-New licences and an open sector will see Greece catch up with Europe-

Digital era comes of age

Development of telecommunications will accelerate this year in Greece's newly deregulated market. Third-generation (3G) mobile phone licences are to be auctioned later in the year, and this is already stimulating interest among the major players. Scheduled for completion by June, the auction is not merely about raising funds for the state, says Emmanuel Giakoumakis, president of the National Telecommunications and Posts Commission (EETT). "Money is secondary. When the market develops, the state wins as this helps to improve other sectors of the economy," he says.

The EETT favours awarding 3G licences through a bidding process rather than a 'beauty contest'. "An auction is a cleaner procedure because the participants themselves decide the winners," says Mr Giakoumakis. "The auction of UMTS (Universal Mobile Telecommunications System) licences, the standard for 3G networks, is a significant move for us. We want to set the framework for a competitive market for the next 20 years." Plans for the sale of GSM (Global System for Mobile Communications) bandwidth, the standard for mobile telephony, will enable existing players to upgrade.

To entice new investment, GSM and UMTS could be auctioned together, adds Mr Giakoumakis. "There is room for a fourth and possibly a fifth player. Combined second-generation (2G) and 3G licence services give investors an opportunity to draft their strategy on a 20-year horizon, which would not be case if we awarded a separate 2G licence." The Greek market is currently served by market leader Panafon, (55 per cent-owned by Britain's Vodaphone), Cosmote (the only 1800MHz GSM operator) and STET Hellas. Mr Giakoumakis says he sees OTE Telecom, which recently lost its fixed-line monopoly, as one of three to four networks and service providers in a mature Greek telecoms market in the medium to long term. Competition for OTE is coming from the five new licence winners of last year's EETT auction.

Mr Giakoumakis believes companies that team up with the major European operators will gain a lead. "The unification of the European market will begin with telecommunications because we will have operators that provide services from one end of the continent to the other. Businesses have to think European." The Greeks are enthusiastically adapt-ing to high-speed telecommunications. The number of mobile subscribers exceeds six million and the operators' combined turnover was $5.5 billion last year. Most analysts of the Greek telecoms and IT markets predict further consolidation.

Greek cellular operator Cosmote saw its client base soar by 96.6 per cent to over two million customers in 2000, compared with the previous year. The firm, a subsidiary of OTE, added 298,935 new customers in the last three months of last year alone. OTE plans to invest 792 million euros this year in infrastructure projects. These include full digitalisation, voice and data networks, and fast internet access. In January, the firm unveiled new local and international call rates in a move calculated to see off the competition.

The company is seeking a European operator to open up activities in the deregulated market. OTE, a major sponsor of the 2004 Games was recently awarded a licence for a second GSM mobile phone network in Bulgaria. The company beat off several rivals with its $135 million bid, including a joint venture involving Britain's Vodaphone. Internet service provider ACN was set up by the Altec Group and Lambrakis. "We have a business-to-business character, which comes from IT rather than telecoms," says managing director Christos Pappas.

"It is the largest private network and covers all of Greece." Mr Pappas says ACN strategy for this year is to provide new services to clients through advanced technology. "Corporate business is growing very fast, to the point where it is stretching our resources. This is a major challenge for the public and private sectors. The Olympics and the vast infra-structure being built in Greece are creating the need for more telecommunications."