GDP per capita at $36,244 was the twelfth highest in the world in 2004 according to the International Monetary Fund. This compares with Luxembourg at $69,737 which is the world's highest GDP per capita, and the UK which ranked fourteenth at $35,548.

 

The telecommunications sector in Austria has been liberalised since 1998. It is regulated by Rundfunk und Telekom Regulierungs-GmbH (RTR-GmbH), which was established by the Austrian Telecommunications Act on 1 April 2001. The RTR-GmbH is a 'convergence operator' and acts as the operative arm of the Austrian communications authority, Kommunikationsbehörde Austria (KommAustria) and the Telekom-Control-Commission (TKK).

 

The Austrian Government has been criticised repeatedly for its lack of a national broadband strategy, with a particular concern being the low availability of broadband in rural areas. According to the government, 7,000 of the 17,245 rural villages in Austria were without broadband at the beginning of 2004. As a result, the Federal Ministry for Transport, Innovation and Technology (BMVIT) was handed the task of increasing the broadband footprint, and to stimulate demand.

 

In May 2003, BMVIT published a guideline - named 'Broadband Initiative 2003' - which outlined the plan to provide almost the entire country with broadband infrastructure by the end of 2007. Its official target was to increase broadband availability from 80% of households in 2004, to 98% of households by the end of 2007. The BMVIT aims to achieve this by providing direct aid for the provision of broadband infrastructure, mainly in rural areas. Originally, the government decided that it would provide EUR10 million for this purpose but later doubled this figure, adding a further EUR10 million. The funding is to be matched by contributions of equivalent amounts from the federal provinces of Austria.

 

In order to stimulate take up of broadband services, a tax subsidy was offered from May 2003 to the end of 2004 for first time connections to broadband services. End users were able to claim a tax allowance of up to EUR50 for activation and installation, plus up to a further EUR40 towards the first monthly payment.

 

The incumbent telecommunications operator, Telekom Austria, is only partially privatised; the Republic of Austria owns a 30.2% share of the company through the holding company ÖIAG. Another major shareholder, Telecom Italia, sold its 14.8% share of Telekom Austria in January 2004.

 

According to theInternational Telecommunications Union (ITU), Austria had the eleventh highest level of international bandwidth per inhabitant in the world in 2004, with over 6Mbps per person. Denmark had the most at around 35Mbps per person and the UK had the fourth highest bandwidth at around 13Mbps per person.

 

In terms of ICT usage, the latest available figures from the OECD show that in 2004, 59% of households in Austria had a PC, while 45% of all households had access to the internet. These figures are in line with the OECD average. (fig.1)

 

 

 

 

 

At the end of June 2005, broadband lines in Austria were calculated to be around 1.2 million. This represents a growth of around 200,000 connections, or 23.8%, over the first half of 2005. (fig.2)

 

 

 

 

 

The market growth compares favourably with the 15.2% growth reported across the OECD and the 16% growth worldwide for the same period; indicating that Austria is still some way from market saturation. (fig.6)

 

 

 

Published figures place Austria in fifteenth position in the OECD in terms of broadband penetration per head of population; with a take-up of 12.5% in June 2005. This is marginally ahead of figures for the OECD as a whole, which had an average penetration of 11.8% of the population. The Netherlands, with a broadband penetration of 22.5% of the population has the highest levels in Europe, while Korea had the world's highest penetration at 25.5% of the population. (fig.4)

 

 

 

Broadband penetration per household at 31% in June 2005, places Austria outside the top ten countries in the world. This is far lower than the household penetration in Korea, the highest in the world, which stood at around 81% of households at that time. The highest household penetration in Europe is in The Netherlands at 50%. This indicates that Austria is far behind the leading nations in terms of broadband penetration. (fig.5)

 

 

 

 

 

In terms of the business market, there are around 100,000 businesses in Austria; with small and medium sized enterprises (SMEs) accounting for at least 98% of them. Latest figures in 2004 show that 94% of all enterprises with 10 or more full time employees had internet access. The figures also show that 55% of all enterprises with 10 or more full time used a broadband connection. These figures are in line with the OECD average. (fig.7)

 

 

 

 

As regards broadband infrastructure coverage, Telekom Austria has claimed that its DSL services were available to 87% of all households in Austria in September 2005. It also claims that coverage will have reached 90% by the end of 2005. Meanwhile, cable infrastructure passes around 50% of all households in Austria; it is unclear, however, as to how many of these lines have been upgraded for cable modem. The cable networks are mainly situated in major towns and cities. (fig.8)

 

 

The dominant technology in June 2005 was DSL, accounting for around 57% of total broadband connections; cable accounted for 42% of total connections. DSL is becoming increasingly dominant, showing growth of 27% over the first half of 2005, in comparison to the 15% growth of cable connections. (fig.9)

 

 

 

 

With regards to other technologies, FTTx is available in the capital, Vienna, through the network of Austria's largest utility, Weinstrom. During February 2004, it was reported that the city of Vienna was conducting a study on its 'broadband future'. This included the possibility of deploying fibre infrastructure in order to deliver broadband and TV services to all households in the city. The results of this study are as yet unknown.

 

Furthermore, during September 2005, Austria's first wireless broadband network was launched using technology based upon the WiMAX standard. The company responsible for this network, WiMAX Telecom, are expected to roll-out to other areas of the country; in particular to those rural areas that still suffer from a lack of broadband coverage. FWA is seen by the government as a technology that can be used to extend the broadband coverage in rural areas of the country where DSL has not been deployed.

 

A broadband service using powerline technology was launched in Austria during 2004 by Linz AG, claiming 3,400 users in December 2004.

 

With a fairly large cable sector (there are over 80 cable operators, most of them operating small regional networks) and further competition from LLU operators, the incumbent, Telekom Austria, maintains a relatively low share of the total wholesale market with 49% of all connections in June 2005. This is one of the lowest incumbent market shares in Western Europe. Telekom Austria's share of the retail market is relatively low at 39%. (fig.11)

 

 

The second largest broadband player, and by far the largest cable operator is UPC Telekabel. In June 2005 it had a 25% share of the total wholesale market. UPC is looking to offer higher speed services, trialling services with speeds up to 30Mbps over cable between April and July 2005 and also by building out FTTx in selective areas. These moves towards higher speeds will help UPC to offer bundled services. As well as triple-play bundles, UPC also offers fixed-mobile telephony services and a broadband with mobile telephony bundle. UPC has differentiated its products by mainly offering flat rate services, whereas its main competitors have concentrated on volume based services.

 

Austria introduced local loop unbundling during June 2000. Despite the early introduction, LLU has a smaller share of the DSL market than in many other Western European countries. Analysys Research calculated that 97,119 local loops were unbundled by the end of June 2005. This represents 14% of the DSLmarket. (fig.10)

 

 

 

 

The largest of the LLU operators is Tele2UTA. Formed by Tele2's acquisition of UTA Telekom in October 2004, it maintained a 3.5% share of the total broadband market in June 2005. Tele2UTA has stated that it will invest EUR9 million to extend its LLU coverage to around 50% of the population.

 

With broadband available throughout the major cities, operators have begun to shift their focus within these areas, to the provision of new and varied services.

 

For example, inode has a fixed-mobile offering in conjunction with mobile operator Hutchinson/3. The service provider also offers a range of SDSL services, some of which offer very high connection speeds, including an 18.4Mbps service using multiple copper pairs. During 2006, inode is expected to launch an IPTV service; following the roll-out of ADSL2+ network.

 

Other operators that are increasing their presence in the LLU sector, particularly in the business market, are Colt, eTel and EUnet.

 

As regards content, Telekom Austria launched a VoD service in mid-2003, and announced in June 2005 that it would launch an IPTV service later in the year. Telekom Austria has also announced that a broadband voice service will be launched as part of a triple-play offering and that it intends to offer broadband voice services to customers of cable operators.

 

In terms of service type, Telekom Austria introduced time and volume based products in September 2002, leading a shift away from unmetered connections. In 2005, most subscriptions are volume based, although there are unmetered subscriptions available in the market.

 

With regards to pricing; basic 'first generation' broadband packages cost around EUR30-40 per month in Austria; which is slightly more expensive than other Western European markets. Similar services in the UK and France, where GDP per capita and penetration levels are similar to Austria, cost around EUR25-30 per month.

 

The two largest DSL players do not currently offer 'second generation' broadband services. As a result availability of these services is low and there is little competition in the area. A 4Mbps service costs EUR50-60 per month while a 10-16Mbps connection costs around EUR70-90. These prices are considerably more expensive than 'second generation' broadband services in France and the UK, which typically cost around EUR30-40 per month, but can cost as little as EUR14.90 in some areas of France.

 

In conclusion, the mountainous geography of Austria has created a barrier in terms of widespread roll-out of broadband infrastructure. Whilst the government has been slow to react, its broadband strategy is helping to increase the broadband footprint by providing funding for infrastructure in rural areas.

 

In 2005, Austria's broadband market is becoming increasingly competitive; with a range of suppliers offering a growing variety of services over a range of technologies.

Nevertheless, average penetration figures and strong growth show that the broadband market is a long way from saturation and a long way off from achieving tele-density levels (Analysys Research calculated that there were 56 lines per 100 people in Austria in 2004).

 

As a result, it is expected that the broadband market will continue to grow; driven by services of increasing bandwidth and the delivery of converged fixed-mobile subscriptions and triple-play service offerings.

 

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Broadband

Austria

WiMAX

LLU

Country report

Market

Europe

 

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