Trends in Fixed Public Network Services: Greece, (Executive Summary) Executive Summary

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1 Trends in Fixed Public Network Services: Greece, (Executive Summary) Executive Summary Publication Date: October 17, 2002

2 Authors Maureen Coulter Michal Halama Katja Ruud Lisa Unden Susan Richardson James Woodcock This document has been published to the following Marketplace codes: TELC-WW-EX-0446 For More Information... In North America and Latin America: In Europe, the Middle East and Africa: In Asia/Pacific: In Japan: Worldwide via gartner.com: Entire contents 2002 Gartner, Inc. All rights reserved. Reproduction of this publication in any form without prior written permission is forbidden. The information contained herein has been obtained from sources believed to be reliable. Gartner disclaims all warranties as to the accuracy, completeness or adequacy of such information. Gartner shall have no liability for errors, omissions or inadequacies in the information contained herein or for interpretations thereof. The reader assumes sole responsibility for the selection of these materials to achieve its intended results. The opinions expressed herein are subject to change without notice

3 Trends in Fixed Public Network Services: Greece, (Executive Summary) This qualitative analysis of the fixed public network services market in Greece looks at the market trends, drivers and inhibitors for a wide range of voice, data, Internet and wholesale services for the period 2000 to In addition to providing an overview of the trends in the market, the report also provides market share data for the end of 2001 for a variety of different segments. This report should be used in conjunction with the quantitative statistics report for Greece to advise how the market is changing and how specific segments are affecting this change (see "Fixed Public Network Services: Greece, " [TCPM-EU-MS-0153 and TCPS-WW-MS-0211]). Market Highlights By 2006, total fixed voice telephony declines to 81.7 percent of overall telecom revenue from 87.0 percent in 2002, as price competition takes hold. Telcos must prepare for the emergence of voice over IP (VoIP), which creates revenue of 70.6 million euros in 2006, compared with 9.2 million euros in Value-added services generated positive returns throughout, with the exception of the calling card market, which suffers from increased mobile penetration and usage. The best-performing individual segments include voice virtual privatenetworks(vpns)andfreephoneservices,whichcontinuetogrowina newly liberalized market. Fixed telcos and ISPs should develop fixed services that complement and can be bundled with mobile services to attract mobile users. Businesses and consumers together boost Internet access revenue, which is expected to grow at a compound annual growth rate (CAGR) of 22.2 percent during the forecast period. ISPs should make access revenue key in their business plans. Leased lines in Greece continue to grow rapidly. Leased lines in use rose by 24.1 percent in 2001, pulled by capacity required by network subsidiaries of OTE, OTEnet and Cosmote. However, service providers attacking this growth area should be prepared to compensate for a continued decline in leased lines prices by improving the efficiency of their higher-speed services Gartner, Inc. 1

4 2 Trends in Fixed Public Network Services: Greece, (Executive Summary) Figure 1 Total Fixed Telecommunications Retail Service Revenue by Sector Greece, 2001 Total Retail Web-Hosting Revenue (0.4%) Total Frame Relay Revenue (1.1%) Total Other Data Services Revenue (4.4%) Total Value-Added IP Services Revenue (0.6%) Total Leased Line Revenue (2.3%) Total Voice Other Revenue (31.7%) Total Exchange Line Rental and Connection Revenue (19.0%) Total DSL and Cable Modem Revenue (0.0%) Managed IP VPN (0.1%) Total ISP Access Revenue (2.2%) Total National Call Services Revenue (11.0%) Total ATM Revenue (0.3%) Total Local Call Services Revenue (26.9%) ATM = Asynchronous transfer mode DSL = Digital subscriber line VPN = Virtual private network Source: Gartner Dataquest (August 2002) Figure 2 Total Fixed Telecommunications Retail Service Revenue by Sector Greece, 2006 Total Voice Other Revenue (32.5%) Total DSL and Cable Modem Revenue (0.6%) Total Frame Relay Revenue (1.6%) Total Leased Line Revenue (1.8%) Managed IP VPN (0.6%) Total Other Data Services Revenue (4.1%) Total ATM Revenue (0.8%) Total Retail Web-Hosting Revenue (1.2%) Total Value-Added IP Services Revenue (3.2%) Total Exchange Line Rental and Connection Revenue (16.6%) Total Local Call Services Revenue (25.0%) Total National Call Services Revenue (7.5%) Total ISP Access Revenue (4.4%) ATM = Asynchronous transfer mode DSL = Digital subscriber line VPN = Virtual private network Source: Gartner Dataquest (August 2002) 2002 Gartner, Inc. October 17, 2002

5 Trends in Fixed Public Network Services: Greece, (Executive Summary) 3 Regulatory Issues The national incumbent OTE dominates the fixed public network services retail market with fresh competition coming from ISP-turned-telco Forthnet. Forthnet gained a telephony license early in 2001, but only began commercial services in European Union (EU) reprimands in 2001 had little effect on the liberalization progress in Greece. Lack of cable modem competition and national pressure to unbundle lines deter the incumbent from expenditure on digital subscriber line (DSL) rollout and other services that might further harm declining leased line prices. Competition Rating Short Term Low Long Term Medium-low Segmentation and Definitions Deepening mobile penetration continues to dampen demand for fixed lines and so for fixed line competition. Forecast Drivers Short Term Demand for value-added services is increasingly effective. Demand for telecommunications services and revenue will gain a boost leading up to and during the 2004 Olympics. There are relatively few alternatives to leased lines in Greece. This averts substitution with cheaper alternatives in the short term. Long Term Organizations will need more bandwidth capacity, prompting provision of higher-capacity leased lines. Increased competition will force prices of managed services down allowing smaller customers to access the higher-priced managed services such as managed frame relay and asynchronous transfer mode (ATM). Forecast Inhibitors Short Term Minor market size in European terms leaves a weak business case for overseas competitors, reducing impetus for home-grown innovation. Long Term Price pressure will intensify through increased competition as more players manifest themselves Gartner, Inc. October 17, 2002

6 4 Trends in Fixed Public Network Services: Greece, (Executive Summary) Lack of significant cable infrastructure limits competitive push in broadband deployment. Other Assumptions Entry of new Eastern European economies in the EU limits EU financial support for Greece. Central and Eastern European economies continue to develop, acting as an investment distraction for Greece's domestic operators and ISPs. Link For the full report, see the Market Trends report "Trends in Fixed Public Network Services: Greece, ," which is published to the Public Network Services Worldwide and the Telecom Public and Mobile Services Europe Clusters: TCPM-EU-MT-0129 TCPS-WW-MT Gartner, Inc. October 17, 2002