Romania - Digital Media and Broadband Market Insights, Statistics and Forecasts Iulie 2013

Romania - Digital Media and Broadband Market Insights, Statistics and Forecasts
11/07/2011 2:16 PM
Paul Budde Communication Pty Ltd
1. SYNOPSIS
Romanias broadband market has grown rapidly due to strong competition. Competition is predominantly infrastructure-based. Competing broadband platforms include widely accessible cable TV, micro LANs, ADSL, wireless and fibre. Increasing broadband take up is fostering development of Romanias internet society, encompassing e-commerce, e-government and e-health. Digital TV is available via cable TV, satellite and digital terrestrial TV, with the satellite-based digital pay-TV operators instrumental in driving digital TV uptake. DTTV developments are progressing following the approval of a DTTV migration strategy. This report provides an insight into Romanias growing broadband and broadcasting market, covering the technologies, the major players and market developments, in addition to a variety of statistics and forecasts on fixed broadband penetration. Key developments: Regulator proposes 2012 auction for national and regional BWA licences; government secures 84 million EU funding to extend broadband to unconnected areas of the country; UPC Romania extends 120Mb/s Business Fiber Power to 13 cities; low rural PC use poses brake for broadband take-up; regulators H1 2011 market data; operator data to end-2011; market developments into 2012. Companies covered in this report include: UPC Romania, RCS&RDS, DigiTV, Boom TV, Dolce.
2. 2.1
INTERNET MARKET OVERVIEW
Romanias internet market has transformed as dial-up users migrated to broadband services, which now account for the majority of internet connections. Internet access services are widely available from a number of ISPs and competing technology platforms. Internet peering services in Romania are provided by the internet exchanges Romanian Network for Internet Exchange (RoNIX), Interlan and Tomis (TomIX).
3.
ROMANIAS EMERGING INTERNET SOCIETY
Recognising the potential of applying ICT to improve both social and economic development, Romania has taken steps to develop a knowledge-based society. Both businesses and governments have been instrumental in creating the online content and services that make up the internet economy. Initial strategies centred on accessibility, encouraging broadband infrastructure deployment and affordability of online access. Broadband internet access is one of the main criteria and development drivers of the information society as it contributes to the development of e-commerce, e-government, e-education, e-health and other new electronic distribution channels of services. Legislation enacted to support the internet society has mostly been done so as to implement EU directives, and includes: Law on Free Access to Information of Public Interest; Law for the Protection of Persons concerning the Processing of Personal Data and the Free Circulation of Such Data;
Copyright Paul Budde Communication Pty Ltd, 2012

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Law on the Processing of Personal Data and the Protection of Privacy in the Electronic Communications Sector (transposes EU Directive 2002/58/EC); Law on Electronic Commerce (transposes EU Directive 2000/31/EC); Law on the Processing of Personal Data and the Protection of Privacy in the Electronic Communications Sector (transposes EU Directive 2002/58/EC); Law on Electronic Signature; Government Emergency Ordinance concerning the Award of Public Contracts, Public Works Concession Contracts and Services Concession Contracts (transposes EU Directives 2004/17/EC and 2004/18/EC ); Romanian Public Sector Information Law No. 109 (transposes EU Directive 2003/98/EC); Law regarding the electronic payment of local taxes.
While there is no exact criteria for measuring the development of a countrys internet economy, metrics have been created by various organisations in an attempt to measure progress. The Economist Intelligence Unit (EIU) publishes annual E-readiness figures, which assesses a countrys ICT infrastructure and its ability to utilise ICT to gain benefit. Based on technological, economic, political and social indicators, Romania scored 5.04 out of 10 in 2010, ranking it 47th out of 70 countries surveyed. Table 1 Internet penetration among businesses by employee size 2004 - 2010 Year 2004 2005 2006 2007 2008 2009 (e) 2010 (e) 10-49 employees 45% 48% 52% 63% 63% 63% 64% Businesses by employee size 50-249 >250 employees employees 67% 90% 70% 92% 73% 94% 80% 95% 83% 97% 85% 98% 85% 98% >10 employees 52% 55% 57% 67% 67% 68% 69%
(Source: BuddeComm based on EU data)
Table 2 E-education usage by individuals 2007 - 2011 Year 2007 2008 2009 2010 (e) 2011 (e) Percentage of individuals who used the internet in the last 3 months for: Consultation for An online course (any Training and education learning subject) 12% 8% 1% 16% 11% 1% 18% 15% 3% 19% 17% 4% 19% 19% 6%
Table 3 E-education usage by businesses 2009 - 2011 Year 2009 2010 (e) 2011 (e) Percentage of businesses by employee size which use the internet for training and education 10-49 employees 50-249 employees 250+ employees 42% 58% 74% 44% 60% 76% 47% 62% 80%
Table 4 Online purchases by individuals 2005 - 2011 Year 2005 Proportion of population 1%

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Year 2006 2007 2008 2009 2010 (e) 2011 (e)
Proportion of population 1% 3% 4% 2% 3% 5%
3.1
E-GOVERNMENT Government initiatives for the internet economy have been focused on providing services to citizens, businesses, and other government organisations online in the hope of capturing benefits such as improved efficiency, convenience, and better accessibility of public services.
The Ministry of Communications and Information Technology (MCIT) is responsible for e-government strategy and policy development at the national level. Public sector involvement in e-government is guided by policy document Government Program 20092013 (eRomania), which aims to modernise public administration and increase competitiveness in the ICT sector. Romanias government has allocated 500 million for 2010-2013 on developing e-government services.
3.1.1
Infrastructure
Web portal e-guvernare is the central portal for accessing e-government services, offering information and transaction capability. All Romanian institutions are legally required to provide access to their online services through the portal. The portal interfaces with a back-end system using XML-based Web services. Electronic payments are done via the Virtual Payment Office (Ghiseu virtual de plati), which has expanded since its initial scope of traffic fines payment in Bucharest. Local communities are connected via Local Communities Electronic Networks (LCENs) designed to interconnect schools, public offices and libraries to the internet, with public access via Public Internet Access Points (PIAPs) designed to reduce the rural-urban digital divide, stimulate the use of ICTs in schools, and facilitate the interaction between citizens and administration. The computerisation of civil records was undertaken by the Ministry of Administration and Interior to create the National Person Identity System, upon which projects to develop biometric passports and electronic ID cards are based. Romanias electronic Procurement system e-licitatie was launched in early 2002. Online procurement systems are designed to decrease bureaucracy, improve transparency and control the public procurement process, as well as offer better access to public contracts. By mid-2010 about 1 billion in contracts had been awarded through the system. Table 5 Uptake of e-government services by businesses 2004 - 2011 Year 2004 2005 2006 2007 2008 Percentage of businesses using e-government services: for obtaining for returning filled in for obtaining forms information forms 29% 22% 12% 33%1 27%1 12%1 37% 33% 13% 39% 36% 20% 37% 35% 23%

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Year 2009 2010 (e) 2011 (e)
Percentage of businesses using e-government services: for obtaining for returning filled in for obtaining forms information forms 39% 37% 25% 41% 39% 27% 44% 40% 29%
Table 6 Uptake of e-government services by individuals 2004 - 2011 Year 2004 2005 2006 2007 2008 2009 2010 (e) 2011 (e) 3% 3%1 3% 4% 9% 6% 8% 10% Percentage of individuals using e-government services: for obtaining for returning filled in for obtaining forms information forms 1% 1% 1%1 1%1 1% 1% 3% 2% 4% 3% 4% 3% 5% 4% 7% 7%
3.2
E-HEALTH
BuddeComm defines e-health as information relating to the use of Information and Communication Technologies (ICT) as a means of supporting health and health-related fields, with a particular emphasis on the use of high-speed networks. Other terms for e-health include tele-health, telemedicine and health informatics. For a general overview of the major e-health sectors and for more information on international developments, see separate report: Digital Economy - E-Health. In 2010 MCIT agreed to fund 17 of 37 submitted e-health projects. The projects were submitted under the Operational Programme 3.2.4 (Supporting the implementation of eHealth solutions and ensuring broadband connection, where necessary). E-health development is guided by policy document The National Strategy for the Rationalisation of Hospitals 2010-2012. Among its objects is the introduction of the health card in 2011. The first health cards were issued in early 2011. Data to be stored on the e-health card includes the owners national identity and social security numbers, proof of payment of contributions to the social health insurance, the number of applications for medical services (by health provider code), information on life-threatening medical issues, as well as the cardholders blood type.
4. 4.1
FIXED BROADBAND MARKET
OVERVIEW Fixed broadband services are widely available in Romania although a disparity exists between urban and rural areas, with broadband services more readily available in urban areas. In early 2011 up to 78% of the 3.5 million rural households had no internet access and 48% no computer. Nationally, up to 10% of Romanians have no internet access, although some surveys have put the figure at between 20% and 25%. Lack of infrastructure in rural areas has exacerbated the gap between Romania and the more developed European countries, placing Romania at the bottom of the European Union ranking of internet usage. According to Eurostat data (March 2011) about 54% of Romanians have never used the internet, the highest percentage among EU member states where the average is 24%. By contrast, only 5% of Swedes have never used the internet.
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To address this broadband connectivity, the government in mid-2011 announced plans to deliver broadband to 90% of areas currently underserved by 2015. The country has up to 3,600 broadband white spaces. Healthy competition is evident where broadband is available due to the absence of a single dominant technology platform. Falling tariffs and increased availability led to improved uptake as dial-up users migrated to broadband services, a trend that has resulted in broadband accounting for the majority of broadband connections. Service providers have focused on increasing broadband uptake, with hopes of generating additional revenue through the sale of broadband content such as broadband TV (IPTV). Broadband market development is guided by the governments Broadband Strategy 2009-2015, which aims to provide 100% broadband coverage of the population by 2015. Funds sourced from the EU and earmarked for strategy implementation have been allocated for ICT projects under the Operational Programme Increase of the Economic Competitiveness. In early 2011 the MCIT secured European Union (EU) funding worth 84 million to provide internet access to unconnected areas of the country. Since 2006 the broadband market in Romania has been characterised by consolidation among players, with smaller ISPs being bought up by larger players. In the CATV market this has left RCS&RDS and UPC Romania as the major operators, with fewer second-tier operators able to offer significant competition. Table 7 Internet users, subscribers and penetration 1999 - 2013 Year 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (e) 2013 (e) Users (thousand) 600 800 1,000 1,440 1,940 2,700 3,580 5,310 6,070 6,930 7,590 7,786 8,580 9,100 9,750 User penetration 3% 4% 5% 7% 9% 12% 17% 25% 28% 32% 34% 35% 39% 43% 46% Subscribers (million) n/a n/a n/a 370 640 930 790 1,430 2,150 2,520 2,810 3,000 3,320 3,560 3,990 Subscriber penetration n/a n/a n/a 2% 3% 4% 4% 7% 10% 12% 13% 14% 16% 18% 19%
(Source: BuddeComm based on ITU and industry data) Note: Total internet subscribers include mobile broadband subscribers.
Note: Users are those accessing the internet from their school, university and work accounts, as well as from their individual household or business accounts. Subscribers are the number of individually paid internet access accounts, eg, a work account is just one subscription but can have many users within that one subscription.
FIXED BROADBAND STATISTICS RomTelecom accounts for about a quarter of all fixed broadband connections, though there are a large number of providers.
Table 8 Fixed broadband providers by access type 2008 - 2011
4.2

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Year 2008 2009 2010 2011 (Jun) 65 61 51 41
Coaxial cable 299 301 289 216
Fibre 40 26 22 17
DSL
(Source: BuddeComm based on regulator data)
Table 9 Broadband subscribers by access type 2008 - 2012 Year 2008 2009 2010 2011 (Jun) 2011 (e) 2012 (e) Coaxial cable 470 480 430 410 405 390 UTP/FTP FttH cable Subscribers (thousand) 1,270 9 1,430 10 1,580 9 1,700 8 1,760 12 1,830 16 DSL 660 780 880 940 960 975
Table 10 Proportion of fixed broadband subscribers by access type 2008 - 2011 Year 2008 2009 2010 2011 (Jun) Coaxial cable 18.6% 17.1% 14.3% 12.9% UTP/FTP cable 50.7% 50.8% 52.6% 54.1% Fibre 3.5% 3.5% 3.1% 2.4% DSL 26.2% 27.8% 29.3% 29.9%
Table 11 Fixed broadband subscribers and penetration rate 2002 - 2012 Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 (Jun) 2011 (e) 2012 (e) Fixed broadband subscribers (thousand) 20 200 100 380 1,090 1,950 2,510 2,820 3,000 3,130 3,250 3,490 Fixed broadband penetration 0.5% 1% 2% 2% 5% 9% 11.6% 13.1% 13.7% 14.5% 16.1% 18.2%
(Source: BuddeComm based on ITU and regulator data)
Chart 1 Fixed broadband subscribers and penetration rate 2002 2012

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(Source: BuddeComm based on ITU and regulator data)
Table 12 Internet access revenue 2008 - 2012 Year 2008 2009 2010 2011 (e) 2012 (e) Revenue (RON billion) 1.20 1.40 1.32 1.28 1.25
Table 13 Fixed broadband subscribers by data speed June 2011 Data download speed 144Kb/s-2Mb/s 2-10Mb/s 10-30Mb/s 30-100Mb/s Total
Subscribers (thousand) 80 1,130 580 890 3,310
4.3
CABLE MODEMS
Romanias cable operators were the first to offer broadband services in 2000. The cable market is dominated by RCS&RDS and UPC due to the reach of their networks. RCS&RDS is Romanias second largest broadband provider by subscribers, with a 24.2% market share at the beginning of 2011, behind RomTelecom with a 30.3% market share. UPC Romania is third-placed, with a 7.7% market share. In early 2011 RCS&RDS negotiated to buy UPC Romania from Liberty Global for around USD300 million. UPC Romania in mid-2011 increased its Business Fiber Power download rates in 13 cities to 120Mb/s. The operator reported 256,000 broadband subscribers in Romania in March 2011. Digital Cable Systems (DCS) is the third largest cableco. Set up in 2005 after a merger between several smaller cablecos, it offers internet, fixed line telephony and digital TV services under the brand name Akta. The company reported around 50,000 broadband/telephony customers at the end of 2010. Table 14 Cable broadband subscribers by access type 2008 - 2010 Year 2008 2009 Coaxial cable UTP/FTP cable Thousand 470 1,270 480 1,430

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Year 2010
Coaxial cable UTP/FTP cable Thousand 430 1,580
Chart 2 Cable broadband subscribers by access type 2008 2010
4.4
ASYMMETRIC DIGITAL SUBSCRIBER LINE (ADSL)
ADSL services are widely available due to the reach of the Public Switched Telephone Network (PSTN) network. The infrastructure used to enable ADSL services is owned and controlled by RomTelecom, although competing ISPs now enjoy regulation-mandated access to this infrastructure for the purposes of offering competing services. Despite this RomTelecom is the dominant ADSL service provider, accounting for nearly 100% of retail ADSL connections. RomTelecom launched its ADSL services in mid-2005 under the ADSL Express brand, with download speeds of up to 1Mb/s. Services were initially available in a number of cities although availability has since expanded. RomTelecom also offers VDSL services, with speeds of up to 30Mb/s. The cost of ADSL services initially made it uncompetitive compared with offerings from the cable operators and Local Area Network (LAN) ISPs, although RomTelecom has since reduced prices and increased speeds through deployments of ADSL2+ infrastructure. By early 2011 RomTelecom had about 50,000 subscribers on its VDSL network, launched at the end of 2009. Table 15 RomTelecom broadband subscribers 2005 - 2011 Year 2005 2006 2007 2008 2009 2010 2011 Subscribers (thousand) 8 89 360 651 824 1,013 1,136
(Source: BuddeComm based on company data) Note: Includes mobile broadband.

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4.5
LOCAL AREA NETWORKS (LANS)
Broadband services are available from micro ISPs and enjoy widespread popularity. Many commenced as grassroots organisations during the 1990s when high internet access prices led end-users to build informal LANs to share internet connections. The number and size of these LANs increased, catering typically to an apartment building or a neighbourhood, with subscriber levels of anywhere between 50 and 2,000. Typically offered through 100Base-T LANs, different download speeds are offered for locally and internationally-hosted content. Metropolitan access is created through peering agreements with other micro ISPs and some cable broadband providers. Access costs vary significantly due to fierce competition and negotiable prices.
4.6
FIBRE-TO-THE-HOME (FTTH) NETWORKS
Fibre-to-the-Home (FttH) and variant Fibre-to-the-Building (FttB) extend fibre cable infrastructure from the core and metro network to the last mile and therefore much closer to the end user, delivering port access speeds of 100Mb/s-1Gb/s. Cost is the main impediment to FttH/FttB network construction due to amount of deployment activity required. FttB is generally more cost-effective than FttH as the fibre connection is shared among a number of end users, although the overall cost of FttH/FttB generally limits construction to high-density areas. The number of FttH subscribers fell in 2009 and 2010 as operators, in the wake of the countrys financial difficulties, channelled their investment in to FttC networks. As a result, the number of FttC-based broadband subscribers increased to about 2.75 million by mid-2011. RomTelecom commercially tested FttH/FttB in 2009, and in late 2010 deployed FttH in some areas, providing 100Mb/s services. Alternative operator RCS&RDS launched FttB-based services during 2006 under the Fibrelink brand in a number of cities including Bucharest, Alexandria, Arad, Brlad, Braov, Constana, Craiova, Drobeta-Turnu Severin, Oradea, Piteti, Reia, Sibiu, Timioara and Trgu-Mure. Availability has since been expanded. Bucharest manages its recently completed NetCity fibre project. More than 10,000 buildings have been connected to the network, which should extend to 10,000km by the end of 2012. The network is managed by UTI Systems (which won the tender to build the network in mid-2008). The company has a 49-year concession, paying a 12% annual fee from revenues. The network provides wholesale to ISPs and cablecos such as UPC and RCS&RDS, which pay for the rental of ducts and network access. Table 16 FttH broadband subscribers 2008 - 2012 Year 2008 2009 2010 2011 (e) 2012 (e) Subscribers (thousand) 90 100 90 80 100
The regulator separates fibre connections by their several types: FttH is where fibre reaches the home directly, FttB (to the building) is where fibre reaches a building (usually multi-dwelling) and has copper to end-users, FttC (to the cabinet) is where fibre reaches the street cabinet (closer than 300m to end-users) and then has copper for the last mile, FttN (to the node) is where fibre reaches a node (generally further than 300m from the end-user). In practice, the regulator includes as fibre connections all broadband subscribers given the fibre-backhaul. Table 17 Fibre broadband subscribers by type June 20112

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10
Type FttH FttB FttC FttN Total
Subscribers (thousand) 80 1,470 1,100 110 2,750
WIRELESS BROADBAND Wireless broadband services are available in Romania. However the biggest impact on the wireless broadband market is expected to come from the mobile network operators, which offer competitivelypriced mobile broadband access with prepaid data bundles over widely accessible networks. There are six providers of satellite broadband in Romania.
In mid-2011 the regulator proposed deploying BWA (Bb wireless Access) in the band 3.4 3.800GHz band, in which seven providers have licences (five of them national and three local). All national licenses expire in September 2013, except for the license in the 3.6 3.8GHz band which expires in July 2011. Local licenses expire between mid-2011 and the end of 2015. The regulator planned to auction three 10-year national licenses in the band 3.4 3.6GHz band and four national licenses in the band 3.6 - 3 .8GHz band in 2012. Regional 8-year licenses will be awarded in 2014 (allocated sub-bands of 2x7MHz). Coverage obligations would be imposed.
4.7
4.7.1
WiFi
Wireless broadband via WiFi is available on a free and paid basis, with approximately 1,100 WiFi hotspots in Romania in early 2012. WiFi service providers include mobile network operators such as Vodafone and Zapp, as well as WiFi network aggregators such as Boingo Wireless. WiFi services are also offered by Ministry of Communications and Information Society (MCSI), which has deployed about 750 hotspots. Table 18 WiFi hotspot locations 2008 - 2012 Year 2008 2009 2010 2011 (Jun) 2011 (e) 2012 (e) Number of hotspots 950 920 1,050 1,080 1,105 1,150
4.7.2
WiMAX
In late 2008 SN Radiocomunicatii (SNR) was granted the right to use the 3657MHz-3685MHz and 3757MHz-3785MHz radio frequency bands in return for returning existing 3600MHz3657MHz and 3700MHz3757MHz radio frequency bands it held. SNR is obliged to rollout network coverage to at least 50 municipalities and 20 towns, with rollout milestones established for 2010, 2012 and 2013. In 2010 vendor Redline was contracted by SNR to supply fixed WiMAX network equipment. WiMAX has also been used to extend telecoms connectivity into rural areas in the form of telecentres that provide telecom services to rural citizens.

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4.8
MOBILE BROADBAND
Mobile broadband has become a feasible proposition and viable alternative to fixed broadband following substantial investments in 3G technology, despite lower transmission speeds than fixed line broadband access platforms. Mobile broadband services are accessible via datacard or USB modems and internet-enabled 3G handsets. Intense competition has led to an increase in the amount of prepaid data bundled into flat rate pricing plans and a drop in tariffs. There are six providers of mobile broadband in Romania, including two which operate High-Speed Circuit Switched Data (HSCSD) networks. Table 19 Mobile broadband connections 2008 2012 Year 2008 2009 2010 2011 (Jun) 2011 (e) 2012 (e) 2.74 4.05 4.67 5.98 7.20 8.40 Total Active EDGE/CDMA/3G connections (million) 1.30 2.10 3.05 3.53 4.10 5.70
5. 5.1
DIGITAL MEDIA OVERVIEW OF DIGITAL MEDIA
Exhibit 1 Overview of digital media

The telecommunications, entertainment, video and multimedia markets are undergoing sweeping changes, currently characterised by expanding product/services developments. At the heart of a digital home is the technical concept known as the media centre. This combines voice, video and data applications, and includes VoIP, broadband TV, Digital or Personal Video Recorders (DVR or PVR), home networking, CD and DVD playback and MP3. Cable TV operators, telcos, consumer electronics and IT companies are all competing for this media centre business. The business model to deliver these integrated products is known as a triple-play of quad-play model, whereby voice, video and data applications are all delivered over one single access subscription.
5.2
BUSINESS MODELS BUNDLED SERVICES
The bundling of voice, internet and TV has transformed the telecommunications and TV broadcasting industries, bringing players in both industries together as direct competitors in the triple play market. The strong growth in broadband take-up in Romania in recent years, at least in urban areas, with a focus on migrating customers from dial-up services to faster Digital Subscriber Line (DSL) and fibre, has stimulated the delivery and consumer use of triple-play services. This development has been aided by the population concentrated in a few major towns, as well as the prevalence of multi-occupancy buildings. The government sees the continuing rollout of these technologies as fundamental to the successful take up digital TV, broadband, triple play and other services. Table 20 Bundled service subscribers by type Jun 2011 Bundle type Dual play Triple, quad play Subscribers (million) 1.99 1.43

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Bundle type Total
Subscribers (million) 3.41
6.
DIGITAL TV
Digital TV (DTV) services are growing in prevalence primarily due to the popularity of satellite Directto-Home (DTH) pay TV services. Digital TV is also available via cable TV, IPTV and Digital Terrestrial TV (DTTV). Growing broadband usage has seen the emergence of online broadcasting (web TV), a trend that is expected to continue as higher-speed broadband connections become more common. Table 21 Digital TV subscribers by platform 2009 2012 Year 2009 (Jun) 2009 2010 2011 (Jun) 2011 (e) 2012 (e) 260 319 397 735 910 1,200 Cable Satellite IPTV Subscribers (thousand) 2,304 5 2,333 8 2,383 30 2,203 38 2,150 45 2,180 60 Total 2,564 2,653 2,810 2,977 3,105 3,440
DIGITAL TERRESTRIAL TV (DTTV) Romania adopted Digital Video Broadcasting-Terrestrial (DVB-T) was as the technical standard by MCIT in 2000. Initial trials for DTTV were undertaken by the Ministry of Communications in 2002, followed by further trials in subsequent years. The Digitalisation Council was established in mid-2005 to source frequencies for a third national DTTV multiplex reserved for up to six commercial broadcasters with national and regional coverage.
A strategic plan for the transition to digital broadcasting published by the Ministry of Communications was approved in late 2009. The plan entailed deployment of a minimum of five UHF national multiplexes, one national VHF multiplex and a multiplex allocated to regional and local services. Under the plan the first two multiplexes was to provide 60% population coverage by 2011 and 90% population coverage by 2012, when analogue switch-off (ASO) was to take place. However, the transition to digital-only terrestrial TV was set back in mid-2010 when the Government postponed the Analogue TV Switch Off date (ASO) to 2015 (a decision based on allowing end-users more time to buy reception equipment). Nevertheless, in March 2011 the Audiovisual Council approved granting Romanian Television Society (SRTv) one of the six digital TV licenses. The remaining licenses will be granted to operators in the following years: the first multiplex will be granted by the end of 2012, the next three multiplexes after January 2013 and the last one after June 2015, once analogue broadcasting has stopped.
6.1
6.2
BROADBAND TV (IPTV)
Faster broadband provides telecom operators the opportunity to move beyond providing consumers with basic communications services such as voice and internet access, to delivering a wide array of entertainment to the home. IPTV has emerged as a key service to which broadband operators are now turning to reduce churn and increase revenue from consumer users.

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Alternative operators such as INES Telecom were among the first to launch IPTV services. INES Telecoms offering is marketed in Bucharest under the INES IPTV brand. INES IPTV offers over 100 standard definition (SD) and high definition (HD) TV channels as well as time shifting functionality. RomTelecom launched commercial IPTV services in late 2009 under the Dolce Interactive brand, offering interactive Video-on-Demand (VoD) capability. By March 2011 it had over 33,000 triple play subscribers (VoIP, broadband and IPTV). The operator also has a video integrated portal in Romania, dolcetv.ro. Dolce TV Online includes three main sections: movies, TV and sport. In early 2011 RCS&RDS, already the countrys leading provider of cable and DTH services, launched IPTV services in around ten cities. Table 22 IPTV subscribers 2008 2013 Year 2008 2009 2010 2011 (Jun) 2011 (e) 2012 (e) 2013 (e) Subscribers 3,000 8,000 30,000 38,000 45,000 60,000 72,000
6.3
CABLE TV (CATV)
CATV is the most popular broadcasting platform in Romania, with approximately 6.7 million households able to access cable TV services. CATV programming is offered by over 500 providers although the market is dominated by UPC Romania and RCS&RDS, which represent over 60% of total CATV subscribers. MMDS is also used to deliver CATV services although the focus on deploying fibre to deliver triple play services has marginalised MMDS to rural areas, where it can be used to cost effectively deliver services. RomTelecom competes in the cable TV market through subsidiary cable company NextGen Communications. Established in 2008, NextGen provides triple play services. Table 23 CATV subscribers, analogue and digital 2008 2013 Year 2008 2009 2010 2011 (Jun) 2011 (e) 2012 (e) 2013 (e) 3.49 3.41 3.33 3.46 3.50 3.55 3.62 Total Subscribers (million) 20 32 40 73 110 170 230 Digital
(Source: BuddeComm based on regulator data
6.3.1
UPC Romania
Cable TV operator UPC Romania offers triple play services and operates in 10 of Romanias 12 largest cities including Bucharest, Timisoara, Cluj, and Constanta. Approximately 84% of its network has been

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upgraded to two-way capability with 82% of homes passed served by a network with at least 860MHz bandwidth. UPC Romania offers analogue cable service with up to 56 channels depending on location and subscription package. Its digital video offering includes up to 109 channels and DVR time-shifting capability. Table 24 UPC Romania homes passed 2006 - 2011 Year 2006 2007 2008 2009 2010 2011 Homes passed (thousand) 1,990 2,056 2,070 2,070 2,070 2,072 1,320 1,561 1,700 1,742 1,636 1,650 Two-way homes (thousand)
(Source: BuddeComm based on company data)
Table 25 UPC Romania subscribers by service type 2006 - 2011 Year 2006 2007 2008 2009 2010 2011 Analogue cable 1,360 1,185 998 838 646 508 Digital cable 7 37 110 231 284 352 DTH Broadband Telephony 56 96 124 151 141 184
Subscribers (thousand) 50 119 115 182 155 237 181 267 227 255 282 281
Chart 3 UPC subscribers by service type 2006 2011
6.3.2
RCS&RDS
Romania Cable Systems (RCS) was founded in 1994. RCS later founded Romania Data Systems (RDS) in 1998 as a specialist company in data transmission and internet and commenced building a

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national fibre optic network in early 2000. RCS and RDS later merged in early 2005 to reduce operational costs. RCS&RDS is a major provider of telecom services, including cable television, internet, data, carrier and fixed-line telephony, with services offered in Romania, Hungary, Slovakia and the Czech Republic. The operator has approximately 8.2 million subscriptions for internet, telephony and TV services. Signalling its desire to become a significant operator in the communications sector, RCS&RDS has entered the mobile market after acquiring a third generation (3G) mobile licence. RCS & RDS has steadily expanded by buying rivals, including local networks and cablecos operating in major cities. In early 2011 the company secured USD368 million from banks to pay part of its debts and to have funds for its proposed purchase of purchase of UPC Romania.
6.4
SATELLITE-BASED DIGITAL PAY TV DEVELOPMENTS
Romanias satellite-based DTV market was created during 2005 following the launch of services by four platforms DigiTV, Focus Sat, Max TV and Boom TV. RomTelecom launched the countrys fifth DTH platform in late 2006. Satellite-based digital pay TV services have enjoyed strong demand and rapid take up to become the second most popular broadcasting platform in Romania. Competition has driven service providers to offer incentives such as free installation and financial arrangements for reception equipment. More than 80% of Romanian homes subscribe to pay-TV, representing some 5.8 million subscribers. Competition in the marketplace has been helped by the decision to postpone ASO to 2015, which has delayed the adoption of DTT in the country and consequently helped boost DTH take-up. Yet the five satellite operators are struggling in the face of competition between themselves and from RCS&RDS and UPC (which is also active in DTH), as well as from another 500 or so smaller cablecos. Together, this has resulted in ARPU being amongst the lowest in the region, as well as reduced profits. DTH Television Groups Boom TV, facing financial problems of its own sought a fresh investor before being bought by RomTelecom in early 2011. DigiTV, backed by RCS&RDS, and Dolce (RomTelecom) control more than 80% of the DTH business in Romania. Table 26 Satellite TV subscribers 2008 2012 Year 2008 2009 2010 2011 (Jun) 2011 (e) 2012 (e) Subscribers (million) 2.15 2.33 2.38 2.20 2.15 2.18
6.4.1
DigiTV
RCS&RDS launched its DTH service under the DigiTV brand in late 2004, making it the first to offer services. Programming is broadcast from Intelsat 10-02 at 1.0 west using eight transponders. The operator has also expanded into neighbouring Hungary, Slovakia, the Czech Republic, Serbia and Croatia.

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6.4.2
Focus Sat/UPC
Eastern Space Systems launched in early 2005 under the Focus Sat brand, the second DTH platform to offer services. Services are available from Thor 3 la 1 west. Focus Sat was the joint-venture between local investors and the UK technology company Focus Sat LLP, with services delivered by satellite operator Eastern Space Systems. In late 2004 the operator contracted Conax to supply conditional access equipment. In mid-2005 UPC Romania acquired a 50% stake, later consolidating ownership through the acquisition of the remaining 50% in early 2006. Focus Sat provides over 70 coded and free to air TV channels and 46 radio stations in digital quality.
6.4.3
Digital Cable System (DCS)/Max TV
DCS launched services in mid-2005 under the Max TV brand. Services are offered from Sirius 2 la 5E and Eutelsat W2 16.0E. DCS is a consortium of approximately 50 Romanian cable operators. The consortium signed an agreement with Nordic Satellite in mid-2005 for two transponders on the Sirius 2 satellite and an option for a third. Further capacity was acquired in mid-2007 when the operator signed a five-year agreement with Eutelsat to secure a transponder on the W2 satellite. The agreement allows DCS to launch a 16-channel multiplex for homes in the country that are connected to small and medium-sized analogue cable networks. The signal is converted from the DVB-S (DVB-Satellite) standard to the DVB-C (DVB-Cable) standard, allowing digital cable services through a set-top box (STB) in subscriber homes.
6.4.4
Boom TV
DTH Television Group was the fourth to launch services in mid-2006, with services available from Amos 2 la 4 west and marketed under the Boom TV brand. The operator deployed an IP-based head end from Harmonic as part of its infrastructure rollout and in late 2006 contracted the vendor to add interactive programming capabilities such as Personal Video Recording (PVR). DTH Television Group was established in 2004 by Milomor Trade & Communication, Erlan (D.D.) Investments and RP Explorer Master Fund. In early 2011 Boom TV was acquired by RomTelecom.
6.4.5
Dolce
Launched by RomTelecom under the Dolce brand in late 2006, the operator redesigned its program offer in mid-2009, resulting in three main program packages offered. Table 27 Dolce subscribers 2007 - 2011 Year 2007 2008 2009 2010 2011 Subscribers (thousand) 400 643 911 1,054 1,079

Note: Includes IPTV and DTH subscribers.

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7. 7.1 7.1.1
FORECASTS FIXED BROADBAND FORECASTS 2010 - 2013; 2020 Scenario 1 stronger broadband subscriber growth
In this scenario the assumption is made that the competitive situation continuously improves, resulting in faster throughput speeds and affordable prices for either standalone products or bundled offerings such as double and triple play. The regulator continues to promote wholesale and infrastructure-based competition through its power to identify and rectify issues obstructing market competitiveness. Assisting the regulator is broadband policy designed to extend broadband access to underserved areas, with care taken to ensure such activities do not distort competition or inhibit private investment, based on a technology-neutral approach. Affordability of broadband access devices has improved, which have evolved predominantly from PCs to encompass gaming consoles, digital TV STBs and mobile handsets, as well as portable computers. The trend towards incorporating internet access into household appliances and utilities is fulfilling the notion of the digital home, giving users unprecedented visibility and control of the household. Broadband access devices are also becoming smarter; expanding the possible potential applications is the addition of spatial sensors such as magnetometers, accelerometers and GPS into some of the aforementioned broadband access devices. In terms of broadband subscriptions, BuddeComm believes the household fixed broadband connection will not be entirely replaced by the increasing prevalence of mobile broadband, given the different user experiences and applications that each can offer. However for a proportion of households, we expect the household fixed broadband subscription will be replaced with a mobile broadband subscription. Broadband demand by end-users is centred on available broadband content and applications. Current broadband content and applications focus predominantly on information, entertainment and commerce with online streaming music and video the prime examples of bandwidth intensive content. Recognising the potential of applying ICT to improve both social and economic development, internet society policy aims to increase participation by all society members and broaden the depth of content and applications related to or currently available for public administration, health and education, increasing the overall appeal of broadband among first-time subscribers. Table 28 Forecast fixed broadband subscribers higher growth scenario 2010 - 2013; 2020 Year 2009 2010 2011 2012 2013 2020 Subscribers (thousand) 2,820 3,000 3,250 3,490 3,720 8,400 Population penetration 13% 15% 18% 19% 22% 42% Household penetration 30% 35% 42% 50% 58% 90%
(Source: BuddeComm, forecasts) Note: 2009 and 2010 are base years.
7.1.2
Scenario 2 slower broadband subscriber growth
This scenario is based on the assumption that the regulator is less successful at stimulating competition than in the first scenario, either through a wholesale access regime or competing infrastructure, resulting in less choice for end users. Major fixed broadband access service providers maintain a significant market share and are reluctant to rollout new fixed broadband platforms such as FttX beyond high-density areas or engage in significant pricing cuts. Hence potential subscribers many of whom already enjoy free broadband access either at work or at education institutions, are reluctant to purchase subscriptions at home. Take up of broadband access devices takes longer, as end users are not convinced of the benefits or due to affordability taking longer to improve. Broadband content and applications take longer to develop

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beyond currently available offerings, restricting its appeal among those who are interested in broadband content and applications related to public administration, health and education. Table 29 Forecast fixed broadband subscribers lower growth scenario 2010 - 2013; 2020 Year 2010 2011 2012 2013 2020 2,820 3,000 3,200 3,600 7,900 Subscribers (thousand) Population penetration 13% 15% 17% 29% 38% Household penetration 30% 35% 40% 55% 90%
(Source: BuddeComm, forecasts) Note: 2009 and 2010 are base years.
7.1.3
Notes on scenario forecasts
The following notes provide some background to our scenario forecasting methodology: This report includes what we term scenario forecasts. By describing long-range scenarios we identify a band within which we expect market growth to occur. The associated text describes what we see as the most likely growth trend within this band. The projections shown in the tables in this report are based on our own historical information, as well as on telecommunication sector statistics from official and non-official, national and international sources. We assume a possible deviation of 15%-20% around this data. All statistics for GDP, revenue, etc are shown in US$, in order to maintain consistency within and between markets. At the same time we acknowledge that this can introduce some irregularities.
8.
RELATED REPORTS
For more information on telecommunications in Romania, see separate reports: Romania. For information relating to: Europe from a regional perspective, see: European Regional Overview; Individual European countries, see: Alphabetical listing of European Countries; Technical information relating to the telecommunications industry, see: Telecommunications Technologies Library; Technology - Terminology - Glossary of Abbreviations (free report); Worldwide activities in the telecommunications industry see: Global Overviews.
Copyright Paul Budde Communication Pty Ltd, 2012. All rights reserved.
This material is subject to the laws of copyright and is restricted to registered licence-holders who have entered into a Corporate, a Multi-User or a Single-User licence agreement with Paul Budde Communication Pty Ltd. It is an offence for the licence-holder to make the material available to any unauthorised person, either via e-mail messaging or by placing it on a network. All BuddeComm research reports are intended to provide general information and strategic insights only, and they do not constitute, nor are they intended to constitute, investment advice. BuddeComm and its employees disclaim all and any guarantees, undertakings and warranties, whether express or implied, and shall not be liable for any loss or damage whatsoever, and whether foreseeable or not, arising out of, or in connection with, any use of or reliance on any information, statements, opinions, estimates or forecasts contained in the reports.
5385 George Downes Drive, BUCKETTY NSW 2250 AUSTRALIA Telephone: +61 2 4998 8144 Fax: +61 2 4998 8247 Email: pbc@budde.com.au Web: www.budde.com.au


Romania - Digital Media and Broadband Market Insights, Statistics and Forecasts Iulie 2013

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Romania - Digital Media and Broadband Market Insights, Statistics and Forecasts Iulie 2013

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Romania - Digital Media and Broadband Market Insights, Statistics and Forecasts

Paul Budde Communication Pty Ltd

INTERNET MARKET OVERVIEW

ROMANIAS EMERGING INTERNET SOCIETY

Copyright Paul Budde Communication Pty Ltd, 2012

(Source: BuddeComm based on EU data)

(Source: BuddeComm based on EU data)

(Source: BuddeComm based on EU data)

Copyright Paul Budde Communication Pty Ltd, 2012

Year 2006 2007 2008 2009 2010 (e) 2011 (e)

(Source: BuddeComm based on EU data)

Copyright Paul Budde Communication Pty Ltd, 2012

Year 2009 2010 (e) 2011 (e)

(Source: BuddeComm based on EU data)

(Source: BuddeComm based on EU data)

FIXED BROADBAND MARKET

Copyright Paul Budde Communication Pty Ltd, 2012

Year 2008 2009 2010 2011 (Jun) 65 61 51 41

Coaxial cable 299 301 289 216

(Source: BuddeComm based on regulator data)

(Source: BuddeComm based on regulator data)

(Source: BuddeComm based on regulator data)

(Source: BuddeComm based on ITU and regulator data)

Chart 1 Fixed broadband subscribers and penetration rate 2002 2012

Copyright Paul Budde Communication Pty Ltd, 2012

(Source: BuddeComm based on ITU and regulator data)

(Source: BuddeComm based on EU data)

Subscribers (thousand) 80 1,130 580 890 3,310

Copyright Paul Budde Communication Pty Ltd, 2012

Coaxial cable UTP/FTP cable Thousand 430 1,580

(Source: BuddeComm based on regulator data)

Chart 2 Cable broadband subscribers by access type 2008 2010

(Source: BuddeComm based on regulator data)

ASYMMETRIC DIGITAL SUBSCRIBER LINE (ADSL)

(Source: BuddeComm based on company data) Note: Includes mobile broadband.

Copyright Paul Budde Communication Pty Ltd, 2012

LOCAL AREA NETWORKS (LANS)

FIBRE-TO-THE-HOME (FTTH) NETWORKS

(Source: BuddeComm based on regulator data)

Copyright Paul Budde Communication Pty Ltd, 2012

Type FttH FttB FttC FttN Total

Subscribers (thousand) 80 1,470 1,100 110 2,750

(Source: BuddeComm based on regulator data)

(Source: BuddeComm based on regulator data)

Copyright Paul Budde Communication Pty Ltd, 2012

(Source: BuddeComm based on regulator data)

DIGITAL MEDIA OVERVIEW OF DIGITAL MEDIA

Exhibit 1 Overview of digital media

BUSINESS MODELS BUNDLED SERVICES

Copyright Paul Budde Communication Pty Ltd, 2012

Bundle type Total

Subscribers (million) 3.41

(Source: BuddeComm based on regulator data)

(Source: BuddeComm based on regulator data)

Copyright Paul Budde Communication Pty Ltd, 2012

(Source: BuddeComm based on regulator data)

(Source: BuddeComm based on regulator data

Copyright Paul Budde Communication Pty Ltd, 2012

(Source: BuddeComm based on company data)

(Source: BuddeComm based on company data)

Chart 3 UPC subscribers by service type 2006 2011

(Source: BuddeComm based on company data)

Copyright Paul Budde Communication Pty Ltd, 2012

SATELLITE-BASED DIGITAL PAY TV DEVELOPMENTS