Trends in Fixed Public Network Services: Austria, (Executive Summary) Executive Summary

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1 Trends in Fixed Public Network Services: Austria, (Executive Summary) Executive Summary Publication Date: September 25, 2002

2 Authors Michal Halama Maureen Coulter Katja Ruud Susan Richardson Lisa Unden This document has been published to the following Marketplace codes: TELC-WW-EX-0438 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2002 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice

3 Trends in Fixed Public Network Services: Austria, (Executive Summary) This qualitative analysis of the fixed public network services market in Austria looks at the market trends, drivers and inhibitors for a wide range of voice, data, Internet and wholesale services for the period 2000 to In addition to providing an overview of the trends in the market, the report also provides market share data for the end of 2001 for a variety of different segments. This report should be used in conjunction with the quantitative statistics report for Austriatoadvisehowthemarketischangingandhowspecificsegmentsare affecting this change (see "Fixed Public Network Services: Austria, " [TCPM-EU-MS-0160 and TCPS-WW-MS-0212]). Market Highlights The total retail fixed public services market in Austria grew by 8.5 percent in 2001 to 3.4 billion euros, and is forecast to reach almost 4.8 billion euros by 2006, growing at a CAGR of 7 percent. Voice remains the largest revenue stream in retail fixed public services, representing 72.4 percent of total retail service revenue in However, at a compound annual growth rate (CAGR) of 1.0 percent, voice has only a 54.2 percent share by Slowing growth in voice is replaced by strong growth in data, and Internet and IP services. Data services will grow from 0.5 billion euros in 2001 to slightly less than 1.0 billion euros in 2006, growing at a CAGR of 12.3 percent. This is principally driven by broadband and managed data services. Data services' share of the total retail fixed public services market will grow from 15.4 percent in 2001 to 19.5 percent in Internet and IP services will grow fastest at a CAGR of 24.7 percent, from 0.4 billion euros in 2001 to almost 1.3 billion euros in Growth will chiefly come from Internet access revenue with more subscribers forecast to go online at a CAGR of 17.8 percent, and because of the strong CAGR of 50.7 percent in value-added IP services. Wholesale revenue will show steady growth at a CAGR of 12.5 percent, to reach 2.1 billion euros by The wholesale market will be driven by IP transit revenue and managed and dedicated Web-hosting revenue. Figure 1 and Figure 2 show the relative status of each revenue stream in fixed retail telecommunications services in Austria. They map the changes between 2001 and 2006, highlighting the increasing significance of value-added IP services revenue and the diminshing, but still dominant role, of voice revenue Gartner, Inc. 1

4 2 Trends in Fixed Public Network Services: Austria, (Executive Summary) Figure 1 Total Fixed Telecommunications Retail Service Revenue Austria, 2001 Total Leased Line Revenue (3.3%) Total Voice Other Revenue (17.6%) Total Frame Relay Revenue (1.7%) Total DSL and Cable Modem Revenue (2.4%) Total Other Data Services Revenue (6.7%) Total ATM Revenue (1.2%) Total ISP Access Revenue (8.0%) Total Retail Web-Hosting Revenue (3.3%) Total Exchange Line Rental and Connection Revenue (22.0%) Total Local Call Services Revenue (22.0%) Managed IP VPN (0.2%) Total National Call Services Revenue (10.8%) Total Value-Added IP Services Revenue (1.0%) ATM = Asynchronous transfer mode DSL = Digital subscriber line VPN = Virtual private network Source: Gartner Dataquest (August 2002) Figure 2 Total Fixed Telecommunications Retail Service Revenue Austria, 2006 Total Other Data Services Revenue (7.4%) Managed IP VPN (0.9%) Total DSL and Cable Modem Revenue (4.3%) Total ATM Revenue (1.4%) Total Frame Relay Revenue (3.3%) Total Leased Line Revenue (2.3%) Total ISP Access Revenue (12.8%) Total Retail Web-Hosting Revenue (8.1%) Total Value-Added IP Services Revenue (5.3%) Total Voice Other Revenue (14.5%) Total Local Call Services Revenue (16.1%) Total Exchange Line Rental and Connection Revenue (16.1%) Total National Call Services Revenue (7.5%) ATM = Asynchronous transfer mode DSL = Digital subscriber line VPN = Virtual private network Source: Gartner Dataquest (August 2002) 2002 Gartner, Inc. September 25, 2002

5 Trends in Fixed Public Network Services: Austria, (Executive Summary) 3 Segmentation and Definitions Regulatory Issues The regulator "Telecom Control" aims to promote a competitive environment that requires Telekom Austria to apply for approval before implementing new tariff schemes. In 2001, the regulator approved further second-based tariff schemes (including flat-rate schemes), new leased line tariffs and new interconnection rates with peak and off-peak tariffs. Telekom Austria's improvements in its network efficiency enabled Telecom Control to reduce transit and call origination fees by 40 percent. In March 2001, Telecom Control authorized alternative operators to use all Telekom Austria's transmission systems (voice telephony, leased line services, data services, and broadband and fast Internet services) to unbundle subscriber lines. Telekom Control aims to reduce costs for subscriber lines. Telekom Austria's full unbundling monthly fee of euros was reduced, from January 2002, to euros. The regulator also established an agreement to guarantee portability of geographic subscriber numbers between network operators this allows endusers to change to a different operator, but to keep their telephone number. Competition Rating Telekom Austria's main competitors are alternative national operators UTA, Tele.ring and E Tel (formerly RSL Com Austria). Other operators active in the market include Tele2, Priority Telecom, Cybertron, Colt, max.mobil's fixed network max.plus and WorldCom. Consolidation and disconnection of failing alternative operators is a feature of the Austrian telecommunications market. Irish telecommunications group E Tel acquired the Austrian subsidiary of the bankrupt U.S. telecom concern, RSL Com, and the liquidated telecommunications company Millennium Communications Network (MCN). Telekom Austria disconnected Star Telecom for nonpayment. Telecom Control has issued 67 licenses for the provision of voice services and 74 licenses for the provision of leased line services, of which approximately 50 of the service providers are actively providing services. Forecast Drivers Short Term Dial-up online demand will sustain local call traffic. A competitive broadband environment between asymmetric digital subscriber line (ADSL) and cable modems, and uptake of unbundled local loop support significant growth in broadband during the forecast period. Increased competition bringing innovative services and fresh content that attract subscribers Gartner, Inc. September 25, 2002

6 4 Trends in Fixed Public Network Services: Austria, (Executive Summary) Long Term High and growing household income and increasing number of households creating a larger market for premium services. Increasing network complexity and greater need for advanced telecommunications services will drive enterprises to outsource their networks. Forecast Inhibitors Short Term The decline of local fixed voice traffic, and the deepening of mobile penetration until The strength of mobile communications temporarily distracting potential Internet subscribers from spending on fixed Internet services. Long Term Cheap Internet calls impacting local call revenue. Local residential voice traffic will continue to decline as a result of mobile substitution through to Minimal PC installed base and growth way below Western European average deters potential Internet subscriber from going online during the forecast period. Other Assumptions Population growth negligible over the period, but at 8 million, the population already makes a viable market for ISPs. A mediocre gross domestic product (GDP) CAGR of 2.3 percent through to PC shipment growth attaining an inconsequential CAGR of 1.5 percent to a limited installed base. European Union enlargement will attract new markets from Eastern Europe. Austria is well-placed geographically to carry traffic and to be the Western European base for companies entering the new markets. Glossary "The forecast period," "the forecast" and "the period" all refer to the full years from 31 December 2001 to 31 December 2006, unless otherwise stated in the text. All CAGRs refer to the forecast period above, unless otherwise stated in the text. Link For the full report, see the Market Trends report "Trends in Fixed Public Network Services: Austria, ," which is published to the Public Network Services Worldwide and the Telecom Public and Mobile Services Europe Clusters: TCPM-EU-MT-0125 TCPS-WW-MT Gartner, Inc. September 25, 2002