Datafile of European Telecommunications CIT Publications Ltd, 3 Colleton Crescent, Exeter, Devon EX2 4DG, UK Tel: +44 1392 315567, Fax: +44 1392 315556

Wonderful, wonderful competition

The Danish telecoms regulator Telestyrelsen is confident that it has identified three key indicators of a competitive market, each of which it claims Denmark complies with. They are: access to raw copper (Denmark boasts a 100% unbundled local loop); charges for switched interconnection (these fell during 2000 after protests from operators); and charges for leased lines. Although Tele Danmark still dominates the local telephone sector, competition has seen the PTO lose rather more of its share of the national and international long-distance markets than many of its European counterparts; during the first half of 2000 it claimed just 45% of international traffic, while Tele2 and Telia both took 12%, Global One 8%, Facilicom International 7% and Interoute Danmark and RSL COM 5% apiece.

At the same date the incumbent’s share of the domestic telephony traffic dipped to 74%, though this was still considerably more than Tele 2’s 8% or Telia’s 7%. The number of customers using carrier selection codes to bypass the PTO’s network jumped from 1.51 million at the end of 1999 to 1.86 million six months later; of these 494,890 were pre-selected. Tele 2 claimed 25% of customers using carrier selection codes, followed by Telia (24%), CyberCity (12%) and WorldOnline Danmark and Mobilix (8%). Other minor players in the carrier pre-selection market include Global One, Telepartner, Tele 1020 and RSL Communications. By September 2000 seven companies had signed co-location agreements - World Online, Tjantik, Telia, InterNord, Formus, CyberCity and Cygate Denmark - and by February 2001 64 providers of telecoms networks and services had concluded interconnect services with Tele Danmark, up from 23 at the end of 1998 and 15 in 1997. The substantial amount of competition for services stems from the fact that there is no individual licensing requirement for any new player which wishes to launch basic telephony operations. However, at the time of writing just four companies had launched DSL services: Tele Danmark, World Online and CyberCity have launched commercial DSL service, while InterNord is providing SDSL services to business customers

This information is taken from CIT Publications' Datafile of European Telecommunications which includes profiles of
all telecoms sectors in 16 European countries as well as 36 company profiles

Regulations
 
 

Regulatory bodies:	The Ministry of Research and Information Technology oversees the telecoms industry but  the National Telecoms Agency (NTA), also known as Telestyrelsen, is responsible for regulatory issues and licensing.
Regulations:	The telecoms market has been open to competition from alternative service providers and resellers since 1993, when the use of leased lines was   liberalised, first for data communications and a year later for private voice transmission. All national and international public voice and data services   were liberalised in July 1996.

Market commentary

Although it still dominates the local telephone sector, the early onset of competition has seen Tele Danmark lose rather more of its share of the national and international long-distance markets than many of its European counterparts; during the first half of 2000 the PTO claimed just 45% of international traffic, while Tele2 and Telia both took 12%, Global One 8%, Facilicom International 7% and Interoute Danmark and RSL COM 5% apiece. At the same date the incumbent’s share of the domestic telephony traffic dipped to 74%, though this was still considerably more than Tele 2’s 8% or Telia’s 7%. The number of customers using carrier selection codes to bypass the PTO’s network jumped from 1.51 million at the end of 1999 to 1.86 million six months later; of these 494,890 were pre-selected. Tele 2 claimed 25% of customers using carrier selection codes, followed by Telia (24%), CyberCity (12%) and WorldOnline Danmark and Mobilix (8%). Other minor players in the carrier pre-selection market include Global One, Telepartner, Tele 1020 and RSL Communications. By September 2000 seven companies had signed co-location agreements - World Online, Tjantik, Telia, InterNord, Formus, CyberCity and Cygate Denmark - and by February 2001 64 providers of telecoms networks and services had concluded interconnect services with Tele Danmark, up from 23 at the end of 1998 and 15 in 1997. The substantial amount of competition for services stems from the fact that there is no individual licensing requirement for any new player which wishes to launch basic telephony operations. However, at the time of writing just four companies had launched DSL services: Tele Danmark, World Online and CyberCity have launched commercial DSL service, while InterNord is providing SDSL services to business customers.

In January 2000 Telestyrelsen unveiled plans to offer seven nationwide fixed wireless in the local loop (WiLL) licences, with the intention of increasing competition in the local telephony market. The regulator said there was an overall political objective, to ‘ensure Danes access to the network society’ by offering end-users freedom of choice in accessing the network. Currently all alternative operators rely on Tele Danmark to provide mainline access to the end-user. Tender documents for the bidding process were issued in May 2000, with the closing date for bids set for 1 September. By the deadline the regulator had received a total of 17 applications from twelve different companies for the seven FWA licences.  Those entering bids for the 3.5GHz licences were Mediascape, a German company listed on the Frankfurt stock exchange which holds FWA licences across the Federal Republic, Radiotel Systems/Zipcom, a consortium between an Israeli wireless network solutions company and a Scottish wireless telco, Danish mobile operator Sonofon, fixed line operator Tele2 (through subsidiary In2Loop), Icelandic consortium Kogun/Icecom and pan-European operator Formus Communications. Those which bid for the 26GHz licences were Mediascape, Radiotel, Sonofon, Tele2, UK-based MLL Telecom, Formus, Priority Wireless, Global Connect Access, Telia Net, Tele Danmark and BroadNet. On 18 December 2000 the winners of licences in the 3.5GHz band were revealed as Formus, Tele2 and Sonofon, while Formus, Global Connect Access, Mediascape and Sonofon secured those in the 26GHz band. The licences were awarded via a beauty contest, with both Tele Danmark and Telia excluded on the grounds of optimising competition levels. The winners of the 3.5GHz licences are required to provide 30% coverage within three years and 60% after five. Winners of the licences in the higher frequency band must cover 20% and 40% within the same time frame.

Telestyrelsen has identified three key indicators of an effectively competitive market, each of which  Denmark complies with. They are: access to raw copper - Denmark boasts a 100% unbundled local loop; charges for switched interconnection - these fell during 2000 after protests from operators; and charges for leased lines.

Main players

Tele Danmark
By the end of June 2000 Tele Danmark had 3.68 million lines in service (including dial-up internet access), a small increase over twelve months. At the same date there were 307,000 basic rate ISDN subscribers, up 66,000.  By the end of September, however, though the operator’s total number of fixed line subscriptions had risen to 3.75 million, the figure exclusive of internet access fell to 3.187 million, down by 0.5% compared to twelve months earlier. This gave Denmark a teledensity of around 69 lines per 100 inhabitants, higher than many European countries and in line with its Scandinavian neighbours. The company completed the digitalisation of its 34,000km network in December 1998. In order to combat the increasing threat of competition, Tele Danmark has been keen to introduce new services in its domestic market. One of these, the integrated fixed-mobile offering Duet, was launched in September 1997.

Tele Danmark is promoting ADSL as a means of achieving fast internet access and has set itself ambitious targets to roll out the broadband technology nationwide. According to official figures ADSL was available to 62% of Danish telephone subscribers at the end of 2000.  By December 2001 around 72% of the copper network will have been upgraded if the company’s timetable runs smoothly, while by the end of 2003 between 75% and 80% will be DSL-enabled. Tele Danmark has embarked on an aggressive advertising campaign, highlighting the ‘always-on’ aspect of ADSL.

Tele Danmark contracted German telecoms equipment manufacturer Siemens to supply most of its ADSL technology. A four-year deal includes the supply of the XpressLink platform, which supports both narrowband and broadband services for residential and business customers, and customer equipment such as universal serial bus (USB) modems and ethernet and ATM interfaces. Also included are broadband remote access servers, which Tele Danmark will use to provide its customers with access to internet and ATM service providers. By late 1999 Siemens had supplied 3,000 ADSL connections, with tens of thousands more to follow by the end of 2000.
 

Facilities-based licensees

Growth of main lines

In an effort to streamline its operations Tele Danmark underwent a major internal restructuring, effective from October 2000. The company is now split into five business divisions: communications solutions, mobile, internet, cable TV and directories. It claims the move away from its traditional geographic organisation will facilitate faster growth and enhanced focus. As part of its strategy it sold off its submarine cable installation and maintenance arm Tele Danmark Marine to Alcatel in August 2000 for EUR121 million, on the basis that it did not form a core part of its business portfolio.

Tele Danmark’s results for the third quarter of 2000 were below forecasts, and its share price tumbled by 5% despite the company’s claims that the figures were strong and that the final accounts for the whole of 2000 would not disappoint. In December a drop of 4.5% came as a result of its failure to win a fixed wireless licence.

Tele Danmark is 41.6% owned by SBC (formerly Ameritech), with the remainder held by private and institutional investors.

TeliaDanmark
Telia Danmark operates a 1,000km fibre-optic infrastructure which runs north to south between Aalburg and Hamburg, west to east from Esbjerg to Copenhagen, with a city ring around the capital. With 446,421 subscribers by mid-2000 it is Denmark’s largest alternative operator, serving 24% of all carrier selection customers. Telia also provides an internet access service; in December 2000 it announced the launch of its ‘Speedy Tomato’ internet portal in Denmark. The company operates a cable TV network through its subsidiary Telia Stofa. From 175,000 connections in mid-1999, the figure leapt to 610,000 in July 2000 after the takeover of rival cable TV operator Jydsk Central Antenne. Telia plans to use the cable network as a platform for offering fixed telephony, as an alternative to using Tele Danmark’s end-user access.

In November 2000 Telia announced the completion of its ‘Scandinavian Ring’, part of its global ‘Viking Network’, linking Copenhagen with Oslo, Stockholm, Gothenburg and Malmö. Telia claims it is the first carrier to connect the Scandinavian capital cities by broadband. At that date it had nine international operator customers leasing capacity on the backbone, with several more waiting to join. The D-WDM technology for the fibre-optic network was supplied by Lucent.

Telia has been involved in a long-running argument with Tele Danmark over interconnection costs and in early 1999 claimed that it was losing up to DKK12 million a month as a result of Tele Danmark’s price policy. In response to the launch of an investigation by the regulator, in August 1999 Tele Danmark announced cuts of up to 15% in its interconnect charges, saying that its costs were now among the cheapest in Europe. This claim was later validated by the regulator.

Telia Danmark is a wholly owned subsidiary of Swedish PTO Telia.

Tele2
Another Swedish-owned alternative carrier is NetCom subsidiary Tele2, which had 829,000 customers in Denmark at the end of September 2000. Of these, 488,000 were voice customers with the remainder subscribing for internet access. Although Tele2 has invested heavily in the construction of its own infrastructure in Denmark, it leases capacity on the 2,000km nationwide network operated by utility company PowerCom and has signed interconnect agreements with Tele Danmark.

Tele2 is wholly owned by NetCom AB.

Sonofon
The country’s second largest mobile operator, Sonofon, originally a joint venture between GN Great Nordic and BellSouth, launched long-distance and international services in early 1999 and had signed almost 113,000 customers by the end of June 2000. This was enough to give it a 6% share of the carrier pre-selection market. In May 1999 Sonofon began offering an integrated fixed-mobile service similar to Tele Danmark’s Duet under the name DuoFon; a quarterly subscription costs DKK175.

In June 2000 GN Great Nordic agreed to sell its 53.5% stake in Sonofon to Telenor for DKK14.7 billion; BellSouth owns the remaining 46.5%.
 
 
 
 

Last updated: January 2001

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