Central And Eastern European Mobile: Four Years Behind The West, Though Not Across The Board
Mobile penetration in Central and Eastern Europe (CEE) lags that in Western Europe by four years. However, adoption varies greatly among these countries, depending on mobile market competitiveness, wealth, and the general state of the telecom market. Contrary to what some Western telecom experts think, mobile adoption in some CEE countries has already reached Western levels: Mobile penetration rates in Slovenia and the Czech Republic already exceed even those of France and the UK. Companies that want to exploit this market need to be particularly aware of this when determining their strategies for expanding into the CEE.
Forrester Research¿s ¿Central and Eastern Europe Mobile Forecast: 2005¿2010¿ report identifies the key indicators of future growth in mobile penetration and how it will reach saturation levels similar to those of many Western countries within five years.
Michelle de Lussanet, Principal Analyst, Telecoms, at Forrester Research, says: ¿In particular, `slow lane¿ countries like Poland ¿ which hopes to issue three additional mobile licenses later this year ¿ are important investment opportunities for mobile operators because they still see enormous growth in terms of mobile penetration. Now that these countries are part of the EU, their purchasing power is expected to increase. Combined with the patchy fixed line coverage in most CEE countries, this means that CEE will become an increasingly important market for mobile value-added services (mobile commerce). Deutsche Telekom ¿ which has a presence in countries like the Czech Republic and Hungary as well as a stake in PTC, Poland¿s biggest mobile operator ¿ will be in a strong position to win this market.¿
Mobile phone usage in the new EU member states ¿ the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia, and Slovenia ¿ is growing rapidly, reaching an overall 57% of CEE mobile subscribers at the end of 2004. As in the West, huge regional variations exist: Mobile penetration in Estonia and Lithuania exploded last year, growing from 62% to 78% and from 50% to 75% respectively, while Poland lags behind at 47%.
According to Forrester, mobile market competitiveness, telecom market indicators ¿ including fixed-line penetration, broadband adoption, and telco regulation ¿ and demographic variables are the three key factors in determining local variations and helping predict future growth. Although higher levels of competition in Western Europe mean that it will continue to lead CEE in mobile uptake, increased operator activity, improved mobile infrastructure, and expected GDP growth is expected to result in vast subscriber growth in CEE countries ¿ rising to 77% at the end of 2010. Maximum penetration levels will be similar to those of Western Europe, which is at just over 80%.
Commenting on which technologies will support the growth in mobile telecoms, De Lussanet states: ¿Starting in late 2005, GSM-model handsets will fade out slowly, and GPRS will dominate this market. UMTS will inch its way into CEE, but EDGE will steal its thunder.¿ De Lussanet continues: ¿After 2006, UMTS and EDGE deployments will accelerate the adoption of mobile Internet services, as the large number of rural households without a fixed line will most likely turn to their mobile to connect to the Internet. By the end of 2010, virtually all phones in use will be mobile Internet-capable.¿
The report concludes by providing recommendations for national regulators and mobile operators on how to speed up mobile adoption. Forrester underscores the importance of competition-boosting legislation ¿ such as introducing MNP and MVNOs, which will lead to lower prices and increased churn ¿ and mandated coverage requirements. To give the market a boost, Forrester says mobile operators should: use MVNOs to penetrate niches; broaden their portfolios of communication services, like mobile chat or instant messaging with presence services; and offer integrated consumer/enterprise offerings.
UMTS = Universal Mobile Telecommunications System
GSM = Global System for Mobile Communications
MNP = Mobile Number Portability
MVNO = Mobile Virtual Network Operator