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FWA winner fears market squeeze

Twenty-four hours after winning one of three licences granted by the state to operate Fixed Wireless Access (FWA) services, telecoms firm GiTy Slovakia warned May 22 that the Slovak market will not be big enough to accommodate three operators.
Having seen his firm beat Metis Slovakia and RDT for the licence, GiTy Slovakia CEO Ján Súkeník declared: "There's room for healthy competition between two operators, but not more. Three is more than the market can hold."
Joined by Nextra Wireless and Callino, GiTy will offer the FWA service, aimed at providing a 'last mile' connection to companies and homes from urban fixed-line hubs - a service currently dominated by the Deutsche Telekom-owned fixed-line monopoly Slovenské Telekomunikácie (Slovak Telecom - ST).

Twenty-four hours after winning one of three licences granted by the state to operate Fixed Wireless Access (FWA) services, telecoms firm GiTy Slovakia warned May 22 that the Slovak market will not be big enough to accommodate three operators.

Having seen his firm beat Metis Slovakia and RDT for the licence, GiTy Slovakia CEO Ján Súkeník declared: "There's room for healthy competition between two operators, but not more. Three is more than the market can hold."

Joined by Nextra Wireless and Callino, GiTy will offer the FWA service, aimed at providing a 'last mile' connection to companies and homes from urban fixed-line hubs - a service currently dominated by the Deutsche Telekom-owned fixed-line monopoly Slovenské Telekomunikácie (Slovak Telecom - ST).

FWA services allow users to bypass so-called 'last-mile' phone cables (those physically joining end users to local phone hubs) by sending communication signals via radio waves from a nearby transmitter. ST currently owns the country's last mile connections.

Telecoms experts believe that the relative youth of the Slovak market - ST was only privatised last year, and its monopoly on fixed-line services will not end until 2003 - makes it hard to gauge whether the predictions of GiTy's CEO will become a reality. The situation is complicated, they say, by the fact the Slovak market is relatively small in comparison with other regional markets; Hungary and the Czech Republic's markets are twice as large, while Poland's is eight times as big.

"Slovakia's market is small, but on the other hand you have three operators providing an alternative service [to that offered by monopoly ST]; in a market dominated by a monopoly, there must be a large demand for new choice," said Ondrej Datka, telecoms analyst at Patria Finance in Prague.

The tender for the licences - priced by the state at $70 million apiece - had attracted 12 interested parties and five final bidders when the deadline expired May 4. The Telecoms Office state market regulator had made it clear that having fixed the price it would be scrutinising what it said was "the suitability and experience" of each bidder to run an FWA service.

Both Nextra Wireless and GiTy won FWA licences in the Czech Republic in 2000 and were seen by analysts as clear favourites in the tender once they had submitted their offers.

"The experience of running a similar service in the Czech Republic will pay off in the long-term" said Datka. "The two cultures are similar, and there are bound to be [company] synergies."

"We believe that it is of the utmost importance to have previous experience, and I'm sure it helped us in winning our licence," added Súkeník.

Welcome boost to competition

The three licence holders will be granted licences for building and operating FWA networks in June. They will have to start operating an FWA network and provide services in at least one region of the country within six months of that date.

The tender for the licences had initially been expected to be announced at the start of this year, but was delayed three times. The interest in gaining a licence voiced by ST, along with existing mobile operators EuroTel and Globtel had irked some analysts, who said that by allowing these firms to bid, the Telecoms Office was not doing enough to ensure that the market was opened up prior to full liberalisation in 2003.

But in breaking the stronghold of dominant monopoly ST, the new services will bring what one new licence holder said would be "desperately needed competition to the Slovak telecoms market".

"We're extremely pleased with winning this, and it will be a good thing for what appears to be a profitable market with a good future," said Dag Storrosten, CEO of Nextra Slovakia.

"In one year we hope to be a key player in introducing something the telecom market in Slovakia is in need of: competition."

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