The Norwegian Electronic Communication Service Market. May Revised September

Transcription

1 The Norwegian Electronic Communication Service Market 2014 May Revised September

2 1 Key figures Change Fied telephony: Total number of subscribers to fied telephony % Of which number of subscriptions for PSTN, ISDN % Of which number of subscriptions for VoIP % Traffic from fied-line telephones (million minutes) % Fied telephony sales revenues (NOK million) % Mobile services: Number of subscriptions for mobile telephony % Number of special subscriptions for mobile broadband % Number of SIM cards for M2M communication % Voice calls from mobile phones (million minutes) % Number of SMS messages sent (millions) % Number of MMS messages sent (millions) % Data traffic from mobile phones and mobile broadband (million GB) % Sales revenues from mobile services (million minutes) % Fied broadband: Number of subscriptions for fied broadband % Of which number of subscriptions based on DSL % Of which number of subscriptions based on cable TV network % Of which number of subscriptions based on fibre % Of which number of subscriptions based on other technologies % Fied broadband sales revenues (NOK million) % Data communication services: Sales revenues from data communication services % Leased lines: Sales revenues from leased lines (end-user) % TOTAL SALES REVENUES Total sales revenues from electronic communications services (NOK million) Transmission of TV signals: % Number of subscriptions % Sales revenues from transmission of TV signals (NOK million) % Investments: Total investments in electronic communications services and networks, including intangible assets (NOK million) %

3 2 Contents 1 Introduction Development trends Telephony Fied and mobile broadband Sales revenues Investments in electronic communications services and networks Fied telephony Subscriptions Traffic Sales revenues Market shares Mobile services Introduction Subscriptions Traffic Minutes and calls Messages Data traffic Sales revenues Mobile telephony Mobile broadband Combined sales revenues from mobile telephony and mobile broadband Market shares Mobile telephony Mobile broadband Mobile telephony and mobile broadband combined International roaming About international roaming Norwegian subscribers abroad Foreign subscribers in Norway Machine-to-machine communication Fied broadband and data communications Introduction... 50

4 3 5.2 Residential market Subscriptions Marketed line speed Sales revenues Market shares Business market Fied broadband subscriptions Marketed speed for fied broadband Sales revenues from fied broadband Market shares for fied broadband Subscriptions for data communication services Sales revenues from data communication services Market shares for data communication services Total sales revenues in the business market Combined figures for the residential and business markets for fied broadband Fied broadband subscriptions Capacity of fied broadband Sales revenues from fied broadband Market shares for fied broadband Leased lines Subscriptions Sales revenues Market shares Transmission of TV signals Introduction Subscriptions Sales revenues The sales concept Developments in sales revenues Market shares Appendi: Operative providers of telephony and broadband at 31 December

5 4 List of figures Figure 1 Development in the number of subscriptions for fied telephony and mobile telephony. Residential and business subscriptions Figure 2 Annual change in number of fied telephony and mobile telephony subscriptions. Residential and business subscriptions Figure 3 Development in traffic from the fied network and mobile networks Figure 4 Average number of traffic minutes per subscription per month from fied-line telephones and mobile phones Figure 5 Development in the number of subscriptions for fied and mobile broadband. Residential and business subscriptions Figure 6 Spread of fied broadband and VoIP among households Figure 7 Number of subscriptions broken down by access technology. Residential and business subscriptions Figure 8 Annual change in fied broadband subscriptions broken down into DSL, cable TV network and fibre. Annual change in mobile broadband subscriptions. Residential and business subscriptions Figure 9 Total sales revenues. Residential and business subscriptions combined. NOK million Figure 10 Share of the total sales revenues for the largest providers Figure 11 Number of subscriptions broken down into PSTN, ISDN and VoIP Figure 12 Share of households in Norway with a fied telephony subscription Figure 13 Voice traffic from fied-line telephones broken down by direction. Million minutes.. 22 Figure 14 Fied telephony sales in the business market for different traffic directions and subscriptions. NOK million Figure 15 Telenor's share of traffic minutes and total sales revenues. Business and residential markets Figure 16 Fied telephony, market share by sales revenues, residential and business markets Figure 17 Fied telephony, market share by traffic minutes, residential and business markets Figure 18 Broadband telephony, market share by sales revenues, residential and business markets Figure 19 Broadband telephony, market share by traffic minutes, residential and business markets Figure 20 Number of subscriptions for mobile telephony... 29

6 5 Figure 21 Number of mobile telephony subscriptions that are active for mobile data. Number of subscriptions that include 1 GB and 5 GB or more per month Figure 22 Number of special subscriptions for mobile broadband Figure 23 Traffic minutes from mobile phones, broken down by direction of traffic Figure 24 Number of calls from mobile phones broken down by direction of traffic Figure 25 Number of traffic minutes per subscription per month Figure 26 Number of SMS messages sent Figure 27 Number of MMS messages sent Figure 28 Number of content messages sent Figure 29 Development in data traffic for mobile telephony subscriptions and special subscriptions for mobile broadband Figure 30 Average monthly data volume per mobile broadband subscription Figure 31 Mobile telephony sales revenues Figure 32 Sales revenues from special subscriptions for mobile broadband broken down into residential subscriptions and business subscriptions Figure 33 Market shares for mobile telephony subscriptions Figure 34 Mobile telephony subscriptions broken down into residential and business customers Figure 35 Market shares for special subscriptions for mobile broadband Figure 36 Market shares for total data traffic for mobile telephony and mobile broadband Figure 37 Market shares for the combined sales revenues from mobile telephony and mobile broadband Figure 38 Development in traffic volumes. Norwegian subscribers abroad Figure 39 Development in earnings and costs. Norwegian subscribers abroad Figure 40 Development in traffic volumes. Foreign subscribers in Norway Figure 41 Development in earnings. Foreign subscribers in Norway. NOK million Figure 42 Number of SIM cards for machine-to-machine communication via a mobile network (M2M) Figure 43 Number of fied broadband subscriptions in the residential market Figure 44 Subscriptions for fied broadband broken down by line speed. Residential customers. Downstream speed Figure 45 Subscriptions for fied broadband broken down by line speed. Residential customers. Upstream speed Figure 46 Sales revenues from fied broadband sales in the residential market Figure 47 Market shares for mobile broadband measured by number of subscriptions. Residential market Figure 48 Market shares for fied broadband measured by sales revenues. Residential market Figure 49 Number of fied broadband subscriptions in the business market... 55

7 6 Figure 50 Subscriptions for fied broadband broken down by line speed. Business customers. Downstream speed Figure 51 Subscriptions for fied broadband broken down by line speed. Business customers. Upstream speed Figure 52 Fied broadband sales in the business market Figure 53 Market shares measured by sales revenues. Business market Figure 54 Market shares for the data communication services Ethernet VPN, IP VPN in closed networks, and IP VPN over Internet, measured by sales revenues. End-customers Figure 55 Combined revenues from sales of fied broadband and data communication services in the business market Figure 56 Number of subscriptions for fied broadband broken down into the residential market and the business market Figure 57 Subscriptions for fied broadband broken down by line speed. Residential and business markets. All forms of access Figure 58 Sales revenues from fied broadband broken down into residential subscriptions and business subscriptions Figure 59 Market shares for fied broadband via DSL in the residential and business markets combined, measured by sales revenues Figure 60 Market shares for fied broadband via cable TV network in the residential and business markets combined, measured by sales revenues Figure 61 Market shares for fied broadband via fibre in the residential and business markets combined, measured by sales revenues Figure 62 Number of analogue and digital leased lines, including dark fibre and optical channels, sold to end-users and wholesalers Figure 63 Development in total sales revenues from transmission capacity from sales to endusers and wholesalers Figure 64 Number of subscriptions for reception of TV signals at the end of the period Figure 65 Number of subscriptions broken down by form of access. By percentage Figure 66 Sales revenues from distribution of TV signals broken down by form of access Figure 67 Market shares for distribution of TV signals, measured by number of subscriptions. All forms of access Figure 68 Market shares for transmission of TV signals, measured by number of subscriptions. Cable TV Figure 69 Market shares for transmission of TV signals, measured by number of subscriptions. Fibre... 75

8 7 Tables Table 1 Development in the number of providers in the electronic communications market, broken down by service category... 8 Table 2 Annual investments in electronic communications services and networks. Figures in NOK million Table 3 Number of PSTN, ISDN and broadband telephony (VoIP) subscriptions in the residential market Table 4 Number of PSTN, ISDN and broadband telephony (VoIP) subscriptions in the business market Table 5 Number of call minutes from fied-line telephones broken down into residential and business. Million minutes Table 6 Calls from fied network to fied network, mobile network and abroad. Residential market. Million minutes Table 7 Calls from fied network to fied network, mobile network and abroad. Business market. Million minutes Table 8 Fied telephony sales in the residential market and the business market. NOK million Table 9 Share of the sales revenues in the fied telephony market held by broadband telephony (VoIP). As a percentage Table 10 Development in data traffic for mobile telephony subscriptions and special subscriptions for mobile broadband. Figures in 1,000 GB Table 11 Sales revenues from mobile telephony broken down by revenue area. NOK million 38 Table 12 Sales revenues from mobile telephony and mobile broadband. NOK million Table 13 Market shares for mobile telephony measured by service category Table 14 Traffic and sales revenues from machine-to-machine communication. Figures in millions Table 15 Number of subscriptions for data communication services Table 16 Sales revenues from data communication services. NOK million Table 17 Sale of transmission capacity. Number of lines at year-end 2013 and Table 18 Wholesaler and end-user sales of transmission capacity. NOK thousand Table 19 Market shares based on revenues from eternal sales of transmission capacity via digital lines. Wholesale and end-customers... 69

9 8 1 Introduction Twice a year, the Norwegian Communications Authority (Nkom) presents statistics showing key developments in the markets for electronic communications services. The reports are based on figures obtained from all the providers of electronic communications services. One report contains statistics for the whole year and is published in May; the other report covers the first half of the year and is published in October each year. The statistics in both the full-year and half-year reports include fied telephony (including broadband telephony), mobile telephony and other mobile services, broadband and transmission of TV signals. The full-year report also includes data communication services and transmission capacity (leased lines). The statistics mainly cover subscriptions and sales revenues, and traffic where relevant. The market shares of the largest providers are also described. Table 1 shows the total number of operative providers on which the annual statistics are based. The total number of providers has decreased almost every year since There was a total of 178 operative providers in In the statistics for 2013 there were 182 providers. The annual decrease reflects changes in the market in this period, including mergers, acquisitions and disposals. There are also fewer newly established providers compared with previously. In some service areas the number of providers varies considerably from year to year. Most of the providers have operations in more than one service area. The appendi contains a list of the individual providers within telephony and broadband Fied telephony Of which VoIP Mobile telephony Mobile broadband Fied broadband Data communication services Leased lines Transmission of TV signals TOTAL Table 1 Development in the number of providers in the electronic communications market, broken down by service category

10 9 Some of the figures from previous years have been restated. Nkom carries out thorough quality control of the reports submitted by the operators. Sometimes, however, we do not uncover erroneous reports until we can compare several years of data. The numerical data in this report may therefore contain minor errors.

11 Number of subscriptions in thousands 10 2 Development trends 2.1 Telephony Figure 1 shows the development in the number of subscriptions for fied telephony and mobile telephony 1 from 2002 on. Fied telephony includes broadband telephony (VoIP) from 2003 when this service was introduced. At year-end 2014 there were over 1.08 million subscriptions for fied telephony and more than 5.91 million subscriptions for mobile telephony Mobile Telephony Fied Telephony Figure 1 Development in the number of subscriptions for fied telephony and mobile telephony. Residential and business subscriptions Figure 2 shows the annual change in the number of subscriptions for mobile telephony and fied telephony. There has been a decline in the number of fied telephony subscriptions each year since Up to 2008 the annual reduction was a good deal smaller than 100,000 subscriptions. Since 2009 the annual reduction has remained relatively stable at over 100,000 subscriptions. Broadband telephony grew in prevalence until the end of 2009 when the number of subscriptions reached a peak of almost 516,000. Since then the number of subscriptions for broadband telephony has fallen each year and was around 412,000 subscriptions at the end of The number of subscriptions for mobile telephony rose sharply each year until The period saw large annual variations in growth. Since 2011 the annual growth has slowed down considerably compared with the previous years. In this contet subscriptions 1 Figures 1 and 2 also include subscriptions for NMT (Nordisk Mobiltelefonsystem Nordic Mobile Telephony) for NMT is also referred to as a first-generation (1G) automatic mobile telephony system. This network opened in Norway in 1981 and was partly closed in 2001 (NMT-900), with final closure at the end of 2004 (NMT- 450).

12 Number of subscriptions in thousands 11 include post-paid subscriptions and pre-paid subscriptions, i.e. active pre-paid cards 2. The proportion of pre-paid cards has decreased significantly in the period from 2002, when prepaid cards constituted some 40 per cent of subscriptions. At the end of 2014 the share of prepaid cards was just under 24 per cent. From the end of 2013 to the end of 2014 the number of subscriptions for fied telephony fell by more than 154,000, while the number of mobile subscriptions rose by over 50,000 in the same period Mobile Telephony Fied Telephony Figure 2 Annual change in number of fied telephony and mobile telephony subscriptions. Residential and business subscriptions Figure 3 shows the change in originated traffic measured in minutes. Traffic minutes originating from the fied network include both voice calls and traffic to dial-up Internet. Traffic from dial-up Internet has been negligible in the last few years. Total traffic from fied telephony and mobile telephony declined substantially until roughly Much of this was due to the decline in traffic from dial-up Internet. Since then the annual decline in the total number of traffic minutes has been smaller. Mobile traffic comprises a steadily growing share of the total traffic. In 2014 traffic from mobile telephones constituted around 81 per cent of the total traffic, compared with roughly 47 per cent in Nkom regards a pre-paid card as a subscription when it is active, i.e. it has generated traffic on a mobile network in the last three months.

13 Number of minutes Million minutes % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Traffic from fied network Traffic from mobile network Share of traffic from mobile network Figure 3 Development in traffic from the fied network and mobile networks The rapid growth in traffic from mobile networks is due to an increase in the number of mobile subscriptions and the fact that each subscription is generating more traffic on average. Figure 4 shows that there has been an increase in the average number of traffic minutes per subscription for mobile telephony, but this growth is beginning to level off. There has been a substantial decline in fied telephony in the same period. Fied telephony includes traffic to dial-up Internet. This traffic dropped significantly with the transition to fied broadband, and dial-up Internet traffic has represented a marginal share of the market in recent years. The difference between the average number of traffic minutes per subscription from fied telephony and mobile telephony is getting smaller. In 2014 the average gap was approimately 60 minutes per month From fied-line telephone From mobile phone Figure 4 Average number of traffic minutes per subscription per month from fied-line telephones and mobile phones

14 Number of subscriptions in thousands Fied and mobile broadband Figure 5 shows the development in subscriptions for fied and mobile broadband from At the end of 2002 there were just over 200,000 subscriptions for fied broadband. At the end of 2014 the number of subscriptions had almost reached 2 million. Mobile broadband was introduced in At the end of 2014 there were approimately 535,000 subscriptions Fied Broadband Mobile broadband Figure 5 Development in the number of subscriptions for fied and mobile broadband. Residential and business subscriptions Figure 6 shows the percentage of households in Norway with a fied broadband subscription and the share of broadband customers that also have VoIP 3. The share of households with fied broadband rose gradually every year. The growth in the number of residential broadband subscriptions was thus larger than the increase in the number of households in this period. The share of households with fied broadband has been around 78 per cent at the end of Nkom uses figures from Statistics Norway regarding the development in private households in Norway. The number of households at the end of 2014 has been estimated by Nkom. The number of households by the end of year 2013 is not comparable with the previous years. A change in definition causes the increase in number of households from 2012 to 2013 which is considerably larger than a normal year. This is a one-time effect and causes halt in the trend from 2012 to 2013, ref. figure 6.

15 Number of subscriptions in thousands 14 Until 2007 an increasing share of households with fied broadband also had VoIP. In 2007 and 2008 this share was roughly 35 per cent. Since 2008 this share has declined slightly, and at the end of 2014 some 20 per cent of households with broadband also had VoIP. 80% 70% 60% 50% 40% 30% 20% Andel husholdninger med bredbåndsabonnement Andel bredbåndskunder med bredbåndstelefoni 10% 0% Figure 6 Spread of fied broadband and VoIP among households Figure 7 shows the number of broadband subscriptions broken down by access technology. At the end of 2014 broadband based on DSL, cable TV network or fibre accounts for almost all of the total number of subscriptions for fied broadband. The number of subscriptions for these three access technologies is levelling out DSL Cable TV Fibre Mobile broadband Figure 7 Number of subscriptions broken down by access technology. Residential and business subscriptions

16 Number of subscriptions in thousands 15 Figure 8 shows the annual change in the number of subscriptions for each of these three access technologies and for mobile broadband. For a long time, fied broadband based on DSL reigned relatively supreme, and this technology is still the most common. There was strong annual growth in DSL subscriptions up until Since 2008 there has been an annual reduction in the number of DSL subscriptions. At the end of 2014 fied broadband via cable TV network is the second most prevalent access technology. Cable TV networks saw increasing annual growth until Since 2010 the annual growth has slowed off. From 2011 the annual growth for fibre-based subscriptions has been higher than the growth in subscriptions based on cable TV network. The first years after mobile broadband was introduced saw significant growth in the number of subscriptions. However, both 2013 and 2014 saw a decline in the number of mobile broadband subscriptions. At the end of 2014 there were roughly 535,000 subscriptions for mobile broadband. This corresponds to some 27 per cent of the total number of subscriptions for fied broadband DSL Cable TV Fibre Mobile broadband Figure 8 Annual change in fied broadband subscriptions broken down into DSL, cable TV network and fibre. Annual change in mobile broadband subscriptions. Residential and business subscriptions 2.3 Sales revenues Figure 9 shows the development in end-user sales for fied telephony, mobile services and fied broadband 4. Mobile services include mobile broadband subscriptions, special subscriptions for mobile broadband and mobile-to-mobile communication (M2M). The figure 4 Up until 2013 the figures for fied broadband include sales revenues from dial-up Internet.

17 NOK million 16 also shows the development in revenues from end-user sales of transmission capacity and data communication services. End-user sales revenues are the amount customers are invoiced for. This figure does not, however, cover earnings from distribution of TV signals since a large portion of this revenue is payment for content and does not therefore count as electronic communication. Sales revenue from distribution of TV signals is described in more detail in section 7.3. The sales figures for mobile telephony do not include wholesale earnings from termination and international roaming (foreign mobile users in Norway). Nor are retail earnings from international roaming (Norwegian mobile users abroad) included. International roaming is described in more detail in section 4.6. Earnings from the sale or lease of mobile phones and other terminals or physical equipment are not generally included as end-user revenues. There was an increase in the total sales revenues of just under NOK 700 million from 2013 to By comparison, sales revenues decreased by almost NOK 326 million from 2012 to Total sales revenues came to roughly NOK 31.6 billion in 2014 and approimately NOK 30.9 billion in Transmission capacity Data communication services Fied telephony Fied broadband Mobile services Figure 9 Total sales revenues. Residential and business subscriptions combined. NOK million Sales revenues from mobile services amounted to more than NOK 17.6 billion in 2014, which is almost 56 per cent of the total sales revenues in Sales revenues from fied telephony amounted to more than NOK 3.5 billion, a decrease of nearly NOK 507 million from Sales revenues from fied telephony accounted for over 11 per cent of the total revenues from

18 17 end-user sales. Revenues from fied broadband sales rose by almost NOK 445 million from 2013 to 2014 to approimately NOK 8.2 billion. Fied broadband sales accounted for roughly 26 per cent of the total sales revenues in Revenues from sales of transmission capacity and data communication services were just over NOK 2.2 billion in Figure 10 shows the ten largest providers' shares of the combined sales revenues. Telenor had a share of the total sales revenues of 50.3 per cent in By comparison, this share was 50.6 per cent in TeliaSonera has the second largest share of the total sales revenues. This share fell from 12.7 per cent in 2012 to 11.4 per cent in Tele2 and Network Norway had a combined share of 9.6 per cent in In 2014 this share had fallen to 8.9 per cent. NetGenTel, Get and Broadnet each had a share of approimately 3 per cent of the total revenue from end-user sales. Telenor 50,6 % TeliaSonera 11,4 % Network Norway Tele2 NetGenTel Get Broadnet 5,3 % 3,6 % 2,7 % 3,2 % 2,8 % Others 20,5 % 0,0 % 10,0 % 20,0 % 30,0 % 40,0 % 50,0 % 60,0 % Figure 10 Share of the total sales revenues for the largest providers 2.4 Investments in electronic communications services and networks In 2012, 2013 and 2014 Nkom has obtained figures on the providers' investments in electronic communications services and infrastructure. These are epenses that the individual provider recognises as fied assets in the accounts. A distinction is made between tangible fied assets (property, plant and equipment) and intangible assets. Tangible fied assets are primarily 5 A new definition of sales revenues from transmission capacity and data communication services was introduced from Until 2010 no distinction was drawn between sales to end-users and sales to wholesalers. The sales figures up until 2010 may thus include revenue from both sales to end-users and sales to wholesalers. From 2011 on only revenues from end-user sales are included in the sales figures in figure 9.

19 18 epenses linked to the development of radio or cable-based networks, but may also relate to buildings, machinery, equipment and other inventory. Intangible assets include research and development, licences, patents, etc. Table 2 shows the annual investments in the period 2012 to Investments in tangible fied assets are broken down into fied network, mobile network, and other investments that cannot be related to fied or mobile networks. For the fied network, investments in fibre have been recorded separately; for mobile networks, investments in LTE (4G) have been recorded separately. Many investments are linked to both the fied network and mobile networks, such as development of the core network. The providers must therefore spread the investments over the various categories based on best judgement. The investment figures obtained by Nkom do not include financial assets or other financial investments. Nor do the investment figures in table 2 include fees for acquisition of frequencies. Most frequency resources are allocated to the providers by means of auctions conducted by Nkom on the basis of predefined guidelines and procedures. The amounts involved will vary considerably from year to year. The fees paid by the providers for allocation of frequencies in 2012 amounted to approimately NOK 52 million. In 2013 this sum was almost NOK 1.8 billion, most of which is related to the auction for the 800, 900 and 1800 MHz bands 6. By comparison, the figure for 2014 was approimately NOK 16 million. The total investments in electronic communications services and networks came to almost NOK 9.0 billion in This is NOK 541 million less than in The investments that can be related to the fied network constituted 45 per cent of the total investments in The corresponding share for mobile networks was roughly 28 per cent. Investments in fibre in 2014 totalled roughly NOK 2.5 billion. This is slightly less than in 2013, but significantly more than in Investments in LTE totalled more than NOK 1.4 billion, an increase of over NOK 800 million compared with There was a slight increase in investments in other tangible fied assets from 2013 to There was an increase of nearly NOK 300 million in investments in intangible assets. Large portions of these investments are linked to providers who have significant market shares in the distribution of TV signals, and the investments are primarily related to the acquisition of rights to distribute content. 6 Some of these frequency resources are widely referred to as the digital dividend.

20 19 Investments in tangible fied assets in the fied network Change Of which Investments in fibre Investments in tangible fied assets in the mobile network Of which Investments in LTE Other investments in tangible fied assets Investments in intangible assets Total investments in electronic communications services and networks Table 2 Annual investments in electronic communications services and networks. Figures in NOK million

21 Number of subscriptions in thousands 20 3 Fied telephony In this report both traditional fied telephony (PSTN and ISDN) and broadband telephony (VoIP) are discussed as fied telephony. 3.1 Subscriptions Figure 11 shows the total number of fied telephony subscriptions from 2005 to the end of The number of subscriptions has been declining since The number of ISDN subscriptions rose until 2002, then started to decrease again. At the end of 2014 there were 1,080,869 fied telephony subscriptions in Norway. This is a decline of about 12.5 per cent since the end of Subscriptions for VoIP decreased by approimately 42,000, while the decline in PSTN and ISDN subscriptions amounted to just under 112, VoIP PSTN and ISDN Figure 11 Number of subscriptions broken down into PSTN, ISDN and VoIP Figure 12 shows the development in the number of households with fied telephony. At the end of 2014 just over a third of Norwegian households had a fied-line telephone. By contrast, at the end of 2012 nearly half of Norwegian households had a fied-line telephone.

22 21 81% 78% 74% 70% 64% 59% 54% 48% 41% 34% Figure 12 Share of households in Norway with a fied telephony subscription Tables 3 and 4 show the change in subscriptions for PSTN, ISDN and broadband telephony (VoIP) for the residential market and the business market. In the residential market, the greatest decline was in ISDN 2B+D, down 22.4 per cent from the end of PSTN and VoIP have fallen by 13.7 and 10.3 per cent respectively in the same period. In the business market too, the greatest decline was in ISDN 2B+D, down 16.3 per cent from This is a total decrease of almost 11.6 per cent during the course of PSTN ISDN 2B+D VoIP Total Table 3 Number of PSTN, ISDN and broadband telephony (VoIP) subscriptions in the residential market PSTN ISDN 2B+D ISDN 30B+D VoIP Total Table 4 Number of PSTN, ISDN and broadband telephony (VoIP) subscriptions in the business market

23 Million minutes Traffic There was a total of 3.26 billion call minutes from fied-line telephones in By comparison, the same figure was billion in In 2014 there were 18 per cent fewer call minutes than in Historically, the relative reduction has tended to be greatest for PSTN and ISDN, but in the residential market in 2014, the relative reduction was greatest for VoIP, with a decline of almost 26 per cent, compared with a decline of around 24 per cent for PSTN and ISDN International calls To mobile network To domestic fied network Figure 13 Voice traffic from fied-line telephones broken down by direction. Million minutes Table 5 shows a greater decline in traffic in the residential market than in the business market in recent years. Although the business market seen as a whole is declining, VoIP has increased in the business market by some 10 per cent in In 2013 broadband telephony traffic in the business market increased by about 15 per cent Business market Of which VoIP Business market Of which VoIP Table 5 Number of call minutes from fied-line telephones broken down into residential and business. Million minutes

24 23 Tables 6 and 7 show traffic broken down by direction for the residential and business markets. In both markets, traffic to the fied network declined, while traffic to the mobile networks increased by a corresponding amount. International traffic has remained relatively stable at 14 per cent and 9 per cent for the residential and business markets respectively Mins. Share Mins. Share Mins. Share Mins. Share Fied network Mobile networks % % % % % % % % International % % % % Total % % % % Table 6 Calls from fied network to fied network, mobile network and abroad. Residential market. Million minutes Mins. Share Mins. Share Mins. Share Mins. Share Fied network Mobile networks % % % % % % % % International % % % % Total % % % % Table 7 Calls from fied network to fied network, mobile network and abroad. Business market. Million minutes 3.3 Sales revenues Figure 14 shows a steady decline in sales revenues from fied telephony over the past 10 years. Sales revenues from fied telephony amounted to NOK 3.5 billion in 2014, a decline of 12.7 per cent from Earnings from subscriptions is the largest category at NOK 2.37 billion, a decrease of 10.9 per cent from Revenues from traffic fell by 18, 13 and 15 per cent for traffic to mobile phones, the fied network and abroad respectively. Earnings from subscriptions and additional services accounted for 68 per cent of the sales revenues in 2014, traffic to mobile phones for about 16 per cent, traffic to the fied networks for 10 per cent, and international traffic for just under 6 per cent. Revenues from PSTN and ISDN amounted to just over 76 per cent of the sales revenues from fied telephony.

25 NOK million International calls To fied network To mobile phone Subscriptions and additonal services Figure 14 Fied telephony revenue for different traffic directions and subscriptions. NOK million Table 8 shows the sales revenues in the residential and business markets for fied telephony as a whole and for broadband telephony. The residential market as a whole saw a decline of 15.3 per cent in 2014: 12.3 per cent for VoIP and 16.1 per cent for PSTN / ISDN. In the business market the decline was 9.4 per cent. Sales revenues from PSTN and ISDN in the business market were down by about 12.5 per cent compared with Revenue from broadband telephony in the business market rose by 11.7 per cent Residential Of which VoIP Business Of which VoIP Table 8 Fied telephony sales in the residential market and the business market. NOK million Table 9 shows the sales revenues from broadband telephony (VoIP) as a share of the total fied telephony sales. The share of the sales revenues from VoIP grew, accounting for about a quarter of the total sales revenues from fied telephony in This share has been rising in the business market, whereas in the residential market the share has remained stable at 30 per cent for the last three years.

26 Total share 17 % 19 % 21 % 22 % 24 % Share business 6 % 7 % 9 % 13 % 16 % Share residential 27 % 29 % 30 % 30 % 30 % Table 9 Share of the sales revenues in the fied telephony market held by broadband telephony (VoIP). As a percentage 3.4 Market shares The total sales revenues from fied telephony in the residential and the business market amounted to NOK 3.44 billion in The total number of traffic minutes was 3.26 billion minutes in This is the basis for the calculation of the market shares below. Here the market shares are defined on the basis of sales of telephony services to end-users in the residential and business markets. Figure 15 shows Telenor's market shares of the total sales revenues and number of traffic minutes for the residential and business markets from 2005 to Telenor's share of the total sales revenues increased by close to 1 percentage point in 2014, while its share of traffic minutes was reduced by about 0.6 percentage points. 80% 70% 60% 50% 40% 30% Telenor's share of total revenues Telenor's share of traffic minutes 20% 10% 0% Figure 15 Telenor's share of traffic minutes and total sales revenues. Business and residential markets Figure 16 shows the providers' market shares of the sales revenues in the residential and business markets combined. Measured by sales revenues Ventelo was the second largest fied telephony operator, with 5.1 per cent of the market, followed by Telio with 4.8 per cent.

27 26 Ventelo was merged into Phonero from 1 January Three of the four largest providers Ventelo, Telio and Tele2 are losing market shares to the rest of the market. Telenor 69,0 % Ventelo Telio Tele2 TDC 5,1 % 4,8 % 4,4 % 3,5 % Others 13,2 % 0% 10% 20% 30% 40% 50% 60% 70% 80% Figure 16 Fied telephony, market share by sales revenues, residential and business markets Figure 17 shows the providers' market shares of the traffic minutes in the residential and business markets combined. Telenor's market share decreased by 0.1 percentage points from Telio has decreased by 1.3 percentage points to 9.9 per cent in TDC's market share rose from 7.1 per cent to nearly 8.3 per cent. Ventelo's market share is unchanged from 2013 to Telenor 57,30% Telio TDC Ventelo Tele2 9,94% 8,27% 5,18% 3,72% Others 15,59% 0% 10% 20% 30% 40% 50% 60% 70% Figure 17 Fied telephony, market share by traffic minutes, residential and business markets As can be seen from figure 18 Telenor has won parts of the broadband market measured by sales revenues, with an increase from 25 per cent in 2013 to 29 per cent in Telio

28 27 continued to lose market shares, falling from 28 per cent in 2012 to 20 per cent in The fibre provider Lyse increased its market share to 8 per cent. Telenor 29,1 % Telio 20,0 % Lyse Fiber Get Viken Fiber 6,9 % 6,4 % 8,1 % Others 29,5 % 0% 5% 10% 15% 20% 25% 30% 35% Figure 18 Broadband telephony, market share by sales revenues, residential and business markets Measured in traffic minutes, Telio is still the biggest VoIP provider. Telenor increased its market share by 2 percentage points to 25 per cent in Get's market share remained stable at 7 per cent, while Phonect increased its market share from 4 per cent to almost 5 per cent. Telio 30,7 % Telenor 25,2 % Get Phonect Viken Fiber 4,9 % 3,8 % 6,9 % Others 28,4 % Figure 19 Broadband telephony, market share by traffic minutes, residential and business markets 0% 5% 10% 15% 20% 25% 30% 35% 40%

29 28 4 Mobile services 4.1 Introduction In this report mobile services consist of three main parts: Mobile telephony subscriptions are subscriptions that enable calls, SMS messaging and Internet access, etc. The statistics for mobile telephony include the number of subscriptions, voice traffic in minutes, the number of messages and data volume. They also include sales revenues from mobile telephony, broken down into subscription revenues and traffic revenues, among other things. In this report, mobile telephony subscriptions are counted as the total number of active pre-paid cards 7 and invoiced subscriptions. These days most post-paid mobile telephony subscriptions include a certain volume of traffic in the form of voice minutes, messages and data traffic. Special subscriptions for mobile broadband are subscriptions used eclusively for Internet access and data traffic and therefore do not generate voice traffic. A separate subscription for mobile broadband is bought independently of a mobile telephony subscription 8. The statistics for mobile broadband cover the number of subscriptions, data volume and sales revenues. Machine-to-machine (M2M) communication using the mobile network. The statistics cover the number of SIM cards for this purpose and related revenues and traffic. Figures for sales revenues were obtained for the first time for 2009, whereas traffic volume figures started being collected in Subscriptions Figure 20 shows the change in mobile telephony subscriptions from 2005 to the end of At the end of 2014 there were more than 5.9 million mobile telephony subscriptions. This is an increase of about 50,400 subscriptions since the end of By comparison, the increase from the end of 2012 to the end of 2013 was nearly 65,500 subscriptions. The annual increase has been decreasing in the last three years and was significantly lower than was normal before. The last three years have seen a drop in the number of pre-paid cards. There were appro. 1.4 million pre-paid cards at the end of This is a decline of almost 40,900 compared with the end of The number of pre-paid cards as a share of the total number of subscriptions has 7 In this report "pre-paid cards" refers to an active pre-paid subscription. Subscriptions are considered active when the account has been used in the last three months. 8 Subscribers often use a USB modem in connection with special subscriptions for mobile broadband. Subscribers may also use a PC card or a WiFi router connected to a mobile network.

30 Number of subscriptions in thousands 29 had a slight downward trend in recent years and was 23.7 per cent at the end of By comparison, at the end of 2005 this share was 36.5 per cent. Some 76.8 per cent of all mobile telephony subscriptions were registered to residential customers 9 at the end of This is the same as at the end of This share has been lower than previously in the last three years. For eample, the share was almost 77.5 per cent at the end of % % % 30% 20% Pre-paid cards Post-paid subscriptions Share pre-paid cards % % Figure 20 Number of subscriptions for mobile telephony Nkom collects statistics on the number of mobile subscriptions that use mobile data. These are mobile subscriptions that have generated data traffic in the period 10. This can be considered an indicator of the prevalence of Internet use on mobile phones. This is shown in figure 21, with figures dating back to The number of subscriptions of this kind has increased significantly over the last three years. At the end of 2014 almost 4 million mobile telephony subscriptions had generated mobile data. This constitutes more than 67 per cent of the total number of mobile telephony subscriptions. By comparison, the corresponding share was less than 64 per cent at the end of The share of active subscriptions for mobile data is slightly higher among business subscriptions than residential subscriptions. For business subscriptions the share was roughly 70 per cent at the end of Since 2012 Nkom has collected statistics on the number of mobile telephony subscriptions that include 1 GB or more per month. This is shown in figure 21. There were more than 2.87 million such subscriptions at the end of This is close to 49 per cent of the total number of subscriptions. By comparison, at the end of 2013 the number of subscriptions that included 1 9 Mobile telephony subscriptions that are registered to devices with an organisation number are regarded as business subscriptions. All other subscriptions are counted as residential subscriptions. 10 These are referred to as active subscriptions for mobile data and are defined as all subscriptions that have generated more than 0.5 MB of data in at least one of the last three months of the year.

31 Number of subscriptions in thousands 30 GB or more was over 2.0 million, i.e. almost 35 per cent of the total number of subscriptions. This share is higher for business subscriptions than for residential subscriptions. At the end of 2014 the number of business subscriptions that included more than 1 GB accounted for 58 per cent of the total number of business subscriptions. In 2014 Nkom has also collected statistics on the number of mobile telephony subscriptions that include 5 GB or more per month. This is shown in figure 21. There were over 594,000 subscriptions of this kind at the end of 2014, which is about 10 per cent of the total number of subscriptions. This share was 23 per cent for business subscriptions and 6 per cent for residential subscriptions Number of subscriptions for mobile data Number of subscriptions with 1 GB included Number of subscriptions with 5 GB included Total number of mobile telephony subscriptions Figure 21 Number of mobile telephony subscriptions that are active for mobile data. Number of subscriptions that include 1 GB and 5 GB or more per month Figure 22 shows the development in the number of special mobile broadband subscriptions 11 from 2008 to the end of The number of subscriptions rose each year until The last two years have seen a decrease. The total number of subscriptions at the end of 2014 was roughly 535,000. This is a decrease of nearly 20,500 since the end of Residential subscriptions had a share of roughly 69 per cent at the end of Special subscriptions for mobile broadband are subscriptions that are used eclusively for mobile data. They can be bought and used independently of a mobile telephony subscription. From 2014 the definition of mobile broadband has been amended. In the past, it included additional services for data usage linked to a mobile telephony subscription, such as twin SIM cards, for eample. The historical figures have been adjusted to match the new definition.