New 3G license may be in the pipeline

Media rumors that the regulator has decided to take out a new 3G license have some foundation. “ANCOM has not decided to grant a new license for 3G services, it has only initiated a series of discussions with the industry to establish to what extent there are still resources available for a new supplier of 3G services,” says president Catalin Marinescu. He said the decision would only be made when there was radio spectrum and concrete demand from the market. “ANCOM's target is to reorganize the radio spectrum to make resource allocation more efficient, which will facilitate the entrance on the market of new operators. We believe the introduction of 3G services in the 900 MHz bandwidth will stimulate the development of the communications market in Romania, since it could help cover less populated and rural areas,” he adds.On September 1, the draft decision regarding the harmonization of the use of various radio frequency bands was released for public consultation. Currently, these bands are given through license to Orange, Vodafone and Cosmote, which use them to supply 2G services. Under the ANCOM project, the operators who own these bands through license will also be able to offer 3G mobile communications through UMTS systems (multimedia services and data transmission). The draft will be under public consultation until October 1.Demand is likely, given that Telefonica has announced its arrival on the Romanian market. It is the last large operator to enter the Romanian market, which is already home to players such as France Telecom, Vodafone and Deutsche Telekom (with 25 percent in Greek company OTE, which runs Romtelecom and Cosmote). Telefonica has opened operational offices in 15 European countries. “Its entrance on the Romanian market will create strong and even competition among large international groups – France Telecom, Vodafone, Deutsche Telekom and Telefonica – which is extremely beneficial for Romania and the consumer,” says the ANCOM president. The Telefonica office in Romania will focus on business services for multinationals. “For a year or two, we cannot talk about competition between Telefonica and the other large players on the market, at least not on the residential side. For business services, Telefonica already has a portfolio of clients in Romania, and will probably try to launch offers to other large companies,” Madalin Lazarescu, research manager at IDC Romania, tells Business Review. Telefonica notified ANCOM in July of its intention to supply networks and electronic communications services. “More competition on a market that is almost saturated [editor's note: 130 percent mobile telephony penetration] means lower tariffs and, therefore, more accessibility. A new 3G license requires the reorganization of the spectrum and then a public auction that might end, or not, in success. In this recession period, it can remain only in project stage like the WIMAX licenses,” Lazarescu adds. “At this point, no player on the market would be likely to invest in a 3G license since the recession has strongly affected their revenues, and investments in such a network cannot be neglected. In all likelihood, ANCOM thinks that Telefonica, which recently entered the local market, will need a 3G license at some point.” Although it has had a 3G license since 2007, RCS&RDS was offering only Digi Mobil voice services (on top of Digi TV cable and satellite television, Digi Net internet and landline telephony Digi Tel). Last week the firm launched mobile internet services Digi Net Mobil, becoming a five-play operator. Currently, RCS&RDS has a million internet users. Its mobile internet service, with speeds of up to 7.2 Mbps, has been launched only in Bihor and Timis county, but will be extended to all large cities in Romania by year's end. “Currently, in the rest of RCS&RDS's 3G national network, mobile internet is available at access speeds of up to 384 kbps,” say company representatives. Digi Net Mobil will be available for a subscription of up to RON 15 (nearly EUR 3.5). “If small tariffs bring many users, then revenues might grow. For this, RCS&RDS needs national coverage to be able to target Romanians everywhere,” says Marinescu. While RCS&RDS offers mobile internet speeds of at most 7.2 Mbps, other players have already tripled that. Only recently, Vodafone and Telemobil (Zapp) each launched an HSPA+ network which mainly addresses business clients with high speed necessities. For both companies, this technology will first be available in Bucharest. “Vodafone and Telemobil offer speeds of 21.6 MHz in limited areas. They will compete better when the coverage is complete. Also, RCS&RDS, through its strategy, targets a different segment of clients – on lower incomes and with standard communication needs. RCS&RDS customers who today have access to cable internet will be able to acquire mobile internet services, and prices are low, which means the number of customers could be high. Finally, in the context of a crisis, other Romanians could become interested in cheap mobile internet access.” The challenge that RCS&RDS has to face right now is that it needs to ensure enough area coverage to reach large numbers of the public.