Central & Eastern European appetite for UC grows
The telecoms sector is one of the most rapidly developing in Central and Eastern Europe (CEE), thanks to sustained foreign direct investment which has insulated some aspects of investment in the region from the effects of recession.
According to analyst firm Frost & Sullivan, the industry is rapidly adopting Western European standards, with world-class service and high-quality telecommunication products now being offered to meet local business customer expectations. Unified communications (UC) are starting to become more popular in the CEE region and Frost & Sullivan states that Poland and Hungary, the two largest regional markets outside Russia, are the leaders in unified communications adoption.
"EU membership has gradually opened up the economies of the CEE countries, increasing competition between regional businesses and foreign companies," says Dorota Oviedo, a research analyst in the firm's Unified Communications and Collaboration group. "Competitive pressure, as well as the ever-increasing number of mobile and multitasking employees, force local companies to look for new ways of cost saving and enhancing productivity."
Public administration organisations have also shown strong interest as well, especially as they look to modernise their ICT infrastructure, taking advantage of European Union funds.
One example cited is Bydgoszcz City Council in Poland, where a UC solution deployment brought many organisational improvements, including 'anywhere, anytime' access to information and communications in a secure environment with business continuity upgrades. It also enabled the flexibility of mobile working so employees are no longer desk-bound. Productivity gains in everyday City Council work also translate into better European Union funds management and usage - one of the priorities for the city of Bydgoszcz. "Additionally, investors have easier access to relevant public administration officers thereby shortening the procedures and speeding the decision making process," says Oviedo.
Since the EU Parliament adopted a package of telecom proposals last November aimed at strengthening the power of telecom regulators and guiding member states on how to propel broadband growth via targeted investments and spectrum awards, governments are becoming more involved. This will be particularly beneficial to the newest EU members, which are still aligning their regulatory frameworks.
Pyramid Research thinks uptake of broadband services (mobile and fixed combined) will grow during 2009-2014 at a compound annual rate of 20% in Central and Eastern Europe, versus 13% in Western Europe. This is partly because there is more room for organic growth in the region and also because of the lower current broadband penetration in those markets. In addition, governments are focusing on bringing internet connectivity to a wider public.
However, it won't be a straightforward path to growth. Pyramid's Europe Telecom Insider report, "Government Initiatives Will Boost Broadband Growth in Central & Eastern Europe", states that governments and operators in CEE markets will continue to face huge challenges in bringing broadband to the masses. Low income levels, a lack of existing fixed infrastructure and widely dispersed rural populations with less IT literate populations than their urban compatriots are likely to constitute barriers to uptake.
Low penetration levels means there's huge potential for growth. The report's author, Sylwia Boguszewska, estimates that total broadband (both fixed and mobile) penetration in the region was just 10% at the end of 2009, compared to an average of 28% in Western Europe. Pyramid gives the example of Bulgaria, a relative EU newcomer that has an extremely undeveloped broadband market, with a penetration rate of just 15% at the end of 2009. The country's economy has suffered during the recent global crisis, but is expected to recover this year with GDP growth forecast at 1% in 2010 and 3.4% in 2011.
This general economic upturn will prompt more ICT investment by the government and private sector but, while DSL is currently the dominant broadband technology accounting for 12% of all fixed access lines in 2009, Bulgaria is viewed as an extremely fertile market for new broadband access technologies such as WiMAX, because of the low level of existing fixed infrastructure. Boguszewska, at Pyramid believes WiMAX connections will more than triple between now and 2014, accounting for about 11% of all access lines by that year, compared with 3% in 2009. By 2014, DSL is expected to account for 29% of all lines, and cable for 11 percent.taginlineimport
Overall, Pyramid expects broadband penetration in the country to rise to 38% in 2014 on the back of sustained EU support. The EU has committed to support Bulgarian broadband deployments with €29m (US$40m) in 2009 and €32m ($43.8m) in 2010, while the country will also have access to the €1bn ($1.37bn) EU pot set aside for investment in less developed EU countries.
It is that step forward in broadband infrastructure availability and penetration that will truly underpin the increased uptake of higher value services such as unified communications.