|Issue:||Europe II 2010|
|Topic:||Wireless Internet access as an incentive for economic growth in Bulgaria|
|Title:||Chairman, Communications Regulations Commission|
Veselin Bozhkov is Chairman of the Communications Regulations Commission, Bulgaria. Previously, Mr Bozhkov has held the following posts: Deputy Chairman of the Commission for Protection of Competition; Chief Auditor in the ‘European integration and EU funds’ Department of the Bulgarian National Audit Office; Chief expert in the Commission for Protection of Competition Planning Department of the City Council; part-time lecturer at the University of National and World Economy – Sofia; lecturer at the International Business College; guest lecturer at Moscow State University ‘M.V. Lomonosov’ and also at Madrid State University. Mr Bozhkov holds a PhD in Economics from the Russian Academy of Management.
A national strategy for broadband Internet access has recently been adopted in Bulgaria, recognising broadband as one of the main tools for improving economic and social well-being. Within the plan, wireless access is seen as a viable alternative for providing Internet connectivity in remote and underdeveloped areas. Across the country, information and reservation services are developing rapidly, projects for mobile learning and e-health have been launched, and mobile commerce services are imminent.
Over the past decade, wireless communications has strengthened its position worldwide as the most rapidly growing segment of the electronic communications sector. Mobile telephones and portable computers are an integral part of millions of people’s lives all over the world and the continuous growth of their usage is a steady trend in both developed and emerging economies. The mobility of today’s customer requires permanent access to information and content for personal and business purposes, which would be impossible without an Internet connection. Thus, widespread broadband connectivity leads to an increase in gross domestic product GDP, employment, competitiveness of national economies and an improved quality of life. In addition, broadband access provides users with the opportunity to fully exploit the economic and social benefits of ICT. However, significant differences in levels of broadband penetration, both in particular countries and across regions within countries, do exist. Therefore, wireless broadband is becoming an increasingly important factor for bridging the ‘broadband gap’. In order to achieve this objective it is crucial to further develop the electronic communications sector policy at European and national levels and to implement a regulatory framework, which in turn will contribute to the overcoming of technological and regulatory barriers to the development of mobile communications services and which will create incentives for investment in disadvantaged regions. As a full member of the European Union since January 1, 2007, Bulgaria has joined the implementation of the Lisbon strategy, which expects the EU to become the most competitive and dynamic knowledge-based economy in the world. In order to achieve this goal it is essential that “businesses and citizens must have access to an inexpensive, world-class communications”1. In November 2009 a national strategy for broadband Internet access was adopted, which recognises broadband as one of the main tools for improving the economic and social well-being of people. The national strategy will encourage the development of high-speed Internet infrastructure throughout the country, as well as the usage of administrative, medical, legal and educational electronic services. The main objective for the period 2010-2013 is to provide broadband connectivity to residents of remote settlements, including access through wireless technologies. The funding for such projects will be provided through the Operational Programme ‘Regional Development’ of the EU with the participation of private partners. The transition to terrestrial digital broadcasting, resulting in released spectrum, is expected to provide an additional incentive for the development of wireless broadband service in Bulgaria and across the EU. The potential use of the digital dividend is related to the development of mobile broadband services, provision of broadband access in less populated areas, rollout of new wireless technologies, etc. Thus, the wireless access is a viable alternative for providing Internet connectivity in remote and underdeveloped areas where the application of other broadband technologies is economically inefficient. According to expert estimates, despite the negative impact of the global economic crisis, wireless Internet enjoys huge interest worldwide. According to Maravedis2 in the second quarter of 2009 global mobile data traffic increased by 30 per cent compared to the previous quarter. As reported by the same source, new users of BWA/WiMAX services in the world reached approximately 560,000 in the second quarter of 2009 alone (an annual growth of 74 per cent). An increase is expected also in the number of UMTS/HSPA mobile broadband subscribers, which, according to an Infonetics Research3 forecast, is likely to reach 1 billion people worldwide at the end of 2013. Broadband penetration in Bulgaria in mid-2009 was 31 per cent in terms of households and 11.9 per cent in terms of population, which is significantly lower than the EU average. However, the majority of customers still prefer traditional fixed-wire access. Wireless broadband access in Bulgaria is in its initial phase but in the past two years we have witnessed a steady trend of growth in demand. At the end of the first half of 2009 WiMAX subscribers represented 0.8 per cent of all broadband subscribers in the country (Figure 1) compared with 0.5 per cent in 2008. Source: Communications Regulations Commission, 2009 Figure 1: Broadband subscribers in Bulgaria by technology, 1 July 2009 In the middle of 2009 fixed broadband subscribers using WiMAX technology launched on the Bulgarian market in 2007 still represented a relatively small number (about 7000), but over a two-year period they have increased six times. Four companies offer this service, although the proposed connection speeds are still lower than those of the competing undertakings offering cable, LAN and DSL services. Evidence of the early stage of development of networks and services provided by ‘point-to- multipoint’ networks in Bulgaria is the low coverage of WiMAX networks in the country, which reached only half of the population at the end of 2008. In 2009, however, despite the economic slowdown, the WiMAX undertakings plan to invest more than BGN 46.6 million (approx. US$32 million) and cover 90 per cent of the population. The growth in usage of broadband Internet via mobile devices, offered by all three mobile operators in the country, is considerable. A major factor for mobile operators to seek for new market niches is the high penetration of mobile voice services – 138 per cent in Bulgaria (EU average 120 per cent), which is forcing them to broaden their portfolio and offer services other than traditional voice services, such as data transmission. Significant growth of mobile Internet service is reported in terms of subscribers with access cards or modems using 3G technologies (UMTS/HSPA). Their number doubled from end-2008 to mid-2009, reaching almost 80,000. Although mobile operators’ revenue from this service accounted for only one per cent of their total revenues, its share is increasing with time. In the short term the demand for mobile broadband service through WiMAX technology, recently launched on the Bulgarian market, is also expected to grow. Overall, the Bulgarian market for electronic communications follows the global trend of deployment of innovative wireless services. The demand for mobile services and applications is growing as a result of the increased mobility of consumers, as well as the increased capacity of the wireless connections. At the moment the fastest-growing service on the market is broadband access through mobile handsets, used mostly for business, entertainment and education. The most popular services are access to email on subscribers’ mobile phones for business purposes and personal use, entertainment services (music and video, mobile games, radio, mobile blog, social networks, mobile TV), as well as file sharing. Mobile data offerings (both prepaid and post-paid) bundled with the purchase of a laptop and mobile device are also becoming increasingly popular among residential customers. Other useful applications such as: information services, ticket reservation services, mobile video observation, notification of different services, navigation, GPS services and remote access to the office are rapidly developing. Projects have also been launched for mobile learning and e-health, enabling the provision of educational and healthcare services electronically. There are also other opportunities for the launching of new services, which represent market niches and potential new sources of revenue for telecom operators. Some of these new services will probably lead to the emergence of completely new industries (e.g. mobile content). Furthermore, the forthcoming launch of mobile commerce in the country is also expected to turn into a significant incentive for the development of mobile broadband services. Currently, a utility bill payment service via mobile phones is offered on the market. However, in early 2010, a new service will be launched that provides customers with always-on access to their bank accounts via mobile phones and the ability to make payments to banks and retail outlets. Thus, wireless access, albeit with a slight delay compared to other EU countries, is gradually turning into a way of life in Bulgaria. It prompts the emergence of new requirements, the supply of innovative services and exciting business opportunities, which might be an engine of economic growth, especially in times of unfavourable economic conditions when traditional industries are experiencing serious difficulties.