The Swedish Telecommunications Market first half year 2003 - PTS-ER-2003:42
18/12/2003
The first half-year of 2003 has not presented any major surprises regarding the development of the market. Overall, the trends that became clear over recent years continued: the growth in the number of customers for fixed Internet access continues to be strong, even if it has tailed off since the record year 2001; growth of SMS is at the same level as during 2002 and the growth figures for mobile subscriptions are at a stable level of around ten per cent. The most exciting development is in the market for fixed subscriptions. Here, primarily Bredbandsbolaget has broken TeliaSonera’s total dominance by offering fixed telephony through its broadband network. However, the alternative operators have remarkably few subscription customers. PTS estimates that there were around 20 000 subscriptions for IP telephony in June 2003. Nearly all of these subscriptions were established during the period. A further event that deserves attention is that Sweden, towards the end of the half-year of 2003, got its first customers of third generation mobile telephony. It was the operator Tre that was the first to launch 3G services.
The growth figures for mobile subscriptions now lie stable at a level of around ten per cent. Between June 2002 and June 2003, the number of contract subscriptions and pre-paid cards increased by in total 12 per cent. The number of contract subscriptions and pre-paid cards was 8 375 000 as of 30 June 2003. In the light of this high penetration, a growth in the number of mobile subscriptions of 12 per cent, or 923 000 subscriptions, must be deemed to be surprisingly strong. A couple of preconditions are required in order to maintain such high growth rates: first, the groups who have not used mobile telephones to a great extent must start to do so, secondly, more individuals must use more than one mobile telephone subscription. The PTS Survey of Individuals, conducted by Temo, shows that it is among users in the group aged 61 to 75 years that growth is greatest. In this group, 76 per cent now use mobile telephones. The PTS Survey of Individuals also shows that increasing numbers have access to several subscriptions: Of those using mobile telephones today, 51 per cent use more than one subscription. The corresponding figure one year ago was 47 per cent. These extra subscriptions are often acquired so that the customer will be able to utilise special offers on the market.
The new service providers of mobile telecommunications services continue to be small, with an aggregate market share of 2.4 per cent of the total number of contract subscriptions and pre-paid cards. This corresponds to 202 000. This growth is limited. Significantly greater growth is required among the service providers for them to constitute an adequate impetus for increased competition.
The turnover for mobile telecommunications services increased by almost 1 per cent from SEK 8.36bn till SEK 8.42bn between the first half-year of 2002 and the first half-year of 2003. This is the lowest growth to date in this market.
During the half-year, 811 million text messages (SMS) were sent, which represents an increase of 32 per cent compared with the corresponding half-year of 2002. During this period, an average of 16.8 SMS were sent per customer and month. At the same time, a GSM customer in Norway sends on average 63 SMS per month, nearly four times as many as a Swedish GSM customer. In Denmark the corresponding number is 56 SMS per month.
The price to send an SMS currently varies from just under one krona to 1.50 kronor. PTS has previously concluded that these continued high prices suggest inadequacies in the manner in which the market functions and that there is scope for increased price competition. This must still be deemed to be a valid conclusion, as prices overall have remained unchanged since the beginning of 2000, that is to say for almost four years. At the beginning of 2000, prices reduced from approximately 2.50 kronor to 1.50 kronor. A comparison of SMS prices for the pre-paid cards offered by TeliaSonera through its respective mobile operators in Sweden, Norway and Denmark shows that Sweden has the highest prices: in Denmark, where the prices have more than halved compared with the first half-year of 2002, an SMS costs 24 öre while the Swedish SMS prices are six times as high as in Denmark (1.50 kr). A new view of SMS appears necessary on the part of the Swedish operators if continued positive development should be possible.
The market value of fixed telephony amounted during the first half-year of 2003 to SEK 12.6bn, which is SEK 0.4bn less than during the corresponding period of the previous year. The reduction is 3 per cent. The cause of the reduction is primarily due to the development for national calls. Revenues for these are almost SEK 0.5bn less than during the corresponding period of 2002. This decrease may be referred to lower revenues for both dial-up access to the Internet and for ordinary national telephone calls. In turn, these lower revenues are a result of reduced traffic, not lower market prices. It is natural that revenues from dial-up access to the Internet reduce as increasing numbers of Internet users transfer to some form of fixed connection. If mobile telephony use increases in the future, this would further accelerate a reduction of the number of traffic minutes in the fixed network.
The number of pre-selection customers continues to increase greatly. During the first half-year of 2003, they increased by 8 per cent or 151 000. Of the total number of pre-selection customers, 1 932 000 were private. Approximately 40 per cent of all private customers of fixed telephony have selected an alternative operator to TeliaSonera. The number of pre-selection customers is high and the development shows that Swedish private customers are not only aware that they have an opportunity to select and cancel an operator, but also actively do so.
The growth in the number of customers with Internet access appears to have halted over the last year. Between 30 June 2002 and 30 June 2003, the number of customers increased by only 31 000, from 2 993 000 to 3 023 000, which corresponds to growth of 1 per cent. As of 30 June 2003, PTS estimates that 743 000 private customers with Internet access were connected to the Internet via some form of fixed connection. The corresponding figure for 30 June 2002 was 551 000.