This annual report offers a wealth of information on the Telecoms Markets and Statistics in Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Moldova, Poland, Romania, Russia, Slovakia, Slovenia, Ukraine, Serbia, Montenegro, Yugoslavia. Subjects include:

Infrastructure Issues
Regulatory issues and government policies re infrastructure
Datacomms Infrastructure, Leased Lines, ISDN
Public and Value Added Data Services
Leased Lines, ISDN, Frame Relay, ATM
Brief overviews on all of the major telecommunications carriers and service providers in the region

The telecoms markets that make up Eastern Europe are not homogenous as those in the west, reflecting the various stages of economic development in each country. The ascension of the 10 new EU member states marks a new era in Eastern Europe, as the countries in the region integrate themselves with their western neighbours. Requirements to the EU and World Trade Organisation (WTO) have been major influence behind liberalisation in the region. As a result of liberalisation prices for services have come, resulting in increased uptake of new services such as broadband. The mobile market in the region is also facing increased competition as an increasing number of operators are having to find new sources of revenue due to maturing or saturated markets. This too has led to the introduction and uptake of mobile data and content applications. This report provides an insight into the macro regulatory forces that have shaped the Eastern European as it is today. A wealth of information relating to the fixed-line, Internet, broadband, convergence and mobile markets is presented, with statistics offered to highlight the growth that is occurring in the region.

Bulgaria and Romania are both scheduled to join the EU in 2007. Croatia is a candidate EU country and the potential EU candidate countries include Albania, Bosnia and Herzegovina, the Former Yugoslav Republic of Macedonia and Serbia and Montenegro. These countries are in varying stages of implementing the EU’s regulatory framework for communications. Liberalisation of Belarus’ telecoms market is expected in 2007 and the Russian long-distance market in 2006, as both must liberalise their markets by 2007 as part of WTO entry requirements.
Privatisation of the Russia’s state-owned telecoms group Svyazinvest is underway as in September 2005 plans to privatise the telecom operator were submitted to the government for approval. The privatisation of Svyazinvest is significant as it holds controlling stakes in all seven ‘mega-regional’ operators that dominate their respective markets but require upgrades to infrastructure. 2005 is also the year of privatisations for other countries in the region and more are slated for 2006. In 2005; Bulgaria privatised its remaining 34.6% state-owned stake, Montenegro privatised its remaining 51.12% majority stake and Albania privatised a 76% majority stake. Bosnia is set to privatise its incumbent by mid-2006 and Romania plans to complete privatisation of its remaining 45.99% stake in 2006. Serbia is moving to privatise its 49% stake in its mobile operator but has been hampered by an ownership dispute. The disposing of state-owned stakes will have implications for competition as it removes the inherent reluctance of governments to introduce extensive competition against their state-owned operators.
The Czech Republic, Lithuania and Cyprus had penetration levels in excess of 100% as at March 2005, with Estonia, Slovenia and Greece near 100%. Russia’s massive mobile market is maturing although it is still showing strong signs of growth as the mobile operators concentrate on acquiring subscribers in the outer regions, where penetration in some regions is in the single digits.
Third generation mobile services have been launched in Slovenia and Hungary but the launch of services have been delayed in Poland and the Czech Republic numerous times by the operators. A number of countries also offer Enhanced Data Rates for GSM Evolution (EDGE). Commercial launch of 3G services that have either occurred in the Balkans in 2005 or are expected to occur by 2006 include Croatia, Cyprus and Romania.
Mobile data usage is increasing in the Baltic region. In Lithuania there were 413,700 subscribers of GPRS and EDGE services as at July 2005, compared with 341,120 subscribers of mobile data services as at 1 January 2005. Estonia also experienced strong growth in mobile data services, with a 17% increase in SMS messages sent in 2004 and a 150% increase in the number of GPRS users in the same period. The operators are promoting the use of higher-margin mobile data services for two reasons; to compensate for reductions in voice tariffs and to increase ARPU as although the mobile voice markets are reaching saturation, the mobile data sector is still in the growth stages of market development. The introduction of additional content such as mobile TV in Lithuania, and the eventual introduction of high-speed third generation services in all three countries will have a positive impact on mobile data usage. The introduction of mobile applications such as email and services that use mobile phones to monitor the status of cars and houses in Estonia highlights the increasing potential of the mobile applications market. The Russian mobile applications market is developing and was estimated to be worth US$270 million in 2004, a 300% annual increase. There are approximately 100 distribution companies providing or promoting content, and about 40 content providers. The majority of them develop their own content while a few purchase programs from foreign companies.
Strong broadband growth has been recorded in all five countries in the Central European reigion the highest growth rate attributed to the Czech Republic, where the number of ADSL connections increased sixfold in 2004 to 101,000. However broadband penetration in each of the countries remains below the EU average of 9.6%. Strong growth has also been recorded in the Balkans, with annual growth rates of 95.19% to 382,783 broadband connections in Romania, 584% in Croatia to 30,550 connections, 300% for ADSL in Greece to 88,400 subscribers and 547% increase for broadband in Macedonia to 5,530. In the CIS region broadband penetration grew strongly in Belarus, with penetration increasing threefold in the capital, although the increase came from a small user base. Broadband penetration is very low in Moldova but is growing as new operators launch services for cable broadband and WiFi. The situation is the same in Russia where future broadband penetration holds much potential as current penetration levels were less than 1% in 2004.
WiMAX services are growing in Russia. In May 2005 Moscow-based operator MediaNetworks launched a WiMAX-specification network in Nizhny Novgorod. Major alternative operator Golden Telecom is also reported to have launched a WiMAX-specification network. Another operator, Prestige Internet holds a licence to provide wireless broadband services in 29 major Russian cities and plans to launch services by end-2005 and expand services to all 29 cities by end-2007. The operator is 50% owned by Japanese firm Sumitomo. The increasing availability of broadband offerings is expected to significantly drive broadband uptake.
Cyprus has made the early progress in convergence as it offers a full Video-on-Demand broadband TV service with an Electronic Program Guide, email and web access that is available via an ADSL connection and set top box. This is beyond what many other countries in the region are offering but gives a glimpse at what may be in the near future due to the increasing prevalence of ADSL in the region.
Digital TV is in the nascent stages of development. Poland is the most advanced Central European country in terms of developments with trials launched and others to be launched soon. Broadband TV is still in its infancy due to low penetration rates although Poland has a large user base. Public broadcaster TVP launched an interactive TV pilot in May 2005 offering TV content online. Slovenia was the first to launch IPTV services in September 2003. Sistema in Russia officially launched its IPTV service under the brand ‘Stream TV’ in July 2004.

This annual report offers a wealth of information on the Telecoms Markets and Statistics in Belarus, Bosnia-Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Macedonia, Moldova, Poland, Romania, Russia, Slovakia, Slovenia, Ukraine, Serbia, Montenegro, Yugoslavia. Subjects include:

Infrastructure Issues
Regulatory issues and government policies re infrastructure
Datacomms Infrastructure, Leased Lines, ISDN
Public and Value Added Data Services
Leased Lines, ISDN, Frame Relay, ATM
Brief overviews on all of the major telecommunications carriers and service providers in the region

The telecoms markets that make up Eastern Europe are not homogenous as those in the west, reflecting the various stages of economic development in each country. The ascension of the 10 new EU member states marks a new era in Eastern Europe, as the countries in the region integrate themselves with their western neighbours. Requirements to the EU and World Trade Organisation (WTO) have been major influence behind liberalisation in the region. As a result of liberalisation prices for services have come, resulting in increased uptake of new services such as broadband. The mobile market in the region is also facing increased competition as an increasing number of operators are having to find new sources of revenue due to maturing or saturated markets. This too has led to the introduction and uptake of mobile data and content applications. This report provides an insight into the macro regulatory forces that have shaped the Eastern European as it is today. A wealth of information relating to the fixed-line, Internet, broadband, convergence and mobile markets is presented, with statistics offered to highlight the growth that is occurring in the region.

Bulgaria and Romania are both scheduled to join the EU in 2007. Croatia is a candidate EU country and the potential EU candidate countries include Albania, Bosnia and Herzegovina, the Former Yugoslav Republic of Macedonia and Serbia and Montenegro. These countries are in varying stages of implementing the EU’s regulatory framework for communications. Liberalisation of Belarus’ telecoms market is expected in 2007 and the Russian long-distance market in 2006, as both must liberalise their markets by 2007 as part of WTO entry requirements.
Privatisation of the Russia’s state-owned telecoms group Svyazinvest is underway as in September 2005 plans to privatise the telecom operator were submitted to the government for approval. The privatisation of Svyazinvest is significant as it holds controlling stakes in all seven ‘mega-regional’ operators that dominate their respective markets but require upgrades to infrastructure. 2005 is also the year of privatisations for other countries in the region and more are slated for 2006. In 2005; Bulgaria privatised its remaining 34.6% state-owned stake, Montenegro privatised its remaining 51.12% majority stake and Albania privatised a 76% majority stake. Bosnia is set to privatise its incumbent by mid-2006 and Romania plans to complete privatisation of its remaining 45.99% stake in 2006. Serbia is moving to privatise its 49% stake in its mobile operator but has been hampered by an ownership dispute. The disposing of state-owned stakes will have implications for competition as it removes the inherent reluctance of governments to introduce extensive competition against their state-owned operators.
The Czech Republic, Lithuania and Cyprus had penetration levels in excess of 100% as at March 2005, with Estonia, Slovenia and Greece near 100%. Russia’s massive mobile market is maturing although it is still showing strong signs of growth as the mobile operators concentrate on acquiring subscribers in the outer regions, where penetration in some regions is in the single digits.
Third generation mobile services have been launched in Slovenia and Hungary but the launch of services have been delayed in Poland and the Czech Republic numerous times by the operators. A number of countries also offer Enhanced Data Rates for GSM Evolution (EDGE). Commercial launch of 3G services that have either occurred in the Balkans in 2005 or are expected to occur by 2006 include Croatia, Cyprus and Romania.
Mobile data usage is increasing in the Baltic region. In Lithuania there were 413,700 subscribers of GPRS and EDGE services as at July 2005, compared with 341,120 subscribers of mobile data services as at 1 January 2005. Estonia also experienced strong growth in mobile data services, with a 17% increase in SMS messages sent in 2004 and a 150% increase in the number of GPRS users in the same period. The operators are promoting the use of higher-margin mobile data services for two reasons; to compensate for reductions in voice tariffs and to increase ARPU as although the mobile voice markets are reaching saturation, the mobile data sector is still in the growth stages of market development. The introduction of additional content such as mobile TV in Lithuania, and the eventual introduction of high-speed third generation services in all three countries will have a positive impact on mobile data usage. The introduction of mobile applications such as email and services that use mobile phones to monitor the status of cars and houses in Estonia highlights the increasing potential of the mobile applications market. The Russian mobile applications market is developing and was estimated to be worth US$270 million in 2004, a 300% annual increase. There are approximately 100 distribution companies providing or promoting content, and about 40 content providers. The majority of them develop their own content while a few purchase programs from foreign companies.
Strong broadband growth has been recorded in all five countries in the Central European reigion the highest growth rate attributed to the Czech Republic, where the number of ADSL connections increased sixfold in 2004 to 101,000. However broadband penetration in each of the countries remains below the EU average of 9.6%. Strong growth has also been recorded in the Balkans, with annual growth rates of 95.19% to 382,783 broadband connections in Romania, 584% in Croatia to 30,550 connections, 300% for ADSL in Greece to 88,400 subscribers and 547% increase for broadband in Macedonia to 5,530. In the CIS region broadband penetration grew strongly in Belarus, with penetration increasing threefold in the capital, although the increase came from a small user base. Broadband penetration is very low in Moldova but is growing as new operators launch services for cable broadband and WiFi. The situation is the same in Russia where future broadband penetration holds much potential as current penetration levels were less than 1% in 2004.
WiMAX services are growing in Russia. In May 2005 Moscow-based operator MediaNetworks launched a WiMAX-specification network in Nizhny Novgorod. Major alternative operator Golden Telecom is also reported to have launched a WiMAX-specification network. Another operator, Prestige Internet holds a licence to provide wireless broadband services in 29 major Russian cities and plans to launch services by end-2005 and expand services to all 29 cities by end-2007. The operator is 50% owned by Japanese firm Sumitomo. The increasing availability of broadband offerings is expected to significantly drive broadband uptake.
Cyprus has made the early progress in convergence as it offers a full Video-on-Demand broadband TV service with an Electronic Program Guide, email and web access that is available via an ADSL connection and set top box. This is beyond what many other countries in the region are offering but gives a glimpse at what may be in the near future due to the increasing prevalence of ADSL in the region.
Digital TV is in the nascent stages of development. Poland is the most advanced Central European country in terms of developments with trials launched and others to be launched soon. Broadband TV is still in its infancy due to low penetration rates although Poland has a large user base. Public broadcaster TVP launched an interactive TV pilot in May 2005 offering TV content online. Slovenia was the first to launch IPTV services in September 2003. Sistema in Russia officially launched its IPTV service under the brand ‘Stream TV’ in July 2004.