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

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1 Trends in Fixed Public Network Services: Finland, (Executive Summary) Executive Summary Publication Date: October 17, 2002

2 Authors Susan Richardson Maureen Coulter Michal Halama Katja Ruud Lisa Unden This document has been published to the following Marketplace codes: TELC-WW-EX-0427 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2002 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice

3 Trends in Fixed Public Network Services: Finland, (Executive Summary) This qualitative analysis of the fixed public services market in Finland looks at the market trends, drivers and inhibitors for a wide range of voice, data, Internet and wholesale services for the period 2000 to In addition to providing an overview of the trends in the market, the report also provides market share data for the end of 2001 for a variety of different segments. This report should be used in conjunction with the quantitative statistics report for Finland to provide a view of how the market is changing and how specific segments are affecting this change (see the Gartner Dataquest Market Statistics "Fixed Public Network Services: Finland, " [TCPS-WW-MS-0187 and TCPM-EU-MS-0147]). Market Highlights Total fixed retail revenue grew by 12.2 percent in 2001 to reach 2.1 billion euros. This is set to grow at a compound annual growth rate (CAGR) of 6.1 percent between 2001 and 2006 to reach 2.8 billion euros. Retail voice revenue grew 3.4 percent in Voice continued to take the largest share of fixed retail revenue in Finland, representing 54.9 percent of total revenue at the end of Although voice continues to represent the largest share throughout the forecast period, its share of total retail revenue declines to 44.6 percent by 2006 with a CAGR of 1.8 percent. Data services showed significant growth of 14.8 percent in 2001 and are expected to grow at a CAGR of 9.5 percent between 2001 and 2006, to reach 1.0 billion euros, representing 36 percent of total retail revenue in Broadband and the increase in IP virtual private network (VPN) will drive this growth. The Internet and public IP services segment will show the largest growth over the period with a CAGR of 12.3 percent between 2001 and This growth will be driven by the continued growth in Internet access revenue and valueadded IP services. By 2006, Internet and IP service revenue will represent 19.4 percent of total retail revenue. The wholesale market showed steady growth of 17.9 percent in 2001 to reach 401 million euros. Steady growth will continue throughout the forecast period withacagrof11.5percent. Finland has a relatively mature, if small fixed telecommunications market. In 2001, Finland represented 1.4 percent of the total Western European fixed retail service revenue. By 2006, this portion will have grown slightly to 1.9 percent Gartner, Inc. 1

4 2 Trends in Fixed Public Network Services: Finland, (Executive Summary) Figure 1 Total Fixed Telecommunications Retail Service Revenue Finland, 2001 Total National Call Service Revenue (7%) Total DSL and Cable Modem Revenue (1%) Total Exchange Line Rental and Connection Revenue (10%) Total ISP Access Revenue (12%) Total ATM Revenue (7%) Total Voice Other Revenue (7%) Total Leased Line Revenue (5%) Total Other Data Services Revenue (5%) Managed IP VPN Revenue (1%) Total Value-Added IP Services Revenue (2%) Total Local Call Service Revenue (31%) Total Frame Relay Revenue (12%) Total Retail Web-Hosting Revenue (2%) Source: Gartner Dataquest (August 2002) Figure 2 Total Fixed Telecommunications Retail Service Revenue Finland, 2006 Total National Call Service Revenue (6%) Total DSL and Cable Modem Revenue (5%) Total Exchange Line Rental and Connection Revenue (7%) Total ISP Access Revenue (14%) Total ATM Revenue (9%) Total Voice Other Revenue (5%) Total Leased Line Revenue (3%) Total Other Data Services Revenue (4%) Managed IP VPN Revenue (3%) Total Local Call Service Revenue (26%) Total Value-Added IP Services Revenue (4%) Total Frame Relay Revenue (12%) Total Retail Web-Hosting Revenue (2%) Source: Gartner Dataquest (August 2002) 2002 Gartner, Inc. October 17, 2002

5 Trends in Fixed Public Network Services: Finland, (Executive Summary) 3 Regulatory Issues Local loop unbundling was mandated in 1997, however the local access market remains in the hands of the established local telephone companies. Carrier preselection for local calls has still to take off following its mandate in March Interconnection prices for new entrants are perceived as too high in comparison with retail prices, producing a price squeeze. The proposed convergence of Finland's telecommunications and broadcasting laws into a single legislative act will aim to treat telecommunications and broadcasting distribution in a technologically neutral way. Competition Rating Short Term There is significant competition in Finland. The Finnish market has been a pioneer in liberalization and deregulation in telecommunications. The Finnish market remains segmented with many small local telephone companies. As a result of the segmentation of the market, new entrants are imited. Following the exit of Elisa from the Finnet Group there are now three main players in the market; Sonera, Finnet and Elisa. Others include RSL Com, Song Networks (formerly Tele1 Europe) and other international operators and ISPs. On 20 June 2001, Song bought Telia's Finnish network. Long Term There is little incentive for new entrants given the dominance of local telephone companies, the segmentation of the market and its relatively small size. Links For the full report, see the Market Trends report "Trends in Fixed Public Network Services: Finland, ," which is published to the Public Network Services Worldwide and the Telecom Public and Mobile Services Europe Clusters: TCPM-EU-MT-0121 TCPS-WW-MT Gartner, Inc. October 17, 2002

6 4 Trends in Fixed Public Network Services: Finland, (Executive Summary) 2002 Gartner, Inc. October 17, 2002