The picture changes on the TV market

Telecom operator Orange Romania announced last week the launch of its satellite TV service in Romania. Just a couple of weeks earlier, French company Eutelsat had also set up a satellite TV service, in collaboration with Oradea-based operator Freesat. These new entries have the potential to disrupt the TV market, so far dominated by providers such as RCS&RDS, Romtelecom and UPC.

By Otilia Haraga

“The subscription TV services market is competitive and it is soaring, so there is the potential to attract new clients. This is especially the case where fixed services are not available – via cable or IP networks – such as rural areas, where the penetration rate of broadcasting services was 74 percent in 2012,” Catalin Marinescu, president of ANCOM, tells BR. Data from the telecom watchdog show that the overall household penetration rate of TV services in Romania had reached 85 percent at the end of 2012.

In 2006, Romania committed, alongside another 102 countries from Europe, Africa and Asia, to switch from analog cable to digital terrestrial television before June 17, 2015.

The transition to digital television should start with the allocation of broadcasting licenses. According to ANCOM, this process is stipulated in the Audiovisual Law, but it should be detailed in a strategy establishing the stages, selection procedure and transition method. This strategy should be adopted by the Ministry of Communications.

“Digital television has become the norm for more and more viewers who have become aware of its advantages – the quality of the image, sound, interactive applications and high-definition,” Severina Pascu, CEO UPC Romania, tells BR.

Until the transition to digital television is completed, Romanians can still choose from various types of TV services.

“Historically speaking, the Romanian market has been very generous as far as TV content is concerned, and for most, TV is still the main source of entertainment and information,” says Pascu.

Information from ANCOM shows that at the end of 2012, there were approximately 6 million subscribers to TV services, 5 percent more than in the previous year.

While 3.8 million had opted for cable TV services – 6.4 percent up on 2011 – 2.19 million had subscribed to DTH satellite services, up 2.3 percent on the previous year.

The digital cable TV customer base saw a 40 percent boost, taking it to 1.24 million. Digital TV therefore represented nearly 33 percent of the total number of cable subscribers at the end of 2012, while 63 percent, corresponding to 3.8 million consumers, had analog cable services.

Satellite TV (DTH) subscribers represented the highest proportion, 63 percent, of the digital TV customer base, says ANCOM. “However, in absolute numbers, the greatest growth in 2012 took place in the digital cable subscriber base,” adds Marinescu.

In Romania, IPTV services are only now beginning to attract customers, with just 37,000 takers at the end of 2012, up 34 percent on 2011. But Romanians increasingly prefer TV services via advanced technologies such as digital cable networks and IP technology networks.

“The Romanian user is more and more interested in acquiring services which allow him or her to receive TV programs at a higher quality via technologies that offer multiple functionalities,” says Marinescu.

Subscribers to national providers of TV services represent 91 percent of the total TV subscriber base in Romania, the rest using smaller local players.

Operators such as RCS&RDS via the Digi platform, Romtelecom via the Dolce TV platform and UPC are the largest providers with national coverage on this market.

RCS&RDS is the market leader in this segment. In October 2012, the company reported a TV customer base in excess of 3 million, including analog, digital and satellite TV services.

“At the end of the first quarter of 2013, Romtelecom had nearly 1.3 million TV customers, which included satellite, IPTV and cable TV,” Ovidiu Ghiman, executive director in the strategy and commercial residential department of Romtelecom, tells BR.

On March 31, UPC had, 1.1 million TV subscribers in Romania. Approximately 435,000 were digital TV customers, 50,000 were HD clients, some 320,000 were satellite TV viewers and nearly 410,000 had taken up analog cable services.

“Romania is one of the most competitive markets in Europe, with advanced telecom services and very low prices. The local market continues to be dominated by promotions and discounts, and price matters the most in the purchasing process,” says Pascu.

Competition will soon move up a gear on the price front and these operators will have to work much harder to keep their customers satisfied, after two new players announced their arrival on the market.

“It is possible to attract clients from competing providers if a new competitor comes on the market with innovative products, at competitive prices, that are different depending on the categories of target clients and with attractive service packages,” says Marinescu, of ANCOM.

Last week, Orange announced the launch of its mass-market satellite TV service at prices of up to EUR 12.

“We believe now is the time to launch TV services in Romania, because we can benefit from our partners’ new technologies,” said Jean-Francois Fallacher, CEO of Orange Romania.

Orange TV offers over 40 HD channels, of which 26 are in HD format for the first time on the Romanian market.

“There will be a big appetite in rural areas because cable infrastructure is lacking, and we are present with full 3G coverage and full HD TV coverage. But I think many people in the city will also adopt the services,” Julien Ducarroz, chief commercial officer business to consumer at Orange Romania, tells BR.

Orange will be tapping into its 10 million-strong customer base to allow the service to get a grip: the operator’s customers qualify for a 20 percent discount if they have only one SIM and a 30 percent discount if they are using two SIMs, as well as free installation and service activation.

“We feel that Orange mobile customers should be offered a special price for TV services. For sure there will be Orange customers who will take up our service, but I believe there will also be non-Orange customers,” said Ducarroz.

Just two weeks before, French company Eutelsat had also launched a digital satellite TV service, in collaboration with Oradea-based operator Freesat.

With this service, Freesat is playing the price card. “We wanted to offer Romanians TV access at an advantageous price that a normal person on a lower salary can afford. We believe the best offer for these clients is without a contract or monthly bills. By paying RON 99 (EUR 22), you have access to your favorite channels for an entire year – no worries, no subscription,” Serban Belenes, general manager Freesat, told the media.

The Freesat service is payable only once a year and is accessed based on a pre-paid card.

The package includes the major Romanian TV channels and up to 500 international stations.

Dissatisfied customers of veteran operators may be a good source of business for these new players. Last year, over 5,000 complaints were submitted to the Consumer Protection Authority about RCS&RDS, UPC, Romtelecom and AKTA. Some 2,937 of these were about the largest player RCS&RDS, 1,803 centered on Romtelecom and 386 UPC, according to data from the institution, quoted by Capital.ro. What’s more, not all complaints from the previous year had been solved.

With these two new players, the number of DTH platforms has increased to seven, including Digi TV from RCS&RDS, Focus Sat by UPC, Romtelecom’s Dolce, AKTA, taken over by Romtelecom from Digital Cable Systems in 2011, and Boom TV, also taken over by Romtelecom from DTH Television Grup the same year.

otilia.haraga@business-review.ro

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