This would allow operators that do not have their own fixed network to provide fixed Internet along with other services, said Dorin Odiatiu, public affairs, partnerships and wholesale director with Orange, the local mobile telephony market leader.
“It is necessary that ANCOM finalize the review of the fixed broadband Internet service market right away and the solutions it requires allow other operators to enter this market, as it is the case now in 26 European Union countries. Such steps will benefit Romanian Internet users, which will be able to choose from the offers of several providers and have access to the most competitive services. It’s time this review were finalized,” Odiatiu said.
Orange is bringing up an issue that was discussed in the local telecom industry in 2009 and 2010: the creation of a ‘wholesale’ market for fixed Internet services, so companies like Orange, Vodafone and 2K Telecom could buy access to rivals’ networks to be able to provide fixed Internet services to consumers.
The target of petitions for regulation in 2009 was Romtelecom, with a decision made the following year. The tariffs at which ANCOM made Romtelecom open its network to competition were not considered attractive by Orange, Vodafone and other companies, so none of them took any such step.
The market has changed in the five years since the issue was first discussed and ANCOM needs to assess the concentration of the market again and force dominant players to open their networks to relaunch competition, Odiatiu says. What are the operators Orange thinks should be regulated?
“I cannot name names. It’s about operators with a dominant position on the market, which will be decided by ANCOM’s review,” the Orange official replied.
If ANCOM issues such a decision, would Orange be prepared to provide fixed Internet services using the network of RCS&RDS or Romtelecom?
“Orange is interested in this possibility. We’ve been expecting a regulatory framework to allow us to do it since 2009,” Odiatiu said without naming any rival operator.
The Orange officials need not say exactly who it is as long as the fixed Internet market has a clear leader: RCS&RDS, a company foundea by Oradea-based entrepreneur Zoltan Teszari, which had almost 1.7 million fixed Internet subscribers in June 2013, almost 50% of the entire market.
RCS&RDS, a group that posted more than EUR600 million revenue last year bet on fiber optics early and made massive investments in developing and expanding its own network, even aggressively buying smaller rivals at times for their infrastructure. This strategy took RCS&RDS’ network to 53,600 kilometers, connecting almost every major city in Romania. On June 30, 2013, RCS&RDS’ fiber optic network covered 4.08 million households, making it all the more attractive to companies that do not have their own fixed Internet networks.
The second largest fixed Internet service provider is Romtelecom, which had about 1.25 million customers by the end of March 2014 and a network that reaches more than four million households in Romania. Number three on the market is UPC, with some 400,000 fixed Internet customers and a network ‘touching’ almost 2.2 million households.
Orange’s petition to ANCOM comes in a different market context than in 2009. Romtelecom is about to merge with Cosmote under the “T” brand of Deutsche Telekom, and start providing integrated services.
On the other hand, RCS&RDS, the main target of the petition has significantly consolidated its position since 2009. Whereas it had just dislodged UPC as cable TV service market leader and had several tens of thousand more customers than its rival in 2009, now it is already by more than 1.5 million customers ahead. It had 220,000 more fixed Internet customers than Romtelecom back then, and the gap was almost double in mid last year, about 400,000 subscribers.
A significant difference now is that RCS&RDS is becoming relevant on the mobile phone and data market: on the one hand, as a result of ANCOM’s intervention, competition on the mobile telephony market got stronger (the guarantee of getting a 900 MHz frequency block at the spectrum auction of 2012) and, on the other, after the signing by Teszari of a national roaming agreement with Vodafone, the number two on the local mobile phone market.
RCS&RDS had 650,000 mobile Internet customers and 1.1 million mobile telephony customers despite its limited coverage in mid last year.
Under the circumstances, without specifically saying so, the major mobile phone operators are asking ANCOM with the petition to speed up the fixed Internet market review: “What are you going to do about RCS&RDS? Why are you in no rush to regulate them even though they clearly have a dominant position on this market segment?”
Only 46% of all the households in Romania had a fixed Internet subscription at the end of last year, so there is significant growth potential.
The discussion about a potential decision of ANCOM forcing RCS&RDS to give rivals access to its own network comes at a time when international mobile phone operators have started buying or signing partnerships with fixed network operators to be able to provide full service packages to their customers. Only RCS&RDS and Cosmote Romtelecom are capable of providing the entire range of fixed and mobile communications services in Romania.
(English version by Loredana Fratila-Cristescu)