CONTENTS I. CONDITION, DEVELOPMENT AND PROSPECTS OF THE TELECOMMUNICATIONS MARKET
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1 CONTENTS I. CONDITION, DEVELOPMENT AND PROSPECTS OF THE TELECOMMUNICATIONS MARKET 1. Internet access services Development of the market Number of hosts Number of users Internet providers Prices Revenues from the Internet services...51
2 I. CONDITION, DEVELOPMENT AND PROSPECTS OF THE TELECOMMUNICATIONS MARKET 1. INTERNET ACCESS SERVICES 1.1. Development of the market The legislation presently in force stipulates that the Internet access services are not subject to licensing or registration regime. This issue is to be resolved by introduction of a legal framework, which will regulate the market relations upon market liberalization. The lack of any registration regime encumbers both the collection of official data about this telecommunications market segment and the protection of the consumers of Internet services. Communications Regulation Commission for a second year requested information concerning the activities of the Internet service providers in order to gather some data about the development of this dynamical market segment. Since the information furnished to CRC by the Internet providers is inaccurate and insufficient for a comprehensive analysis, certain data from independent n and international agencies are used. It is difficult to find comparable sources of information about the Internet market. The study methodologies employed and the working definitions of user (the age limit is not defined in one and the same way), access type, etc. differ significantly. On a large scale, the condition evaluations and the comparisons of the Internet markets are made basically by two indicators number of hosts (the computers connected to the Internet) and the number of users. The Internet penetration is measured through the number of hosts per 1, residents and the number of users per 1, residents. The penetration is thus made a more valuable indicator of comparison across the different countries than the absolute values of the number of hosts and the number of users Number of hosts The increase in the total number of hosts in in 22 (22.5%), as compared to 21, and in the EU candidate countries (24%) remained greater than that of the EU Member States (21%). Despite the increase in the number of hosts, the indicator values for is almost four times below the average value in the EU candidate countries. Figure 45 shows the data of the EU candidate countries Number of hosts in the EU candidate countries Av. value in the EU candidate countries Fig
3 Figure 46 shows the penetration for the EU candidate countries by number of hosts Number of hosts per 1 inhabitants in the EU candidate countries Av. value in the EU candidate countries Fig. 46 The value for of this indicator is again about four times below the average value for the EU candidate countries and the penetration tends to increase. What is notable is the great difference between the EU Member States and the EU candidate countries. The average value for the EU candidate countries of this indicator is hardly one fourth of the average value for the Member States Number of users The tendency of the last three years towards a gradual increase in the number of the Internet users is preserved. The value for of this indicator is twice below the average value for the EU candidate countries and the increase is insignificant. Based on the data of Vitosha Reseach as at December 22, the Internet users in comprise 9.6% of the adult population (i.e. over 18 years of age). Figure 47 shows the data for the EU candidate countries 47
4 Number of users in the EU candidate countries, in thousands users 4 9, ,52 3 8, 1 Fig. 47 The growth rate in the EU candidate countries is over 3% (36.3% in 21, as compared to 2 and 31.7% in 22 as compared to the previous year) while this indicator decreased in the EU Member States. Despite the increase in the number of users, the values of this indicator in the EU candidate countries are considerably below the average ones in the EU Member States. Apart from the high growth rate of Internet users, the development of this market segment both for and the EU candidate countries is markedly expressed also by the indicator number of users per 1, residents. The average value for the EU candidate countries of this indicator is hardly twice smaller than the average value for the Member States. Figure 48 shows the data for the EU candidate countries. Number of users per 1 inhabitants in the EU candidate countries , 56, 21, 31, 25, 99, 1 8, 862,8 8, 1 6, 1 5, Av. value in the EU candidate countries Av. value in the candidate countries Fig. 48 The value for of this indicator is twice smaller then the average one for the EU candidate countries. 48
5 1.4. Internet providers In 22 there was an increase in the number of the Internet providers present on the n market. Their number is about 17 and only 11 of them are at a national level. This evaluation is made on the basis of the presence of Internet providers in different n towns and the established entry points for dial-up access and number of subscribers. Table 8 presents the number of the Internet providers in the EU candidate countries in 22 Country Number of nationwide Internet providers Table 8 Number of regional Internet providers N/A N/A Source: IBM Business Consulting Services, 3rd Report on Monitoring of EU Candidate Countries (Telecommunications services sector) 1.5. Prices Most of the Internet providers provide both types of access to the Internet (dial-up and leased lines) and the larger part of the subscribers use an access over a public switched telephone network (PSTN). About 2% of the subscribers to dial-up access are also subscribers to ISDN access. The most affordable price for the residential users is still the dial-up access. The expenses of the users of a dial-up Internet access in are among the lowest for the EU candidate countries 1. Figure 49 presents the costs of residential Internet users. The prices of the Internet access for the residential users in four of the EU candidate countries also include the telephone fees. In five of the concerned countries, including, the telephone fees are greater than the Internet access fees. 1 The comparison was made on the basis of the most profitable price quoted by a national Internet provider for 2-hour packages (in non-working hours) and 4-hour packages (in working hours). These costs also include the prices of telephone services for establishing an Internet access. 49
6 Costs on 2 hours dial-up access to the Internet (in non-working time), PSTN ISP EC min EC max Source: IBM Business Consulting Services, 3rd Report on Monitoring of EU Candidate Countries (Telecommunications services sector) Fig. 49 As a comparison with the EU Member States, Figure 49 shows the limits wherein their residential users' expenses on Internet access are the minimum and the maximum values are respectively 7.31 (France) and 17.7 (Belgium). Figure 5 shows the costs, which the business users in EU candidate countries spend on the Internet access 12 Costs on 4 hours dial-up access to the Internet (in working hours), PSTN ISP EC min EC max Source: IBM Business Consulting Services, 3rd Report on Monitoring of EU Candidate Countries (Telecommunications services sector) Fig. 5 The expenditure of the business users on the Internet is significantly higher than that of the residential users. The minimum value of the Internet costs spent by business users in the EU Member States is 6.4 (France) whereas the highest one is 69 (Belgium). Meanwhile, the business users have mainly a leased-line access whose price is considerably higher than that of the dial-up access. 5
7 1.6. Revenues from the Internet services As stated in an expert evaluation, the volume of the Internet market in amounted to 57 million BGN in 22. Figure 51 shows the revenues in this market segment. Revenues from Internet services in 22 1% 6% 8% 1% 8% 67% Dial-up Internet access VoIP Sales of Internet cards Leased-line Internet access Equipment collocation Other Source: Communications Regulation Commission Fig. 51 The difference in the revenues generated from a dial-up and leased-line access is very significant almost seven times. In spite of the great number of subscribers to dial-up access, the basic portion of the revenues are gained by the Internet providers from a leased-line access. This can be explained both with the higher cost of the lines leased to provide this type of service and the significantly higher consumption realized by the business subscribers. In 22 seven of the Internet providers also offered VoIP services. The revenues from this market segment are only by 2% less than the revenues from dial-up access and are greater than the revenues from sales of Internet cards. The lack of any licensing regime allows the Internet providers with smaller business and fewer subscribers to offer alternative ways for an Internet access. In order that new technologies can penetrate the market and the Internet services reach sufficient quality, it is necessary for the infrastructure already established by the providers to develop and improve further. For this purpose, a lot of investments are to be made and larger part of the Internet providers rely on attracted capitals to further extend their business. The penetration of the Internet services in is still weak. The saturation point there has not been reached by any indicator. The liberalization of the market will augment the competition in the provision of Internet services, which is a necessary condition for the penetration increase. The provision of various services by the Internet providers will increase the number of users. 51
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