2011 Switzerland - Telecoms, IP Networks, Digital Media and Forecasts

Switzerland’s cooperative fibre infrastructure showing dividends

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 CHF18.1 billion in 2011, showing a slight increase year-on-year compared to a near 8% increase between 2006 and 2007. This reflected 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 including HSPA and LTE, as also in fibre-based broadband infrastructure. Although liquidity issues coupled with lower operator revenue during the past two years have dented overall investment, which has fallen steadily since 2008, some rebound may be expected in 2012 as a result of Swisscom’s continuing efforts in its FttH network and operator interest in the forthcoming mobile spectrum auction.

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 the mobile sector, Orange Switzerland in early 2012 was bought by the private equity firm Apex Partners for €1.6 billion. France Telecom sold the unit as part of a portfolio review that will see it focus on fast-growing emerging markets in the Middle East and Africa. The move followed the 2010 purchase of Sunrise by the private equity investment group CVC Capital Partners. This suggests significant faith in the health and viability of Switzerland’s telecom sector among key investment houses.

Switzerland retains one of the highest broadband 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 to 100Mb/s 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. Assessments by the Competition Commission obliged Swisscom to renegotiate some of the partnerships. The regulator’s series of Round Tables in early 2012 established that operators had developed sufficient progress in network sharing agreements, the development of uniform technical standards, the laying of multiple fibres and the 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.

Switzerland – Key telecom parameters – 2010; 2012

(Source: BuddeComm)

Key highlights

• DSL remains the dominant broadband access platform though FttX developments will see the DSL subscriber base diminish from 2012/2013 as consumers are migrated to fibre networks. The cable sector is likely to retain its market share given operator investments in DOCSIS3.0 technology.
• The regulator’s planned auction of a wide range of spectrum in 2012 will provide greater certainty for operators planning their investment and network upgrade strategies. Including digital dividend spectrum in the sub-GHz band will greatly enhance the development of mobile broadband offerings based on LTE.
• Swisscom planned to launch commercial LTE services by the end of 2012, following trials in late 2011 and a five-year contract with Ericsson to upgrade mobile-core and radio networks.

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