Country Report. Sweden. January Hilary Bailey and David Martin

Transcription

1 Country Report Sweden January 2013 Hilary Bailey and David Martin

2 Sweden country report i Contents 1 Executive summary 1 2 Introduction Major telecoms market indicators Major players 7 3 Market outlook The mobile operators are racing ahead with their LTE deployments, but are they ahead of the market? Mobile operators' broadband offerings are increasingly supported by superfast fixed broadband capabilities Operators are intensifying their efforts in the fibre access market 16 4 Appendices 18 About the authors 20 About Analysys Mason 21 Research from Analysys Mason 22 Consulting from Analysys Mason 23 List of figures Figure 2.1: Telecoms KPIs for Sweden, Figure 2.2: Population penetration rates for active mobile subscribers and mobile broadband, and household penetration rates for residential fixed voice and fixed broadband, Sweden, Figure 2.3: Broadband connections by technology, Sweden, Figure 2.4: Voice traffic by type, Sweden, Figure 2.5: Average revenue per minute from voice calls by service type, Sweden, Figure 2.6: Fixed retail revenue by service type, Sweden, Figure 2.7: Mobile voice and non-voice service revenue, and ARPU, Sweden, Figure 2.8: Mobile market share based on active subscribers, Sweden, 2Q Figure 2.9: Mobile infrastructure status, Sweden... 8 Figure 2.10: Fixed broadband retail subscriber market share, Sweden, 2Q Figure 2.11: Operators fixed access infrastructure plans, Sweden Figure 4.1: Major regulatory organisations, Sweden Figure 4.2: Key market liberalisation dates, Sweden Figure 4.3: Additional regulatory information, Sweden Figure 4.4: Incumbent s fixed infrastructure status, Sweden Analysys Mason Limited 2013 Contents

3 Sweden country report 1 1 Executive summary Sweden is the tenth-largest country in Western Europe in terms of population. The country has a high GDP per capita (around EUR in 2011). Sweden went into recession in 2009, but experienced strong growth in 2010 and Revenue from telecoms services continued to grow during the recession, but growth has since slowed to a level below that of the general economy. The main players in the Swedish telecoms market are the incumbent, TeliaSonera (fixed and mobile operator); the fixed and mobile operators Tele2 and Telenor; Hi3G Access ('3') (3G mobile operator); Com Hem (Sweden s largest CATV operator); Net 1 (CDMA 450MHz network operator); and numerous local municipality and utility company fibre network operators. The main trends in the Swedish telecoms market are as follows: The mobile operators are racing ahead with their LTE deployments, but are they ahead of the market? TeliaSonera, and Tele2 and Telenor via their Net4Mobility joint venture, are racing ahead with their 4G deployments. 3 has also launched LTE but is focusing mainly on improving its 3G+ coverage. There is a risk that operators' LTE investments are outstripping demand. However, Sweden has witnessed explosive growth in smartphone usage; and present roll-outs are designed to anticipate future 4G device take-up and provide a more manageable way for operators to regulate bandwidth consumption. Mobile operators' broadband offerings are increasingly supported by superfast fixed broadband capabilities. The three leading mobile network operators are also leading players in the NGA infrastructure market. The operators' extensive investments in superfast fixed broadband might appear contradictory to their mobile broadband strategies, as they result in their fixed and mobile broadband services competing against one another to some extent. However, these investments are increasingly proving to be complementary and mutually supportive, particularly with respect to enabling converged services that allow users to access the same content via multiple devices and networks. Operators are intensifying their efforts in the fibre access market. During 2011 and particularly 2012, the leading fixed broadband providers have been intensifying their efforts to penetrate the fibre LAN and municipal FTTH segments. This is a reaction to the competitive challenge posed by the growing fibre segment, as well as a response to regulation in 2011 that has served to ensure that all fibre LAN and FTTH infrastructure must be open to competing providers. TeliaSonera is defending its position as incumbent; Telenor is seeking to become the leading challenger to TeliaSonera in the fibre segment; cable operator Com Hem is responding to the challenge from fibre-based providers by entering the fibre access and IPTV markets itself; and Tele2 is seeking to establish a credible fibre market presence and footprint to rival that of its competitors. Telia is resisting fixed-to-mobile broadband substitution, for the time being. The roll-out of LTE has increased the potential for fixed-to-mobile broadband substitution. Telia s marketing and pricing of 3G+ and 4G mobile broadband attempts to minimise this risk, whereas Tele2 and Telenor are more aggressive in offering superfast mobile broadband as an alternative to DSL. However, all three companies are wary of cannibalising their higher-value and higher-speed, next-generation access-based broadband and triple-play services. Analysys Mason Limited : Executive summary

4 Sweden country report 2 2 Introduction Sweden is a relatively small Western European country in terms of population, though large geographically. Most of its 9.5 million (2011) inhabitants live in the south west of the country and around the capital, Stockholm, while the north is very sparsely populated. Like the other Nordic countries, Sweden is affluent and has a high level of nominal GDP per capita (around EUR in 2011, roughly on par with Denmark). Its economy is orientated towards export, with highly developed engineering and technology sectors, the bestknown example of which is the equipment vendor Ericsson. Sweden s nominal GDP achieved a CAGR of 4.75% in the period However, nominal GDP contracted by approximately 4% in 2009, but grew again by 7% and 9% in 2010 and 2011 respectively. Telecoms revenue fell marginally, for the first time, in 2008, but this decrease was not long-lived: the telecoms sector showed modest growth in 2009 despite the recession (+ 1.7% year-on-year growth in total service revenue), although growth slowed to below that of the general economy in 2010 and 2011 (+0.4% and 0.3% respectively). The main reason for this slowdown in growth was the accelerated decline in the value of the fixed market, linked to a reduction in fixed voice lines and traffic. This was more than offset by increasing mobile service revenue linked to usage of mobile Web and content services. Overall, Sweden s telecoms service revenue reached SEK65.2 billion (EUR7.2 billion) in 2011, deriving evenly from the fixed and mobile sectors. Fixed voice: TeliaSonera remains the dominant player, with 61% of fixed voice subscriptions at June 2012, according to the regulator PTS. The leading competitors are the mobile network operators (MNOs) Tele2 (around 10.5%) and Telenor (approximately 7.5%), both of which operate over a combination of unbundled DSL, fibre LAN, municipal FTTH and, in Tele2's case, cable networks. Cable operator Com Hem is the third-largest provider, with an 8% share. Other players include numerous LLUB, fibre LAN and FTTH operators. Broadband: The same operators are also the leading players in the fixed broadband market. TeliaSonera led with around 39% of subscriptions at June 2012, followed by Com Hem and Telenor (18% and 17% respectively). Tele2 lags behind somewhat, with 7% of subscriptions at June There are also a large number of smaller operators providing services over fibre LAN and FTTH networks. However, the leading broadband technology in the market now is mobile. TeliaSonera is also the market leader in this segment. Mobile: TeliaSonera is also the dominant MNO, with a 46% share of active SIMs at June Tele2 is the leading competitor, with around 27% of subscriptions. Since 2008, third-ranked Telenor's market share has remained at between 16% and 17%. 3 has steadily built up its market share over the same period, at the expense of the two leading players: at June 2012, it had around 10% of subscriptions. The largest MVNOs are mainly owned by the leading fixed and mobile operators.

5 Sweden country report Major telecoms market indicators Figure 2.1: Telecoms KPIs for Sweden, [Source: Analysys Mason, 2013] Total mobile subscribers Mobile penetration (percentage of population) 122% 129% 135% 143% Prepaid subscribers as a percentage of mobile subscribers 3G subscribers as a percentage of mobile subscribers 40% 38% 35% 32% 34% 46% 58% 68% Mobile broadband subscribers Fixed voice lines Residential fixed voice penetration (percentage of households) 86% 79% 73% 69% Fixed broadband subscribers Fixed broadband penetration (percentage of sites) 59% 59% 59% 60% Total service revenue (SEK million) (EUR million) Data revenue as a percentage of mobile service revenue Broadband revenue as a percentage of fixed service revenue 17% 24% 29% 33% 27% 29% 30% 32% Mobile ARPU (SEK per month) (EUR per month) Fixed voice ARPU (SEK per month) (EUR per month) Fixed broadband ARPU (SEK per month) (EUR per month) Mobile MoU (minutes per month) Fixed MoU (minutes per month) Subscriber figures are on a 3-month active, year-end basis. Revenue figures are for the calendar year. ARPU and MoU rates (which are outgoing) are averaged over the calendar year. Mobile data revenue includes revenue from all non-voice services, including mobile broadband. Subscribers and penetration Sweden has experienced strong fixed-to-mobile substitution in terms of both voice and broadband subscriptions. Residential fixed voice penetration fell from 90% in 2007 to 69% at the end of 2011, and further to 67.5% at June 2012 (somewhat below the Western European average of 75% at December 2011). Over the same period, there has been uninterrupted, solid growth in active mobile penetration, from 112% in 2007 to 143% at December 2011 (versus the Western European average of around 127%), rising to 146% at June The increase in the number of active SIMs has been driven by smartphone and mobile broadband (via USB dongles) take-up. Mobile broadband penetration increased to 20% in 2011 (and to 20.5% by mid 2012), which gives Sweden the third-highest mobile broadband penetration in Europe, after Finland and Austria; although the rate

6 Percentage of the population Percentage of households (and business sites for fixed broadband) Sweden country report 4 of growth in mobile broadband connections decreased from 2010 onwards. Fixed broadband penetration also levelled off from 2008 onwards, settling at between 58% and 60%. At June 2012, it stood at 59%, a little below the average for Western Europe (64%). These trends taken together point to a significant degree of substitution of fixed broadband by mobile, with rapid growth in mobile broadband subscriptions standing in contrast to virtually zero net growth in fixed broadband. The mobile market has also seen significant growth in machine-tomachine connections, which have grown from 2.3 million in 2010 to 3.4 million in June Figure 2.2: Population penetration rates for active mobile subscribers and mobile broadband, and household penetration rates for residential fixed voice and fixed broadband, Sweden, [Source: Analysys Mason, 2013] 1 160% 100% 140% 120% 100% 80% 60% 40% 20% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 0% Active mobile SIMs Mobile broadband Residential fixed voice Fixed broadband 1 The residential fixed voice penetration rate represents the proportion of residential households with at least one fixed voice service, be it PSTN, ISDN or VoIP over a fixed broadband line. Mobile overtook DSL as the leading broadband access technology in 2010, and the gap has widened since then as mobile broadband take-up has continued while DSL is in slow decline. At the end of 2011, there were around 1.93 million active mobile broadband subscriptions (up by 14% from 2010), compared with 1.52 million DSL connections (down by 5% from 2010). However, mobile broadband growth slowed during 2012, and by the end of June 2012, the number of active mobile broadband connections had risen to only 1.96 million (39.5% of the total), while the number of DSL subscriptions had fallen to 1.48 million (30%) at that time. DSL is the technology most affected by fixed-to-mobile broadband substitution, with which lower-speed DSL services are competing head to head for first-time and low-usage broadband subscribers. Other technologies have fared better than DSL. Consumers in Sweden, particularly in the larger cities, have a choice between a wide range of competing superfast fixed broadband technologies: cable DOCSIS3.0, fibre (FTTB, FTTH and LAN) and Telia s expanding VDSL2 infrastructure. These continue to retain existing subscribers and to attract new ones: the numbers of FTTH/B/Ethernet and cable broadband subscriptions rose in 2011, by 11% and 3%, respectively. However, these growth rates are slower than in the preceding few years; and as the growth rate for mobile broadband has also slowed, this suggests the overall broadband market may be experiencing a degree of saturation.

7 Connections (million) Sweden country report 5 Figure 2.3: Broadband connections by technology, Sweden, [Source: Analysys Mason, 2013] DSL Cable modem FTTH/B and Ethernet FWA Other fixed broadband Mobile broadband ARPU and revenue trends In addition to fixed mobile line substitution, fixed mobile call substitution has also been taking place over the past few years: the volume of fixed-originated traffic, including VoBB, decreased from 30 billion minutes in 2006 to 18 billion minutes in 2011, while mobile-originated traffic rose from 13 billion minutes to 23 billion minutes over the same period. The volume of call minutes originated on mobile networks overtook that originated on fixed networks for the first time in 2010, and by the first half of 2012, 60% of all minutes originated on mobile networks. As in a number of European countries, the overall voice market has peaked in Sweden: outgoing traffic fixed and mobile started to decrease from 2009 onwards. The pace of growth in mobile-originated calls has slowed and is no longer fully offsetting the steady decline in fixed calls. A major contributory factor in fixed mobile call substitution has been the decline in the mobile premium (the difference between the average retail revenue per minute for mobile- and fixed-originated calls), from 153% in 2006 to just 8% (including VoBB calls) in Indeed, in the first half of 2012, the mobile premium became negative ( 2%) for the first time. The average retail revenue per minute for fixed calls has continued to rise slowly while mobile revenue per minute has fallen steadily, reflecting strong price competition, and the increasing popularity and generosity of flat-fee subscriptions offering bundles of voice, text and data.

8 Retail revenue (SEK billion) Outgoing traffic (billion minutes) Average retail revenue per minute (SEK) Sweden country report 6 Figure 2.4: Voice traffic by type, Sweden, [Source: Analysys Mason, 2013] Figure 2.5: Average revenue per minute from voice calls by service type, Sweden, [Source: Analysys Mason, 2013] PSTN/ISDN VoBB Mobile Fixed (including VoBB) Mobile The fixed market has experienced a long-term trend of decline, with fixed retail revenue (excluding business network services) decreasing from nearly SEK28 billion (EUR3 billion) in 2005 to SEK24 billion (EUR2.7 billion) in Broadband and VoBB revenue has grown steadily year on year, with the exception of 2010, when broadband declined by nearly 3%. However, these increases have generally not been sufficient to offset the fall in narrowband calls and access revenue: at SEK11.8 billion (EUR1.3 billion) in 2011, narrowband calls and access revenue was 42% below the level it had been in Narrowband calls and access accounted for just under half of all retail fixed revenue (excluding business network services) in 2011 (and only 46% in the first half of 2012); broadband access accounted for 43% and 45% respectively. Figure 2.6: Fixed retail revenue by service type, Sweden, [Source: Analysys Mason, 2013] Narrowband access Fixed voice calls Dial-up calls VoBB (access and calls) Broadband (excluding VoBB) 1 Excludes business network services.

9 Mobile service revenue (SEK billion) ARPU (SEK per month) Sweden country report 7 Mobile service revenue increased by around 4.5% to SEK32.7 billion (EUR3.6 billion) in 2011, consistent with a CAGR of 4.7% from 2005 to Since 2007, this growth has been entirely driven by non-voice services, as voice revenue has declined by a CAGR of -2.5% over this period (and by 1.4% in 2011). Non-voice revenue grew by 20% in 2011, to SEK10.9 billion, driven by smartphone and mobile broadband take-up. Accordingly, the share of mobile service revenue accounted for by non-voice services increased to 33% in 2011, which is roughly the average for Western Europe. In the first half of 2012, non-voice revenue accounted for 36% of total mobile service revenue of approximately SEK17 billion (EUR1.9 billion). Strong growth in non-voice revenue has stemmed the decline in overall mobile ARPU, which has decreased only very slowly over the past few years: in 2011, it stood at SEK207 (EUR23), down from SEK211 (EUR22) in Figure 2.7: Mobile voice and non-voice service revenue, and ARPU, Sweden, [Source: Analysys Mason, 2013] Voice revenue Non-voice revenue ARPU 0 1 Includes interconnect revenue. 2.2 Major players Mobile operators (including integrated operators) Fixed incumbent TeliaSonera is also the largest MNO. Its two main mobile rivals, Tele2 and Telenor Sweden, are also leading competitors in the fixed broadband market. The smallest full-service MNO, Hi3G ('3'), is a mobile-only player, as is Net 1, a CDMA EV-DO Rev. B operator, which provides a wireless broadband and VoBB service in rural areas inadequately served by fixed networks. Most of the largest MVNOs are owned by the leading mobile and fixed operators.

10 Sweden country report 8 Figure 2.8: Mobile market share based on active subscribers, Sweden, 2Q 2012 [Source: Analysys Mason, 2013] 10% 17% 46% 27% TeliaSonera Tele2 Telenor Sverige Hi3G Access ('3') All four full-service MNOs have 3G networks offering near-100% coverage of the Swedish population; although there remain many large white zones in areas with very few inhabitants, particularly in the northern half of the country. Similarly, all four have launched 4G networks; and TeliaSonera, Tele2 and Telenor (the latter two via their Net4Mobility infrastructure joint venture) have embarked on a race to achieve nationwide coverage, with Net4Mobility aiming to roll out LTE to 99% of the population by the end of has deployed LTE in the largest cities but is focusing on improving the range and quality of its 3G network, which is being constructed via a further joint venture with Telenor, 3G Infrastructure Services. TeliaSonera and Tele2 have also formed a joint venture Svenska UMTS-Nät to deploy and operate their 3G network. All four 3G networks have been extensively equipped with HSPA+ and HSPA+-DC technology, which is being used to complement and back up the 4G coverage (enabling operators to market tiered bandwidths and offload traffic from the 4G network), and to enable 4G users to maintain high-speed (3G+) service outside of the 4G coverage zones. 3 is the only fullservice MNO not to operate a GSM network. CDMA operator Net 1 uses the 450MHz frequency band to deliver comparatively lower-speed broadband to virtually 100% of the population. Figure 2.9: Mobile infrastructure status, Sweden [Source: Analysys Mason, 2013] Operator Technology Licence date Launch date Population coverage (at December 2012) TeliaSonera GSM N/d (900MHz); January 1996 (1800MHz) November 1992 (900MHz); November 1997 (1800MHz) 99.8% GPRS N/a September % EDGE N/a May % W-CDMA: 2.1GHz band made technologyneutral from March 2011 HSDPA / HSUPA Licence held via joint 3G network with Tele2 (Svenska UMTS-Nät): December 2000 March % N/a April % HSPA+ / N/a N/d Available across most

11 Sweden country report 9 Operator Technology Licence date Launch date Population coverage (at December 2012) HSPA+-DC LTE (2.6GHz; 800MHz; and 1800MHz (technologyneutral)) May 2008 (2.6GHz); March 2011 (800MHz); October 2011 (1800MHz) Tele2 GSM 1989 (900MHz); January 1996 (1800MHz). Part of the 900MHz spectrum pooled with Telenor as part of Net4Mobility Telenor Sverige December 2009 September 1992 (900MHz); November 1997 (1800MHz) densely populated areas, including Stockholm, Gothenburg and Malmo conurbations: 85% (Analysys Mason estimate) Over 600 locations in towns and cities across Sweden: more than 80% population (Analysys Mason estimate). At April 2012: over 200 locations, 61% population More than 99% GPRS N/a September 2001 More than 99% EDGE N/a N/a N/d: being rolled out via Net4Mobility W-CDMA: 2.1GHz band, made technologyneutral from March 2011 Licence held via joint 3G network with Telia (Svenska UMTS- Nät): December 2000 June % HSDPA N/a April % HSPA+ / HSPA+-DC LTE (2.6GHz; 800MHz; and 1800MHz (technologyneutral)) GSM N/a N/d Available across most densely populated areas, including Stockholm, Gothenburg and Malmo conurbations: 85% (Analysys Mason estimate) Licences held via LTE network joint venture with Telenor (Net4Mobility): May 2008 (2.6GHz); March 2011 (800MHz); October 2011 (1800MHz) 1991 (900MHz); January 1996 (1800MHz). Part of the 900MHz spectrum pooled with Tele2 as part of Net4Mobility November % (at September 2012); plan to cover 99% population by end-2012 September 1992 (900MHz); December 1997 (1800MHz) More than 99% GPRS N/a September 2001 More than 99% EDGE N/a N/a N/d: being rolled out via Net4Mobility W-CDMA: 2.1GHz band, made technologyneutral from March 2011 Licence held via joint 3G network with 3 (3G Infrastructure Services AB): December 2000 February % HSDPA N/a June % HSPA+ N/a May 2011 (at 42Mbps; 70%

12 Sweden country report 10 Operator Technology Licence date Launch date Population coverage (at December 2012) LTE (2.6GHz; 800MHz; and 1800MHz (technologyneutral)) 3 W-CDMA: 2.1GHz band, made technologyneutral from March 2011; 900MHz (technologyneutral) Licences held via LTE network joint venture with Telenor (Net4Mobility): May 2008 (2.6GHz); March 2011 (800MHz); October 2011 (1800MHz) 2.1GHz licence held via joint 3G network with Telenor (3G Infrastructure Services AB): December 2000; 900MHz licence separately held: March 2010 previously 21Mbps) November % (at September 2012); plan to cover 99% population by end-2012 May 2003 (2.1GHz); May 2011 (900MHz) HSDPA N/a November % HSUPA N/a September % HSPA+ / HSPA+-DC (2.1GHz) LTE (2.6GHz and 800MHz bands) N/a May 2008 (2.6GHz); March 2011 (800MHz) May 2011 (at 42Mbps; previously 21Mbps) December 2011 (2.6GHz) Net 1 CDMA2000 March 2005 January 2007 N/d 98.5% (2.1GHz and 900MHz) 70% EV-DO Rev. A N/a October % EV-DO Rev. B N/a February % Cities of Gothenburg, Lund, Malmo and Stockholm TeliaSonera is Sweden's largest MNO in terms of subscribers. It is an integrated fixed and mobile operator, established in 2002 by the merger of Sweden's and Finland's incumbents, Telia and Sonera respectively. The Swedish state owns 37.3% of the company, the Finnish state owns 13.7%, and private and institutional investors hold the remaining shares. The company operates in Sweden under the Telia brand. Apart from Sweden and Finland, the company has extensive mobile and fixed operations in the Baltic states, Denmark, Norway, Spain and Eurasia. In the Swedish mobile market, the company's strategy is centred on driving growth from data, broadband and value-added services, and from fixed mobile convergence. The company has rebalanced its contract tariffs so as to charge proportionally more for greater data volumes and speeds, and relatively less for voice and SMS. For example, in September 2012, Telia introduced a new bottom-ofrange subscription for customers not wishing to use over-the-top VoBB services such as Skype, while allowing VoBB on the higher-priced tariffs. In terms of value-added and converged services, in June 2012, Telia launched a Web TV service ('Telia Play +') allowing users to stream TV programmes and download catch-up TV and movies, over both the fixed and mobile network. The company is investing substantially in both mobile (3G+ and 4G) and fixed (FTTH and VDSL2) broadband infrastructure to support this converged service proposition. During 2012, it has expanded its 4G network to over 600 urban locations. Telia s 3G licence and network are shared with Tele2 via a joint venture (Svenska UMTS-Nät). Tele2 is a pan-european mobile and fixed operator, with activities in 11 Nordic and Baltic countries, and in Eurasia. In Sweden, Tele2 is the second-largest MNO by number of subscribers. It operates its 2G and 4G networks through a joint venture with Telenor (Net4Mobility); and its 3G network is run as part of a further joint venture with TeliaSonera (Svenska UMTS-Nät). The Net4Mobility 4G network has been rolled out aggressively during 2011 and 2012 with the aim of achieving 99% population coverage by the end of 2012.

13 Sweden country report 11 The company regards mobile broadband, sales of smartphones, adoption of associated data-centric contract tariffs, and value-added data and content services as its key growth drivers. Tele2 reported that 71% of its contract subscribers were using smartphones at September It also reported increasing take-up of 4G as compatible smartphones have become more widely available, with more than G customers by the end of June Tele2's brand positioning is based on value for money (high quality and user value for the least possible cost); although it also targets the pure budget end of the market via its predominantly prepaid 'Comviq' brand. The company is positioning mobile broadband and voice as an alternative to its fixed equivalents, and offers a 'home telephony' mobile service: a cordless, landline-style phone system for the home, where calls are routed over the cellular network. Tele2 is listed on the open market. Telenor Sverige (Telenor Sweden) is a subsidiary of the Norwegian incumbent and is Sweden's thirdlargest MNO as well as its second-largest fixed broadband provider. The company has expanded its presence in Sweden through acquisitions: it entered the country's mobile market in 2006 through its acquisition of Vodafone s Swedish MNO subsidiary. The company has a 3G network-sharing agreement with 3 relating to the 2.1GHz band only (via a joint venture, 3G Infrastructure Services), while its 2G and 4G networks are owned and operated via the Net4Mobility joint venture with Tele2. Using a combination of the partners' jointly held spectrum in the 800MHz, 1800MHz and 2.6GHz bands, the 4G network has been expanded aggressively during 2012, with the aim of attaining coverage of 99% of the population by the end of the year. Concurrently, together with 3, Telenor has continued to expand the reach of its 3G network, which uses HSPA+ and HSPA+-DC in most areas. In common with Sweden's other MNOs, Telenor is focusing on driving growth from mobile Internet services, and sales of smartphones and tablets. The company has simplified its tariff structure, and offers a range of '4G'-branded subscriptions incorporating a sliding price scale for increasing bandwidth and data volumes, and where the bottom-of-range services in fact operate at 3G speeds. Telenor also reorganised its marketing and sales operations in June 2012, creating three new departments responsible for mobile and fixed services to consumers and small businesses, and for integrated communications solutions for larger enterprises respectively. This was intended in part to enhance the mobile-only focus of Telenor as a brand. As such, it competes against other Telenor group fixed broadband brands, particularly via LTE, which it is positioning as an alternative to fixed broadband and, indeed, telephony. In October 2012, Telenor launched a new home gateway device ('D-Link') supporting both 4G-based broadband and telephony via Wi-Fi. Hi3G Access, which trades as 3, is the smallest mobile operator but has managed to increase its market share steadily over the past few years, mainly at the expense of Telia and Telenor. It operates a 3G network via a joint venture with Telenor (3G Infrastructure Services). The joint venture relates only to the companies' 2.1GHz spectrum assets. 3 also holds a technology-neutral licence in the 900MHz band and is rolling out 3G base station sites using this frequency, including in urban areas to provide better indoor coverage and thereby enhance 3G's effectiveness as an alternative to fixed broadband. The company has deployed HSPA+-DC technology across most of its 3G network. In December 2011, it also launched its 4G network (which uses spectrum in both the 2.6GHz and 800MHz bands) in the cities of Gothenburg, Malmo and Stockholm. 3 claimed that its 4G network was the world's first dual-mode FDD/TDD LTE network. During 2012, the company has, however, been less aggressive than its rivals in rolling out 4G and has concentrated mainly on completing and improving its 3G+ deployment. In terms of services, the company focuses on data-centric tariffs, sales of smartphones and associated multimedia services and applications, and mobile broadband for PCs and tablets. Net 1 is a CDMA EV-DO Rev. B network operator using the 450MHz band. It focuses on offering mobile broadband services particularly aimed at customers in rural areas of Sweden and off the coast, for which the superior long-distance propagation characteristics of the 450MHz band are especially well adapted. In addition to broadband, Net 1 also offers VoBB, including on a wholesale basis to third-party operators (such as Tele2) in remote areas where DSL connectivity is insufficient or non-existent. Net 1's

14 Sweden country report 12 network is also used to support M2M and telematics services. The company was formerly known as Nordisk Mobiltelefon and operated under the ice.net brand in Sweden, Denmark and Norway, but was rebranded as Net 1 in Sweden after it encountered difficulties and was bought by the US company Access Industries in March Fixed operators The incumbent, TeliaSonera, dominates the fixed telephony market, but its dominance is less pronounced in the broadband market, which features a large number of operators providing services over a wide range of technologies. TeliaSonera, and the third- and fourth-largest providers, Telenor Sweden and Tele2 respectively, compete with each other via DSL and fibre LAN, and over many of the 150+ open-access FTTH networks owned by municipalities and utilities. In addition, Tele2 operates a small cable network. The largest cable operator, and second-largest fixed broadband provider, is Com Hem. Many other smaller operators deliver triple-play services over the municipal FTTH networks. Figure 2.10: Fixed broadband retail subscriber market share, Sweden, 2Q 2012 [Source: Analysys Mason, 2013] 20% 7% 39% 16% 18% TeliaSonera Com Hem Telenor Sverige Tele2 Others Sweden has a very high concentration of superfast NGA infrastructure, particularly in larger urban zones. This includes a substantial amount of fibre, in two main variants: fibre LAN networks in apartment blocks and housing estates in both the public and private sector, the construction and running of which is generally subcontracted to third-party platform providers and operators, and which are increasingly being opened up to competing service providers utility- and, mainly, municipality-owned FTTH networks, which are also generally open access and accommodate multiple service providers. The country's four leading fixed broadband providers, including cable operator Com Hem, are all increasingly seeking to get involved in the construction of new networks, including co-funding new city networks, which enjoy the financial and political backing of national and local government. They are also aiming to take over the running of existing fibre LAN and FTTH networks, and to deliver services across them. Some of the newer fibre LAN networks support advertised downstream speeds of up to 1Gbps; the municipal FTTH networks generally

15 Sweden country report 13 deliver maximum symmetrical bandwidths of 100Mbps. Com Hem's cable networks have been almost fully upgraded to the DOCSIS3.0 standard and presently support up to 200Mbps downstream. TeliaSonera is also rolling out VDSL to around households. Figure 2.11: Operators fixed access infrastructure plans, Sweden [Source: Analysys Mason, 2013] Operator Access infrastructure plans announced Roll-out target Progress (at December 2012) TeliaSonera Tele2 Telenor Sverige (Bredbandsbolaget; Open Net; Open Universe; Ownit) Com Hem Investing around SEK5 billion (EUR524 million) on rolling out fibre access up to the end of Partnering with municipalities, building owners and housing cooperatives to deploy openaccess networks based on either fibre LAN or FTTB/H via an Ethernet P2P architecture. Also roll-out of VDSL2 from April 2011 to end-2013 Incremental capacity upgrades to fibre LAN network up to 1Gbps. Expanding presence in thirdparty owned open-access FTTH networks Bredbandsbolaget, Open Net and Ownit are all providers of triple-play services over thirdparty owned fibre access networks. Through Open Universe, Telenor is also aiming to increase its presence as a wholesale provider of capacity on such networks, as well as constructing new networks in selected locations Selective installation of fibre LANs and/or new HFC networks in new-build housing developments. Also, winning contracts to deliver services over third-party fibre networks Nearly 1 million fibre households; VDSL2 households Aims to offer services to over households via open access networks by end N/A N/A N/A 1Gbps already available to many fibre LAN customers. No data on number of openaccess homes passed Bredbandsbolaget's services available to around 2 million households in over 70 locations (includes DSL as well as fibre); more than households and businesses connected. Open Net's services available over 36 municipal networks at June 2012; Ownit served end users at September 2012; no data for the number of end users served by networks operated by Open Universe 1.6 million homes on own network upgraded to DOCSIS3.0 supporting 200Mbps downstream Stokab N/a N/A Completed previous plan to deploy FTTH to around households (90% of the population of Greater Stockholm) TeliaSonera is the incumbent operator and trades in Sweden under the Telia brand. The company continues to dominate the fixed voice market and is also the largest broadband operator. TeliaSonera provides its broadband services across a range of access infrastructure: DSL (ADSL and VDSL2), its own fibre (in LAN and FTTx variants), and via many of the country s municipality- and utility-owned fibre networks. The operator is also the leading provider of IPTV (over both fibre and DSL); and IPTV, and associated premium

16 Sweden country report 14 services such as HD-TV and VOD, represent a key target growth area, helping to drive adoption of superfast broadband and offset declining fixed voice revenue. The company has embarked on an ambitious NGA infrastructure roll-out programme, including the plan to deploy FTTH and fibre LANs to nearly 1 million homes by the end of 2014, and to cover a further homes with VDSL2 by the end of The fibre deployment is based predominantly on an open-access network architecture and business model, and is being carried out in partnership with municipalities, housing associations and private property companies in the areas concerned, which include semi-rural locations alongside larger cities and towns. The roll-out is intended to support Telia's strategic focus on converged, multi-play and value-added services, including the delivery of multimedia content and services across both fixed and mobile broadband connections. It is also intended to make Telia the long-term leader in the retail and wholesale fibre broadband market, which is rapidly gaining ground on the declining DSL segment. Mobile operator Tele2 is also Sweden's fourth-largest fixed broadband provider. The company delivers variable combinations of broadband, TDM voice and VoBB, and IPTV via a wide range of infrastructure types in different areas. These include ADSL2+ and VDSL2 unbundling and bitstream access, fibre LAN, municipal and utility fibre networks, and its own cable network in limited areas. The company's strategy is to migrate its broadband customer base from DSL to fibre (e.g. LAN or FTTH via municipal networks), where its cost base is lower, and where there are greater opportunities to introduce multi-play and valueadded services, e.g. advanced IPTV features. In addition, Tele2 is expanding its addressable fibre broadband market by reaching agreements to provide LAN and FTTH access with housing associations, real estate companies and municipal networks in new regions throughout Sweden. Telenor Sverige (Telenor Sweden) is the second-largest fixed broadband provider in Sweden. As in the mobile segment, Telenor has expanded its Swedish broadband operations through a number of acquisitions, including those of Bredbandsbolaget and Glocalnet in the first half of the 2000s. Bredbandsbolaget has been retained as a brand focused on premium broadband and triple play over fibre LANs and DSL, along with mobile broadband; and Glocalnet now serves as a budget brand for ADSL broadband, and fixed and mobile telephony. Further acquisitions have been completed in 2011 and In December 2011, Telenor Sweden acquired direct ownership from Telenor itself of the cable-tv operations of Canal Digital (Telenor's Nordic satellite DTH and CATV operation) in Sweden. This brought an additional TV customers to Telenor Sweden, served both via Canal Digital's own cable networks and via IPTV over a large number of municipal FTTH networks, including in the cities of Stockholm and Gothenburg. Then in June and September 2012 respectively, Telenor Sweden acquired Open Net and Ownit: two triple-play providers with extensive operations across Sweden's municipal networks. These acquisitions are part of a major drive on Telenor's part to expand its presence in the fibre LAN and FTTH markets. As part of this strategy, in December 2011, Telenor Sweden formed Open Universe: a new business unit dedicated to providing wholesale access to fibre LAN and FTTH networks owned by housing associations, municipalities and property companies, including constructing, owning and maintaining new networks where required. This is Telenor's response to a similar drive on the part of TeliaSonera to construct new fibre access networks and lease capacity on them to third-party service providers. Com Hem is Sweden s largest cable TV operator. It was formerly the cable subsidiary of Telia, which was obliged to divest it when merging with Sonera. The company was acquired by the private equity groups The Carlyle Group and Providence Equity Partners, which in turn sold Com Hem to the venture capital firm BC Partners in July The Carlyle Group and Providence Equity Partners had invested around SEK4 billion (EUR420 million) on upgrading Com Hem s infrastructure and services, including integrating UPC s cable networks in the Stockholm conurbation (acquired by Com Hem in 2006), and upgrading these and Com Hem s existing networks to the DOCSIS3.0 standard. By September 2012, the infrastructure serving around 1.6 million of the 1.75 million households connected to Com Hem s networks had been upgraded and was capable of delivering downstream speeds of up to 200Mbps. The company has also

17 Sweden country report 15 increasingly been targeting the fibre LAN and municipal FTTH networks, and won several contracts to deliver its triple-play portfolio (including IPTV) over such networks during Com Hem also provides mobile broadband on an MVNO basis over 3's network. FTTH operators: there are over 150 fibre networks operated by local municipalities and utility companies (such as Svenska Kraftnät and Vattenfall), providing operator-independent access or dark fibre. Stokab, owned by the Stockholm municipality, is the largest of these. Operation of the networks is generally subcontracted to companies such as Bahnhof, Open Net (acquired by Telenor Sweden in June 2012), ViaEuropa and Zitius, which provide platforms enabling two or more competing service providers to deliver and bill services to end users. 3 Market outlook 3.1 The mobile operators are racing ahead with their LTE deployments, but are they ahead of the market? Sweden has one of the world's most advanced mobile markets. All four of its full-service MNOs have launched LTE, and their 3G networks have been upgraded to HSPA+ and HSPA+-DC across most of their coverage. The leading operators TeliaSonera, and Tele2 and Telenor via their Net4Mobility joint venture have accelerated the pace of their LTE deployments during At the start of the year, TeliaSonera had installed LTE in over 200 urban locations; but by the end of 2012, it reported that it was on track to have deployed to over 600 locations, although it did not specify the population coverage this provided. For its part, Net4Mobility indicated that it expected to meet its target of rolling out LTE to 99% of the population by the end of 2012, which involves extensive use of the joint venture's 800MHz spectrum licence, obtained in March By comparison, 3 has adopted a somewhat more cautious approach to deploying LTE; although, at the end of 2012, its 4G network was present in Sweden's three largest cities: Stockholm, Gothenburg and Malmo, as well as the city of Lund. 3 has been focusing instead on increasing the range and density of its 3G coverage, including rolling out HSPA+-DC technology operating over the 900MHz band. This approach makes sense for a mobile-only player such as 3 that is positioning mobile broadband as an alternative to residential fixed broadband, in that denser urban 3G coverage in the 900MHz band enables 3 to offer superior indoor service quality. At first sight, 3's relative caution appears to be justified given that take-up of 4G services has not been spectacular. For example, it was reported that TeliaSonera had gained LTE subscribers (using dongles, tablets or smartphones) by the end of May This accounted for about 2% of its total active subscriber base of 6.4 million at June This is despite the fact that TeliaSonera introduced LTE in Sweden as early as December Alongside the company's simultaneous launch in Norway, this was the first commercial deployment of LTE in the world. Similarly, Tele2 reported that it had over LTE subscribers at June 2012: less than 2% of its total customer base. However, apart from the marketing benefit of allowing operators to claim they offer the best nationwide 4G coverage, the main driver behind the MNOs' accelerated LTE roll-out is the explosion in adoption of smartphones and tablet PCs, with users increasingly employing multiple connected devices in different contexts. The regulator, PTS, reported that the number of subscriptions including a data component (for smartphones or tablets) more than doubled in the year to June 2012, from around 1.9 million to 4.2 million. This compared with Analysys Mason Limited : Market outlook

18 Sweden country report 16 an actual deceleration in the rate of growth of mobile broadband via USB modem: there were 2.05 million subscriptions of that type at June 2012, an increase of only 12% in 12 months. As 4G-enabled smartphones and tablets become more available and affordable, this creates a customer expectation that 4G networks will also be accessible nationwide. Hence the operators' 4G deployments have been carried out more in anticipation of future demand than on the basis of demonstrable demand in the present. Besides which, LTE enables a more efficient use of the spectrum resource, allowing operators to manage traffic flows more effectively, including offloading traffic on to 3G networks for customers on lower-tier subscriptions. This strategy demonstrates the importance of deploying 3G+ infrastructure alongside 4G, since for the time being at least, the data rates enabled by HSPA+ and HSPA+-DC are likely to be more than sufficient for most users. 3.2 Mobile operators' broadband offerings are increasingly supported by superfast fixed broadband capabilities Parallel to developments in the mobile segment, the fixed market is also transitioning from fast to superfast broadband, with widespread availability of competing VDSL2, fibre (LAN and FTTH) and DOCSIS3.0-enabled cable infrastructure. In fact, the three largest MNOs TeliaSonera, Tele2 and Telenor are also among the leading protagonists in the superfast fixed broadband market. This fact is paradoxical in the sense that, to some extent, operators' fixed and mobile services end up in competition against each other, with Telenor and Tele2 in particular positioning offerings such as 4G-based residential WLANs as explicit alternatives to fixed broadband and voice services. However, the advantages for operators of having both mobile and fixed superfast broadband infrastructure outweigh the risks of revenue cannibalisation. One advantage is the ability to offload significant volumes of data from the mobile network as users of connected devices access the same services via Wi-Fi in the home or office as they do via the mobile network on the go. Operators are increasingly developing converged services that rely on the ability for users to access the same content via multiple devices, screens and types of infrastructure. For example, TeliaSonera's Web TV and video-downloading service ('Telia Play +'), which was rolled out to PC and Mac users in June 2012, was extended to smartphone and tablet users from December 2012 onwards. The flip side of using fixed access networks for mobile data offload is that users expect a comparable quality of service when they try to access their content and apps over the mobile network. Accordingly, Swedish operators' mobile and fixed superfast broadband capabilities are increasingly mutually reinforcing. 3.3 Operators are intensifying their efforts in the fibre access market During 2012, the four leading fixed broadband operators have all intensified their efforts to expand their share of the fibre access infrastructure and service markets. In addition to the benefits of combining the mobile and fixed superfast broadband infrastructure and services discussed above, the operators are all reacting to the threat posed by Sweden's open-access fibre networks and by regulation to their previous business models focused on Telenor's copper access network and, in Com Hem's case, the cable network. The country's municipal FTTH networks have virtually all been built on an open-access architecture, allowing multiple competing operators to deliver triple-play services, including superfast broadband at 100Mbps downstream or more. TeliaSonera's decision (announced in June 2011) to invest around EUR5 billion by the end of 2014 on rolling out its own FTTH networks to nearly 1 million homes was in part prompted by the need to respond to this competitive challenge. The incumbent's infrastructure will itself be effectively constructed and operated on an open-access basis (e.g. using a P2P architecture), following regulatory decisions in November 2009 and February 2011 respectively obliging TeliaSonera to enable LLUB on its new fibre networks Analysys Mason Limited : Market outlook

19 Sweden country report 17 and to provide an offer of dark fibre to the building, allowing competitors to market services to whole buildings on equal terms. A further regulation, in the form of a provision in Sweden's Communications Act, came into force in July This effectively extended the open-access principles into existing fibre LANs by obliging landlords or their operator sub-contractors to open up in-building networks to any competitor making a reasonable request for access. Following this, in December 2011, PTS published a set of guidelines resulting from consultation with industry players as to how this regulation should be applied in practice; and PTS also agreed to provide arbitration in cases where operators could not agree terms. However, no disputes have in fact arisen from the new regulation, which has intensified competition between the operators to win the right to operate new and existing fibre LANs, and provide wholesale access on a non-discriminatory basis. In 2012, TeliaSonera effectively decided to make a virtue out of the necessity of providing open-access networks, and has been aggressively seeking to win contracts to manage fibre LANs and municipal FTTH networks on an operator-independent basis, alongside building out its own FTTH networks. For TeliaSonera, this has emerged as the most logical way to defend its position as the dominant player in the local loop, rather than as a mere service provider on third party-owned and -managed networks. In addition, this is consistent with government policy, which seeks to promote the extension of fibre broadband via public-private partnerships and effective market competition, rather than through regulatory coercion. The Swedish government is of course TeliaSonera's largest single shareholder. In response to TeliaSonera's change in strategic direction, Telenor established a new business unit, Open Universe, in December Open Universe is dedicated to providing wholesale access to fibre LAN and FTTH networks owned by housing associations, property companies and municipalities, including constructing, owning and maintaining new networks where required. The unit has secured a number of large-scale contracts during 2012; and one of its main customers is Telenor's own retail premium broadband operator Bredbandsbolaget. In a similar way to TeliaSonera, Open Universe represents an attempt on Telenor's part to maximise its participation across the fibre broadband value chain, including: building and owning networks; managing them on behalf of property owners; providing wholesale access to third-party operators; and acting as a retail service provider. It also reflects a shift in strategic emphasis away from the declining DSL market and over to the fibre access market, where a more level playing field has been successfully established. Indeed, PTS's efforts to regulate copper LLUB have been persistently dogged by legal challenges on the part of TeliaSonera. For instance, in March 2012, Sweden's Administrative Court overturned parts of PTS's regulation of TeliaSonera's LLUB prices for 2008 having previously issued a similar ruling relating to 2007 allowing the incumbent to retrospectively impose higher prices on its wholesale customers, such as Telenor. Tele2 and Com Hem have similarly intensified their efforts to penetrate the fibre LAN and FTTH markets in The cable segment has grown much more slowly than fibre; but the opening up of in-building LANs presents an opportunity for Com Hem to develop a business as a provider of fibre-based IPTV and triple-play alongside CATV and cable broadband, in some instances literally: Com Hem has reported that in some projects, property owners have requested that it installs FTTH and co-ax cable as part of the same deployment. In Tele2's case, the long-term strategic rationale for targeting the fibre LAN and municipal FTTH markets is not as obvious, given that, as a group, Tele2 is focusing increasingly on a mobile-centric offer and that Tele2's fixed broadband market share in Sweden (7%) is much lower than that of its three larger rivals. However, for the time being, Tele2 is clearly driven by the need to be seen to be squaring up to its rivals in its home market and to be building up its addressable fibre broadband market in a competitive manner. Analysys Mason Limited : Market outlook

20 Sweden country report 18 4 Appendices Figure 4.1: Major regulatory organisations, Sweden [Source: Analysys Mason, 2013] Name PTS (Post och Telestyrelsen (Post and Telecoms Agency)) Responsibilities PTS is responsible for granting licences, monitoring competition, determining interconnect terms if operators cannot agree, determining which companies should be considered dominant operators, and resolving disputes. It is overseen by the Ministry of Enterprise, Energy and Communications. PTS's basic philosophy, as set out in the 1993 Telecommunications Act, is that priority should be given to furthering consumer interests, rather than to promoting competition for its own sake. It also believes that parties should, wherever possible, reach agreement without regulatory intervention. Figure 4.2: Key market liberalisation dates, Sweden [Source: Analysys Mason, 2013] Date January 2008 July 2003 February 2002 March 2000 January 2000 September 1999 July 1999 Event TeliaSonera formed Skanova Access (now referred to simply as Skanova) as a separate and independent subsidiary in response to pressure from PTS for functional separation. A new law on electronic communication came into effect, incorporating a number of EU directives and guidelines into Swedish law. In particular, the aim of the new law was to promote competition in the fixed telecoms market by reducing the advantages of the SMP operator and making it easier for OLOs to access long-distance and local networks. CPS on local calls was introduced. TeliaSonera voluntarily offered its local loops for unbundling. Portability of mobile and non-geographic fixed numbers was introduced. CPS on long-distance and international calls was introduced. Number portability was introduced for fixed networks The government agency Televerket was split into the incumbent operator, Telia AB, and the PTS, which assumed responsibility for telecoms regulation. The fixed telephony market was liberalised. Figure 4.3: Additional regulatory information, Sweden [Source: Analysys Mason, 2013] Issue Mobile licensing Information Sweden has five licensed MNOs: TeliaSonera, Tele2 and Telenor (GSM, UMTS and LTE); Hi3G Access (UMTS and LTE); and Net 1 (CDMA2000 EV-DO Rev. A). The operators are rolling out 3G services via two network joint ventures: Svenska UMTS-Nät (TeliaSonera and Tele2) and 3G Infrastructure Services (Telenor and H13G). In addition, Tele2 and Telenor have a 4G network joint venture, Net4Mobility. Two sets of spectrum auctions were carried out in 2011: in March 2011, all four existing MNOs were successful bidders in an auction of spectrum in the 800MHz band, designed to support the roll-out of LTE across Sweden's sparsely populated rural areas. Tele2's and Telenor's spectrum procured in the auction was assigned to their Net4Mobility 4G joint venture. Net4Mobility's licence included an obligation for it to provide 4G coverage at a minimum of 1Mbps to all homes and businesses presently without any broadband connection, for which it received a grant of SEK300 million (EUR31 million) paid from the revenue generated by the auction. In February 2012, Net4Mobility began rolling out this coverage, with the objective of delivering broadband to 25% of the homes and businesses concerned by the end of In October 2011, TeliaSonera, and Tele2 and Telenor via Net4Mobility, each won 35MHz of vacant spectrum in the 1800MHz band. This was technology-neutral but was expected to be used to support LTE in built-up areas. By contrast, H13G is the only operator to have been assigned technology-neutral spectrum in the 900MHz band (in February 2009), which it is using to build out superior indoor and longrange 3G coverage. In February 2012, PTS allowed Tele2 and Telenor to transfer their respective 2.6GHz licences, and parts of their licensed 900MHz assets, over to Net4Mobility. Analysys Mason Limited : Appendices

21 Sweden country report 19 Wholesale broadband Retail VoBB Functional and structural separation Mobile termination TeliaSonera unilaterally opened its local loops for unbundling in 2000, in a move that was later reinforced by PTS s ruling that TeliaSonera had SMP in the LLUB market. TeliaSonera has had SMP obligations in the wholesale broadband market since January 2007, and it is required to satisfy all reasonable access requests at cost-oriented prices. PTS determined new shared and full LLUB prices. In addition, PTS determined in November 2009 that TeliaSonera had an obligation to provide wholesale access for fibre, as well as copper, networks. PTS reinforced this ruling by a decision in February 2011 that Telia s reference unbundling offer for fibre should include the provision of dark fibre to the building, enabling competitors to offer services to all the homes in it, rather than mere unbundling of the connection to the individual dwelling within the building. The LRIC pricing methodology for fibre unbundling was finally agreed in May In July 2011, a new provision to Sweden s Communications Act came into force, which obliges property owners, or operators contracted to them, to open up their LANs and in-building networks to any alternative provider making a reasonable request for access. In December 2011, PTS published a set of guidelines resulting from consultation with industry players as to how this regulation should be applied in practice, particularly in relation to pricing. PTS also agreed to provide arbitration in cases where operators could not agree terms. However, as at December 2012, PTS had not reported on a single instance of the new law having been applied, either with or without mutual agreement on the part of the operators concerned. PTS announced in December 2012 that the next round of its analysis of the wholesale unbundling and bitstream access markets (EU Markets 4 and 5) would not now be completed until the end of 2013 or beginning of Originally, the regulator had expected to complete its preliminary analysis by the second quarter of The delay was caused by the fact that the EC was working on new methods for assessing price fixing and non-discrimination, which were expected to have a major impact on PTS's analysis; and the EC was not expected to publish its conclusions until spring Retail VoBB is, under certain conditions, considered voice telephony, and ISPs that fulfil the criteria for telephony service are required to register (declare) with PTS, and have the same rights and obligations as other registered operators. PTS recommended functional separation for TeliaSonera in September PTS based its framework on the UK s separation model, recommending that TeliaSonera set up an independent subsidiary to manage its network assets and to ensure that all players received equal rights of access to the network. The company responded by launching a new infrastructure division, Skanova Access (now simply Skanova), in January 2008, which supplies copper and fibre networks to wholesale customers and to its own internal operations. An independent Equality Access Board has been set up to ensure that no discrimination takes place against customers. In June 2011, PTS published a new LRIC pricing model for mobile termination rates (MTRs), agreed after lengthy consultation with operators. This imposed a symmetrical MTR of SEK0.21 (EUR0.02) per minute for all operators and leading MVNOs, down from SEK0.26 (EUR0.025). The new rate was applicable from 1 July A new rate of SEK0.15 (0.0167) became effective from 1 July 2012 until further notice. Figure 4.4: Incumbent s fixed infrastructure status, Sweden [Source: Analysys Mason, 2013] Item Information Main distribution frames (MDFs) 8103 (at September 2009) of which co-located 2994 (at September 2009) Cabinets Total incumbent copper lines Median local loop length Core network infrastructure N/A N/A N/A km of SDH fibre backbone with POPs in every municipality. DSL coverage (households) 98% NGN status Equipment suppliers TeliaSonera has also deployed an enhanced packet core (EPC) network throughout the Nordic region to support its LTE services. Alcatel-Lucent (ADSL equipment, IP routers); Bay Networks (Ethernet switches); Cisco Systems (IP networking, Ethernet P2P equipment); Clarent (IP telephony equipment); Ericsson (IP routers, softswitches, EPC network); Juniper Networks (backbone routers); Lucent Technologies (DWDM equipment); Motorola; Nokia Siemens Networks (ADSL equipment). Analysys Mason Limited : Appendices

22 1 Sweden country report 20 About the authors Hilary Bailey (Senior Analyst) has worked for Analysys Mason for more than 20 years. She specialises in quantitative forecast modelling and is a key contributor to Analysys Mason s Core Forecasts and Country Reports research programmes. Hilary helped to develop and implement our new converged core forecast methodology. She manages and is one of the key contributors to Analysys Mason's Telecoms Market Matrix, which tracks and compares telecoms metrics and market shares for all the major fixed and mobile operators in Europe. She has previously specialised in telecoms price comparison studies encompassing fixed, mobile and the converged fixed/mobile markets. Hilary has a degree in Economics from the University of Bristol, and an MPhil in Economics from the University of Cambridge. David Martin (Analysys Mason Associate) is an experienced freelance researcher, telecoms analyst and writer. He has worked extensively for Analysys Mason, including authoring and co-authoring a number of reports. These include Competition in Corporate Networking, Business-to-Business E-billing, and two editions of New Network Operators in Western Europe. From 2002 to 2008, he was a key contributor to the Analysys Mason online service Next Generation Telecoms IT (previously Billing and OSS Markets); and he has also written a large number of company and country profiles, and case studies focusing mainly on the Western European fixed and mobile telecoms markets. His other professional work has included a wide range of research projects for other telecoms publishers, mainly focusing on European markets; regular senior executive-level reports on the media performance of major telecoms, electronics and other corporations for a London media consultancy; and writing and research on green technology and environmental regulations. 1 Published by by Analysys Mason Limited Bush House North West Wing Aldwych London WC2B 4PJ UK Tel: +44 (0) Fax: +44 (0) research@analysysmason.com Registered in in England No Analysys Mason Limited 2013 All rights reserved. No part of of this publication may be reproduced, stored in in a retrieval system or or transmitted in in any form or or by any means electronic, mechanical, photocopying, recording or or otherwise without the prior written permission of of the publisher. Figures and projections contained in in this report are based on on publicly available information only and are produced by by the Research Division of of Analysys Mason Limited independently of of any client-specific work within Analysys Mason Limited. The opinions expressed are those of of the stated authors only. Analysys Mason Limited recognises that many terms appearing in in this report are proprietary; all all such trademarks are acknowledged and every effort has been made to to indicate them by by the normal UK publishing practice of of capitalisation. However, the presence of of a term, in in whatever form, does not affect its its legal status as as a trademark. Analysys Mason Limited maintains that all reasonable care and skill have been used in in the compilation of this publication. However, Analysys Mason Limited shall not be under any liability for loss or damage (including consequential loss) whatsoever or howsoever arising as a result of the use of this publication by the customer, his servants, agents or any third party. Analysys Mason Limited 2013 About the authors

23 Sweden country report 21 About Analysys Mason Knowing what s going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialist knowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research. Consulting Our focus is exclusively on TMT. We support multi-billion dollar investments, advise clients on regulatory matters, provide spectrum valuation and auction support, and advise on operational performance, business planning and strategy. We have developed rigorous methodologies that deliver tangible results for clients around the world. For more information, please visit Research We analyse, track and forecast the different services accessed by consumers and enterprises, as well as the software, infrastructure and technology delivering those services. Research clients benefit from regular and timely intelligence in addition to direct access to our team of expert analysts. Our dedicated Custom Research team undertakes specialised and bespoke projects for clients. For more information, please visit Analysys Mason Limited 2013 About Analysys Mason