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TeliaSonera Triggers a Debate on "Universal Services" with Plans to Migrate Customers from Fixed to Mobile Network
14 Mar 08
TeliaSonera's Finnish unit unveils plans to migrate fixed-line customers in sparsely populated areas to its mobile network.
Global Insight Perspective | | Significance | TeliaSonera becomes the first former incumbent to adopt a fixed-to-mobile strategy publicly. | Implications | The plan is likely to trigger a debate on the state of the European Union's Directive 2002/22/EC, which guarantees universal telecoms services. | Outlook | Given the increasing use of mobile and wireless services in Finland, the plan will hasten the increase of mobile-only households in the country. |
TeliaSonera's Finnish unit, Sonera, is to begin migrating customers from its fixed network to its wireless units as it aims to discontinue fixed services in sparsely populated areas. In a move that could trigger a review of the European Union (EU)'s definition of "Universal Access", Sonera said it will switch over to modern and cost-effective wireless technology (mobile and Digita’s @450 broadband), while ensuring that it meets the conditions outlined by the Finnish Ministry of Transport and Communications for the change of technology. The Ministry, in its report entitled People’s Phone—from Fixed-Line Telephones to Mobile Phones, set 12 conditions for the migration of telecoms services from fixed to wireless networks. In a statement, Sonera said it had submitted its plan to the ministry, seeking approval to effect the migration. Sonera indicated that it undertakes to maintain its customers' current voice and broadband services until a wireless solution replacing the services is available. “Instead of spending millions of euros to replace hundreds of thousands of telephone poles that are approaching the end of their lifecycle, Sonera has decided to invest in modern, wireless technology," said Juha-Pekka Weckström, senior vice-president of TeliaSonera Broadband Services Finland. "This allows us to safeguard the continuity of our customers’ telecom services in sparsely-populated areas, and we are convinced that the customers will notice the benefits of the change," he added. Outlook and Implications A Rational Move: Sonera's plan is bound to make it the first former incumbent in Western Europe to adopt a fixed-to-mobile substitution plan publicly and is designed to trim its costs as more and more people abandon their fixed-line services. The company claims that as much as half of its fixed network in sparsely populated areas is now idle as the number of customers drops by 10-15% a year. Indeed, across Western Europe, Sonera is probably the most likely telco to pioneer such an agenda. With a population of about 5.3 million, and the eighth largest land area in Europe, Finland is the most sparsely populated country in the EU. Population density is about 16 people per square kilometre and the bulk of the population is concentrated in the south of the country. Sonera is relying on existing regulations that allow telecoms operators to provide services with any technology. The company insists that its aim is to use a technology that allows the services to be provided to customers as cost-effectively as possible. Besides, the company is already expanding its mobile and wireless networks and it makes sense to use it whenever possible. The Mobile Phenomenon: Sonera's ability to push ahead with its fixed-to-mobile substitution agenda is only possible because of the high level of use of mobile services in the country. In fact, an E-Communications Household Survey by the European Commission in January 2006 revealed that as much as 47% of Finnish households are mobile only, second in the EU only to Lithuania. The company maintains that mobile calls are more affordably priced than fixed-network calls, and mobility adds to the ease of use. It also notes that the speed and availability of its popular Digita’s @450 network and HSPA wireless broadband services will improve at a quick pace. Already, anecdotal evidence suggests that mobile broadband services are booming in the country and could account for up to 5% of total broadband by end-2008. Sonera is pledging to improve the coverage area of its mobile communications networks in such a way that every customer will have at least the same indoor coverage at home as it has now with the fixed-line telephone. The company is offering a desktop GSM phone to replace the fixed-line telephone and is offering broadband speeds of at least 1 Mbps either in Digita’s @450 network or in Sonera’s 3G network. "Customers who have had an access speed of over 1 Mbps at their permanent dwelling place or at the office will be provided with equal access rates, technology independently and at a cost-recovering price," the company said (see Finland: 30 November 2007: TeliaSonera to Launch Finnish Broadband over 450 MHz Network, Finland: 17 August 2007: Sonera Turns On Finnish HSPA Network and Europe: 29 August 2006: EU Study Reveals Need for More Competition, Finds Mobile Households Exceed Fixed. Review of Universal Access Laws Looms: Although Sonera may not have set out to trigger a review of the EU's universal access laws, its plan will certainly foster debate that may eventually lead to that. The main parts of the current Directive 2002/22/EC of the European Parliament and of the Council of 7 March 2002 refer to fixed communication services and there is uncertainty as to how the growing dominance of mobile will alter that. An attempt by some legislators to include mobile services under the directive was thrown out in 2006. Meanwhile, Sonera's argument to use cost-effective means to provide services will embolden most other former incumbents across Europe who are unhappy at being forced to maintain unprofitable phone boxes. If Sonera can install "desktop GSM phones", and much of Western Europe has mobile penetrations in excess of 100%, the debate for a review of the Universal Service Directive could come sooner rather than later (see Europe: 22 March 2007: The EU's New Regulatory Framework; Benefits, Opportunities and Risks for Telcos, 19 June 2006: EU to Review 'Universal Services' Law and 14 April 2006: EU Rules Against Applying Universal Access Law to Mobiles).
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