Digital light at the end of the optical fiber – Marko Marković

At this moment, sports events are one of the few TV contents that are watched in real-time because it's challenging to remain indifferent to the convenience offered by on-demand content access. In Serbia, around 900,000 and 1,000,000 users of SVoD services (streaming services) are constantly growing at about 10% annually. Out of this number, half use the most popular service, Netflix, 15% use Amazon Prime, 10% use HBO, and the rest of the market is divided among lesser-known benefits. The total revenue of SVoD services annually is around $24 million, with a projected growth to approximately $38 million by 2025. When you add services like downloading games, online gaming, music streaming, mobile games, and e-commerce, it's clear that the telecommunications market is changing, and traditional players face competition they must pay attention to soon.

But what's the current state? The telecommunications market is consolidated with well-known players: Telekom Srbija, SBB, Orion, Sattrakt, and PTT Cable Networks in the field of fixed telecommunications services (fixed telephony, internet, media content), and Telekom Srbija, Telenor, and VIP in the mobile phone sector. According to the latest available data from RATEL in 2019, the total telecommunications market in Serbia was about 1.75 billion euros. Assumptions suggest that it reached 1.8 billion euros in 2020 and will be around 1.85 billion this year. While Telekom Srbija is the only actual incumbent operator in the market, SBB, Telenor, and VIP offer only a portion of the services available. According to the latest RATEL data, SBB has a 46.1% market share. At the same time, Telekom, along with its related companies, holds 42.4% (28.7% plus the 13.7% market share of the Moja Supernova brand. In 2020, Kopernikus merged with Radijus Vektor, Masko, BPP ing, Telemark, Avkom, and Sat TV Meteor). The remaining ten per cent of the market is divided among Orion, Sat Trakt, PTT (each with about 2% market share), and several tiny local operators.

In support of the argument that the telecommunications market in Serbia has significant potential, we've recently witnessed a sort of "war" between Telekom Srbija and SBB, or the United Group, which culminated after a battle for the acquisition of cable operators and the signing of a contract between Telekom and Telenor for the use of optical infrastructure. This contract sparked a significant debate about competition protection and the role of Telekom Srbija as a state-owned company in the Serbian media and telecommunications market. The 2014 law allowed cable distributors to be broadcasters, but at the same time, the state should not own media, and thus, Telekom is majority state-owned. It's also well-known that channels from United Media (a part of the United Group that owns SBB) are not available to other operators, either because United Media ignores their requests for distribution of its media content or due to the high fees United Media demands for channel distribution. For example, PTT lost many customers in 2016-2017 due to the loss of United Group channels. The same happened to many small operators who needed help to protect their customer base. At the same time, SBB faces significant challenges in expanding its infrastructure, making it practically impossible to enter new "territories."

By signing an agreement to lease optical infrastructure from Telekom, Telenor officially announced its entry into fixed-line telephony services. If the Competition Protection Commission approves it, Telenor will offer broadband internet, fixed-line telephony, and media content services on Telekom's optical infrastructure and pay Telekom a fee. A similar market entry method was used by VIP when it entered the Serbian market in 2007, using national roaming services on Telekom's network to establish its benefits and later build its infrastructure. Telenor is taking a similar approach regarding fixed-line telephony services. However, United Group is unlikely to provide Telenor access to "its channels" – N1, Nova S, and Sport Klub, just as it didn't offer them to Telekom and just as Telekom didn't provide its channels to SBB. This situation has even reached the point where the EON platform, which works as an OTT (similar to Netflix), cannot operate on Telekom's infrastructure.

It remains to be seen what strategy Telenor will employ to acquire customers. Clearly, they won't start from scratch and will utilize their existing customer base for cross-selling. We can expect "4-play" packages (TV, internet, fixed, mobile) as a bundled service. Only Telekom can currently provide such a package in the market through its Box offering.

What can be expected is a major "war" among operators in the market. Aggressive sales campaigns, competition in the field, and fierce battles for customers can be expected. We've seen offers of six months for a dinar, 12 months for a dinar, and free TV equipment, which will become even more extreme. Who will "win," and whether it will be a Pyrrhic victory, remains to be seen. At the same time, Telekom and SBB are under pressure from the loans they've taken, which have reached several times their EBITDA, and this "war" is exhausting for both of them. Moreover, Telenor will have to invest significantly to break into the market. Such a market situation is unsustainable in the long run.

It's as clear as day that these problems could be solved with a few steps, especially regarding market regulation. Telecommunications operators should focus on product and service quality and customer service as their primary tools for further growth. Imagine the Serbian market where SBB, using Telekom's, Orion's, and other operators' infrastructure, can reach every household. On the other hand, imagine that Telekom Srbija can offer N1, Nova S, or Sport Klub channels on its infrastructure and through its service. Would it be easier to choose an operator, then? Imagine Telenor offering mobile phone services, broadband internet, fixed-line telephony, and TV content (Telekom's and SBB's channels) on Telekom's infrastructure. This sounds better, and only then would there be real competition for customers, focused on the quality of services customers receive.

Now, let's go back to the story's beginning and the new services emerging in the market. Traditional telecom operators know that their industry is no longer protected and is under attack from new players in the market. Uber revolutionized passenger transport, Booking.com and Airbnb transformed the tourism industry, and Amazon changed how we shop. Nokia lost the mobile phone market battle because it didn't realize in time that smartphones were the future. BlackBerry lost because it didn't understand that security and business use of mobile phones weren't enough, and the "marketplace" approach for phone content, launched by Apple, was the actual future. The same will happen in the telecommunications market; it's clearer now. It's just a matter of how much time it will take. Traditional operators must adapt, forget about quasi-monopolies and traditional approaches, and finally realize that the future is knocking at their door. Despite all the challenges this market brings, digital services, AI, and IoT services are already here as part of that future.

In Mumbai, taxi drivers routinely use virtual reality apps to get real-time smartphone traffic data. In Punjab, farmers know when to expect rain and receive alerts for all natural disasters through multiple apps offered by operators. Fishermen in India have access to wind direction data and information about where to find fish on their mobile phones. In Kolkata, people pay at markets using their mobile phones. Millions are saved through insurance thanks to smart home systems. Unfortunately, the focus of the telecommunications market is in the wrong place. Regulators need to understand that only through complete and comprehensive market liberalization can these problems be solved, allowing the telecommunications market in Serbia to follow global trends. This eliminates monopoly issues, capital interests, and state influence and creates an environment that stimulates innovation and business models for the benefit of customers.