PRAGUE, Czech Republic-During the 11 years since the fall of communism in Central Europe, the region’s countries have rapidly embraced mobile telephony, including the ubiquitous GSM networks now blanketing the region. And operators are beginning to plan for next-generation mobile telephony in countries where fixed-line service was hardly reliable, if even available, just a decade ago.
The GSM boom in Central Europe is well illustrated by the Czech Republic, which currently boasts a 36-percent mobile-phone penetration rate. In 1998, about 962,000 Czechs used mobile telephones, but by the end of 2000, the country possessed about 3.7 million customers, a year-on-year growth of 100 percent for two consecutive years, according to analyst projections.
Slovenia, which borders Austria, Croatia, Hungary and Italy, already has a penetration rate of about 50 percent, said Slovenian government spokesman Janez Vouk.
Poland, the most populous country in Central Europe, is logically forecast to have the highest number of mobile users. Erste Bank estimates the Polish mobile market will count 19.7 million clients by the end of 2007, about half the population.
New-generation mobile
The next phase in the region’s mobile-telephone development is upgrading existing GSM networks to General Packet Radio Service (GPRS) technology, which allows customers to retrieve information much faster from the Internet than current networks allow.
The Czech Republic’s EuroTel Praha, among others, has already rolled out GPRS services, but to a less-than enthusiastic population, EuroTel spokesman Jan Kucmas said. EuroTel has less than 1,000 GPRS customers, but Kucmas blames the lack of clients on a scarcity of GPRS handsets and their current high costs. He said more handset vendors will hit the Czech market in 2001, which should translate into better selection and cheaper prices.
Finally, there is Universal Mobile Telecommunications System (UMTS) technology, which will accelerate data transmission to 2 Megabits per second (Mbps). Its Central European licensing debut was less than sparkling.
The Polish government, seeking cash to shore up its state budget deficit, pushed ahead with a plan to sell five UMTS licenses for 750 million euros (US$ 697 million) each, although the country’s mobile market is underdeveloped by Central European standards. Less than 20 percent of the population owns a mobile.
The result? The only offers came from incumbent GSM operators, and only after they threatened to boycott the sale altogether. The government canceled the tender and opted to extend UMTS frequencies to existing GSM operators for a fee of 650 million euros (US$604 million) each. The Polish UMTS networks are required by the sale agreements to be operating by 1 January, 2003.
Poland’s UMTS license-selling failure may have dampened other governments’ financial expectations related to selling UMTS licenses. Hungary’s government announced it would sell UMTS licenses in 2001, “but I wouldn’t be surprised if that was delayed,” said Imre Sztano, Budapest-based regional telecom analyst for Austria’s Erste Bank.
The Czech government, meantime, will announce details of its sale of four licenses during the first quarter of 2001, with the actual sale occurring before the end of 2001, Czech Telecommunications Office Vice President Vladimir Kurka said. But the Czech government also has delayed its plans to sell UMTS licenses from 2000 to 2001.
On the other side of the spectrum, the fate of older, 450 MHz analog systems is uncertain. Hungary’s Westel 450, unlike other regional operators offering NMT services, does not offer GSM services, so its survival is dependent on using only that frequency. Companies can continue to offer 450 MHz analog service or perhaps use the bandwidth for another purpose. The 450 MHz NMT frequency can be used for certain restricted customers, such as police and fire departments, said Peter Kali, regional telecom analyst for investment concern Wood & Co. in Budapest, Hungary. With investment, the frequency can also be upgraded to a digital network, he added.
Global investment
Despite Central Europe’s relatively small population and average incomes compared with their western neighbors, many of the world’s global mobile firms have invested in the area. The company with the most customers in the region, about 2.8 million as of the end of 2000, is Poland’s Polska Telefonia Cyfrowa, majority owned by a Deutsche Telekom subsidiary.
Deutsche Telekom also owns a majority stake in RadioMobil, a Czech Republic operator, and has two holdings in Hungary. It owns 49 percent each of Westel 450, a 450 MHz analog carrier, and of Westel 900, a separate firm possessing a dual-band GSM frequency. And a Deutsche Telekom subsidiary owns 60 percent of Eurotel Bratislava, one of two mobile operators in Slovakia.
France Telecom owns majority shares of market leader Globtel in Slovakia and about 34 percent of Poland’s PTK-Centertel. A consortium including Verizon Communications owns 49 percent of NMT and GSM operator Eurotel Bratislava and 49 percent of EuroTel Praha.
Vodafone Group, the world’s largest mobile operator, owns parts of GSM operators in Hungary and Poland. And Montreal-based Telesystem International Wireless is taking an interest in the region, plumping for 92 percent of Cesky Mobil, the Czech Republic’s third carrier; previously, it bought a Romanian mobile operator.
Regional mobile operators will continue chasing new customers for the next five to seven years or until new subscriber numbers begin to level off, regional telecom analysts said. At that future date, operators will focus on increasing the amount of money clients spend on mobile services, they said.
Meanwhile, operators continue to boost the types of services offered, such as news and information sent to handsets. The added services, however, generally are not popular with users, Sztano said. “The range of services is gradually expanding, but I think it’s fair to say the majority of clients use the phone just for voice services and SMS,” he said.
