|Luxembourg Telecommunications Research|
Luxembourg - Telecoms, IP Networks, Digital Media and Forecasts
Luxembourg has one of the smallest telecom markets in Europe, greatly supported by an influx of workers and migrants from larger neighbouring countries. Luxembourg City is also one of the political centres of the European Union, and so attracts affluent migrant employees.
The incumbent P&T Luxembourg retains a dominance in the fixed-line and broadband sectors which has become unusual in Europe. Despite regulatory attention in recent years, competition in the broadband market has been hampered by high very costs for local loop unbundling and shared-access offers. As yet, there are few broadband subscribers on fibre networks - alternative operators do not yet have access to P&T's fibre network, which has implications for their competitiveness in the provision of services, since a growing number of new-build areas of Luxembourg City are equipped with fibre only. Given the slow regulatory pace, alternative operators will be considerably disadvantaged when remedies come into play since P&T would by then have had time to consolidate itself as the first market player and thus have taken a lion's share of potential subscribers.
Nevertheless, the government has continued to push for fibre development to improve Luxembourg's connectivity. Its wholly-owned fibre operator, LUXConnect, set up in 2006 to provide dark fibre to other operators on a wholesale basis, began offering services during 2009. As part of a package of measures to address the economic downturn, and to accelerate the development of fibre infrastructure, the government decreed that LUXConnect must invest €100 million to 2012. In addition, the State renounced its dividends from P&T for the 2009 financial year so that the company could invest a further €74 million in fibre over and above its existing investment. The government aims for complete FttH coverage in Luxembourg by 2018.
In common with most other markets, revenue from the fixed-line sector has been falling steadily. Indeed since 2005 income generated by mobile telecoms has far exceeded income from fixed lines, while revenue from the broadband sector has propped up total revenue.
Total investment in fixed-line and mobile infrastructure reached almost €124 million in 2009, showing only a 2.2% growth year-on-year. Given the continuing constraints in financial liquidity it is unlikely that significant growth in investment should be expected until 2011 at least. Furthermore, investment growth has been curtailed by Luxembourg's general economic slump, which saw GDP fall 4.2% in 2009. Nevertheless, economic recovery is anticipated to strengthen in 2010, while GDP growth of 2.1% is expected for the year. Most investment has been in the fixed-line sector as P&T shows its commitment to FttH and FttC network upgrades. Mobile operators have also concentrated on network upgrades to provide mobile broadband connectivity to subscribers.
Luxembourg - key telecom parameters - 2009; 2011
Fixed broadband subscribers159,000185,000
Fixed broadband penetration rate32%37%
Mobile broadband subscribers106,000160,000
Subscribers to telecoms services:
Fixed-line telephony (million)264,000266,000
SIM cards in service (million)720,000745,000
SIM penetration (population)151%156%
(Source: BuddeComm based on industry data)
Luxembourg's telecom sector revenue was stagnant in 2009 and shows little prospect for significant growth until at least 2012. About two-thirds of revenue is derived from the incumbent P&T Luxembourg, the remainder from alternative operators. The telecom sector continues to be supported by transient workers from neighbouring countries as also those based in the EU's political centres.
Despite regulatory measures adopted to encourage competition in the local loop, and so grant easier access to P&T's infrastructure, the cost of access for alternative operators remains the highest in Europe and so the provision of broadband and other services leaves only a very small profit margin. This is a central measure for concern if the regulator is to encourage real market competition in coming years.
Luxembourg's mobile SIM penetration continues to be the highest in Europe, largely due to the high number of transient workers and to the popularity of multiple SIM use.
The national fibre network is being encouraged by the government's financial input through its wholesale provider LUXConnect. Nevertheless, P&T's own fibre deployment is not yet open to competitor access, which in the long term will prove detrimental to the market's competitiveness as alternative operators struggle to catch up with the incumbent's advantages for being the first to deploy services.This report covers trends and developments in telecommunications, mobile, Internet, broadband, digital TV and converging media including VoIP and IPTV developments. Subjects include:
Market and industry analyses, trends and developments;
Facts, figures and statistics;
Industry and regulatory issues;
Major players, revenues, subscribers;
Internet, VoIP, IPTV;
Mobile voice and data markets;
Broadband (FttH, DSL, cable TV, wireless);
Convergence and digital media;
Broadband market forecasts for selective years to 2020.
Last Update: 3 Aug 2010 Number of Pages: 35
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