TELECOMMUNICATION
INFRASTRUCTURE AND REGULATION
OVERVIEW
On April
30, 1997, the Federal Assembly of the Swiss Confederation passed the
Telecommunications Law that aimed to “ensure that a range of cost effective,
high quality and nationally and internationally competitive telecommunications
services is available to private individuals and the business community.”1 This law went into effect on
January 1, 1998 liberalizing Switzerland's telecommunications market.
This event opened the door for over 200 companies to compete in the
Swiss telecommunications market.
Historically, Switzerland has
offered high quality telecommunications services to its citizens. This level
of service, however, has been expensive. According to the European Information
Technology Observatory, Switzerland, for several years, had one of the highest
rates of spending per person in the world. Prior to 1997, the PTT
(post, telegraph and telecommunications) had a monopoly on the telecommunications
markets. After liberalization, this company was divided into two operations
– one for the post the other for telecommunications. Liberalization also
dismantled the government monopoly of services. Swisscom was allowed to operate
as a commercial enterprise although with the Swiss government as majority
shareholder.
Swiss
Telecommunications Market 1997-2001
|
1997
|
1998
|
1999
|
2000
|
2001
|
Telephone
main lines (000)
|
4684
|
4875
|
5050
|
5146
|
5278
|
Telephone
main lines (per 100 people)
|
66.0
|
68.4
|
70.5
|
71.4
|
73.0
|
Phone
sets (000)
|
8063
|
8300
|
8495
|
8587
|
8745
|
Mobile
subscribers (000)
|
1044
|
1698
|
3058
|
4629
|
5100
|
Mobile
subscribers (per 100 people)
|
14.7
|
23.8
|
42.7
|
64.3
|
70.5
|
Internet
users (000)
|
1477
|
2290
|
3284
|
4006
|
4390
|
Internet
users (per 100 people)
|
20.8
|
32.1
|
45.8
|
55.6
|
60.7
|
Source
EIU Executive Briefing
TELECOM GROWTH
Switzerland’s penetration
of main phone lines is one of highest in the world at 71 per 100 people.
This rate is second only to Norway. During this same year, the US reported
61 per 100. In contrast to the penetration rate of main phones, the level
of mobile phones is significantly less. In 2001, mobile phone subscriptions
were 71 per 100 persons. This is one of the lowest rates in Western Europe.
This low rate of mobile phone subscription reflects the Swiss' hesitance to
adopt new technology. Also, the geography of the country compromises the quality
of phone service. The Swiss are also quality conscious and are not inclined
to invest in unpredictable service. Swisscom held a 67.7% market share of
the mobile telephony operators during the five-year period 1997-2001. The
company's competitors Orange held 14.7% and TDC held 17% of the market.
For the six year period 1995-200
the average annual growth of subscriber for fixed networks was -1.3% while
the growth rate for mobile networks was 59.9%.2 Digital access is also experiencing
growth. Switzerland's Federal Office of Communications (OFCOM) reports the
average annual growth rate between 1995-200 of basic access ISDN lines is
62% and the primary access rate was 30%.3
These rates support the high penetration rate of ISDN lines in Switzerland.
Even though ISDN lines have had significant growth, it is believed that faster
internet access demands will lead to a decrease in ISDN lines as users migrate
to DSL or cable modems. Currently, ISDN is cheaper and more widely available
from service providers
Prepay phone
cards have spurred a rapid growth in mobile communications. There were 70.5
mobile subscribers per 100 persons in 2001. OFCOM reports between the end
of December 1990 and the end of December 1999 the mobile subscriber
growth rate was exponential. Recently, this market has been showing signs
of peaking. As shown in the table below, mobile subscription subscribers
per 100 persons is growing at a smaller incremental rate. When comparing
the growth rate of prepaid subscriptions and postpaid ones, there is a rise
in the number of prepaid subscriptions. This growth is attributed to the
aggressive marketing by service providers.
Swiss Telecommunications Market 2002-2007
|
2002
|
2003
|
2004
|
2005
|
2006
|
2007
|
| Telephone
main lines (000)
|
4078.5
|
4054.2
|
4029.9
|
3976.4 |
3917.8
|
3866.0
|
Telephone
main lines (per 100 population)
|
56.0
|
55.6
|
55.1
|
54.3
|
53.4
|
52.6
|
Phone
sets (000)
|
6806.1
|
6713.5
|
6628.4
|
6505.4
|
6388.0
|
6272.8
|
Mobile
subscribers (000)
|
5497.1
|
5649.5
|
5774.0
|
5927.3
|
6081.1
|
6235.2
|
Mobile
subscribers(per00 population)
|
75.5
|
77.5
|
79.0
|
81.0
|
82.9
|
84.9
|
Internet
users (000)
|
2539.6
|
2791.9
|
3016.4
|
3206.5
|
3318.6
|
3380.4
|
Internet
users (per 100 population)
|
34.9
|
38.9
|
41.3
|
43.8
|
45.2
|
46.0
|
Personal
computers (stock per 1000 population)
|
688.9
|
691.8
|
707.1
|
708.8
|
719.8
|
726.5
|
Source: EIU Executive Briefing
LAST MILE
Switzerland liberalized
its telecommunications market just as the European Union had enacted a
deadline for member countries to deregulate and privatize. The Telecommunications
Law has helped to spur growth in this market. However, the liberalization
of this market was only partial deregulation. Swisscom still holds considerable
control over “the last mile.” The company has argued that the last
mile is not under monopoly control because of cable and other connections
to the home. Switzerland’s liberalization of its telecommunications market
has been a voluntary act. Being outside of the EU, the government was under
no obligation to liberalize it market. The EU’s lack of regulatory influence
has helped Swisscom maintain its control of the last mile.
In April 2002, the Swiss Department
of Justice announced its plans to unbundle the “last mile” of the telecommunications
market. According to Swiss newspaper Neue Zürcher Zeitung, the remaining
signs of its former telecommunications monopoly may disappear as early
as January 1, 2003.4
With this move, Swisscom will have to offer cost-efficient rates for leased
and subscriber lines. It must be noted that these new rules will apply
to all markets controlled by one entity. This means that not only will telecommunications
be affected, but also cable TV, radio and high-speed cable Internet access.