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Viewing cable 07VIENNA1996, LATEST TELECOM DEVELOPMENTS IN AUSTRIA

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Reference ID Created Released Classification Origin
07VIENNA1996 2007-07-27 08:48 2011-08-26 00:00 UNCLASSIFIED Embassy Vienna
VZCZCXYZ0006
RR RUEHWEB

DE RUEHVI #1996/01 2080848
ZNR UUUUU ZZH
R 270848Z JUL 07
FM AMEMBASSY VIENNA
TO RUEHC/SECSTATE WASHDC 8170
INFO RUCPDOC/USDOC WASHDC
RUEHBS/USEU BRUSSELS
RUEHGV/USMISSION GENEVA 1375
UNCLAS VIENNA 001996 
 
SIPDIS 
 
SIPDIS 
 
DEPARTMENT FOR EB/CIP (TIMONTHY FINTON) AND EUR/AGS 
USDOC FOR NTIA (CHRISTINA SPECK) AND OTT (JOSEPH BURTON) 
 
E.O. 12958: N/A 
TAGS: ECON ECPS ETRD USTR AU
SUBJECT:  LATEST TELECOM DEVELOPMENTS IN AUSTRIA 
 
Summary 
------- 
 
1.  After strong growth over the past 10 years, total telecom sales 
in Austria declined slightly in 2006 due to downward pressure on 
prices in the mobile phone sector and a significant drop in demand 
in the fixed-wire phone segment.  Austrian mobile phone operators 
will implement the EU Roaming Regulation at the latest allowable 
date.  A Hungarian financial investor and the France Telecom 
subsidiary Orange have acquired control of "One," Austria's third 
largest mobile phone provider.  A recent poll indicates that 
Austrians are mobile phone addicts, with 89% always carrying their 
mobiles.  With a broadband penetration rate of 15.8%, Austria fell 
to 11th place in the EU in 2006, down from 5th place in 2003. 
Telekom Austria will upgrade its satellite infrastructure to target 
the African market in cooperation with its partner, the satellite 
operator Loral Skynet.  End Summary. 
 
 
Telecom Sales Declined in 2006 
------------------------------ 
 
2.  According to the Austrian telecom regulator RTR, telecom sales 
declined in 2006 for the first time following 10 years of strong 
growth propelled by market liberalization.  Total telecom sales 
declined 0.5% from 2005 levels to Euro 4.75 billion in 2006. 
Downward pressure on prices, a consolidation in the mobile phone 
sector, and a significant drop in the fixed-wire telephony segment 
contributed to the overall decline.  RTR Managing Director Georg 
Serentschy noted that the fixed-wire segment suffers from stagnating 
prices and drastically shrinking call minutes demand.  The number of 
fixed-wire phone lines shrank by 92,000 to 2.9 million in 2006, 
while the number of mobiles rose by 600,000 to almost 9 million in a 
population of 8.3 million. 
 
 
Dragging Out Implementation of EU Roaming Regulation 
--------------------------------------------- ------- 
 
3.  The EU's new Roaming Regulation requires mobile phone operators 
to offer the new Eurotariff by July 30, with an effective date of 
August 30 for customers of existing roaming packages.  For those 
without a package, the effective date is September 30.  While 
T-Mobile announced it would implement lower roaming fees in Germany 
as of July 1, the Austrian T-Mobile subsidiary stated that, for 
technical reasons, introduction of the Eurotariff would take 
approximately three months, i.e., after the summer holiday season. 
Austria's market leader, Telekom Austria subsidiary Mobilkom, 
reportedly also plans to fully utilize the September 30 deadline, as 
do the third and fourth largest operators, "One" and "3." 
 
 
Mobile Phone Provider "One" Sold 
-------------------------------- 
 
4.  On June 20, the Hungarian financial investor Mid Europa 
Partners, acquired a 65% share and the French-Telecom subsidiary a 
35% share in "One."  With an offer of Euro 1.4 billion, the 
Hungarian-French consortium outbid the Dutch competitor KPN. 
Previous attempts to sell "One" had faltered due to a high asking 
price.  The new owners announced they would soon rebrand "One" into 
Orange. 
 
5.  "One" holds the number three position in the Austrian mobile 
phone market with some 2 million customers.  The market leader, 
Telekom Austria subsidiary Mobilkom, boasts 3.6 million customers, 
followed by the German T-Mobile subsidiary with 3.4 million 
customers.  Hutchinson "3" Austria, a subsidiary of China's 
Hutchinson Whampoa holds the number four spot with 450,000 
customers.  "One" attracted 12% additional subscribers in 2006 with 
cheap tariffs, but at the expense of reduced profitability.  The 
Austrian mobile phone market is characterized by cut-throat 
competition with minimal growth potential, as mobile phone 
penetration has reached 110%. 
 
 
Study Shows Austrians Are Mobile Addicts 
---------------------------------------- 
 
6.  According to a study by the GfK market research institute, 89% 
of the Austrians always carry their mobile when leaving home - more 
than those carrying ATM cards or drivers licenses.  Availability and 
security rank as primary reasons for carrying mobiles at all times. 
One-third of those polled need a mobile for business reasons.  Since 
2004, the number of phone calls per mobile has remained relatively 
stable at 11 calls per day. 
 
Broadband Expansion - Austria Falls Behind 
------------------------------------------ 
 
7.  According to Berthold Thoma, President of the Alternative 
Telekom Network Operators, Austria is falling behind in broadband 
penetration.  Thoma pointed to the EU's 2006 Electronic 
Communications Regulations and Market Report, which ranks Austria 
with a broadband penetration rate of 15.8%, number 11 in the EU, 
down from number 5 in the EU in 2003.  The broadband penetration 
rate of the EU-25 is 15.7%.  The number 1 EU country, the 
Netherlands, has a broadband penetration of 29.8%, while in the 
U.S., penetration is 19.2%. 
 
 
Telekom Austria - Satellite Infrastructure for Africa 
--------------------------------------------- -------- 
 
8.  Over the last several years, Telekom Austria has successfully 
established itself in the African market with satellite 
communication, as well as increasing business by connecting 
International Service Providers (ISPs) to international backbones. 
With a view towards further expansion in the African market, Telekom 
Austria will upgrade the satellite capacity of its teleport Aflenz 
by installing a new large antenna with a 16-meter diameter.  The new 
antenna will be available in early 2008 as an uplink station for the 
new "Telstar 11N" satellite, which the satellite operator Loral 
Skynet, Telekom's partner, will launch in 2008.  "Telstar 11N" 
reportedly represents a quantum leap to improve Africa's 
communications connection.  The new antenna and the cooperation with 
Loral Skynet will enable Telekom Austria to benefit from the 
enormous Internet growth in Africa. 
 
OLESEN