978-1-4577-0580-9/12/$26.

00 c2012 IEEE
Wireless Communications in South-Eastern Europe:
Opportunities and Challenges
Milica Pejanovic-Djurisic
University of Montenegro
Podgorica, Montenegro
milica@ac.me

Veronica Bocarova
Cullen International SA
Brussels, Belgium
Veronica.Bocarova@cullen-international.com

Abstract This paper deals with analyses of electronic, and
especially wireless, communications in the region of South-
Eastern Europe. Taking into account the so called enlargement
countries, being at various stages of their EU integration, it is
shown that the electronic communications market represents a
key factor enabling their overall development and reforms. Since
wireless communications are making majority of the revenues
and investments in the whole sector, detailed description of this
segment is given. Based on that, opportunities for future
deployments of next generation wireless communications systems
are identified. Additionally, challenges, related mainly with the
EU integration process, are recognized.
Keywords- Wireless communications; South-Eastern Europe;
digital dividend; spectrum management
I. INTRODUCTION
The electronic communications market in South-Eastern
Europe (SEE), or more precisely in eight, so called
enlargement, countries: Albania (AL), Bosnia & Herzegovina
(BA), Croatia (HR), the Former Yugoslav Republic of
Macedonia (FYROM) (MK), Montenegro (ME), Serbia (RS),
Kosovo (under UNSCR 1244) (XK) and Turkey (TR), can be
considered as the most dynamic segment of the overall
economy. And this is still the fact, despite the economic crises
that hit the EU and enlargement countries as well.
Having in mind the fact that those SEE countries have been
given the perspective of becoming EU members, and that they
are at various stages on their road towards the EU, compliance
with the EU acquis is a key requirement that must be fulfilled
prior to becoming member states. Therefore, all segments of
economy and society as a whole are subject to intensive
reforms and changes. This is as well the case with the
electronic communications sector which is usually considered
as an important segment of the knowledge economy.
Therefore, it is very important, for all the actors
(governments, regulators, operators, users), to adopt adequate
approach when development of electronic communications
market is considered. That implies not only adequate policies
and regulatory activities, but also the right decisions when
underlying technology solutions are concerned.
In this paper we give an overview of the electronic
communications in the chosen eight enlargement SEE
countries. A special focus is given to the wireless
communications, representing almost a half of the overall
electronic communications market, with the most dynamic
development. On that basis, some of the opportunities for
overcoming the constraints introduced by the current economic
environment, so that the further development of the sector will
be enabled, are identified. Additionally, challenges that could
be expected in the process of EU integration, when the
adoption of Digital Agenda is concerned, are also described.
II. ELECTRONIC COMMUNICATIONS IN SEE
After an uninterrupted growth that had been ongoing since
2005, the SEE electronic communications sector fell by 6.75%
down to 15.3 billion in 2009 from 16.4 billion in 2008.
However it returned back to growth already in 2010 growing to
a total value of 15.7bn, which represents a year-on-year
increase of 2.5%, [1]. This growth in revenue, however, is not
always carried through to an increase in investment in the
sector. For example, the overall investment in electronic
communications in the eight SEE countries was 2.9bn in
2010, with Turkey accounting for over 70% of the total. In
comparison with 2009, the overall investment fell by 17%,
based on the available data, [2]. In Croatia there were
significant declines in investment in internet services (-34.4%)
and in wireless communications (-30.5%). These were set
against an 80% rise in investment in cable TV, albeit starting
from a far lower base. An apparent halving of investment in
wireless communications in Turkey from 2009 to 2010 is
explained by a huge spike in investment in 2009 in 3G
networks and services following the issuing of 3G licences in
the country. On the other side, some countries like Serbia
recorded an increase in investment in all areas, notably in
internet services (82%) and in cable TV (59.4%), as well as in
wireless communications (17.3m in absolute terms, equivalent
to a 13.1% rise).
Fig. 1 shows the structure of electronic communications
revenues by service category, for each of the countries
considered, [1].
It is clear that wireless communications services represent
almost 60% of the total SEE electronic communications
market, and no less than 50% for each particular country. Still,
internet and cable television services can be considered as the
fastest growing service categories in the last couple of years.
Revenue from fixed voice telephony meanwhile rises a little in
some countries and falls a little in others but, overall, revenue
in this sector is more or less flat year-on-year basis. More
surprisingly, despite continued fixed-to-mobile substitution,
revenues from the wireless communications sector in the
enlargement countries are also more or less flat year-on-year,

with the overall figure lifted by a slight rise only in some of
them (Croatia and Serbia).
III. WIRELESS COMMUNICATIONS IN SEE
When wireless communications are concerned, mobile
telephony as well as wireless broadband data services (3G,
WiMAX, WiFi) represent very dynamic market segments
(Fig.2). Thus, the total number of mobile telephony
subscriptions across the eight SEE enlargement countries is at
the level between 89 and 90 millions.
Competition has been effectively implemented in all mobile
telephony markets with the exception of Kosovo there are at
least three active network operators licensed in each country. In
Albania there are four licensed mobile network operators,
while in Kosovo in addition to two mobile network operators
there are two service providers (MVNOs) using networks of
both respective mobile operators. The market shares of the
third-placed operators have risen slowly but surely.
Nevertheless, most of the national mobile telephony markets
remain highly concentrated with two established players
typically controlling over 80% of the market, [3].
The Herfindahl-Hirschmann Index (HHI), the sum of the
squares of the market shares, is commonly used in assessing
concentration in competition law. The HHI value for the
mobile telephony markets has fallen in most of the enlargement
countries in the last two years a sign of improved
competitiveness (Fig. 3). And generally, when liberalization of
the electronic communications market is concerned, the sector
of mobile telephony is far ahead of all the others.


Figure 1. Electronic communications in SEE: percentage of revenue by
service category by country (December 2010)

Figure 2. Mobile subscriptions per 100 population, by country, 2008 2010

Figure 3. Mobile market concentration levels, HHI (December 2010)

Figure 4. Dedicated data cards/wireless modems per 100 population,
December 2010
The broadband wireless data services can be considered as
the highest growing segment of the electronic communications
sector in SEE, [4]. Apart from constant increase of WiFi access
points, WiMAX has appeared at some stage as a broadband
access technology of choice, but as elsewhere in EU, it did not
live up to the expectations. At the same time, the penetration
rate of dedicated 3G mobile data cards/modems has doubled in
less than a year in most countries (Fig 4). For example, in
Croatia the penetration of such dedicated 3G data devices is
now above the EU average, while in Montenegro the
penetration increased from 3.4% to 5.5% over the course of
2010, [1].
With the significant level of liberalization and deregulation,
achieved in wireless communications sector at the first place,
there is still a number of issues that should be appropriately
handled in order to maintain demand for wireless services. This
is especially important in the actual economic environment in
SEE, where the administration and regulatory bodies should
choose the optimal approach in motivating network operators
and service providers to further develop their infrastructures
and services, implementing new generation wireless
communications technologies. Moreover as it can be observed
that generally in SEE region mobile operators are not too keen
on 4G networks deployments. They rather decide to exploit to
full extent the existing technologies such as HSPA+. They are
also not too enthusiastic about the possibilities to obtain
additional spectrum in the 800MHz considering their existing
spectrum holdings to be sufficient for the time being. Operators
in Serbia, for example, do not even view the refarming of the
900 MHz with subsequent deployment of UMTS in this band
as a priority.

Thus, for maintaining the achieved level of competitiveness
and for creating the favorable conditions for the deployment of
new technologies, it is very important to ensure the stable and
predictable institutional environment in SEE enlargement
countries, including the independent sector regulation. Other
factors such as authorisation regime, access to rights of way
and spectrum liberalization are also important for the overall
wireless communications sector development. This is
especially true when wireless broadband technologies are
concerned, where adoption of appropriate radio spectrum
management policy represents real opportunity in creating
conditions for their deployment.
IV. RADIO SPECTRUM MANAGEMENT
It is well known that wireless access technologies can
constitute efficient and cost-effective solution for providing
broadband services in uncovered or underserved areas, in
particular in the countries where the penetration of traditional
fixed networks and other wired infrastructures is very low.
However, in order to reap the full benefits of wireless
broadband, most of the SEE countries need to ensure
availability of spectrum for wireless broadband and to carry out
spectrum assignments subject to transparent and non-
discriminatory procedures. The main opportunity is in ensuring
sufficient spectrum to be available for wireless broadband
services, in order to meet rapidly increasingly mobile data
traffic volumes and bridge digital divide. Assignment of
spectrum for wireless broadband services in the 2.0 GHz, 2.6
GHz and 3.5 GHz bands, refarming of GSM spectrum in the
900 and 1800 MHz bands and opening the digital dividend
spectrum in the 800 MHz bands are key elements in this
process.
When the spectrum assignments for 2G/3G mobile
operators are concerned (Fig. 5), six of the SEE enlargement
countries have three 2G mobile operators: Croatia,
Montenegro, FYROM, Turkey, Bosnia & Herzegovina and
Serbia. In Albania, there are four and in Kosovo two 2G
mobile operators. All countries, except Kosovo, have issued
3G spectrum in the 2100 MHz band.
In Montenegro, a tender procedure was launched in
November 2011 to award additional spectrum in the 900 MHz,
1800 MHz and 2100 MHz bands either to a new entrant
mobile operator or the three existing ones. In practice, no new
entrants were interested in the available spectrum and the
frequencies are most likely to be distributed among two of the
three existing mobile operators.

Figure 5. Spectrum assignments in 900MHz, 1800MHz and 2100MHz bands
The distribution of spectrum assignments demonstrates
some asymmetries, typically between established operators and
new entrants. In practice, these asymmetries mean that mobile
operators with spectrum assignments in the higher 1800 MHz
band are often facing higher network deployment costs.
When refarming of 2G spectrum for 3G/4G services, the
SEE enlargement countries follow the procedures given in the
EU Council Directive 87/372/EEC (GSM Directive) which
was amended in October 2009, removing the restriction that
reserved the 900 MHz spectrum exclusively for GSM services.
The European Commission has also adopted complementary
decisions setting out the technical parameters that enable the
co-existence of 3G (UMTS) and 4G (LTE and WiMAX)
mobile technologies along with the traditional GSM services in
the 900 MHz and the 1800 MHz bands. The objective of these
Commissions initiatives has been to stimulate deployment of
wireless broadband services in these bands.
The Commission has also called for redistribution of the
existing spectrum assignments in the GSM bands between
mobile operators, in order to avoid competition distortions and
to modify channeling arrangements from the current 2x200kHz
spectrum blocks used by GSM to 2x5 MHz blocks required for
deployment of UMTS and LTE.
Four of the eight SEE enlargement countries have so far
allowed UMTS services in the 900 MHz and 1800 MHz bands:
Croatia and FYROM since 2009, and Montenegro and
Bosnia & Herzegovina since 2010. In Croatia, the regulator
renewed in 2009 spectrum licences of the three mobile
operators on technology neutral basis. In Turkey, the regulator
has proposed to the Ministry of Transport that frequencies
allocated to GSM operators (both at 900 MHz and 1800 MHz)
be opened for 3G services.
Spectrum licences for broadband wireless access (BWA) in
the 3.5 GHz band have been issued in Croatia, Montenegro and
FYROM. Most of the regional licences issued in Croatia and
FYROM, however, either expired or were returned to the
regulator. In Croatia, out of 56 initially issued regional
licences, currently there are 11 valid licenses covering 11 of 20
counties and the district of Zagreb. In FYROM, out of initially
issued two national and 18 regional licences, there are six valid
regional licences covering the whole national territory issued to
one licensee. All other licences were revoked either because of
the failure to meet coverage obligations or on request of the
licensees themselves.
In other SEE enlargement countries no licences for
provision of broadband wireless access services have been
issued so far. In majority of them, however, alternative
operators are offering broadband services using Wi-Fi
spectrum in the license-free 2.4 GHz and 5 GHz bands.
Another possibility for the provision of wireless
communications services is offered in the 800 MHz (790-862
MHz) band, i.e. in the upper part of the spectrum that will be
freed up with the switchover from analogue to digital terrestrial
television broadcasting. The European Commission calls all
EU member states to have completed their analogue terrestrial
broadcasting switch-off by January 1, 2012, although this is not
a binding deadline.


Figure 6. Analogue switch-off schedule in the SEE enlargement countries
Only Croatia and Bosnia & Herzegovina would have
completed their analogue terrestrial transmissions by January 1,
2012. Croatia already completed the switch-off process on
October 5, 2010. Montenegro and Serbia have plans to
complete switchover in 2012, FYROM in 2013 (Fig. 6).
Turkey plans to terminate analogue transmissions in 2014 and
Kosovo in 2015. No formal decision on digital switchover has
been taken in Albania.
However, at this stage, none of the countries has decided on
further steps to allocate the digital dividend for wireless
broadband. Even in Croatia, where the 800 MHz band is free,
the allocation of digital dividend for wireless broadband
applications in practice is not possible because of the
interception caused by the neighboring countries that currently
continue analogue broadcasting transmission in this band.
V. CHALLENGES OF FURTHER DEVELOPMENT
Since the considered eight SEE countries are so called
enlargement countries, in different phases of EU integration,
the future development of their wireless communications
markets should be analyzed in the wider context of the Digital
Agenda for Europe [5], which constitutes the strategy for the
development of the entire ICT sector until 2020. The overall
aim of the Digital Agenda is to deliver sustainable economic
and social benefits from a digital single market based on fast
and ultra fast internet and interoperable applications.17 As the
monitored countries are seen as potential members of the
European Union, either in the short or medium term, the
ambitious goals of the Digital Agenda present significant
challenges that need to be tackled in order to bring the
enlargement countries up to speed with the EU member states.
First and foremost, the enlargement countries need to align
their policies for the ICT sector with the priorities of the Digital
Agenda. The main challenge would be to create a policy
environment which encourages high-risk investments in fast
and ultra-fast networks while the countries are facing the
serious economic crisis.
On the other side, the Digital Agenda defines broadband
targets to be reached by 2013 and 2020, [5, 6] :
By 2013, 100% of EU citizens should have access to
basic broadband. Many of the EU member states are
already close to reaching this target. Reaching a similar
target in the analyzed enlargement countries will
require significant investments, as the average
broadband penetration rate reaching 9.4% of the
population in 2010 remains significantly below the
EU-27, broadband offers are often only available in
limited areas and competition is still at a very early
stage.
By 2020, 100% of EU citizens should have access to
fast broadband with at least 30 Mbps, and 50% or
households should have subscribed to ultra-fast
broadband above 100 Mbps. With regard to this target,
the need for investment in the EU member states and
the eight enlargement countries is not so different.
Even in many of the advanced EU economies,
broadband with 100 Mbps is only available as a few
pilot projects or in a few cities. The main difference
between EU member states and the analyzed
enlargement countries with regard to fast and ultra-fast
broadband are the different competitive conditions as
outlined above, in particular the absence of competitive
safeguards and difficulties to acquire spectrum usage
rights as well as rights of way and construction
permits. A further step would be adjusting competitive
safeguards along with promotion of co-investment and
risk sharing mechanisms.
Another challenge presented by the Digital Agenda is
related to the integration of the SEE countries into a single
European digital market. In this context, the specific priority
areas outlined by the Digital Agenda would require joint
efforts, both by the EU and the enlargement countries as they
progress on their road towards the EU membership. In
particular, this applies to the development of a single market
for online content, the enforcement of intellectual property
rights, the implementation of the regulatory framework
facilitating online and cross-border transactions and the
development of a durable solution for international voice and
data roaming.
VI. CONCLUSIONS
Electronic communications in eight enlargement SEE
countries represent the most dynamic market segment in the
region. It is especially the case with the wireless
communications which constitute efficient and cost-effective
solution for providing broadband services in uncovered or
underserved areas, in particular in the countries where the
penetration of traditional fixed networks and other wired
infrastructures is very low. The analyses presented in the paper
show that, despite the current economical environment,
significant opportunities for further development of wireless
communications market still exist in terms of radio frequency
management. There, the adequate assignment of digital
dividend spectrum has been recognized as an efficient
solution in that sense. The analyses are completed with the
identification of possible challenges when further growth of
this specific market segment is considered. In the wider context
of Digital Agenda for Europe, a number of issues that have to
be taken into account are explained.


REFERENCES
[1] Cullen International SA, Monitoring regulatory and market
developments in electronic communications and information society
servcies of Enlargement countries, Report for EC, November 2011.
[2] International Monetary Fund, World economic and financial surveys,
September 2011.
[3] Eurostat Pocketbook on the enlargement countries, 2011 edition,
September 2011.
[4] M.Pejanovic, Optimization of e-strategies for Western Balkan
countries, Int, Conf. TELFOR, Belgrade, Serbia, 2007.
[5] European Commission, A digital agenda for Europe, COM 2010
[6] European Commission, European broadband: investing in digitally
driven growth, COM 2010