The year 2009 was positive for the local telecommunications sector, with operators investing more in their networks and technology, the consumer getting better deals, and ongoing efforts to provide a good legislative framework both locally and in the EU to sustain the growth of this sector.
This, in a nutshell, is the message that comes across in the 2009 annual report just published by the Malta Communications Authority.
Published several months later than usual, this report is the authority’s review of the developments in the local communications sector from its point of view as regulator of the sector.
“During this year, we were able to fully integrate and consolidate the new functions that were assigned to the authority in 2008 and consequently concentrate our efforts in contributing to the competitiveness and sustainability of this thriving sector,” writes Philip Micallef, the chairman of the MCA, in his message for the report.
“The growing level of competition in the electronic communications sector has contributed in no small way to the increased deployment of networks and the resultant proliferation of offers on the market. The review highlights the continued positive trends across the sector, with growth in most key indicators.
“We have definitely come a long way in this sector,” Mr Micallef wrote.
The market review of the report says the Maltese electronic communications markets are characterised by infrastructure competition due to the number of operators owning their own networks. This phenomenon continued to be reinforced in 2009 with the advent of a third mobile network operator (Melita Mobile), new small mobile virtual network operators, as well as the deployment of two submarine fibre-optic cables, bringing the total number of connections offering international services, such as the provision of internet protocol bandwidth, to four.
“This type of competition is beneficial to consumers both in a direct manner, through more retail choice, as well as indirectly, through the proliferation of multiple platforms which are capable of hosting virtual wholesale operators, thus increasing consumer choice in terms of service provision,” according to the report.
The Authority said retail markets continued to reflect these competitive characteristics through additional bundled offers, better prices as well as more value-for-money for consumers overall. It has continued to work to consolidate these opportunities by making such products more accessible whilst, at the same time, safeguarding the sustainability of the underlying networks. This is important as it provides potential market entrants with an investment ladder enabling them to adopt a staggered approach in reaching higher levels of autonomy in service provision.
In terms of performance, the local telecoms industry maintained a strong economic performance in 2009 despite the international economic crisis.
As far as the sector’s contribution to Gross Domestic Product (GDP) (or gross value added) is concerned, local telecoms directly accounted for 2.4 percent of the economy in 2009, down from 2.9 percent in 2008, but well in line with the growth rate registered in 2007. It registered an increase in employment levels through the creation of 172 full-time and 15 part-time jobs.
Given the global economic downturn, the ongoing investment in telecoms infrastructure and the increase in the uptake of telecoms services is viewed by the MCA “very positively”.
Fixed-line telephony experienced a growth in terms of subscriptions and usage in 2009, inverted the downward trend since 2006. In particular, the stronger take-up of multiple play packages, including free on-net (same network operator) minutes with any post-paid tariff included in the bundle offer, seems to have driven growth in traffic.
The mobile sector continued to show growth, and 2009 was a watershed for this sector as the year was out with a higher number of mobile subscriptions than the local population (422,083 subscriptions or 102 percent of population).
The MCA attributes this to the launch of the third mobile operator in Malta, Melita Mobile, in February 2009, an above average number of portings (people switching operator but keeping their number) and increased competition that brought tariffs further down. Indeed, the report says that in 2005, domestic mobile voice call tariffs hovered around an average rate of €0.26 per minute while at the end of 2009 they went down to approximately €0.1212.
Traffic originating from mobile phones increased by almost 24 per cent and the use of SMS was slightly up after the previous year’s dip. Roaming was also up by 24.4 per cent, thanks to lower roaming tariffs.
In terms of internet access, the MCA’s reports remarks that the Maltese have become accustomed to the proliferation of broadband, as the respective customer base continues to expand and infrastructure-based competition intensifies. The total number of internet subscriptions as at the end of 2009 increased by 8.4 percent over 2008, to reach 111,543. Subscribers enjoyed higher connection and download speeds however, choice became more restricted, as four smaller internet service providers (ISP) folded-up.
As at the end of the year under review, Malta’s fixed broadband penetration rate (measured as a percentage of the population) stood at 26.8 per cent, up from 24.4 per cent as at the end of the previous year. This penetration rate is also significantly higher than the EU average rate of 24.8 per cent.
In September 2009 the MCA commissioned an e-commerce survey which revealed how around 73 per cent of internet users buy online, an increase over the previous year.
The number of digital pay TV subscriptions increased from 84,184 as at the end of 2008 to 110,236 as at the end of 2009. During 2009 the MCA was heavily involved in the preparations for Malta’s switchover to digital terrestrial television, earmarked for December 31, 2010. However, i-Tech recently reported that this deadline will be missed.
Other activities carried out by the MCA during 2009 included the launch of consumer guides, the installation of more free public wireless hotsposts, the inauguration of community learning centres, and participation in the drawing up of the EU’s new telecommunications framework.
“No doubt, challenges will remain unabated in the year ahead [2010 facilitating roll-out of fibre networks, implementing the new EU framework for telecommunications, the switchover from analogue to digital terrestrial general interest broadcast transmissions, laying the groundwork for a fully liberalised postal market, implementing the important EU-funded initiatives related to the information society, reassigning the spectrum band in the 900Mhz and 1800Mhz band and the establishment of a regulatory regime for electronic signatures are but a few of these. On top of our agenda, however, remains our commitment to provide consumers with the necessary means to assess the quality of their broadband services with the aim of improving quality overall,” concluded the MCA chairman in his message for the authority’s annual report for 2009.