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“The mobile communications industry as a main pillar
in the growth strategy of the Greek economy”,
March 2015
1
Contents
Executive summary ...................................................................................................................................3
1. The industry's results in the recession ...............................................................................................8
2.
The industry's contribution to the Economy ...................................................................................17
3.
Obstacles to investments and usage ...............................................................................................26
4.
Growth scenarios under conditions ……...........................................................................................35
5. Moving into the future – Evolutions and Τrends in telecommunications ........................................40
6. Conclusions .......................................................................................................................................62
2
Executive summary
Mobile telecommunications create value for the greek economy.
benefit for the user - productivity
Consumers
• Price reduction : 67% in voice and
90% in data (2008-2014)
• 372% increase in mobile internet
usage in 2009-2014
• 99.5% of 3G geographical coverage in
2013
Businesses
• 27.4% of businesses provided
portable devices to their personnel in
2013
• Improvement of productivity due to
direct access to information, contact
with personnel on the move
• Development of mobile apps –
industry with turnover > €400 million
GDP
• €6.9 bn increase in productivity
through the use of mobile telephony
• €1.3 bn increase in productivity
through the use of 3G networks
benefit from the offer - domino effects
Industry's
direct
contribution to
the economy
Public
revenues
Domino effect
on the
economy
• €2,312 million contribution to
GDP in 2014 (1.3% of total GDP)
• €309 million in investments in
2014
• 4,568 jobs
• €1,239 million contribution in
public revenues in 2014
• The industry pays its obligations
consistently, despite over-taxation
• 15.6 thousand jobs for suppliers and
device retailers
• 21.5 thousand jobs from domino
effects on the entire economy
• €1,909 million in contribution to GDP
from domino effects
3
Executive summary
The industry is facing its 7th year of recession, with a tendency to level off, through the increase in use
of services. Despite reduced revenue, capex increased in 2014.
revenues from
services
EBITDA
talk time
data
subscribers
investments
• 2013: -17.2%
• 2014: -4.4% to €1,991 m.
• 2013: -15.9%
• 2014: -8.2% to €739 m.
• 2013: 1.8%
• 2014: 4.5%
• Revenues have been negatively affected by
the economic crisis, regulatory changes in
termination rates and over-taxation of
services.
• Revenues from data increased by in 2013,
representing 10% of revenues from services,
but they fell in 2014 and are considerably
short of the european average.
• 2013: 36.8%
• 2014: 28.2% to 19.1 PB
• ARPU has constantly decreased in the last
years and in 2014 it dropped close to €10
per user.
• 2013: 5.2%
• 2014: 0.3% to 16.4 m.
people
• The industry invests 16% of its revenues
from services and 42% of its EBITDA
• 2013: -12%
• 2014: 21% to €309 m.
4
Executive summary
Greece deviates from Europe and the targets of the Digital Agenda:
 Obstacles in licensing of new and upgraded network infrastructures and
 Excessive fiscal burden on consumers
Are a major hindrance to the development of mobile communications.
Public Administration is unable to meet
the regulatory framework's
requirements
Regulatory framework with delays,
ambiguities and contradictions



Regulatory framework lags
behind investments and
relevant spectrum auctions Investors are called to assess
the spectrum without full
knowledge of the framework
Even today, completion of
secondary law on existing
networks is pending
Spectrum is auctioned, without
having being cleared from other
uses

4,500 pending applications for
base stations’ licenses –
licensing process rate at 10% of
required rate

Public bodies involved are
lacking human capital and
technologies

Public bodies are overloaded
due to licensing requirement of
base stations even for small
structural changes or change of
frequency
Consumer is over-taxed

2nd in ΕU-28 in indirect taxation
of mobile communications
services

Greece: 38% fiscal charge on
the telecommunications bill,
against the ΕU-28 average of
22.5%

Reduction of the special fee
would result in an increase of
public revenues due to increase
in the usage
5
Executive summary
Should Greece converge with Europe in penetration of data usage, the impact on GDP will amount to
+1.9% by 2019, while public revenues will increase by €1.5 bn.
Impact on GDP by 2019 from the increase
in data usage
Annual data usage in GB per
subscriber
20
15.4
15
5
5.2
1.1%
regulatory and fiscal framework
0.9%
• Scenario Β: Limited improvements on
0.5%
the regulatory and fiscal framework
3.4
1.2
4.0
0.0%
Scenario A
0
Scenario B
Scenario C
2014 2015 2016 2017 2018 2019
Impact on government revenues (in €Μ) by
2019 from the increase in data usage
Europe
Greece - Scenario A
2,000
Greece - Scenario B
Greece - Scenario C
• Scenario Α: Continued
implementation of the existing
1.5%
1.0%
10
1.9%
2.0%
1,517
• Scenario C: Abolition of the special
fee, an appealing regulatory framework
for Investors, positive response by the
public administration in licensing of BS
1,500
1,000
720
884
500
–
Scenario A
Scenario B
Scenario C
6
Executive summary
Strategic repositioning of public authorities in mobile communications will allow the industry to keep
abreast of global trends in the ITC sector.
• Global data traffic was increased by 81% in 2013 and its annual growth rate is estimated at 61% by 2018
(Cisco).
• The most important entrepreunership and public administration fields where mobile telephony can contribute
are the following: Μ2Μ, Mobile Money, Mobile for Development, Mobile Agriculture, Smart Metering,
Smart Cities.
• Competition with new players, such as over-the-top (OTT) service providers, with a monopolistic position in
their markets, without facing the national fiscal and regulatory framework.
Data traffic through mobile networks
Μ2Μ subscriptions
7.3
8
15.9
bn subscriptions
exabytes per month
20
15
10.8
10
5
7.0
1.5
2.6
4.4
5.9
6
4.7
4
2.3
2.9
3.7
2
0
0
2013
2014
2015
2016
2017
2018
2013
2014
2015
2016
2017
2018
7
The industry's results in the recession:
Decrease of revenues and profits
8
Τhe greek financial environment in the recession and
mobile telecommunications
The recessional environment of Greek economy has had a direct impact on the industry of mobile
telecommunications, resulting in a drop in revenues by 50% since 2007.
Recession in the Greek economy and the mobile telecoms industry (2008 - 2014)
Real GDP growth
Mobile telecoms revenues
2%
0.7%
0%
-2%
-0.4%
-1.7%
-4%
-3.9%
-4.4%
-6%
-5.4%
-5.9%
-6.6% -6.9%
-8%
-8.0%
-10%
-8.9%
-12%
-12.0%
-14%
-16%
-15.2%
-16.6%
-18%
2008
2009
2010
2011
2012
2013
2014
source: Eurostat, data analysis from mobile telephony providers
9
The industry's results – revenues from services
In 2014 the industry's service revenues fell by 4.4% to € 1.99 bn
Evolution of service revenues
Service revenues in €Μ
Change from previous year
5,000
30%
4,500
4,000
20%
3,000
10%
0.4%
7.4%
2,500
7.1%
14.8%
in €M
3,500
2,000
0%
-4.4%
-17.2%
-9.3%
-12.6%
500
-16.2%
1,000
-11.2%
-1.2%
1,500
-10%
3,254 3,737 4,002 4,299 4,316 4,263 3,787 3,173 2,775 2,516 2,083 1,991
0
-20%
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
• Revenues have been negatively
affected by the economic crisis,
regulatory changes in termination
rates and over-taxation of services
• Approximately half of revenue
reduction in 2013 and 2014 is due
to cutting down on termination
rates
• Revenues from data increased by in
2013, but they fell in 2014 and are
significantly short of the european
revenues’ average.
2014
source: data analysis from mobile telephony providers
10
The industry's results – EBITDA
Τhe industry's EBITDA has dropped by 57% since 2008 to € 739 m.
• The industry has significantly limited its
expenses over the last years, managing
to contain the EBITDA reduction.
Evolution of EBITDA
EBITDA in €Μ
2,000
Change from previous year
40%
1,800
30%
1,600
20%
6.8%
1.2%
-8.2%
-15.9%
-7.1%
0%
-8.7%
400
50%
-17.9%
600
EBITDA margin
10%
-20.9%
800
0.2%
1,000
2.9%
in €M
1,200
16.4%
1,400
• Τhe negative financial environment in
Greece leads the companies to finance
their investments on new networks with
own funds from their financial flows.
-10%
-20%
200
1,340 1,560 1,606 1,714 1,718 1,739 1,375 1,129 1,031 958
806
-30%
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
37% 38%
33% 32% 33% 33% 33% 33%
30%
20%
10%
739
0
40%
0%
2007 2008 2009 2010 2011 2012 2013 2014
source: data analysis from mobile telephony providers
11
Usage – subscribers indicators
The number of subscribers has picked up in 2012 and 2013 and seems to stabilize in 2014 at 16.4 m.
customers
Number of subscribers (average per year)
Change from previous year
Subscribers
25
25%
Subscribers in millions
19.1% 18.3%
14.3% 13.9%
20
20%
17.5
7.5%
15
1.5%
10
10.2
15.5
11.0
14.9
20.2
17.7
15.5
4.4%
16.4
16.4
15%
10%
5.2%
0.3%
5%
0%
13.1
-5%
• The largest reduction of 5.3 million
subscribers in 2010 and 2011 is due
to registration of personal
information to mobile operators.
However, in the following years, the
number of subscribers has
increased, without reaching the
2009 level, though.
-10%
5
-13.0%
0
2004
2005
2006
2007
2008
2009
2010
-15%
-15.1%
2011
-20%
2012
2013
2014
source: data analysis from mobile telephony providers
12
Usage – Average revenue per user (ARPU) indicator
In 2014, average revenue per user (ARPU) in Greece is further reduced by 2% close to 10€ per month,
significantly lower than other European countries.
Evolution of ARPU
Change from previous year
€
ARPU per month
40
10%
29.5
15
5%
-2.0%
0%
-5%
-10%
13.8
-15%
13.8
10
5
-7.6%
-23.4%
-27.2%
2.2%
-6.7%
20
12.3%
25
24.8
-17.6%
30
-9.7%
31.6
8.2%
30.9
-15.8%
35
15%
12.8
12.5
• Whereas until 2006, ARPU in Greece
and Europe were comparable, in the
following years it decreased much
faster in Greece, due to price drop
10.3
10.1
18.1
-20%
• The lowest price per minute of talk
time and the lowest penetration
data in Greece have a negative
impact on this indicator.
-25%
0
-30%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
source: data analysis from mobile telephony providers
13
Usage – talk time indicators
In 2014, total talk time and talk time per user are recovering
• Competition leads to price reduction, thereby encouraging usage. In spite of the recession, talk time has increased in
2013 and 2014.
Talk time (total voice minutes)
Evolution of AMOU
Change from previous year
Change from previous year
€
5
1.8% 4.5%
20.2% 16.5%27.9%22.3%17.0% 24.2%10.6% -1.9%
100
20%
15
10
122.2
10%
0%
-3.1%
0
10%
5%
0%
50
-10%
-20%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
133.7
4.0%
14.9 17.4
150
20%
15%
164.7
-3.4%
30%
145.1 148.8 152.2
25%
222.5 214.8 223.4
-7.1%
22.2
25
200
40%
24.4%
27.1
204.9
8.2%
50%
239.5
250
2.3%
31.8
30
20
70%
60%
35
30%
2.5%
minutes in billions
40
300
8.5%
39.4
80%
9.4%
45
44.1
43.6 42.8
41.5 42.2
17.0%
50
AMOU per month
16.9%
Voice minutes
0
-5%
-10%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
source: data analysis from mobile telephony providers
14
Data usage indicators
Data usage by consumers in Greece is growing rapidly (17 times since 2008)...
Data usage in GB
Change in data volume from last year
25,000,000
100%
94.3%
90%
19,092,346
20,000,000
70%
14,890,784
15,000,000
80%
60%
50%
10,881,144
9,575,594
10,000,000
36.8%
40%
7,861,930
28.2%
30%
4,047,316
5,000,000
21.8%
20%
13.6%
10%
1,095,910
0
0%
2008
2009
2010
2011
2012
2013
2014
2010
2011
source: data analysis from mobile telephony providers
2012
2013
2014
15
Data usage indicators
… but it falls short compared to other ΕU-28 countries, both in regard to data to talk time ratio, and possession of
smartphones.
Data usage (MB) to talk time (voice minutes)
% of subscribers owning a smartphone
3.5
70%
3.0
65%
61%
2.88
60%
2.5
2.12
2.0
50%
2.15
61%
58%
50%
49%
47%
42%
1.71
1.75
1.76
1.74
1.71
40%
1.52
1.5
1.0
63%
60%
37%
36%
26%
25%
30%
0.73
0.57
0.85
0.83
0.81
0.62
0.56
0.34
0.5
0.0
0.63
0.33
0.72
20%
10%
0%
Q4 2013
Q4 2012
Q4 2014
Q4 2014
source: Vodafone Group
16
The industry's contribution to the economy:
Pillar of development, investments,
employment and public revenues
17
Contribution to the economy - GDP
Overall, mobile communications contribute directly and indirectly to GDP by 7% (12.5 bn in 2014). The largest
part of its contribution comes from the impact of mobile telecommunications on productivity.
Contribution of mobile telecoms to GDP
Direct contribution to GDP
Multiplier effects
Rise in productivity caused by mobile telephony
Rise in productivity caused by mobile broadband
Total contribution to GDP
18
16
14
in €B
12
10
8
6
10.9
0.0
4.0
3.1
12.1
0.0
13.4
0.1
5.4
14.5
0.2
6.4
15.4
0.3
7.1
15.2
0.4
7.5
4.6
3.4
14.7
0.5
1.0
7.3
3.6
3.6
3.7
3.3
3.7
4.1
4.3
2004
2005
2006
4.3
4.4
13.4
1.2
12.6
12.5
1.3
1.3
6.7
6.9
2.1
1.9
7.5
3.1
4
2
14.1
2.7
6.8
2.5
4.0
3.7
3.2
3.0
2.5
2.3
2009
2010
2011
2012
2013
2014
0
2007
2008
source: data analysis from mobile telephony providers, projection of impact on productivity based on a Deloitte case study
for GSMA entitled “What is the impact of mobile telephony on economic growth”
18
Contribution to the economy - GDP
The industry of mobile telecommunications contributes in the gross value added of several other economy sectors
with €1.3 bn through the supply of products and services and €1.9 bn from multiplier effects.
Gross value added created by mobile telecommunications in other industries (2014)
0
Real estate services
Financial services - insurance excluded
Hotels and restaurants
Wholesalers - vehicles excluded
Food, beverages and tobacco products
Oil refining
Telecommunications services
Legal, accounting and consulting services
Electricity and natural gas
Administrative support
Warehousing and transportation support
Retailers - vehicles excluded
Publishing services
Advertising and market research
Computers, electronic and optical products
Construction
Insurance services
Scientific and technical services
Postal and courier services
Rental and leasing services
Other
100
200
300
400
In €M
500
600
700
800
900
1000
Gross value added from suppliers and
retailers
Gross value added from multiplier effects
source: data analysis from mobile telephony providers, input – output analysis based on Eurostat’s input –
output table
19
Contribution to the economy - Employment
The mobile telecommunications industry contributes directly and indirectly to the creation of 41.6 thousand jobs
in the entire economy.
Jobs created by mobile telecommunications in other industries (2014)
0
2
Retailers - vehicles excluded
Hotels and restaurants
Direct and indirect jobs from mobile
Wholesalers - vehicles excluded
telecommunications (2014)
Legal, accounting and consulting services
Administrative support
4,568
Agriculture
Financial services - insurance excluded
Computers, electronic and optical products
21,481
Warehousing and transportation support
15,552
Food, beverages and tobacco products
Textiles and clothing
Construction
Education services
Health services
Land transportation
Employment by providers
Postal and courier services
Printing and reproduction
Employment by suppliers and retailers
Personal services
Employment by multiplier effects
Services auxiliary to financial services
Vehicle trade and repair
Other
source: data analysis from mobile telephony providers, input – output
analysis based on Eurostat’s input – output table
in thousands of jobs
4
6
8
10
Jobs created in suppliers and
retailers
Jobs created from multiplier
effects
20
Contribution to the economy – public revenues
Overall, mobile communications contribute directly and indirectly by €1.239 bn to public revenues (2014),
showing a continual decrease in the last years.
Public revenues from mobile telecommunications
in €M
2,500
Tax take in the mobile telecommunication industry and
the whole economy
80%
70%
60%
% of government revenues in GDP
50%
% of government revenues in the sector's contribution to GDP
1,500
40%
€M
2,000
30%
1,000
1,869
1,951
1,899
1,850
20%
1,622
1,507
1,291
500
4.4%
-2.7%
-7.1%
2009
2010
Public revenues
2011
-4.1%
-14.3%
0
2008
1,239
0%
-2.6%
-12.4%
2007
10%
2012
2013
-10%
-20%
2014
80%
70%
60%
50%
40%
30%
20%
10%
0%
70%
63%
45%
48%
43%
41%
41%
38%
51%
40%
2007
2010
2008
2009
42%
51%
44%
52%
44%
45%
2011
2012
2013
2014
Change from last year
source: data analysis from mobile telephony providers
21
Contribution to the economy – public revenues
VAT constitutes the main source of public revenues from the industry, followed by the special duty.
Public revenues’ breakdown for 2014
1400
96
1200
17
1239
102
131
1000
222
77
€M
800
600
594
400
200
0
VAT
Special duty
Insurance
Insurance
Income tax by
contributions by contributions by the poroviders
the providers suppliers and
retailers
Income tax by Other taxes and
suppliers and
duties
retailers
source: data analysis from mobile telephony providers
Total
22
Contribution to the economy – public revenues
Public revenues from the special duty are constantly decreasing in the past years and have reached levels lower than
the last % increase of the special duty in 2009.
Government revenues from the special duty on mobile telephony
400
375.3
Aug 2009: Increase
in special duty
350
312.1
300
Jan 2007: Increase
in special duty
250
in €M
286.0
273.7
229.6
250.5
241.7
221.7
200
150
100
65.5
76.6
86.5
95.9
107.2
50
0
2002
2003
2004
2005
2006
2007
2008
2009
2010
source: Bank of Greece
2011
2012
2013
2014
23
Contribution to the economy – consumer’s benefit
•
Greece has the lowest rates in talk time compared to all other countries of Western Europe,
even if we take into account the additional charge for the consumer from the special fee.
The price drop is constant as far as voice (-67.4% from 2008 to 2014) and data are concerned
(-90.1% from 2008 to 2014) in the past years.
Change in pre-tax voice prices (€ per minute)
Change in price
Change in pre-tax prices for data (€ per ΜΒ)
Price in € per minute
0.250
0.09
30%
40%
0.08
20%
0.07
10%
0.06
0%
0%
0.100
-3%
-7%
-7%
-14%
-18% -19%
-20%
-13%
0.050
-21%
-25%
-30%
-10%
-7%
0.04
-20%
-21%
-21%
0.03
0.02
0.039-40%
0.01
-50%
0.00
2014
2013
2012
2011
2010
2009
2008
2007
2006
0.05
-30%
0.000
2005
-10%
€ per MB
10%
Change from previous year
20%
0.150
Price (€ per ΜΒ)
50%
30%
2004
€ per voice minute
0.200
Change in price
-30%
-44%
-39%
-40%
Change from previous year
•
-50%
-50%
2008
2009
0.008
2010
2011
2012
source: data analysis from mobile telephony providers
2013
-60%
2014
24
Contribution to the economy - investments
Despite difficulties from the financial situation, the industry keeps investing €250 m. – €350m annually
• More than €7.5 bn investments in total
Mobile telecommunications capex
from 1993 until today, without including
1000
licenses.
900
• In the last 5 years, where total
800
700
investments in the greek economy have
441
been reduced by two thirds, the industry
600
380
500
381
of its revenues and 28%-35% of EBITDA,
400
300
without taking into account necessary
575
507
200
continues investing each year 11%-13%
405
398
451
490
482
499
406
363
100
352
investments in new generation
291
255
309
networks’ licenses.
• In 2014, these rates are higher (16% of
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Capex in fixed assets
Capex for licenses
revenues and 42% of EBITDA), since it is
estimated that capex rose by 21%.
source: data analysis from mobile telephony providers
25
Obstacles to investment and usage:
delays in licensing and over-taxation
26
Digital Agenda – progress against objectives
Greece demonstrates low performance in almost all targets of the Digital Agenda and namely those that
pertain to stimulating the demand for ITC services and use of services by SME and citizens.
2020
50 % of the EU to subscribe to broadband above 100 Mbps
the entire EU to be covered by broadband above 30 Mbps
50 % of citizens to use eGovernment
to halve the proportion of the population that has never used the
internet from 30% to 15%
2015
target
to increase regular internet usage from 60 % to 75 %
EU
Greece
33 % of SMEs to make online sales
20 % of the population to buy online cross-border
2013
50 % of the population to buy online
the entire EU to be covered by broadband by 2013.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Dec2013
27
Digital convergence indexes
The 3G and 4G network coverage may be comparable in Greece with the ΕU, but demand from
SΜΕ and citizens alike is lagging behind
Demand
Enterprises providing portable devices to some of their employed
persons
Mobile broadband penetration
EU
Use of mobile phones to access the internet
Greece
Supply
3G coverage
4G broadband LTE coverage
0%
20%
40%
60%
80%
100%
120%
Dec 2013
28
The outlook of Digital Agenda in Greece
2014
2020
2030
✖ 2nd target (30% >30Mbps)
✖ 3nd target (0% >100Mbps)
✓2nd target (95% >30Mbps*)
✓3nd target (50% >100Mbps**)
Providers’
strategy
Obstacles
from the
regulatory
body and the
public sector
✖ 6000-7000 new licenses for
LTE in 2015-2017
✖ 4500 pending licensing procedures
✖ 600-700 processed / year
* LTE & VDSL
** VDSL & Hybrid xDSL/LTE
✖ The regulatory body and the broader public
sector need 11 more years in order to finalize LTE &
3G licensing procedures
Deadline for Digital Agenda
29
Regulatory obstacles by the Public sector to the
development of telecommunications
Τhe regulatory framework falls behind the relevant spectrum auctions and corresponding investments,
creating an unclear and uncertain investor sentiment for providers.
€440 m. for
€380 m. for
€381 m. for
licenses
licenses
licenses
3G licenses
2001
L.
3431/2006
lRENEWAL OF
900 & 1800
MHz licenses
2006
2011
L.
4070/2012
&
4053/2012
2012
4G licenses
2014
Dysfunctional law that was never
Improvement of the legal
Shortcomings in the
effectively enforced
framework – difficult
secondary legal
implementation in practice due
framework
3G licenses’
expiration
2016
to deficiencies in public
administration
30
Public sector administrative obstacles tothe development
of telecommunications
Laws 4053/2012 and 4070/2012 have improved the situation in lots of the existing issues in relation to
the base stations, nevertheless, the lack of know-how and human resources in the competent public
services still create significant delays in their implementation.
• The four-month deadline for issuing a license is not observed by public services: Hellenic Telecommunications & Post
Commission (ΕΕΤΤ) has a significant workload, without the relevant manpower. As a result, it constitutes a bottleneck. The
most significant obstacles originating from the involved public bodies come from the Urban Planning Department,
Archaeological services and Regions.
• There are 4,500 applications pending, while another 6,000-7,000 new applications relating to upgrade to LTE are
expected; on the other hand, the rate at which applications are processed reaches, approximately, 600-700 per year.
Additional licensing applications will relate to small structural modifications to base stations or changes in frequency.
• Outdated procedures: Most bodies involved (Archaeological services , Forestry Services, Regions and all except one Urban
Planning department) still operate using hard copies.
• The cost burdening Administration and providers originating from court disputes and fines : 3,000 court trials each year,
while the maximum fines have increased from 19 thousand euros to 300 thousand euros; still, procedures that will permit
licensing have not improved.
• Delays in secondary law : i.e. The Joint Ministerial Decision (JMD) on Antenna Parks is pending since 2006 while JMD on
Standardized Antenna Construction was published in 2012 and the first administrative decision was issued in mid 2014.
31
Other obstacles to telecommunications
Spectrum licensed is not free from other uses, leading to interferences with telecommunications.
• Athens International Airport : The use of the 2.6GHz frequency by airports in a 30 km radius is forbidden, in order
to avoid interferences. Practically, 2.6GHz is impossible to use in the center of Athens – UK regulator Ofcom , in
London that has 5 airports and the busiest airport worldwide with 5 Terminals, has limited the radius to 3 km
without any other consequences.
• Borders: Countries such as Turkey and Albania have not made the transition to digital TV creating interferences in
the spectrum of 800MHz which was recently auctioned. The problem is mainly in the islands of Northern Aegean.
• Digital Services Provider Digea: Interferences from the Digital television network at 800 MHz.
• Other antenna systems : Public Sector does not coherently apply observance of strict regulations on the emission
and licensing of all antenna systems (radio, Digea, etc).
32
Fiscal obstacles to the development of mobile
communications
A key factor for the delay in adopting new technologies and services by consumers is the excessive fiscal
charge on mobile communications, which ranks as 2nd highest in the ΕU-28
Rate of indirect taxes in mobile telecommunications per country in the EU-28
45
40
42
38
35
30
25
25
25
24
24
24
23
23
23
22
%
25
22
22
21
21
21
21
21
21
20
20
20
20
19
19
18
15
15
12
10
5
0
VAT
Special duties
VAT on special duties
source: AT Kearney, Eurostat
Total
33
Budgetary benefit from the reduction of the special fee
Total public revenues shall be raised by €13 m. if the special fee is cut down by 50%.
Amounts in m. €
VAT
Special fee
Providers’ social security
contributions (employers &
employees)
Suppliers and retailers ’ social
security contributions (employers
& employees)
Providers’ income tax (companies
and employees) and special levy
Suppliers and retailers ’ income tax
(companies and employees)
Other taxes and duties
Spectrum licenses
Total
Domino effects on public revenues
Total amount with domino effects
-100%
631
0
Change in special fee compared to current rate
-50%
-40%
-30%
-20%
614
610
606
602
120
142
163
183
-10%
598
203
0%
594
222
90
84
83
81
80
79
77
152
141
139
137
135
133
131
151
127
122
117
112
107
102
167
20
0
1,211
888
2,100
132
19
0
1,236
882
2,118
125
18
0
1,238
879
2,118
117
18
0
1,240
877
2,117
110
18
0
1,240
874
2,114
103
17
0
1,240
870
2,110
96
17
0
1,239
867
2,105
34
Growth scenarios and conditions:
The industry's contribution to the future
depends on removing obstacles
35
Development of mobile communications in Greece, under
conditions
Utilising the benefits from new generation networks involves eliminating distortions related to the
regulatory framework on base stations and relieving consumers from over-taxation of the use of
mobile phones.
• Institutional - licensing framework that functions and is implemented efficiently.
• Removing the disincentives for use of mobile services by abolishing the special fee.
• Long term strategy for development of investments in Greece that shall restore the
role played by the Digital economy.
36
Scenarios on growth and penetration of new generation
networks
Development of mobile communications in the future is examined in three convergence scenarios
with Europe depending on the Greek State’s support to the fiscal and regulatory framework.
• Scenario Α - Continued implementation of the
existing regulatory and fiscal framework resulting
Annual data usage in GB per subscriber
18
in a growing gap: data penetration in Greece follows
16
15.4
14
the same change rate as in 2014 (27.8% increase
annually per subscriber)
12
• Scenario Β – Limited improvements in the
10
regulatory and fiscal framework resulting in steady
8
divergence: data penetration in Greece converges with
6
4
2
5.2
4.0
3.4
1.2
• Scenario C – Abolition of special fee, an appealing
regulatory framework for Investors, positive
0
2014
Europe at the projected* change rate (35.2%)
2015
2016
2017
2018
2019
response by the public administration in licensing
Europe
Greece - Scenario A
of BS, resulting in convergence: data penetration in
Greece - Scenario B
Greece - Scenario C
Greece converges with the projected* usage level (15.4
GB per subscriber annually in 2019) in Europe.
* source: Analysys Mason, 2014
37
Benefits from convergence and development of new generation
networks
With every doubling of the data usage, the change rate of the GDP per capita increases by 0.5%*.
Should Greece converge with Europe in penetration of data usage, the impact on its GDP will
amount to 1.9% by 2019.
Impact on GDP by 2019 from the increase in data usage
2.0%
Impact on government revenues (in €Μ) by 2019 from
the increase in data usage
1.9%
1.8%
1,600
1.6%
1,400
1.4%
1,200
1.1%
1.2%
1.0%
1,517
1,000
0.9%
800
0.8%
884
720
600
0.6%
0.4%
400
0.2%
200
0.0%
–
Scenario A
Scenario B
Scenario C
Scenario A
Scenario B
Scenario C
Τhe benefits from development of mobile Internet come from three sources:
• Improvement of the services rendered
• Higher productivity in selected labour categories (transport, health, education, etc.) and
• The value acquired by Internet users through mobile devices.
* source: Deloitte
38
Benefits that will originate from the development of new
generation networks
If the convergence scenario succeeds, financial benefits will be significant.
Quality benefits
• Direct communication of network of sellers on stock,
prices, new customers
1990 - 2010
• Monitoring of logistics vehicle fleet, identification of
problems, informing drivers for new routes
• Capabilities to communicate and coordinate meetings
and cooperation of employees while on the move
• Consumer entertainment and information through mobile
applications
• Online commerce, consumer benefits from the direct
2010 - 2020
possibility to compare prices while on the move
Quantification of benefits
• World Bank : for each 10% increase in mobile
telephony penetration, an increase in GDP by 0.6%
in developed countries is achieved, while for each
10 percentage units of broadband networks
penetration , an increase in GDP by 1.21% is
achieved .
• Deloitte: for each 10% increase in mobile telephony
penetration, GDP rises by 0.6%, for each 10%
increase in penetration of the use of 3G networks
(with substitution of 2G networks), GDP increases by
• payments via mobile devices and applications
0.15% and with every doubling of data usage, GDP
• Management and monitoring of patients suffering from
rises by 0.5%
chronic diseases remotely
• McKinsey: the benefits from mobile Internet
• Online training
development are still at the starting point and by
• Development of public services for citizens through mobile
2025, the benefits for global GDP from this
applications and substitution of bureaucratic processes
technology shall amount from $3.7 trillion to $10.8
(i.e. information, applications, tax payments)
trillion annually.
39
Moving into the future – Trends and
Evolutions in telecommunications:
Innovative applications in
entrepreneurship and public
administration
40
Over the Top Players Vs. Telecommunications providers
• Over the top players (ΟΤΤ): promotion of services, such as voip or/and moip, multimedia content (i.e. television, music) and cloud services
(i.e. computing power and storage capacity) through the Internet and other networks.
• Major international players: Skype, Facebook, WhatsApp, Viber and Netflix.
• Constraint imposed by OTT can be dealt with: i.e., spanish Telefonica Digital plans its involvement in other domains (i.e., Μ2Μ, digital
security and cloud computing), expecting revenues of more than 6 m. dolars by 2015.
Impact
(financial and strategic)
Voice
Hold their
ground
multimedia
content
Embrace it
Long term
multimedia
content
Embrace it
Medium term
SMS
Plan their
retreat
Cloud
Be prepared
Providers’ influence
41
Over the Top Players Vs. Telecommunications providers
Telecommunications providers
• > 100 providers in the european market for 150 m.
Competition
level
households.
• Regulated markets to ensure competition
Over the top players (ΟΤΤ)
• Google: 92% of search engines market in
Europe,
• Facebook: 48% of digital social networks
market,
• YouTube : 58% of online video market.
• iTunes: 63% of global music market
Contribution to
the european
economy
Providers are european companies with important
Google, Yahoo, YouTube, Skype, Viber, Facebook
Contribution to the european economy:
and iTunes are american companies without any
• €335 bn to the european GDP and 230 thousand jobs from
particular contribution to public revenues, jobs
providers alone (GSMA 2013)
and the national economy.
• contribution to public revenues of €53 bn (GSMA 2013) and
€16.7 bn for 4G licenses only in Germany, France, Italy, the
UK and Spain
• Excise duties on telecommunications in several countries
(France, Spain, Hungary, etc.), the higher rate being in
Greece
42
Response strategies to VoIP
• Promotion of smart tariff plans: tariff plans combining voice and data, tiered to devices. For instance,
approximately 70% of Vodafone UK’s clients have already subscribed to such tariff plans.
• Market placement based on diversified quality: providers have the possibility to offer high quality in voice calls
and shape the corresponding consumer perception. This is an important diversification opportunity, while
offering high quality to best clients.
• Promotion of OTT solutions: ‘mashed up’ ΟΤΤ services and solutions, based on partnerships (i.e., Sprint and
Google Voice), or acquisitions (i.e., acquisition of Jajah by Telefonica).
• Wholesale to VoIP mobile providers : efficient strategy if there is a possibility to charge both traffic and
different quality of services.
43
Response strategies to MoIP
• Introduction of defensive SMS tariff plans: tiered SMS bundles can delay the MoIP impact.
• Reinforcement of business messaging: SMS as a marketing tool. Smaller companies in particular can
significantly benefit from such a strategy, targeting specific clients.
• Connectivity change from SIM to M2M: providers can create, in cooperation with third parties, network
application programming interfaces - APIs, and go-to-market programs. They must reconcile themselves with
the idea that the SMS will decline significantly and that they need to focus on mobile marketing and Μ2Μ
connectivity.
44
Developments in Mobile telephony : USΑ and ΕU
comparison
• Revenues in the USA from mobile communications are increasing, while in the ΕU they practically remain the
same.
• The average revenues per consumer has grown in the States, while it was reduced in the ΕU.
Revenues from mobile communications in the ΕU
and the States, in bn of euros
60
180
160
Average revenues per consumer in the ΕU and
the States
50
€ per consumer
140
bn €
120
100
80
60
40
30
20
40
10
20
0
2005
2006
2007
2008
USA
2009
2010
2011
2012
0
EU
USA
EU
45
Developments in Mobile telephony : USΑ and ΕU
comparison
€0.08
Average revenues per
minute
1000
Average voice usage per
subscription (minutes)
€0.07
• Unit rates are higher in the ΕU, but consumption
800
€0.06
€0.05
600
is significantly higher in the USA, thus leading to
400
higher revenues per subscriber in the States.
€0.04
€0.03
€0.02
• Revenues from mobile telephony continue to
200
€0.01
USA
600
decline.
0
€0.00
USA
EU
Data traffic per
subscription
(in ΜΒ)
Monthly revenues per
subscription
€60
500
€50
400
€40
300
€30
200
€20
100
€10
0
EU
• The data boom helps remedy this trend, while
requiring investments in network upgrades and
leading to average ΜΒ price drop.
€0
USA
EU
USA
EU
46
Wireless vs. Wired
Monthly consumption in Exabytes (Internet only)
Traffic from wired devices for 2013: 41%
140
of total Internet traffic
Traffic from wired devices για το 2018: 24%
mobile data (61%
CAGR)
of total Internet traffic
fxed (wired) (12%
CAGR)
70
fixed (WiFi) (25%
CAGR)
0
2013
2014
2015
2016
2017
2018
47
Wireless vs. wired
• Traffic on mobile networks, on global scale is mainly due to traffic from video applications.
• Wireless devices are mostly tablets and smartphones rather than laptops.
• 45% of global traffic from mobile devices shall burden fixed networks (through wi-fi).
• An important increase is to occur in smartphones and tablets applications for mobile payments, shopping, games
and applications that use location and tagging information.
• By 2015 the average traffic will be quadrupled, traffic during peak hours will increase five-fold, while traffic from
video-on-demand will triple (≈3 bn DVD/month).
• By 2016, the amount of devices that connect to mobile networks will exceed global population by 3 times.
• By 2017, tablets will generate 12% of global traffic on mobile networks.
48
Technological evolution and opportunities for providers
• 70% of businesses use to some extent big data, the cloud, mobile devices and applications, as well as social
media, while 75% of businesses considers said technologies strategically important.
• 75% of businesses wish to increase their investments in big data, the cloud, and mobile communications, while
66% intend to spend more on social networking applications.
• 90% of businesses setting the pace in adopting innovation consider they have a competitive advantage thanks to
these technologies.
Data volume to be used in Big Data
analyses
Data traffic rate through the cloud
technology
2013
2020
2013
2020
750 exabytes
13,000 exabytes
35%
70%
49
Technological evolution and opportunities for providers –
The Cloud
• There are currently only a handful big players (i.e. Apple, Google, Microsoft, Amazon), but an increase in their
number is expected.
• Telecommunications providers are very well placed to capitalize on their relationship with their clients and
network, so as to secure a good position in the field.
• Given that the Cloud market is relatively new, now is the best moment for providers to seize the opportunity.
• They must establish appropriate proposals and structures (and partnerships). They need to ensure availability,
continuous and high speeds etc.
50
Technological evolution and opportunities for providers –
The Cloud
• Business cloud
Vertically integrated solutions, tailored and targeted proposals, through partnerships. For instance: Orange has
teamed up with Virtual Computing Environment Co., thus offering full technological infrastructure, with
integrated solutions for virtualization, networking, computing power, storage, security and management
technologies.
• Consumer cloud
Providers benefit from the cloud services dynamic, since consumers tend to subscribe to pricier data tariff plans.
Other opportunities: creation of open platforms to unify cloud services and applications from various providers,
developers, etc. Moreover, an additional benefit comes from the strengthening of the consumer’s loyalty
towards the provider (consumers entrust them with digital files, such as photographs, music, videos, etc. that
they deem important).
51
Technological evolution and opportunities for providers –
Big Data
• Unprecedented increase in the volume, variety and speed of information, due to new generation mobile
networks and the large increase of smartphones and social networks.
• Big data can help increase revenues, satisfy and maintain clients and cut down on operating costs.
• Fulfillment of three main objectives thanks to big data:
a) Provision of smart services that increase revenues and create new revenue sources,
b) Transformation of businesses (operations) to achieve primacy in services, and
c) Creation of smart networks to offer a consistent and high level consumer experience.
52
Technological evolution and opportunities for providers –
Big Data
Four big data utilisation perspectives by telecommunications providers:
• Pro-active call centre: provide information through big data on cutting down cost, increase of customer
satisfaction and identification of new potential services, so as to increase consumer credit and improve the
consumers’ perspective about the provider.
• Smarter campaigns: combine various information and data on each subscriber (usage, location, etc.) with the
subscriber’s profile to create tailored offers in real time.
• Network analytics: in depth measuring to manage and optimize the network, so as to seek opportunities to
increase profits (i.e., remedying bottlenecks, managing demands, and optimizing investments in the network, so
as to maximize impact on best clients.)
• Location - based services : analysis of consumers’ actual location, which, combined with their consumer profile,
usage and digital behaviour, will allow providers to create tailored and personalized offers (i.e., cooperative
solutions to provide e-health services, finalization of payments, tickets, smart cities, etc.).
53
Mobile services applications and data development
Innovative applications through mobile communications create new data and a development dynamic
for the mobile communications industry and the economy on a global scale.
• Data traffic is estimated to annually rise by 61%
Data traffic through mobile networks
18
globally until 2018 (Cisco).
contribute are : Μ2Μ, Mobile Money, Mobile for
Development, Mobile Agriculture, Smart Metering,
Smart Cities.
exabytes per month
• The most important fields where mobile telephony can
15.9
16
14
10.8
12
10
7.0
8
6
4.4
4
2
1.5
2.6
0
2013
2014
2015
2016
2017
2018
54
M2M
The most important evolution that impacts entrepreneurship and everyday life pertains to Μ2Μ
subscriptions
• Τhe Internet of Everything shows a rapid increase (people, processes, data and equipment are connected to the
Internet)
• Applications such as video surveillance, smart meters, smart cars, tracking of parcels and resources, domestic
animals and household pets with chips, e-health devices and a multitude of other next generation services
account for the Μ2Μ and data traffic boom.
Μ2Μ subscriptions
26% increase rate
Μ2Μ subscriptions in monthly consumption
in Exabytes (84% increase rate)
7.3
bn subscriptions
8
3.7
4
5.9
6
3
4.7
2.1
3.7
4
2.3
2
2.9
1.2
2
1
0
0.2
0.3
2013
2014
0.6
0
2013
2014
2015
2016
2017
2018
2015
2016
2017
2018
55
Mobile Agriculture
• Improved access to financing services: mobile payments system, micro-insurance scheme, and micro-lending
platform, which lead to increased access to funding services, appropriately designed for agricultural / farming
purposes.
• Information offer for farmers: creation of mobile information platform and help line, specifically for farmers,
with the aim to transfer the appropriate information to the agricultural / farming population (i.e., agricultural
techniques, product prices and weather forecast).
• Improvement of data and information interpretation in the context of the supply chain’s increased efficiency:
smart logistics, tracking and tracing systems, management through mobile communications of suppliers and
distributors’ networks, in order to optimize the supply chain.
• Increased access to markets: platforms regarding trade, offer and exchange of agricultural goods, resulting in
strengthening the bond between goods’ exchange, traders, buyers and vendors.
56
Smart Metering
• Automatic measuring in real time of the use of electricity, natural gas and water shall allow faster balance
between supply and demand, direct pricing and limiting measuring cost
• Through the new generation network of smart meters, consumption measuring can be carried out each minute
(contrarily to 2 month or 4 month manual measuring)
• By 2023, 31% of households will have installed some form of smart metering.
• There are many similarities between telecommunications providers and public utility companies, namely in
regard to flexible charges and smart meters. Existing relations can be turned into a “sales channel”, while
electrical power tariff plans and other products by telecommunication providers or even new ones can be
created (i.e., home / office automation, remote access with the help of mobile devices).
For instance: british operator Telefonica (Ο2) is the interconnection provider for the installation project of
53 m. natural gas and electricity smart meters until 2020 (cost of agreement 1.5 bn GBP), using its network
to offer connectivity and mesh technology.
57
Smart Cities
• Smart city: the one that tries to tackle
public issues with the help of ITC
technologies.
• Features: smart governance, smart people,
smart living, smart mobility, smart
economy and smart environment.
• Large cities at the forefront: 240 cities
(>100,000 residents) have proposed or
already implemented initiatives on the
smart city. About 90% of cities with more
than 500,000 residents are smart cities.
58
Smart Cities
Municipalities in Greece can utilize mobile communications and applications to upgrade their services
and their residents’ quality of life, while supporting entrepreneurship.
The european classification of smart cities includes 2 greek cities : Larissa (71st)
and Patra (74th)
smart economy
smart living
2
1.5
1
0.5
0
-0.5
-1
-1.5
smart economy
smart people
smart
environment
smart
governance
smart mobility
Luxembourg
Larisa
Average of all cities
smart living
2
1.5
1
0.5
0
-0.5
-1
-1.5
smart people
smart
environment
smart
governance
smart mobility
Luxembourg
Patra
Average of all cities
59
Smart Cities
• Rio de Janeiro: in 2013 it was voted as best smart city, thanks to its initiatives in the field of smart mobility. It has a
fully equipped control center to manage traffic in the city’s fabric, with the possibility to create a smart map and
predictive analytics with regard to road traffic, eventual incidents, etc. Furthermore, data from commuters and
citizens are also collected and analysed (through social media).
• Seoul: in 2012, 25,000 taxis adopted a touch card payment system using GPS technology. Thus, the city managed to
collect and utilize information on traffic in the city in real time and at reduced cost.
60
Smart Cities
In the medium term:
• Open data and free APIs shall influence decision making.
• Most innovative cities will experiment with gamification as a first step to achieve citizens’ behaviour change.
• Investments of smart cities on a global level in the Internet of Things shall attain 265m. USD by the end of 2014.
• In 2014, smart cities will channel 15-20% of their costs in the cloud technology.
• 45% of the entire big data usage will be allocated to financial performance, public safety and transports.
61
General conclusions
62
General conclusions
•
Mobile telecommunications support productivity and create domino effects on the economy (i.e., €12.5 bn
contribution to GDP, €1.24 bn in public revenues and 41.6 thousand jobs).
•
Mobile telecommunications support entrepreneurship and innovation, creating Μ2Μ, Mobile Money, Mobile
for Development, Mobile Agriculture and Smart Metering solutions, and fostering the creation of Smart Cities.
•
Although the industry's revenues and profits continue to decrease in Greece’s recessional environment,
investments are increasing to support data usage’s rapid development.
•
Despite progress, Greece deviates from the targets set in the Digital Agenda and from much faster development
rates regarding use of data in Europe.
There are two main obstacles by public authorities:
– Over-taxation of consumers
– Delays in regulatory framework and its implementation as regards licensing of base stations
National strategy must be redefined with regard to mobile telecommunications, so that : a) Greece converges
with the targets set out in the Digital Agenda and Europe, and b) local providers may be able to keep up with
international developments and meet the challenges arising from the emergence of Over the Top Players.
•
Should Greece converge with Europe in penetration of data, its GDP will further increase by 1.9% and public
revenues will also increase by €1.5 bn by 2019.
63