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CYPRUS 2011 Telecommunication Market and Regulatory Developments

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CYPRUS 2011 Telecommunication Market and Regulatory Developments EUROPEAN COMMISSION Information Society and Media Directorate-General Electronic Communications Policy Implementation of Regulatory Framework 18 June 2012 CYPRUS 2011 Telecommunication Market and Regulatory Developments This report is a Commission Services working document, issued as part of the Scoreboard 2012: http://ec.europa.eu/information_society/digital-agenda/scoreboard/ Commission européenne / Europese Commissie, B-1049 Bruxelles / Brussel Email: [email protected] CYPRUS 1. MAIN MARKET/COMPETITIVE DEVELOPMENTS Development of the sector Although revenues in the electronic communications sector reached €580 million in 2010, the level of investments remained stable in the mobile market (€32 million) and witnessed a significant reduction in the fixed market (reaching € 42 million in 2010). (Section 3) The incumbent operator (Cyta) still enjoys a very strong position in the fixed market (78.5% of all types of call by traffic volume). The national regulatory authority (OCECPR) maintained price regulation in the national retail voice markets. The incumbent's mobile arm (Cytamobile-Vodafone) is the most dominant incumbent operator in Europe with a 73.8% market share (loosing 3 percentage points in the reporting year), followed by MTN with 25.8%. The reporting year saw the beginning of operations of the first full MVNO (Primetel), hosted on the incumbent's network and expected to increase competition on this market. In the broadcasting market, intermodal competition between digital terrestrial television (DVB-T), cable television and IPTV, is mainly taking place in the domain of content, though there are marked differences in the geographical coverage as well. (Section 5) In the fixed broadband market, despite its limited geographical coverage, cable (Cablenet) emerges, with 12% of broadband lines, as the most dynamic competitor of one of the most dominant incumbent operators in the EU (70% of all broadband lines, down from 73.5% a year before), while the main alternative DSL operators which relay on LLU (91.6%) and marginally on bitstream (8.1%) gained only another 1.3 percentage points of the DSL market. Cyprus failed to close the gap with regard to fixed broadband penetration (25.1%) and is still below the EU-27 average in terms of mobile broadband take-up (3.4% for dedicated service cards and 42.7% of all active users). (Section 4.1) While the number of days needed to port a fixed or a mobile number is steadily decreasing, a considerable reduction was also recorded on the number of fixed transactions (5.8%). The number of mobile transactions substantially increased (16 628 in 2011, compared to 11 623 in 2010). (Section 7.4) Progress in broadband deployment and take-up (Section 4.2) At the end of 2011, Cyprus was close to achieving the DAE target aiming at securing a basic broadband connection (in the order of 2 Mbps) for all EU households by 2013. However, progress in the deployment of high-speed (30 Mbps) and very-high speed broadband (100 Mbps) has so far been negligible, both in terms of coverage and take-up. Cyprus is however addressing broadband with a Digital Strategy, which not only fully endorses the DAE targets for broadband, but is also more ambitious on certain goals, while also integrating take-up targets. The incumbent operator unveiled a first version of its self-financed NGA network deployment strategy, which was not yet finalised at the end of the reporting period. The analogue switch-off was successfully completed between July and September 2011, paving the way for the granting of the 800 MHz band. Independence and effectiveness of the NRA While the OCECPR is perceived as successful in carrying out its mission, the position of the Deputy Commissioner was vacant at the end of the reporting period. A 8.5% reduction of its budget for 2012 was planned by the Government. (Section 2) Implementation of the framework Although draft laws have been submitted to public consultation during 20111, Cyprus had not yet transposed the revised Regulatory framework by the end of the reporting period. Infringement proceedings were therefore ongoing. Cyprus notified, however, full transposition of the EU 2009 Reform Package on 18 May 2012. The judgement of the Court of Justice on the case of rights of way for the installation of masts and antennae (C- 125/09) was still pending2. Spectrum management Although the analogue switch off was completed in 2011, and despite the availability of spectrum in all bands, at the end of the reporting period, the Cypriot authorities had still not set a final date for the assignment of the 800 MHz band to electronic communications services, or for the licensing of another mobile operator. (Section 6) Citizens and consumer protection While there is no 116 number operating in Cyprus, the necessity of social value numbers appears to be well identified. (Section 7.1) Awareness of the European Emergency Number 112 is low. Responsibility for coordination, information and awareness raising on the European Emergency Number 112 has been transferred to the Ministry of Communications and Works. (Section 7.2) The incumbent operator was designated in March 2011 as the Universal Service provider, for all elements of the Universal Service, for a period of 3 years.(Section 7.5) No major issues regarding consumer complaints or ePrivacy were reported. (Section 7.7) 2. NATIONAL REGULATORY AUTHORITIES (NRA) While the OCEPRR is perceived as successful in carrying out its missions, the position of its Deputy Commissioner was vacant at the end of the reporting period. A 8.5% reduction of its budget for 2012 was planned by the Government. The Office of the Commissioner for Electronic Communications and Postal Regulation (OCECPR) and the Department of Electronic Communications of the Ministry of Communications and Works (DEC), are perceived as successful in carrying out their respective missions. The two Authorities collaborate closely, as far as the joint 1. 2 On 26 April 2012, the Court of Justice of the European Union delivered its judgment confirming that by significantly delaying the granting of rights of way, Cyprus infringed Article 11(1) of the Framework Directive and Article 4(1) of the Authorisation Directive. 3 authorisation procedure (for the electronic communication networks using frequencies) is concerned, but OCECPR's implication in this area is about to be limited to advice on competition issues in the new law transposing the 2009 EU Reform Package. OCECPR is considered by the market as an independent Regulator. Since 5 October 2011, the position of the OCECPR Deputy Commissioner is vacant. While at the end of the reporting period the Office was still running smoothly, OCECPR's budget will be significantly reduced for 2012, with at least a 8.5% reduction. The Council of Ministers can exercise its right to reduce not only the overall amount of the budget, but also, specific chapters within. Although OCECPR is market financed, its personnel has experienced salary cuts, in line with the general public expenditure cuts. Though the Regulator has conducted in late 2010 a public consultation on the provisions of the secondary legislation on dispute resolution, providing guidance on its methodology and process, no request for dispute resolution was submitted during the reporting year. There were six appeals against decisions of the Commissioner during the reporting year. The average duration of appeals is two years. The Supreme Court has notably upheld the decision of the OCECPR on the first round of analysis of the market for wholesale (physical) network infrastructure access at a fixed location. 3. REVENUES AND INVESTMENTS Although revenues in the electronic communications sector reached €580 million in 2010, the level of investments remained stable in the mobile market (€32 million) and witnessed a significant reduction in the fixed market (€ 42 million in 2010). Telecom investment as a % of revenue, 2010 30,0% 25,0% 25,5% 20,0% 24,0% 20,7% 19,3% 18,2% 15,0% 18,2% 17,5% 17,2% 16,3% 15,8% 15,7% 14,6% 14,3% 14,1% 13,8% 13,7% 13,2% 10,0% 13,1% 12,8% 12,4% 12,1% 11,0% 11,0% 9,8% 10,0% 9,3% 10,0% 9,1% 5,0% 0,0% SE UK EE DE IE ES CZ LT EU CY FI SK FR PL AT BE IT RO HU EL SI DK PT LU LV MT NL BG Source: Commission services The total revenue generated in 2010 by the electronic communications sector increased to €580 million. The fixed sector's revenues amounted to €212 million, while the mobile market's revenue totalled €291 million. Overall investments in the electronic communications sector were reduced to €74 million. Investments were stable in the mobile sector, however, with €32 million, since the two MNOs are continuing their 3G coverage expansion plans. The investment over revenue ratio in the Cypriot telecom sector for 2010 dropped to 12.8%. 4 4. BROADBAND In the fixed broadband market, despite its limited geographical coverage, cable (Cablenet) emerges, with 12% of broadband lines, as the most dynamic competitor of one of the most dominant incumbent operators in the EU (70% of all broadband lines, down from 73.5% a year before), while the main alternative DSL operators which relay on LLU (91.6%) and marginally on bitstream (8.1%) gained only another 1.3 percentage points of the DSL market. Cyprus failed to close the gap with regard to fixed broadband penetration (25.1%) and is still below the EU-27 average in terms of mobile broadband take-up (3.4% for dedicated service cards and 42.7% of all active users). At the end of 2011, Cyprus was close to achieving the DAE target aiming at securing a basic broadband connection (in the order of 2 Mbps) for all EU households by 2013.
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