Executive Knowledge Exchange on Effective Regulation: A Key Enabler for Broadband Development

Law and Strategy• Law on Electronic Communications (2008) is based on the EU 2002

regulatory framework• Ministry for Information Society and Telecommunications prepared a

new Draft Law on Electronic Communications which is harmonized with the 2009 amendments to the regulatory framework in the field of electronic communications

• Final public discussion regarding the text of the Law will take place on 10 September 2012

• Rapid development of information and communication technologies, understanding the need and importance of the development of broadband infrastructure and access to high speed internet and active policy of accession to the EU have imposed the need to create a new Strategy for the Development of Information Society 2012 - 2016.

Goals and Objectives• Effective implementation of this Strategy by 2016 Montenegro wants to achieve

the following visible, clear, measurable and key goals:• Increase the share of ICT sector in GDP by 50%,• Enhance workforce in ICT sector by 50%,• Raise the possibility of broadband access that is high-speed access by providing a

symmetrical, guaranteed access to broadband (agnostic approach) of at least:• 10Mbps for 50% of the population by 2014• 10 Mbps for 100% of the population, and 30Mbps for 50% of the population by

2016• Achieve mass acceptance of ICT and the Internet and improve digital inclusion

and reach the level of:• use of the Internet of 70% by 2014 and 80% by 2016• broadband access - of 25% by 2014 and 40% by 2016• Provide wide accessibility to the most used electronic services of public

administration: to ensure accessibility of 100 most used services of government agencies and local self- governments on the eGovernment portal by 2014 that is 200 services by 2016.

It terms of its structure, the Strategy is organized so to:

• Indicate the need for further and rapid development, bearing in mind Digital Agenda and the analysis of the present situation,

• Draw attention to real problems and obstacles to be overcome,• Create the vision, goals and objectives to be reached and

implemented,• Adopt Strategy for their implementation by defining basic pillars of the

development and programs for their implementation,• Establish goals, objectives and action plans for each programme, and

in the end• Establish preconditions and mechanisms that will enable their

implementation.

"Montenegro - digital state - a country that has recognized social and economic potential of ICT and broadband", is the vision of the development of information society in the following five-year period.

For the implementation of the vision five pillars of the development have been

identified • ICT sustainability, • ICT for community, • ICT for public administration • ICT for economic development • The development of media and radio-broadcasting market

which are followed by ten programs with individual goals and objectives.

• Aware of the importance of the development and application of ICT, in the previous period Montenegro has made significant steps in this direction. This is very clearly identified in the World Economic Forum ranking - the Network Readiness Index (NRI), where it is ranked to the 44th position of a total of 138 countries, far above other European countries in the region. With penetration of mobile network users of nearly 200% and penetration of Internet users which is continuously growing, it is evident that the ICT sector in Montenegro is undergoing rapid growth.

• When it comes to high-speed networks based on optical fibre cables, penetration in Europe is only 1%, while in Japan it is 12%, and in South Korea 15%; 40% of the amount spent in total in the USA is spent in the EU for the ICT research and development.

• According to the research conducted by OECD increase in investments in the field of electronic communications of 8% conditions gross domestic product growth of 1%, and based on the World Bank Group research the increase in penetration of broadband connections by 10% enables gross domestic product growth of 1.38% in developing countries, that is, 1.21% in the developed countries.

Market analysis On the basis of the analysis of the 7 relevant markets, in November 2010 we adopted the

following measures that have an impact on the development of the broadband access Market 4: The market of access to network infrastructure on wholesale level (including

shared or fully unbundled access at a fixed location) – wholesale level– In line with the obligation of transparency, Crnogorski Telekom A.D, Podgorica

published in February 2011 the Reference Offer for local loop access. In this way they introduced new wholesale services: the service of shared or fully unbundled access to infrastructure.

– In line with the obligation of price control and cost accounting Crnogorski Telekom implemented the prescribed prices: the price of the monthly subscription for the full access to the local loop on the level of 3,88 euros and the price of monthly subscription for shared access to the local loop on the level of 1,16 euros.

– Crnogorski Telekom A.D. also applied the required reduction in the price for using cable ducts for the space for cables in PE pipes Ø 40mm, placed in the PVC pipe Ø 110mm from 36.00 euro cent which was the price before the Decision of the Agency was adopted to 9.45 euro cent per running meter (RM).

Market 5: Broadband access market - wholesale– In line with its obligation to operate transparently Crnogorski Telekom

A.D. Podgorica published the Reference Offer for wholesale broadband access in February 2011. After the analysis of this relevant market the Agency imposed the obligation to Crnogorski Telekom to provide access point for routing the traffic on the IP level, Ethernet level and DSLAM level.

– In line with the obligations of price control and cost accounting in setting the wholesale price of bit stream access, Crnogorski Telekom A.D, Podgorica defined the amounts of monthly fees on the principle „Retail – 42%“ according to price list that is currently in force

Market 6: Terminal or trunk segments of leased lines, regardless of the technology used to provide leased or dedicated capacity – wholesale level – In line with the obligation of transparency, in February 2011 Crnogorski

Telekom A.D published the Reference Offer for the terminal segment of the leased lines on the wholesale level.

Shared use of infrastructure

Cable ducts– Data from June 2012 show that Crnogorski Telekom (CT) has leased cable ducts in

the total length of 39.871 m, which is an increase of about 64% in relation to the situation in March 2012.

Antenna poles– Data collected from the operators show that there are 470 antenna poles in the

territory of Montenegro. – Operators leased the space on 183 antenna poles, which is 38.7% of the total

number of antenna poles that exist in the records of the Agency. Shared use of the space in buildings

– Data from June 2012 show that operators in Montenegro jointly use 130 buildings – Procedures for acquiring the right of use, prices and conditions of using the

infrastructure are public, which is in line with the obligations stemming from the analyses of the relevant markets done beforehand. The shared use of infrastructure is usually subject to agreement between operators without the involvement of the Agency.

Global Internet Access

– In three six-month intervals, starting from 1 January 2013, Crnogorski Telekom will do the revision of the offer with the reduction of the prices for IP transit for the offered speeds, on average by 20% in relation to the prices which were in force in the last six-month interval.

Digital dividend

– After the process of broadcasting digitalization is finished, which is postponed in Montenegro for mid 2015, within the UHF band, the total 72 MHz of the spectrum (band 790-862 MHz) will be free. This is the band of very good propagation characteristics («digital dividend»). Current plan of purposes of the broadcasting spectrum stipulates that this band is to be used for the fixed, mobile and broadcasting services equally, on the primary basis. Currently there is no decision on the national level on the use of the spectrum of the digital dividend, although all the analyses indicate that this part of the spectrum should be allocated to the mobile broadband (IMT network).

Market overview

• In the first half of this year the number of users of ADSL increased by 4% in comparison to 2011. In the first half of this year the number of connected FTTx connections also increased by 128% in comparison to 2011, while the number of the installed FTTx connections increased by 87%. This means that the trend of increase in the number of users of the fixed broadband access continued.

• IPTV is the dominant platform for the distribution of TV programmes and it is used by 42,1% users.

• The capacities of international links to the Internet is 22Gb/s

Fixed broadband access ADSL Internet Access• The trend of increase in the number of ADSL users continued in the first half

of 2012. The number of ADSL users has been increased by 4% in comparison to 2011. At the end of June 2012 Crnogorski Telekom had 67,278 ADSL users

• The most popular package for residential users is the flat package with the maximum download speed of 2Mb/s (ADSL - Fl@t 2 and Extra Trio Flat 2), while the most popular package for business users is the flat package with the maximum download speed of 4Mbps (Fl@tB4)

• Availability of the ADSL service is 99,9 % - to put it in other words, 99,9 % of users who have fixed telephone line can also introduce the ADSL service.

ADSL users

2005 2006 2007 2008 2009 2010 2011 Jun-12

1,095 6,639 14,428 27,839 43,473 57,37 64,717 67,278

WiMAX Internet Access Number of M:Tel users who have WiMAX Internet Access increased in the

first half of this year by 2.7% in comparison to 2011. In the end of the first half of 2012 M:Tel had 7,491 users.

WiMAX users

2007 2008 2009 2010 2011 Jun-12

1,707 5,520 6,271 6,789 7,296 7,496

Internet Access via Cable Distributive System (CATV)

• The number of Internet users of M-kabl has increased in the first half of this year by 23.3% in comparison to 2011. Thus, in June this year M-kabl had 2,678 users. The most popular package for residential users is the flat package 768/64 kb/s.

• Number of Internet users of Cabling increased by 17,1% in the first half of this year in comparison to 2011. Thus, at the end of June 2012 Cabling had 1,365 users

FTTx

In the first half of this year the number of connections increased by 128%, while the number of the installed units increased by 87% in comparison to 2011.

June 2012

FTTH FTTH FTTB FTTB FTTC FTTC

Installed Connected Installed Connected Installed Connected

14,919 2,084 97 81 192 183

Total installed 15,208

Total connected 2,348

The figure bellow presents the structure of the broadband Internet access users in percentages by the manner of access

ADSL; 67278; 79%

WiMAX; 7496; 9%

CATV; 4043; 5%

Hot spots(2,4GHz i 5GHz); 3697; 4%FTTx; 2348; 3% leased lines; 329; 0% MPLS; 44; 0%

ADSLWiMAXCATVHot spots(2,4GHz i 5GHz)FTTxleased linesMPLS

Mobile Broadband Internet Access Number of users of the mobile broadband Internet access that accessed Internet

in 2011 through data SIM cards increased by 89.4 % in comparison to 2010.

It is worth mentioning that the offer of one mobile operator M:Tel does not include data SIM cards that are used only for data traffic.

Users of data SIM cards

2008 2009 2010 2011

T-Mobile 3,143 9,172 18,856 27,450

Telenor 4,954 11,183 15,149 36,966

Total 8,097 20,355 34,005 64,416

Internet penetration

The results of the Survey on the ICT usage in Montenegro, done in the period from 01 to 28 February 2011 show that 54.1 % of population used Internet in the last three months.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

2.70% 4.10%

12.50%16.00%

19.80%23.90%

31.50%

38.50%

43.90%

50.90%54.10%

Internet penetration

At the end of 2011 fixed broadband access penetration (users of ADSL, WiMAX, cable modems, leased lines, FTTx, etc.) was at the level of 13.6%, which is an increase of 2.3% in comparison to 2010. If we observe the penetration in relation to the number of households, we can see that the penetration increases to 42.4%, which is an increase of 2.4% in comparison to 2010.

AL XK TR Avg-9 BA ME RS MK RO BG HR HU SI EU-27 IS

Dec-09 0.035 0.062 0.096 0.094 0.076 0.083 0.08 0.111 0.13 0.13 0.16 0.187 0.229 0.248 0.328

Dec-10 0.036 0.077 0.103 0.106 0.102 0.113 0.118 0.128 0.14 0.149 0.187 0.206 0.241 0.266 0.342

Dec-11 4.9% 8.3% 10.3% 10.9% 11.2% 13.6% 13.7% 13.7% 15.2% 16.0% 19.5% 22.1% 24.6% 27.7% 35.1%

2.5%

7.5%

12.5%

17.5%

22.5%

27.5%

32.5%

37.5%

4.9%

8.3%10.3% 10.9% 11.2%

13.6% 13.7% 13.7%15.2% 16.0%

19.5%

22.1%

24.6%

27.7%

35.1%

Fixed Broadband Access Penetration

Source of the data is the "Cullen International" Report (July 2012).

XK MK AL BA RS HR TR EU-27 ME IS

Dec-10 NaN 0.004 0.002 0.015 0.029 0.076 0.02 0.072 0.055 0.108

Dec-11 NaN 0.008 0.012 0.025 0.035 0.065 0.067 0.081 0.104 0.131

1.0%

3.0%

5.0%

7.0%

9.0%

11.0%

13.0%

Mobile Broadband Internet Penetration

Source of the data is the "Cullen International" Report (July 2012).

Thank you for your attention! Branko Kovijanic

Member of Council

Agency for Electronic Communications and Postal ServicesBulevar Dzordza Vasingtona 5681000 PodgoricaMontenegrobranko.kovijanic@ekip.me