2. Key figures

Population*:

Currency:

GDP:

Telecom:

Romania is the second largest telecommunications market in Central and Eastern Europe and offers significant growth potential in the fixed, mobile and Internet sectors in the medium to long term as a competitive market becomes established. The telecom market has progressed significantly since 2001, closing gaps in the EU accession and establishing a new independent regulatory body in September 2002.

Liberalisation

Since the market was fully liberalized at the beginning of 2003, some 670 providers have registered with the regulatory authority (ANRC) to offer a range of telecommunications services. However, very few of these companies have valid business plans and can actually be expected to enter the market. The head of parliament’s IT commission foresees no more than 10 real players operating in the market in the future. Aside from incumbent RomTelecom and the country’s existing mobile operators, these are likely to include larger players, such as cable operator Atlas, the telecom arm of the state electricity utility, Transelectrica (which will benefit from its own fiber-optic network), and ISPs such as pan-regional Euroweb. RomTelecom, which is owned by the Greek company OTE (54%) and the Romanian government (46%), has failed to cement its position as a monopoly provider prior to liberalization. Not only has it done little to entrench its interests, there is still a considerable amount of potential pent-up demand for all types of telecom services. Fixed-line penetration of 18 percent is one of the lowest in Europe, particularly in rural communities.

Challenges

A significant obstacle to market growth, particularly for the rollout of high-speed asymmetric digital subscriber line (ADSL) services, will be RomTelecom’s ownership of the local loop (the Alast mile@ providing access to end customers). New providers will either need to use RomTelecom’s network or an alternative network, such as cable. The ANRC has been holding a series of discussions with RomTelecom recently on interconnection tariffs, and has designated work groups to assist in the formation of a new regulatory framework. ANRC has no experience in a liberalized market and even the most well-intentioned regulator can only do so much without previous practice or precedents.

Internet:

Internet penetration in Romania is currently small, but the growth rate of the sector is significant (50 percent/year). There are about 200 ISPs, most of which are resellers of services provided by about ten larger ISPs. Computer literacy, good English language skills of the population, the existence of a widespread cable TV network, and reasonably high penetration of mobile telephones as a basis for mobile Internet, are factors that will support increased Internet access. Factors negatively impacting Internet development include a low rate of PC penetration, the limited use of credit cards, and the lack of necessary banking infrastructure to clear payments made via the Internet. Projects for upgrading all types of infrastructure to allow greater Internet penetration are strongly encouraged by the government. The implementation of a series of e-government projects as well as greater emphasis on e-commerce, for which the government has issued special regulations, are expected to lead to a fast increase in Internet penetration. Growth of the sector will also be closely linked to full liberalization of the telecom sector, which will allow current subscribers to wired telephony to opt for VoIP services.
By the end of 2002 some 13% of the Romanian population used the Internet and 6% were frequent users, accessing the net at least once per week, according to a recent study undertaken by the market research company GfK.
While 53% of the population had heard about Internet but never accessed the Internet, an amazing 33% Romanians say they have never heard about it.
As regards the activities of Romanian users online, the Gfk study found that 49 per cent use the net for e-mail, 46 per cent use chat services, 37 per cent search the internet for information about specific events, 26 per cent read news, 21 per cent search for jobs on the internet and 18 per cent use the network to interact with the authorities.
Most Romanian users access the Internet in public places and very few have access at academic institutions. The average time spent online is 5.8 hours per week.
(* source: www.osec.doc.gov)

Mobile phones:

Mobile telephony has developed dramatically over the last five years. Mobile penetration, although relatively low, has surpassed fixed-line penetration reaching 22 percent by the end of 2002. There are four service providers with a total of more than 5 million subscribers: Mobifon (GSM 900 MHz), Orange (GSM 900 MHz), Cosmorom (DCS 1800 MHz), and Telemobil (CDMA 450 MHz). Mobifon and Orange account for 95 percent of the mobile market. The most revolutionary development in this market was the launching, in late 2001, of the CDMA digital 450 MHz network by Telemobil, an operator supported by the U.S. firm Qualcomm. Romania was the first country to deploy CDMA 2000 in Europe and the first in the world to build a high-speed mobile digital 450 MHz network using CDMA technology. The current trend in the market is to encourage a range of 3G technologies. If the Romanian government manages to sell the four 3G licenses for which it intends to organize an international tender, IMT 2000/UMTS may be commercially available by the end of 2004. The licenses are valid for 15 years. Each winner will pay a $35 million fee for the release of radio spectrum, and payments can be made in tranches.