The Swedish telecommunications market first half-year 2002-PTS-ER-2002:25
11/12/2002
Two phenomena in particular have had an impact on the Swedish telecommunications market during the first half-year of 2002. The first is the supplementation of the pre-selection reform by pre-selection customers no longer needing to dial the area code to be able to use their preselection operator when making local calls. The other is that the growth in the number of customers with Internet access with higher transmission capacity continues to demonstrate the same strength. However, the growth of text messaging (SMS) is declining compared with previous periods, and the growth figures for mobile subscriptions have now stabilised at a more modest level. The number of ISDN subscriptions is also reducing now, both for private customers and also business customers. It has already been clear for some time that ISDN has reached a phase where the number of subscriptions was no longer increasing, but it is only now that the number is actually decreasing.
The total market for fixed telephony, mobile telecommunications services and Internet access increased by 7 per cent, compared with the first half-year of 2001, and amounts to a half-year turnover of SEK 23.4bn. This figure can be related to the monthly revenue of the operators from households being, on average, SEK 509 during the first half-year of 2002. During the corresponding period in 2001, it was SEK 460, i.e. an increase corresponding to 11 per cent over one year.
The number of pre-selection customers continues to increase. During the first half-year of 2002, the number of pre-selection customers increased by 6 per cent or 83 000. This means that 1 518 000 fixed telephony customers have selected an operator other than Telia as their preselection operator. Of these pre-selection customers, 1 364 000 were private, which corresponds to one third of all private subscriptions for fixed telephony (PSTN and ISDN).
The market value of national calls amounted during the first half-year of 2002 to SEK 4.3bn. Revenues for this kind of call are approximately SEK 0.3bn lower than during the corresponding period in 2001. This decline is basically entirely referable to lower revenues for dial-up access to the Internet. It is likely that we will in the future observe the decreasing use of dial-up access to the Internet in conjunction with more Internet users transferring to some kind of fixed connection.
During the first half-year of 2002, the turnover for international calls was SEK 797m, which is somewhat greater than during the corresponding period a year ago. The market for international calls represents the kind of call within fixed telephony that has been subject to competition for the longest time in Sweden, something that has also involved constantly reducing call tariffs for the consumer. However, this trend appears to have been broken in recent times. Previously, call tariffs fell more rapidly than could be covered by the growth in traffic volume. PTS’s figures now show the opposite relationship.
Developments within the mobile telecommunications market once again showed that the growth in the number of subscriptions has entered a calmer phase. During the half-year, the number of contract subscriptions and pre-paid cards increased by in total 4 per cent to 7 460 000 and the turnover for mobile telecommunications services increased by just over 6 per cent to SEK 8.4bn compared with the corresponding period in 2001. The interest in using pre-paid cards continues to increase, something that has resulted in 53 per cent of all GSM subscriptions currently comprising pre-paid cards. Compared with the first-half year of 2001, the number of pre-paid cards has increased by 6 percentage units. The total number of subscriptions as a proportion of the entire population corresponded to almost 84 per cent.
Approximately 15 providers of mobile telecommunications services were operating in the Swedish market during this period. However, the new service providers are still small, with an aggregate market share of nearly 2 per cent or 141 000 GSM subscriptions.
During the first half-year of 2002, the growth in the number of SMS messages sent continued to be great, although it is on a significantly lower level than previously. During this period, 37 per cent more SMS were sent than during the corresponding period in 2001. Counted as numbers, this represents an increase of 167 million SMS sent, from 448 million to 615 million. This is the first time that the number of SMS sent during any particular period has not been more than double the number applicable during the corresponding period in the previous year. PTS has on several occasions observed that the prevailing high prices for SMS suggest inadequacy in the way the market functions and that there is future scope for increased price competition. This must still be deemed to be a valid conclusion, as prices have basically remained unchanged since the beginning of 2000, that is to say for 2.5 years.
The data now available to PTS concerning GPRS suggests that the market for GPRS has not really taken off yet. On 30 June 2002, there were 57 000 subscribers who had used GPRS at least once during the second quarter of 2002. Approximately 36 per cent of these were private customers.
The growth in the number of customers with Internet access continues to be strong in Sweden, even if it is somewhat less than during previous periods. During the first half-year of 2002, the number of customers increased by more than 7 per cent to 3 037 000.
As of 30 June 2002, PTS considers that 576 000 private customers with Internet access were connected to the Internet via some form of access with higher transmission capacity. Penetration, or more precisely, the relationship between the number of private customers connected to the Internet via some kind of access with higher transmission capacity and the number of households in Sweden, was 13 per cent on 30 June 2002. Compared with 30 June 2001, penetration has doubled. The access form ADSL has continued to dominate the development even during the period in question and now represents 11 per cent of the total market for private Internet accesses. Both cable TV and fibre LAN had almost 5 per cent each of the total private market. Of the net growth of private customers with Internet access during the first half-year of 2002, 71 per cent were customers with higher transmission capacity. Only one fifth of all private customers with higher transmission capacity have access to 2 Mbps or more.
The financial importance of Internet access as a service in the Swedish telecommunications market continued to grow during the first half-year of 2002. In total, the turnover in the market for Internet access was SEK 2.62bn. It is primarily the fixed charges for continuous connection (always-on) that yield increasingly large revenues for ISPs. These revenues alone increased in value by 79 per cent during the period compared with the corresponding period during the previous year. The revenues from charges for always-on connection, which amounted to SEK 1.19bn, thereby exceed for the first time the revenues that are generated from the minute-based traffic for dial-up Internet. The latter constituted SEK 1.07bn.