02 August 2006

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Business Today analysis the biannual report on the telecommunications industry

The communications industry in Malta contributes three per cent of the Gross Domestic Product for Malta and although the sector’s performance tracks the cyclical movement of the general economy, it has to grow at a faster rate than the domestic economy if Malta is to meet the targets set out in the Lisbon agenda.
The situation as at end March 2006 registered some improvement in certain sectors of the communications industry compared to the same period last year. In other sectors, however, a regression was registered. This may be the result of various factors such as less purchasing power on the part of consumers, or the use of alternative technologies for communication for which no statistics are gathered or as a result of a flaw in data collection.

Fixed line market
The fixed line to communicate by voice still remains the most popular means of communication with MCA statistics showing that there were around 202,000 active telephone lines, an insignificant decrease from March last year. However, this figure has remained relatively constant for some time, which could indicate market saturation.
In the future, the MCA should also include the number of ISDN lines, mainly used by businesses for their telephone connectivity. The number of minutes for fixed line calls originating and terminating on the same Maltacom network shows a downward trajectory. Customers may be using their mobile phone more to communicate but the decline could also be explained by the trend for businesses to connect their PABXs sited in different localities via a voice over IP network utilizing their broadband connectivity. The authorities should investigate this issue to have more accurate data. Calls from fixed lines to mobile phones started to decrease. The proliferation of GSM gateway attachments to PABXs could be a contributing factor to this result.
Businesses have started to attach a sim card to their telephone network, and when they need to use the phone to call a mobile phone, the call is routed as if it is a mobile to mobile call as it is less costly.

Mobile market
Malta has a high penetration of mobile phones. Four out of five citizens have a mobile phone. Our 81% penetration figure compares well with the EU average, however we are one of nine countries from the 25 member states that do not exceed the average figure. Is their further growth to be registered? The answer is in the affirmative, however it will be at a lower rate of growth than that registered lately but it will result from customers that do not add up much in usage figures. Maybe new applications for use of mobiles like TV clips, lower priced handsets but with more facilities or the advent of another mobile operator may restart the growth in numbers.
Mobile companies register their income through a measurement called the average revenue per user. This is the total turnover from mobile telecommunication services and divided by the number of subscribers. However there are factors that distort this figure. If the operators continue to lower the cost of a call it may not result in a commensurate increase in usage. Also, the add-on of more mobile numbers in use will bring down the average as will also the income generated from roaming. The EU is determined to bring down the cost of a roaming call and both local operators have moved slowly but steadily to revise their overseas call rates. An encouraging figure is the 28% increase in quarter one 2006 against the same time last year for mobile-to-mobile phone. Here, convenience is resulting in higher use of this gadget. With a mobile phone I am reachable and available other than having the facility, literally in one’s hand to make a telephone call anytime and anywhere.
SMS usage in Malta is still the highest per user in Europe. At 100 million messages we Maltese we seem to be addicts. On the other hand, the multi media messaging service is relatively low in relation to the number of mobile phones in use. Mobile operators need to review their tariff structure as this is an ancestor to 3G applications.

Voice telephony market
Even though we are a nation having at least one mobile phone and a fixed line available to call, the volume registered for voice call minutes is on the decrease. The fixed to fixed calls have decreased at a faster pace than the increase in mobile to mobile calls. The introduction by mobile operators of an off-peak rate per call as against per minute is effecting these results. Also, the use of Voice over Internet Protocol for overseas calls has increased the usage of this facility through the innovative service, 1021 offered by Maltacom and Melita Cable’s Hello. If the 1021 service will also be available from mobile phones it would boost these figures. Maybe both mobile operators may consider the introduction of a similar service as an alternative to the normal offering for direct dial overseas calls to lower the international telephony roaming rate to a level being proposed by the EU commissioner. Pre-empting an event before it happens may be of benefit.
In the future the MCA should try to estimate the number of VOIP calls for local usage from the various wide area networks found in Malta. Total international voice minutes including through VOIP technology is registering a decline. The main factor may be the voice over broadband services, MSN messenger facility which is a glorified SMS facility as is yahoo messenger. Indeed internet search engines are trying to share in the communication traffic market.

TV market
Malta has nearly 105,000 subscribers having a digital or analogue TV connectivity via cable. Even though there are two digital service providers utilising different technologies, the MCA does not give the figures per operator, unlike what it does for mobile where two operators share the market. If the figures for one operator are low it does not mean that the market is not interested to know the market share of the different operators.
If a market is not responding to the offer, it may set the alarm for the revision of rates. The data is also important in view of the fact that by the end of the decade receiving TV via analogue transmission will not be possible anymore.
Terrestrial transmissions will be switched off so a set top box converter to receive digital transmission will become a necessity in every household.

Internet is available in Malta via broadband or narrowband - the latter a typical dial-up connection. Malta has 89,000 users or one person from every five, who has an internet connection.
The number of dial up users is decreasing as the price differential of broadband internet as against the price for dial up services has narrowed. The most popular facility for broadband is ADSL technology as against the cable modem facility. Broadband penetration in March 2006, stood at the same average as that registered by the EU with 10% broadband connections per population. Broadband still offers substantial growth potential

Price index
The index is there to measure changes in prices for communication services. It has remained pretty constant in 2005 but on the other hand one cannot but observe that this does not reflect the quality of the service offering. ISPs providing higher bandwidth to their customers at the same price are giving a better service but this is not reflected in the index.
The industry players have relatively remained the same and constant revision in pricing and improved quality as a result of competition is of benefit to consumers. However if usage increase to alternative technologies or less income availability of the user will affect the profit margins than this may end up with less investment in this sector which is the commodity that directly improves the individual’s quality of life and the businesses efficiencies that are necessary all the time.

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