The Swedish Telecommunications Market 2003 - PTS-ER-2004:24
23/08/2004
Three particularly notable events have occurred in the market for electronic communications over the past year, and they will have great importance for the market in the future. First, Sweden obtained a completely new law controlling the market, the Electronic Communications Act (EkomL), second, third generation mobile telephony acquired its first customers and, third, it was shown that IP telephony is a commercial service of importance.
Towards the end of 2002, some operators began to launch subscriptions for IP telephony in broadband networks. The customer is thereby given an opportunity to terminate his ordinary fixed telephony subscription with TeliaSonera. PTS estimates that there were almost 40 000 subscriptions for IP telephony in December 2003. Almost all of these subscriptions were acquired during the year. Even if PTS has identified the cautious start of a change in the competition situation in the market for subscriptions for fixed telephony, it must nonetheless be concluded that there is overall hardly any functional competition prevailing in this market. PTS is currently conducting work with making decisions concerning obligations for the operator(s) who have significant market power for access to the public telephone network via a fixed interconnection point. This work is being conducted on the basis of the new Act, EkomL, and aims to improve the conditions for alternative operators to gain access to TeliaSonera’s fixed access network, to thereby enable them to offer subscriptions for fixed telephony.
The number of pre-selection customers continues to increase rather greatly. The number of pre-selection customers is high and demonstrates that Swedish private customers are not only aware that they have the opportunity to select and eliminate an operator, but also actively do so.
Revenues for fixed call services continue to decline. This decline is partly referable to lower revenues from both dial-up access to the Internet and from ordinary national telephone calls. This in its turn results from reduced traffic, not from lower market prices. For example, revenues for Internet calls have reduced by a full 30 per cent since 2001, the year during which they were highest. The reason for this is that increasing numbers of Internet users transfer to some form of fixed connection.
The yearly growth figures for mobile subscriptions have during the last three years been stable at a level of around ten per cent. The lower rate of growth for mobile subscriptions compared with previous years can probably be attributed to the high proportion of the population who already use mobile telephones.
PTS has, together with several authorities, been able to conclude that the Swedish mobile market is characterised by a structure that resembles an oligopoly, where mutual dependence prevails between the network-owning operators. It should be emphasised that although a certain number of service providers are now present in the market, the mobile market is still completely dominated by the three network- owning mobile operators, TeliaSonera, Tele2 and Vodafone. However, at the end of 2003 and in early 2004, PTS saw signs that price competition may have changed slightly. It is as yet too early to determine whether the Swedish mobile market has taken the step into a period of more functional competition. PTS still considers that there is scope for increased price competition between the mobile operators.
The new service providers for mobile call services are still rather small, with a total market share of 3.3 per cent of the total number of subscriptions. Considering that these service providers have been operating in the Swedish mobile telecommunications market since 1999, a few hundred thousand customers is not much. The service providers’ low customer share, together with the low growth rate, clearly shows unfavourable conditions for conducting mobile operations as service providers. The service providers who entered the market since 1999 have had relatively limited scope to manoeuvre. This results, first, from the formulation of their third-party contracts with the mobile network operators and, second, from the mobile network operators being able by making alternative selections to thereby eliminate those service providers who constituted a competitive threat in relation to their own operation. Moreover, by starting their own service providers, the mobile network operators further limit scope in the market for alternative operators to grow significantly in the market. This result has clearly demonstrated itself through the service providers being only very marginally able to influence the inadequate price competition in the Swedish market for mobile call services.
During the period, 18.4 text messages (SMS) were sent per customer and month. At the same time, a GSM customer in Norway sent on average 66 SMS per month and a Danish GSM customer sent 72 SMS per month, almost four times as many as a Swedish GSM customer. The question is whether the Swedish GSM customers will send such a great number of SMS within the foreseeable future.
The market for Internet access is now in a period of great change that is clearly linked to the transfer from dial-up connection to fixed connection. Competition in the market for Internet access has until now been rather good but, with a gradual transfer to fixed connection, the issue of control over the access network has clearly increased in importance. As a consequence, competition in the market for Internet access with fixed connection is more limited than for dial-up Internet access.