Broadband Access

1. Broadband Access Catalin MARINESCU, President of ANCOM CASPIAN TELECOMS Istanbul,19-20 April 2012

2. Outline • A short introduction to the Romanian market • Addressing the challenges

3. The Romanian Market:A Combination of 3 HIGHs & 3 LOWs A market unlike other European peers

4. Dynamics of the supply side: • A retrospective incumbent • limited territorial coverage and shy (non-existent) expansion of access network • concentrating to cream the market on voice, the incumbent lost momentum in broadband, creating a window of opportunity (nearly 3 years) for competition • Rights of way & urban planning rules • de facto no mans’ land, aerial cables could hang everywhere • enhanced business opportunities for rapid network deployment in density areas, and at low cost • Competition between fixed infrastructures • cable operators & network neighbourhoods (coaxial, fibre, UTP/FTP) exploit the windows of opportunity especially through competitive bundles • incumbents’ network becomes less interesting, even with competitive LLU regulation • cable operators consolidate & start overlapping their networks • Incumbents’ fibre deployment • a direct response to competition & high customer churn • Incumbent goes further and grows a low cost subsidiary which mimics CATV business • Advent of mobile broadband as mass market – early 2010 • with the liberalisation of 900 MHz & 1800 MHz and upcoming of LTE in 800 & 2600 MHz

5. Several technologies for super-fast broadband

6. The Demand side: When did you last use internet? • 6,6 mil. broadband connections at 20 mil. population • ~ half of them are mobile • ~ half of population never went online • multiple subscription, fixed & mobile Main Dividing lines on Broadband Adoption % adopters in the group source: market survey for ANCOM, individuals

7. The fibre getting closer & closer to the citizens • TOTAL fixed broadband 3,13 mil. active lines • 88% of broadband lines have some fibre build-in source: ANCOM statistics, H1 2011 • 50% at least FTT-Building Mobile broadband coverage for > 90% of citizens • HSPA and HSPA+ in urban, UMTS in rural • Rapid deployment through multi-mode SDR solutions (software defined radio)

8. Benefits of competition in fixed infrastructures FTTB/H coveragein % of homes at mid 2011 FTTN (VDSL+DOCSIS 3.0) penetrationin % of homes, mid 2011 Source: WIK - NGA Progress Report march 2012

9. The challenges

10. Key challenge areas: stimulate demand Why is there no internet in your household? • Understanding the reasons of non-adopters is not easy • Several reasons often quoted • Digital illiteracy & lack of relevance surely hide behind the “no need, no use” reason • “Too expensive” may in fact refer to access equipments (PCs, Smartphone, etc.) rather than monthly price • Non-adopters need to be provided compelling reasons to get online source: market survey for ANCOM, individuals Net neutrality e-România

11. Main challenges on the supply side Digital Dividend • Equity / investments • investments take place in response to competitive threats and/or to improve efficiency • before mass adoption effects, the significant upfront investments with NGA seem riskier (to the operators) • end-user equipments to get online (PCs, routers, dongles) come at a cost, even though subsidised (by the operators) • Productivity • new content & applications of the digital economy expected to lead to productivity gains in all sectors • technological progress makes services cheaper • Cost of digital exclusion • already huge & rising • exacerbates territorial imbalances Infrastructure sharing e-România Net neutrality

12. Supply side challenges: • Net neutrality is the key to success • networks’ congestion and content applications are not excuses to renounce to neutrality • technical progress resolves congestion problems • operators should be capable to respond to disruptions from content applications, they just need to be creative • Promote competition: • effective competition is the main driver for growth • in reality, investments usually take place in response to competitive threats and/or to improve efficiency, not in response to regulatory holidays • wire-line networks as broadly available as possible, wire-less everywhere • infrastructure based competition where efficient, services based competition everywhere • Spectrum issues: • significant impact, especially if fixed networks are not omni-present • liberalise spectrum usage (2G…4G) to increase spectrum efficiency and let higher speeds & cheaper services pass through mobile networks • put to auction as much spectrum as possible • enable a minimum number of competing networks in high & low bands, ensure against hoarding • Universal service: • universal service provider does not necessarily mean 1 single provider in the entire country • technologically neutral, i.e. fixed or mobile • the most efficient solution for the white area(s)

13. Fixed broadband dynamics in the EU Penetration increase (2010/ 2009) EU-27 = 25,7% EU-27 = 7.5% Penetration rate per population Source: Digital Agenda Scorecard, EC Commission

14. Mobile broadband dynamicsdedicated equipments EU-27 = 7.24% Penetration increase (2010/ 2009) ~900.000 EU-27 = 42% Penetration rate per population Source: Digital Agenda Scorecard, EC Commission

15. FTTB/H take-up rates (subscribers/homes passed),mid 2011 Source: WIK - NGA Progress Report, march 2012

16. FTTN take-up rates (subscribers/homes passed),mid 2011 Source: WIK - NGA Progress Report march 2012

17. Super - fast Broadbandpenetration in % of homes at mid 2011 14% above 100 Mbps 42% above 30 Mbps Source: COCOM 2011

18. Thank you for your time and attention! Cătălin MARINESCU, ANCOM President catalin.marinescu@ancom.org.ro