Home EuropeEurope 2006 Building Romania’s future

Building Romania’s future

by david.nunes
Zsolt NagyIssue:Europe 2006
Article no.:4
Topic:Building Romania’s future
Author:Zsolt Nagy
Title:Minister of Communications and Information Technology
PDF size:92KB

About author

Zsolt Nagy is Romania’s Minister of Communications and Information Technology. He has held a number of managing positions in technical-scientific associations and coordinated programmes initiated by the Democratic Association of the Hungarians in Romania (DAHR) in the sector of local public administration and coordinated the collaborative programme on Information Society initiated by DAHR and the Ministry of Informatics and Communication in Hungary. Mr Nagy has coordinated electoral campaigns for the DAHR in both local and general elections. He is presently the DAHR’s Vice-President. Mr Nagy is a member of the Hungarian Technical-Scientific Society in Transylvania. He is the President of the Progress Foundation for promoting digital culture, and President of the Janovics Jeno Cultural Foundation. In January 2005, he was awarded the “Neumann Janos” prize for supporting and promoting Information Society. Zsolt Nagy graduated from the Faculty of Automation and Computers of the Technical University of Cluj-Napoca as a System and Computer Science engineer specialised in Automation and Industrial Informatics. Between 1997 and 2000, he attended management courses at the Robert Schuman Institute (Budapest), the National Democratic Institute (Washington DC), International Republican Institute, and the Foundation for Pluralism and Democracy after Communism (AFC), Hungary.

Article abstract

ICT, the fastest growing sector in Romania, accounts for 8 per cent of its GDP. The Ministry of Communications and Information Technology, MCIT, is working to liberalise the ICT sector, to privatise government-controlled telecom companies, re-launch Romania’s mobile phone operator, and attract investments. It is facilitating 3G services, digital radio broadcasting and WiMAX testing. The MCIT’s Power Line Communications (PLC) pilot project will bring broadband to the whole county via the electrical power grid that connects almost all of Romania’s households.

Full Article

The Romanian ICT sector has the highest growth rate, 20.2 per cent of any sector of the Romanian economy. The sector accounts for 8 per cent of the country’s GDP and is one of the fastest growing markets in Central and Eastern Europe. The Ministry of Communications and Information Technology (MCIT) has established the development of the Information Society as an objective for 2006 and hopes to make significant additional progress from 2007 to 2009. The spread of ICT to the entire economy is a goal of high importance both for the growth of the overall production level and as a tool for regional competitiveness. It also stimulates the reorganising of the methods of production and the emergence of new business and private services. Stimulating the use of ICT is a primary objective of the Ministry of Communications and Information Technology. The Romanian ICT sector, especially the software production segment, is active and dynamic. The Ministry is acting to stimulate the demand of IT products by taking measures to encourage greater competition among the local providers. Strategic objectives The year 2005 was an important one. During 2005, we not only managed to achieve the strategic objectives of the Government’s programme but took important steps, as well, toward successfully achieving all the long-term objectives set forth by Romania’s Ministry of Communications and Information Technology. The priorities, back at the beginning of 2005, were the privatisation of those companies in which the Government was a majority shareholder, the re-launching of Cosmorom, the mobile phone operator, and enhancing the welfare of our citizens by carrying out essential projects. The ministry was successful in its efforts to obtain revenues of twice the public outlays earmarked in the budget: €60 million were obtained from the licensing of 3G operations and another €28 million for licensing Cosmorom. Cosmorom attracted a further €128 million in investment funds for its reactivation after some years of problems, and some days ago, Cosmote, the successor to Cosmorom, announced it would invest more than €500 million over the coming five years. Romtelecom, as well, plans to invest some €450 million in upgrading its network. The activities of MCIT have focused upon establishing public-private partnerships and creating a framework for increasing competitiveness within the ICT market. This helped improve service quality and facilitated the emergence of new technologies on Romania’s market. This resulted, among others, in the launching of 3G services, the initiation of procedures for the accreditation of the second local digital certificate issuer, the launching of T-DAB digital radio broadcasting system, and the start of tests of WiMAX technology. The number of mobile phone users grew to approximately 11 million and banks transferred over €3.7 billion and RON 47.5 billion through online payment instruments. Currently, there are more than 84,200 people using Internet Banking, Home Banking or Mobile Banking payment instruments. As far as national communications are concerned, the situation of the Cosmorom mobile phone operator was resolved, after five years of procrastination. As a result of the consistent actions of MCIT, at the end of May Greece’s Cosmote Group pledged to invest €120 million to recover Cosmorom. Cosmorom’s outstanding debts to suppliers and others were fully serviced by the shareholders and the capital was strengthened, with 70 per cent of the shares going to Cosmorom’s successor, Cosmote, and 30 per cent to Romtelecom. Cosmote Romania has already made its new commercial strategy and service offerings public, contributing this way to boosting the competitiveness of the mobile phone services market, bringing down prices and improving service quality in the process. Privatisation The recovery of Cosmorom under the new name Cosmote Romania makes it possible to achieve another objective of the Romanian Government’s programme, namely the full privatisation of Romtelecom. The government named CSFB (Credit Suisse First Boston) as consultant to prepare and carry out the privatisation process. The shares owned by the Romanian Government in Romtelecom will be floated on the stock exchange by mid-2006. Changes in the management board of the Romanian Post Service and the RADIOCOM National Corporation made it possible to start the reorganisation of these state-owned companies. The aim is to steer them to the competitive market and enhance service quality. Efficient reorganisation is a prerequisite for successfully turning them private. At the same time, the ministry began seeking consultants to assist the Romanian State in drawing up and carrying out the restructuring and privatisation projects for both companies. The year-end results of the projects initiated in 2005 are remarkable. The MCIT established a high priority goal calling for the reduction of the digital gap between the urban and rural areas of Romania by identifying, and implementing, the best possible technology for providing communications services in rural areas. To achieve this goal, MCIT developed a series of pilot projects, including its Power Line Communications (PLC) project and its Knowledge-based Economy project. Tests will be finalised this month at the pilot village of Band, in Mures County, and the PLC project will be officially released. The Romanian Government, via the MCIT, initiated its Knowledge-based Economy project. A US$60 million World Bank loan and an additional US$9.4 million contributed by the Romanian Government will finance the project. The Time of Knowledge conference, organised by MCIT in December 2005, presented the project’s achievements during 2005. The objectives set for the pilot stage of the project were met, and the development of the first nine integrated networks in the rural areas was completed by the end of December 2005, as provided for in the contracts. Digital information The main aims of this project are to guarantee the Romanian citizen access to digital information, to stimulate business competitiveness and to fill the gaps in ICT education throughout our nation, with the help of at least 200 Local Area Electronic Networks. The project has had a significant impact on the development of rural and small population centres throughout the country. Importantly, the project meets the requirements of the Romanian national computerisation and communications strategy and, as well, the recommendations of the European Union regarding Romania’s implementation of the Information Society project. As far as the projects designed to increase efficiency and modernise public services are concerned, MCIT held an open tender this August, in connection with the “Virtual payment counter” project, seeking to acquire an ICT-based solution to facilitate online payments for bank cards and for local and national taxes. The project is now being pre-tested and is expected to be commissioned in early 2006. Broadband communication has grown considerably in Romania. Broadband services began with the use of the existing infrastructure; the telephone operating companies offered Asymmetric Digital Subscriber Lines (ADSLs) and Fibre to Home (FTH), and the CATV (cable TV) companies offered Hybrid Fibre Coaxial (HFC). All of these solutions can offer a maximum transmission speed of 8 Mbps. In practice though, the Internet providers, outside the big cities, offer data transmission rates of only 2 Mbps because of insufficient network coverage. The competition existing in the broadband services market hastened the decline of some of the technologies used, but stimulated the emergence of new technologies to meet consumer demand for increasingly rapid service. For instance, as many as 37 per cent of the households currently using dial-up Internet connections are considering switching to broadband connections in the following 12 months, and 41 per cent of the business users are in a similar situation. One new technology is ADSL2+ (ITU standards G.992.3/G.992.4), which offers users more efficient data transmission and new technology options, increased performance – up to 25 Mbps depending upon the distance from the exchange and interoperability. New technology also makes it possible to combine mobility with high-speed Internet services, and there is demand from users for the new wireless broadband access technologies. Wireless services Romania’s market for wireless services is flourishing. The main priority of wireless service providers is to offer broadband telecommunications services to urban dwellers, and to expand services to include underprivileged areas currently without broadband Internet access. The MCIT is considering a strategy to free the 3.6 GHz and 3.8 GHz frequency bands to allow the implementation of WiMAX wireless broadband technology. In the long run, we want to extend the PLC (Power Line Communications) project to include the whole country and provide universal service to the largest possible part of the population. Since the electrical power grid connects most of the country’s households, the introduction of the PLC system will pave the way for the development of universal fixed, wired, access services in Romania. The latest version of PLC permits integrated voice, data and video services, called triple play, in one package. Other services that will make full use of this technology are video on demand, high definition TV streaming, online gaming, online HiFi Audio Streaming, online education and tele-working. The UMTS 3G technology is one of the broadband mobile communications technologies already in use in Romania. According to the country report issued by the European Commission on Romania in 2004, Romania continues to register new achievements in its quest to liberalise the communications market. It has also made progress in its efforts to comply with such European legislation as that which calls for the freeing up of frequency bands for use by mobile communications and digital television broadcasting. The European Commission has recommended that all European countries switch over to digital television broadcasting by 2010. The Commission has requested the support of the national governments to develop the digital infrastructure and implement pilot projects for digital radio and television broadcasting. Promoting the interests of the end users is another priority objective in Romania’s communications development strategy. In the years ahead, IT activities will focus upon legislation, institutional adjustments, and the development of specific projects and applications. Government support for large-scale use of information technology will be seen by the increasing availability of personal computers and Internet access among all the public segments, and by the widespread installation of computers in rural schools. Simultaneously, the government will promote the development of efficient modern local public administration services, work to guarantee the security of information systems and step up its fight against cyber-crime.

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