiokomunikace (CRa)
    • 4.4 GTS Czech
    • 4.5 CD-Telematika (CD-T)
    • 4.6 VOLNÝ
  • 5. Telecommunications Infrastructure
    • 5.1 Telefónica O2 CR
    • 5.2 Alternative operators
    • 5.3 Telecoms & IT
    • 5.4 Wholesaling
      • 5.4.1 Overview
  • 6. Broadband Market
    • 6.1 Fixed broadband market
      • 6.1.1 Overview
      • 6.1.2 Cable modems
      • 6.1.3 Asymmetric digital subscriber line (ADSL)
      • 6.1.4 Fibre-to-the-home (FttH) networks
      • 6.1.5 Broadband over powerline (BPL)
    • 6.2 Wireless broadband market
      • 6.2.1 Overview
      • 6.2.2 WiFi
      • 6.2.3 Wireless local loop (WLL)
      • 6.2.4 WiMAX
      • 6.2.5 Mobile broadband
  • 7. Digital Economy
    • 7.1 Market overview
    • 7.2 Strategy
    • 7.3 Legislation
    • 7.4 E-government
      • 7.4.1 Infrastructure
    • 7.5 E-health
  • 8. Digital Media
    • 8.1 Overview of broadcasting market
      • 8.1.1 Czech Television (CT)
      • 8.1.2 TV Nova
      • 8.1.3 Prima TV
    • 8.2 Regulatory developments
    • 8.3 Digital TV
      • 8.3.1 Broadband TV (IPTV)
      • 8.3.2 Cable TV (CATV)
      • 8.3.3 Satellite-based digital pay TV developments
      • 8.3.4 Digital terrestrial TV (DTTV)
  • 9. Mobile Communications
    • 9.1 Overview of the Czech Republic’s mobile market
      • 9.1.1 Mobile statistics
    • 9.2 Regulatory issues
      • 9.2.1 Significant market power (SMP) obligations
      • 9.2.2 EU roaming tariffs
      • 9.2.3 Mobile termination rates (MTR)
      • 9.2.4 GSM licences
      • 9.2.5 UMTS licences
      • 9.2.6 Mobile data network tender
      • 9.2.7 Mobile number portability (MNP)
      • 9.2.8 Network sharing
    • 9.3 Mobile technologies
      • 9.3.1 Analogue
      • 9.3.2 GSM
      • 9.3.3 Code division multiple access (CDMA)
      • 9.3.4 3G UMTS
    • 9.4 Major mobile operators
      • 9.4.1 Overview
      • 9.4.2 Telefónica O2 Czech Republic
      • 9.4.3 T-Mobile
      • 9.4.4 Vodafone Czech Republic
      • 9.4.5 MobilKom/U:fon
    • 9.5 Mobile voice services
      • 9.5.1 Prepaid cards
    • 9.6 Mobile messaging
      • 9.6.1 Short message service (SMS)
      • 9.6.2 Multimedia message service (MMS)
      • 9.6.3 TDD-UMTS
      • 9.6.4 1x EV-DO
    • 9.7 Mobile data services
      • 9.7.1 Overview
      • 9.7.2 General packet radio service (GPRS)
      • 9.7.3 Push-to-talk (PTT)
      • 9.7.4 Enhanced data for GSM evolution (EDGE)
      • 9.7.5 High-speed packet access (HSPA)
    • 9.8 Mobile content and applications
      • 9.8.1 Mobile TV
      • 9.8.2 Location-based services
      • 9.8.3 Mobile advertising
      • 9.8.4 M-commerce
      • 9.8.5 M-payments
  • 10. Forecasts
    • 10.1 Forecasts – fixed broadband subscribers – 2010 - 2013; 2020
      • 10.1.1 Scenario 1 – higher broadband subscriber growth
      • 10.1.2 Scenario 2 – lower broadband subscriber growth
    • 10.2 Notes on scenario forecasts
  • 11. Glossary of Abbreviations
  • Table 1 – Country statistics Czech Republic – 2011 (e)
  • Table 2 – Telephone network statistics – 2011
  • Table 3 – Internet user statistics – 2011 (e)
  • Table 4 – Broadband subscriber statistics – 2011 (e)
  • Table 5 – Mobile statistics – 2011 (e)
  • Table 6 – National telecommunications authority
  • Table 7 – Telefónica O2 interconnection rates – 2008 - 2009
  • Table 8 – Mobile number portings – 2003 - 2010
  • Table 9 – Telefónica O2 financial data – 2006 - 2011
  • Table 10 – Telefónica O2 fixed-line accesses – 2006 - 2011
  • Table 11 – GTS financial data – 2009 - 2010
  • Table 12 – Dial Telecom revenue breakdown – 2008 - 2009
  • Table 13 – Fixed lines in service and teledensity – 1995 - 2012
  • Table 14 – Workplace network usage by network type – 2006 - 2011
  • Table 15 – Telefónica naked DSL lines – 2009 - 2011
  • Table 16 – Wholesale lines by type – 2008 - 2009
  • Table 17 – Cost of local loop unbundling and share access – 2006 - 2009
  • Table 18 – Internet users, subscribers and penetration rate – 1998 - 2011
  • Table 19 – Fixed broadband subscribers by access type – January 2010
  • Table 20 – Market share of broadband subscribers by access type – 2010
  • Table 21 – Fixed broadband subscribers and penetration – 2001 - 2012
  • Table 22 – Proportion of broadband subscribers by technology – 2010
  • Table 23 – UPC broadband subscribers by service type – 2003 - 2011
  • Table 24 – Telefónica O2 broadband subscribers by access type – 2006 - 2011
  • Table 25 – ADSL subscribers by type – 2006 - 2010
  • Table 26 – Mobile broadband subscribers – 2005 - 2012
  • Table 27 – E-education usage by individuals – 2007 - 2011
  • Table 28 – E-education usage by businesses – 2007 - 2011
  • Table 29 – Electronic sales as percentage of total non-VAT turnover for non-financial sector businesses with 10 or more employees – 2009
  • Table 30 – Online purchases by individuals – 2005 - 2012
  • Table 31 – Uptake of e-government services by businesses – 2003 - 2012
  • Table 32 – Take up of e-government services by individuals – 2003 - 2012
  • Table 33 – Audience share by broadcaster – prime time – 2005 - 2010
  • Table 34 – Audience share by broadcaster – all day – 2005 - 2010
  • Table 35 – Total TV advertising spending – 2004 - 2011
  • Table 36 – Telefónica O2 pay TV subscribers – 2006 - 2011
  • Table 37 – UPC revenue – 2007 - 2010
  • Table 38 – UPC – Homes passed – 2003 - 2011
  • Table 39 – UPC – Subscribers by service type – 2003 - 2011
  • Table 40 – SkyLink subscribers – 2006 - 2011
  • Table 41 – Mobile operators, subscribers and annual change – June 2011
  • Table 42 – Mobile subscribers and penetration rate – 1995 - 2012
  • Table 43 – European roaming charges – 2007 - 2012
  • Table 44 – Roaming charges by operator– 2010
  • Table 45 – Mobile number portings – 2006 - 2010
  • Table 46 – Telefónica O2 subscribers – 2006 - 2011
  • Table 47 – Telefónica O2 ARPU – 2006 - 2011
  • Table 48 – T-Mobile subscribers – 2006 - 2011
  • Table 49 – T-Mobile financial and operational data – 2004 - 2011
  • Table 50 – T-Mobile blended ARPU – 2004 - 2011
  • Table 51 – Vodafone subscribers – 2008 - 2011
  • Table 52 – Ratio of prepaid to postpaid subscribers – 2001 - 2011
  • Table 53 – T-Mobile prepaid subscribers – 2005 - 2011
  • Table 54 – Telefónica O2 CR prepaid subscribers – 2004 - 2011
  • Table 55 – Vodafone CR prepaid subscribers – 2005 - 2011
  • Table 56 – Total SMS messages sent – 2003 - 2012
  • Table 57 – SMA roaming charges by operator– 2010
  • Table 58 – Forecast broadband subscribers – higher growth scenario – 2010 - 2013; 2020
  • Table 59 – Forecast broadband subscribers – lower growth scenario – 2010 - 2013; 2020
  • Chart 1 – Telefónica O2 financial data – 2006 - 2011
  • Chart 2 – Dial Telecom revenue breakdown – 2008 - 2009
  • Chart 3 – Telefónica O2 broadband subscribers by access type – 2006 – 2011
  • Chart 4 – ADSL subscribers by type – 2006 – 2010
  • Chart 5 – Audience share by broadcaster – prime time – 2005 - 2010
  • Chart 6 – Audience share by broadcaster – all day – 2005 - 2010
  • Chart 7 – UPC – Subscribers by service type – 2003 - 2011
  • Chart 8 – Mobile subscribers and penetration rate – 1995 - 2012
  • Chart 9 – Telefónica O2 ARPU – 2006 - 2011
  • Chart 10 – T-Mobile financial and operational data – 2004 - 2011
  • Exhibit 1 – The EU regulatory framework for communications
  • Exhibit 2 – Access, the local loop and unbundling – an overview
  • Exhibit 3 – The Economist Intelligence Unit (EIU) annual E-readiness criteria
  • Exhibit 4 – 2G spectrum awarded in the Czech Republic

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