Romania prepares to go digital in 2015

This year, Romania will switch off the analog signal and make the transition to digital terrestrial television. A few other important events are also expected on the local telecom market as it goes through a process of consolidation.

Otilia Haraga

The first announcement on the market came at the beginning of the year when the Romanian telecom watchdog revealed that five contenders – 2K Telecom, Radio M Plus, Regal, Cargo Sped and Digital Video Broadcast – had submitted their applications to take part in the second procedure allocating digital terrestrial television multiplexes.

This is part of the strategy to switch off the analog signal and move to digital terrestrial television before June 17, 2015. In 2006, Romania committed, along with another 102 countries from Europe, Africa and Asia, to make the digital transition.

The strategy for the digital switchover and the national implementation of digital multimedia services was approved by the Romanian government on June 19, 2013.

Following the first tender, which took place on June 10, the National Radiocommunication Company (SNR) won three multiplexes for just over EUR 1 million in license tax, as announced by the national telecom watchdog ANCOM.

RCS&RDS and SNR were the two candidates in the tender.

In this second tender, the telecom watchdog will put up for sale two national multiplexes, 40 regional and 19 local ones.

On January 20, the auction committee began to analyze the candidates’ files and decide who is eligible.

By the end of the month, ANCOM will announce the winners of the first round and whether it is necessary to organize a second round.

According to the competitive selection procedure, each of the participants must submit an initial offer, mentioning the categories and number of multiplexes they wish to acquire.

If the demand exceeds the supply, the tender will continue with a new round. For the categories where demand is lower, the winners will be decided in the first round.

After the winners and the prices for each of the multiplexes are settled, the next step will be a new allocation round in which the multiplexes will be allocated based on the supplementary payments they are willing to make to obtain certain frequencies.

The minimum license tax, which represents the starting price in the auction for the two national multiplexes, is EUR 300,000. Regional and local multiplexes start from EUR 12,000 for a regional multiplex for Bucharest and EUR 1,000 for a multiplex allocated in a town or village that is not a county residence.

The multiplexes are granted for ten years and winners can start providing TV broadcasting services on June 17, 2015.

By May 1, 2017, the winners of the two national multiplexes must set in place at least 36 transmitters, while the operators awarded the local and regional multiplexes should establish at least one transmitter in each area.

This year, ANCOM will also award additional spectrum for broadband services, in a tender that will see allocation of radio spectrum in the frequencies of 3,4-3,8 GHz.

Catalin Marinescu, president of ANCOM, said, “Once the licenses in the 800 MHz frequency come into force, we have every reason to believe that, fuelled by the competition between mobile operators, we will witness fast growth in the coverage and number of users of LTE/4G services in Romania.”

He added that the current limitations in covering the country with fixed communication networks via fiber optic, cable or copper, as well as the performance of some of these networks, could prove to be a competitive edge for the development of 4G networks.

Against the backdrop of growth in 3G and 4G/LTE connections, more mobile internet connections are expected this year.

“After developing their 4G networks, mobile operators will be able to improve current applications and develop new ones to attract more customers – for instance mobile internet, IP telephony, online games, HD TV and even 3D, videoconferences, machine-to-machine, cloud computing or specific applications for smartphones with NFC,” Marinescu said.

Operators can also allocate higher bandwidth to mobile internet at peak hours, meaning higher data transfer speeds or several simultaneous data transfers.

From the point of view of the end user, it will be possible to commute a voice call to a video call or transfer files without interrupting the conversation.

This year, the telecom watchdog will also continue to implement the infrastructure law by pursuing the multi-annual project compiling the inventory of networks and the related infrastructure elements, as stipulated by Law 154/2012, governing the regime of network infrastructure.

The inventory will indicate the coverage of these networks in every Romanian town and village and the situation of the available infrastructure elements.

This will help to identify the areas that need a boost in infrastructure investment as well as to share the use of infrastructure elements.

Operators should expect some inspections from the telecom watchdog, to check whether they have inserted some basic clauses into the contracts signed by end users. The watchdog will also check whether the operators have fulfilled their obligation to keep their customers informed.

Another project on the legal agenda is to ensure growth in the access of people with disabilities to telephony and internet access services.

According to an ANCOM bill currently under public consultation, end users with sight, hearing or speaking impediments will be able to benefit from telephony and internet offers comprising optimized consumption resources which meet their specific needs, Marinescu told BR.

Telecom market undergoes consolidation

Other major moves are tipped to take place on the telecom market this year. One is the long-heralded privatization of Romtelecom (currently Telekom Romania Communications) and its merger with Cosmote (currently Telekom Romania Mobile Communications).

Last year, Romtelecom and Cosmote acquired the German identity of mother company Deutsche Telekom. The two firms started working as Telekom Romania, having integrated their fixed and mobile shops, a unified call center, one single website, and one social media presence.

Even though they work as one, they are not legally merged, something which DT aims to do in the future. However, for that to happen, the Romanian state, which has a 46 percent stake in Romtelecom, needs to decide in what way the privatization of the former incumbent will take place. This topic should be high on the government’s agenda in 2015. The state is already late in making a decision: a possible listing of Romtelecom shares was announced for 2014, but did not happen.

“In 2015, we can expect more and more generous offers from mobile operators, which will include more mobile internet and national minutes. We will also witness the diversification of convergent fixed-mobile offers fuelled by smartphones and tablets. Moreover, we can even talk about the substitution of fixed services for mobile services, accompanied by fixed-mobile internet substitution,” predicted Marinescu.

While Telekom Romania targets consolidation, Vodafone seems to be actively seeking new opportunities. According to Reuters, the mobile operator is reviewing potential acquisitions, including of Europe’s leading cable operator Liberty Global, which in Romania is represented by UPC Romania. The Liberty Global acquisition would enable Vodafone to provide TV services in Romania on a par with its main competitors, Orange Romania, Telekom Romania and RCS&RDS.

Vittorio Colao, CEO of the British group, said in an interview with Ziarul Financiar that Vodafone was analyzing the option of providing fixed voice and data services to the consumer segment as well as TV services in Romania, which may include a merger or acquisition.

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