Austria

National Infrastructure: Telecommunications and its regulatory policies

Executive Summary

When Austria joined the European Union in January 1995, it was required to open its telecommunications market to competition. It took 2-3 years to officially accomplish this goal but the country moved rapidly from a monopoly to a competitive market with low prices and high-quality services. The following sections discuss Austria’s telecommunications infrastructure in terms of telephone and Internet usage as well as a brief subsection about its regulator, the Telekom Control Commission (TCK).

 

Telephone

 

According to the CIA: the World Factbook (2), Austria has a highly developed and efficient telephone system. Before liberalization in January 1998, the telephone sector was monopolized by Telekom Austria. Competition lowered call rates by 20-40 percent but increased fixed monthly charges so many customers remained with Telekom Austria, which as of September 2003 still maintained 55.4 percent of the fixed-line market share (based on minutes, including internet dial-up).

 

The Austrian government still owns 47 percent of Telekom Austria. It wants to sell its remaining stake by 2006 and was in deep discussions with Swisscom until August 2004. The Swiss government owns 64 percent of Swisscom, which it would like to reduce, and purchasing Telekom Austria would seem to be a win-win situation. The discussions ended primarily for political reasons. Austria was requiring a “politically acceptable ownership structure” that Swisscom has not addressed. Swisscom is also hesitating relinquishing majority control because it would require new legislation, an arduous and time-consuming process under the Swiss democracy (12).

 

Austria has a very extensive fiber optic system and multiple satellite earth stations for the telephone system provide a rich network for all telephone and Internet services. In 2003, the country had 48 main lines for every 100 persons or 3.881 million main telephone lines, a decrease from four million in 2002. The number of mobile lines has increased from six million in 2002 to 7.1 million in 2003. By June 2004, 72 percent of all households had at least one mobile phone (20). The statistics for main and mobile telephone lines suggests that Austrians are substituting main lines for mobile lines.  

 

 

Austria

Switzerland

Germany

Main Telephone Lines in Operation, 2003

3,881,000

5,419,000

54,350,000

Percentage of Population

47%

73%

66%

Percentage of Growth, 1999-2002

3%

5%

11%

 

Cellular Mobile Telephone Subscribers, 2003

7,094,500

6,172,000

64,800,000

Percentage of Population

87%

83%

79%

Percentage of Growth, 1999-2002

51%

88%

152%

Source: CIA-the World Factbook

 

 

 

 

Though approximately 87 percent of Austria’s population has a cellular phone subscription, the growth rate of Austria’s mobile telephone subscribers from 1999 to 2002 is far below Germany and Switzerland.

The following table lists the 2001 market share for Austria’s cellular providers.

 

 

Percent Market Share, 2001

Mobilkom (owned by Telekom Austria)

44%

Max.mobil (owned by Deutch Telekom)

37%

Connect Austria (One)

17%

Telering

2%

Source: Economist Intelligence Unit

 

The Global Information Technology Report 2003-2004

Rankings on various variables can help to put an issue into perspective. The Global Information Technology Report 2003-2004 (1) uses the Networked Readiness Index as a basis of comparison, scoring countries on a scale of one to seven. This is “a nation’s or community’s degree of preparation to participate in and benefit from information and communication technology (ICT) developments.” It is a comparison of 102 countries in three component areas: Environment, Readiness, and Usage. The Index identifies three stakeholders in ICT: individuals, businesses, and governments. Readiness assesses the capability of the stakeholders of an economy to access and utilize ICT. Overall Austria, Germany, and Switzerland were very comparably scored in the Readiness Component, ranking 15, 12, and 13 consecutively.

 

One important factor in the Readiness Component is the Business Readiness Sub-index, which refers to the readiness of businesses and the ease of businesses to set-up operations and to hire talented employees. Austria scored (score 1-7) only slightly below Germany and Switzerland in the following areas of the sub-index, indicating its willingness to compete in an open-market.

 

 

Austria

Switzerland

Germany

Ease of Obtaining Telephone Lines, 2003

6.59

6.89

6.79

New telephone lines for businesses are (1=scarce and difficult to obtain, 7=widely available and highly reliable)

 

Cost of Business Phone Subscription, 2002

0.06

0.04

0.04

Cost of business telephone monthly subscription as percent of per capita GDP, 2002

Source: The Global Information Technology Report 2003-2004

 

  

 

Internet

 

Internet infrastructure and usage has grown at a steady pace in Austria. As previously mentioned, Austria’s extensive fiber optic system and multiple satellite earth stations provide a rich network for all Internet services.  There were 3.73 million users (2) in 2003 and though cyber cafés are very popular in Europe, 1.4 million households (40 percent of all households) had Internet access as of June 2004 (20). Dial-up is still the most widely used connection but 36 percent of households with Internet access used a broadband connection as of June 2004. 917,000 households are expected to use broadband by 2005 (6).The highest rates of Internet usage are in the regions of Upper Austria and Vorarlberg; the lowest, in the region of Burgenland. Overall approximately 46 percent of all Austrians had access to the Internet in 2003, which almost equals the 47 percent in Germany. By the June 2004, 53 percent of Austrian households had a computer (an 8-10 percent increase from 2002).

 

Austria

Switzerland

Germany

Personal Computers, 2002*

3,013,000

N/A

35,920,940

Percentage of Population

37%

N/A

43%

Percentage of Growth, 1999-2002

43%

N/A

47%

 

Internet Users (estimated), 2003

3,730,000

2,556,000

39,000,000

Percentage of Population

46%

34%

47%

Percentage of Growth, 1999-2002

82%

61%

105%

Source: CIA-the World Factbook and The Global Information Technology Report 2003-2004 (*)

In 2000, Internet Monitor and Fessel-GfK conducted a market research on Internet use in Austria. It was concluded that most users in 2000 were either business people using the Internet for work or teenagers. The teenage users were using the Internet to find information, contacts or activities.

 

The number of Internet service providers jumped from thirty-seven in 2002 to 131 in 2004 (11). There are also 387,006 Internet hosts in 2004, providing access through broadband, cable, and other sources (i.e. wireless, satellite, etc.) for 377,577 domain names ([.at], [.co.at], and [.or.at]).

 

 

Regulation

 

Austria’s regulator, the Telekom Control Commission (TCK), was established in 1997 to supervise and to support competition in a free and fair national market. TCK has judicial powers and develops regulations that support Austria’s citizens and businesses. It strives to keep modern telecommunications services cost-effective and high quality by “lowering barriers to market entry, ensuring open network provision and by acting as an arbitrator in case of disputes between market participants” (7). Recently TCK has discussed easing the restrictions on the country’s largest telecommunications provider, Telekom Austria (8). In October 2004, the European Union is most concerned about Telekom Austria’s ninety percent market share in the transit service sector. The EU has urged the regulator to reconsider this decision. According to the Associated Press, the Austrian government owns 47 percent of Telekom Austria.

The Global Information Technology Report 2003-2004

The Environment Component evaluates the country’s environment in facilitating the development and use of ICT. Overall, Austria was 21st out of the 121 countries surveyed. Germany ranked 17th; Switzerland, fourth. One of its sub-indexes is Infrastructure Environment, which rates the level of accessibility and quality of a country’s key access infrastructure for ICT. For its “Overall Infrastructure Quality,” Austria received a decent score of 6.06 (score 1-7). This score indicates that while the wires and cables have been laid, the country is still adjusting to the competition of an open-market.

 

 

Austria

Switzerland

Germany

Overall Infrastructure Quality, 2003

6.06

6.73

6.64

General infrastructure is (1=poorly developed and inefficient, 7=among the best in the world) 

Source: The Global Information Technology Report 2003-2004

 

 

Another sub-index is the Political/Regulatory Environment, which rates policies and laws that influence the rate of growth and direction of the ICT sector. With regard to “Competition in the ISP Sector,” Austria received a score of 5.23 (score 1-7). Again, this score reflects the country’s relative infancy in an open-market and the government’s continued involvement with certain aspects (i.e. Telekom Austria).

 

 

Austria

Switzerland

Germany

Competition in the ISP Sector, 2003

5.23

5.41

5.52

Is there sufficient competition among Internet service providers in the country to ensure high quality, infrequent interruptions, and low prices? (1=no, 7=yes, equal to the best in the world)

Source: The Global Information Technology Report 2003-2004