1

Romania

1. DIGITAL AGENDA TARGETS AND ECONOMIC INDICATORS

Broadband Indicators (January 2014)1

Speed Romania EU Average
% Growth2 % Growth
From 144 Kbps 90,0 N/A 97,1 2
Fixed broadband coverage3
NGA 65,9 3 61,8 15
From 144 Kbps 18,9 7 29,9 4
Fixed broadband penetration4 From 30 Mbps 10,5 27 6,3 47
From 100 Mbps 4,6 48 1,6 78
Basic (HSPA) 99,7 4 97,1 1
Mobile broadband coverage
LTE 25,0 6 58,9 125
Mobile broadband penetration 40,7 14 61,1 5

Romania continued to make progress towards the achievement of the DAE objectives in
2012/2013. Fixed broadband coverage is 90% in Romania. Fixed (basic) broadband
penetration in Romania increased to 18.9% which is still the lowest in the EU and well below
the EU average of 29.9%. The number of fixed broadband lines reached over 3,79 million in
January 2014, representing the 9th largest amount of lines in the EU. However. fast
broadband (at least 30Mbps) penetration reached 10.5% which is well above the EU average
of 6.3%. Ultrafast broadband (at least 100Mbps) penetration reached 4.6% also above the EU
average of 1.6%. Mobile broadband coverage is 99.7% while mobile broadband penetration
reached 40.7%, one of the lowest in the EU. Mobile broadband users reached over 8,15
million in January 2014. Concerning LTE coverage, 3 operators were offering LTE services
as of October 2013 with a focus on urban areas.

2. COMPETITIVENESS IN THE SECTOR

Revenues and investment in the electronic communications sector

2010 2011 2012
Revenues €3,61 billion €3,60 billion €3,65 billion
Growth N/A -0,2% 1,2%
Investment €0,57 billion €0,56 billion €0,61 billion
Growth N/A -1,7% 8,8%

1
The figures in this table have been provided by Romania to the European Commission via the EU
Communications Committee (COCOM) for the Scoreboard of the Digital Agenda for Europe. For more
information see http://ec.europa.eu/digital-agenda/ and http://ec.europa.eu/digital-agenda/en/scoreboard.
2
Increase over the figure of a year earlier, expressed as a percentage. E.g. if there has been an increase from 20%
in January 2013 to 30% in January 2014, that would be a 50% growth.
3
Coverage is the availability of the network for those who want to subscribe to the service, as % of the
population. See also the Glossary.
4
Penetration is the number of subscribed lines per 100 inhabitants. See the Glossary for a more detailed
explanation.
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In a context of an uncertain economic recovery in Romania over the 2010-2012 period, the
revenues in the electronic communications sector have fallen from €3.610 millions in 2010 to
€3.60 billion followed by a growth of 1,2% in 2011 to €3.65 billion. In this economic context
investment in the sector has experienced a decrease of 1,7% in 2011 while in 2012 the
investments grew with 8,8%. The telecom investment as a percentage of revenue in 2012 was
of 17%, above the reported EU average (13%). In 2012 Romania represented the 14th largest
amount of investment in the sector in the EU (€605 million out of the total €41.986 million)
and of the 16th according to the revenues in the market (€3.646 million out of a total EU of
€324.299 million).

3. MARKET DEVELOPMENTS

The Romanian broadband market is characterised by platform based competition. Although

the market share of the incumbent's (Romtelecom) DSL lines is 99.99%, the market share of
the incumbent in fixed broadband has decreased for the first time below the 30% threshold in
2012, from 30% in January 2011 to 29% in January 2012. In January 2014 the incumbent's
market share slid to 28%, which is below the EU average of (42%). In the fixed market, an
alternative operator is the leading operator with a market share of 45.5% as of December
2013. The latest figures provided by ANCOM indicate a total amount of 3.79 million fixed
broadband lines in Romania in January 2014 out of which 97% is FTTx (3,7 million active
lines). The broadband market structure comprised 791 operators providing fixed broadband
internet access (down from 949 in December 2012), of which 36 by cable networks, 170 by
fibre, 159 by radio, 14 by xDSL, 659 by UTP/FTP cable.

51 new operators entered the market in the second half of 2013 (66 in the first half of 2013),
using fiber optic technology, radio or UTP/FTP, on the basis of the information provided by
ANCOM.

The number of ISPs that are commercially offering high speed connection is growing rapidly.
As a result, for example, while the EU average for 100 Mbps lines is 5.3% (in January 2014),
in Romania 24.5% of the connections provide speeds equal or exceeding 100 Mbps, 55.3% of
the connections provided speeds equal or exceeding 30 Mbps, while 98.5% of the connections
are equal or exceeding 2 Mbps.

NGA penetration as a percentage of total lines increased from 65% in January 2013 to 67% in
January 2014 (well above the EU average of 26%), and 13% of NGA lines as percentage of
population while the average of the EU is 8%. However the coverage of rural areas with
standard fixed broadband is only 78,2%, below the EU average of 89.7%.

Romtelecom remains the leading operator in the fixed market although its market share for all
types of calls by traffic volume has decreased over the past year to 60,8% as of December
2013, compared with 64% in December 2012 compared with the EU average 52.2% in 2012.
However, in 2012 the voice traffic on fixed networks represented only 8% compared with
92% on the mobile networks, while the EU averages were 36% respectively 64%. In the
mobile market, the market share of the market leader in terms of SIM cards grew from 42.9%
(December 20to 43.2%, followed by 29.2% and, respectively, 22.9% market share of the
following two competitors. There were 6 mobile operators in the Romanian market of which 5
were offering mobile telephony services, while no MVNO yet present. As a result of spectrum
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tenders carried out by ANCOM in September 2012 two operators undertook MVNO access
obligations.

With regard to revenues, the average revenue per minute in mobile communications was of
€1,81 in 2012. For the same period, the average revenue per user in mobile communications
was of €53, more than three times lower than the reported EU average of €187 for 2012.

4. MARKET REGULATION

Throughout 2012 and 2013, the Romanian National Authority for Management and
Regulation in Communications (ANCOM) has analysed the retail market for fixed access
services, the wholesale market for fixed call origination and the wholesale market for national
transit services in the public telephone network.

In December 2013, ANCOM identified the market for national transit services in the public
telephone network as susceptible for ex-ante regulation (D1154/18.12.2013). Romtelecom
S.A. has been designated as having significant market power on the defined market
(D1/06.01.2014). Regarding the markets for fixed access services and, respectively, the
wholesale market for fixed call origination, ANCOM found them to be competitive and the
regulation to be withdrawn after a transitory period of one year.

In February 2014 following the favourable opinion of the European Commission, ANCOM
adopted the decisions setting the new maximum tariffs for the interconnection services for the
purpose of call termination based on pure LRIC. From 1 April 2014, the maximum
termination rates in Romania decreased from 0.67 eurocents/minute to 0.14 eurocents/minute
for fixed call termination and, respectively, from 3.07 eurocents/minute to 0.96
eurocents/minute for mobile call termination. From the same date, 1 April 2014 the fixed
termination rate is based on the pure LRIC methodology, all SMPs having to charge the
regulated tariffs, for all calls terminated irrespective of their origin.

ANCOM has started the review of the market for wholesale network infrastructure access at a
fixed location and the market for wholesale broadband access, and anticipates to finalize its
analysis in December 2014.

5. BROADBAND PLANS AND FINANCING

The Romanian Digital Agenda Strategy is still to be finalised by the Ministry for Information
Society and it will be sent to the Commission services for consultation. The same ministry is
responsible for elaborating the Romanian NGN strategy which is not finalised yet. Such
strategy, however, is an ex-ante condition for receiving frnew funding for broadband from
Structural Funds.

In the current structural funds cycle (2007-2013+2) the RoNET project which was in an
incipient phase for 5 years, was finally tendered out in December 2013 by the Ministry for
Information Society. The aim of the RoNET project is to support the deployment of backhaul
networks in ”white areas” of Romania where broadband is currently not available and where
there are no plans for broadband rollout by market players over the next three years. The
public support takes the form of grants. The overall amount of the measure is approximately
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EUR 84 million. A significant part (approximately 82%) of the budget will be funded from
European Regional Development Fund (ERDF) (EUR 68.5 million) and the remainder from
the State budget (EUR 15.5 million). The project received state aid clearance from the
European Commission on 12 December 2013.

6. INSTITUTIONAL ISSUES

6.1. The National Regulatory Authority

The Autoritatea Națională pentru Administrare și Reglementare în Comunicații (ANCOM)

has been established by Emergency Ordinance 22/2009 concerning the setting up of the
National Authority for Management and Regulation in Communications. ANCOM is
responsible for all of the tasks assigned to national regulatory authorities under the regulatory
framework for electronic communications in the EU.

Resources of the national regulatory authority

2011 2012 2013
5
Personnel 640 631 629
Increase/Variation -1,24 % -1,41 % -0,32 %
Budget € 53 Million € 47 Million € 64 Million
Increase/Variation -13 % -11 % +36 %
6
Administrative charges - - -
7
Administrative costs € 53 Million € 72 Million € 52 Million

The president and two vice-presidents are appointed for six year mandates (which can be
renewed once) by the President of Romania acting upon the proposal made by the
Government.

The mandate of the president of ANCOM may be terminated only for well determined
reasons: incapacity to fulfil the duties for more than 120 consecutive days within 140 days;
criminal conviction established by final judgment without rehabilitation; failure to observe the
three months deadline to end the incompatibility situation defined by the law; resignation;
decease; end of the six year tenure of the mandate.

The decisions of ANCOM can be judicially reviewed as first instance court by the Bucharest
Court of Appeal, Contentious-Administrative Chamber and as second instance court by the
High Court of Cassation and Justice, Contentious-Administrative Chamber. In 2012, three
decisions and 2013, one decision, were challenged but all upheld in court.

5
Number of staff in full time equivalents (fte).
6
In the sense of Art. 12 of the Authorisation Directive (Directive 2002/20/EC as amended by Directive
2009/140/EC).
7
Idem.
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6.2. Authorisation
The European Commission has raised concerns already in 2011 on the implementation of the
general authorisation regime, in particular with regard to the duplication of conditions which
are applicable to undertakings by virtue of the general Romanian legislation in the general
authorisation regime (e.g. establishment) and the inclusion of notification requirements that
are not needed for identification of the provider. Facing an imminent infringement proceeding
ANCOM decided to remedy the relevant normative act and removed all its provisions which
might be in conflict with the Regulatory Framework. The new decision of the President of
ANCOM on the general authorisation regime was published on 6 December 2012.

6.3. Taxation
On 14 November 2013, the Fiscal Code was amended through the Government Emergency
Ordinance (GEO) No.102/2013, in order to include, among others, the tax on the value of
special constructions. As "special constructions" will be considered, inter alia,
telecommunications lines and overhead cables (poles, circuits, cables, rails, brackets, etc.),
communications networks and underground ducts, urban and interurban (except subsea and
subfluvial telecommunications transmission medium of fibre optic cable systems) platforms,
metal antenna towers and masts for radio, mobile phone, radio and TV as well as telephone
booths. The tax is applicable from 1 January 2014, calculated by applying 1.5% to the (gross)
book value of constructions in the previous year. Industry considers that during a critical
period for the development of the sector (i.e. roll-out of 4G mobile and NGA networks) the
tax on special constructions will lead to a decrease of investments in infrastructure by firstly
reducing the funds available to operators and secondly by the increase of the direct costs
associated for the new investments. It is anticipated that the incumbent will be most affected
because its "legacy" network has the most sites deemed as "special constructions".

7. SPECTRUM MANAGEMENT

ANCOM organised a spectrum auction in September 2012, whereby five operators have won
485 MHz in the 800 MHz, 900 MHz, 1800 MHz and 2600 MHz bands, the radio frequencies
suitable for mobile broadband and voice communications. The amount of spectrum available
for mobile communications increased by 77%. In view of the RSPP, the rights of use awarded
in the 800 MHz band will be effectively used for the provision of services by 6 April 2014,
date by which the spectrum will be freed by the Ministry of Defence and all rights of use will
be aligned to the same starting date. Consequently, Romania has requested a derogation until
5 April 2014, which is the date when the 800 MHz band will be vacated by the Department of
Defence and will become available for electronic communications services.

The Government Decision approving the digital switchover strategy was published in the
Romanian Official Gazette no. 400 of 3 July 2013. The strategy provides that the full and
effective transition to the digital television services will take place until 17 June 2015.
ANCOM organised in June 2014 an auction for five digital terrestrial television multiplexes,
four in UHF and one in VHF, in the DVB-T2 standard. Following the competitive selection
procedure only three multiplexes were awarded, all in the UHF band. The licences cover a
ten-year period and will entry into force starting 17 June 2015.
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All new spectrum usage rights in 800 MHz, 900 MHz, 1800 MHz and 2600 MHz have been
awarded on a technology and service neutrality basis, according to the relevant EC decisions.
All licences in the 3410–3600 MHz band and the 3600–3800 MHz band were issued bearing
in mind the technology and service neutrality; only the type of application has been stated in
the licences.

The rights of use of radio frequencies may be transferred in accordance with art. 35 of the
GEO no. 111/2011 to a third party, in total or in part, however, only after prior approval of
ANCOM. The transfer of the rights of use shall not result in constraining hindering or
distorting competition. In cases where the use of radio frequencies is harmonised at European
level, the transfer of the rights of use must not lead to changing the usage destination of the
frequencies that are subject to the licence in such a way as to breach this harmonised usage. In
case of a partial transfer of the rights in 800 MHz, 900 MHz, 1800 MHz and 2600 MHz, the
licence holder may only transfer 5 MHz blocks, with all the obligations associated with or, for
the TDD operation mode in 2600 MHz, only in compact unpaired blocks of 15 MHz.

8. RIGHTS OF WAY AND ACCESS TO PASSIVE INFRASTRUCTURE

The procedure for granting the rights of way is based on a request which must be answered in
maximum 30 days. A written, objective and sound justification is required for denying access.
If the request has not been answered within the term, it shall be deemed approved. In case of
such tacit approval, the requestor will notify the start date of the works required for the access
on public property, a date which cannot be sooner than 10 days from the date of sending the
notification. The holders can exercise their right of access only upon the conclusion of a
contract. The terms established by the contract must be non-discriminatory to all the providers
of electronic communications networks.

Within 15 days from the date of concluding the contract, the administrator of the public
property has the obligation to publish it on its website and to send a copy to ANCOM (who
will make it available to any interested persons). Art. 12 FwD has been transposed in national
law by chapter III of the new Infrastructure law. Under the same law the obligation to allow
the use of passive infrastructure may be imposed, on a case by case basis, to any owner of
such infrastructure, provided the access is technically and economically feasible. As per art.
30 of the Infrastructure law mandatory NGA wiring is provided for those new buildings for
which a construction authorization is requested after January 1st 2013. ANCOM may impose
on a provider of electronic communications networks or on the infrastructure owner the
obligation to allow other providers of electronic communications networks to share in-
building wiring. ANCOM has not yet mandated such obligation.

9. ACCESS AND INTERCONNECTION

IP interconnection agreements are used by small operators between themselves, big operators
still require SS7 telephony signalling interconnection for voice termination. 24 IP
interconnection agreements for voice termination were registered with ANCOM. As regards
IP interconnection, no specific obligations are in place besides the general obligation to
negotiate in good faith an interconnection agreement. As regards the migration of fixed
networks towards IP interconnection infrastructure, the small fixed networks have been
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developed on IP infrastructure from the beginning while the incumbent’s large legacy fixed
network is slowly migrating towards IP infrastructure.

One IP interconnection dispute was registered with ANCOM between two operators, the
plaintiff claiming that the defendant did not observe its obligation to negotiate an IP
interconnection agreement. ANCOM ruled in favour of the plaintiff (Decision no. 91/2013)
and requested the defendant to negotiate the IP peering agreement within 45 working days
from the date of communication of ANCOM’s dispute resolution decision to the parties.

10. CONSUMERS ISSUES

10.1. The European emergency number 112

There is no legislation in place for laying down caller location accuracy and reliability
criteria. However ANCOM is in discussing with the relevant stakeholders for establishing
more stringent caller location requirements than Cell ID for mobile networks. ANCOM is also
involved in the European Conference of Postal and Telecommunications Administrations
(CEPT) project team Emergency Services for drafting a report on Caller location accuracy
and reliability. While 112 SMS is not available yet, it is considered to be implemented as an
alternative access to 112 for disabled end-users. 112 is the sole emergency number used in
Romania. Therefore the awareness on the European Emergency Number 112 is one of the
highest in Europe: 95% would call 112 in case of an emergency, while 71% know that 112 is
available EU-wide.

10.2. Number portability

ANCOM President's Decision 351/2012 on the modification of the number portability
regulations provides for a reduction of timeframes in which providers are required to perform
specific activities associated with different phases of the porting process and the protection of
subscribers throughout the switching process. The average time to port numbers from
conclusion of the porting agreement to number activation in 2013 was 7.3 hours for fixed
numbers and 2 hours for mobile numbers. The average time to port numbers effectively (for
the process as a whole) was 3.8 days for fixed numbers and 2.8 days for mobile numbers. The
prices related to the porting of numbers were established by ANCOM decisions: 7.8 euro for
fixed numbers and 5.6 euro for mobile numbers. Operators do not charge subscribers for
porting.

10.3. Contractual obligations

The rules governing the minimum commitment period in Romania are enshrined in article 50
para. 1 and 2 of the GEO no. 111/2011, which transposes the provisions of Art. 30 of the
Universal Service Directive related to the minimum contractual period. Contracts concluded
with consumers can only have an initial contractual period of no more than 24 months. Also,
providers have to offer consumers contracts with a minimum commitment period of 12
months. These rules have not changed since the entering into force of the GEO no. 111/2011
in December 2011. In practice providers propose a minimum contractual period of both 24
and 12 months.
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10.4. Other consumer issues

ISPs have the obligation to publish on their websites the values of certain administrative
quality indicators set by ANCOM (the time necessary to provide Internet access, the fault
repair time, the frequency of customer complaints, the frequency of the complaints related to
billing) and the procedure of measuring these quality indicators. The providers of publicly
available telephony services are obliged to provide to the consumer information regarding
tariffs and conditions for obtaining and usage of services.

ANCOM’s Interactive Tariff Guide – www.veritel.ro – is available for end-users since 2013.
This is an online “price calculator” which performs, based on the user’s options, comparative
analyses of the standard tariff plans available on the market with regard to fixed telephony,
mobile telephony, internet access and bundles. The project was financed by EU Funds (83%).
542 operators are included in a database representing 99% market share for voice services
(fixed & mobile), 99% market share for internet access services (fixed & mobile). Currently
around 500,000 offers are published on this site.

11. UNIVERSAL SERVICE

The following services are included in the scope of universal service in Romania: telephone
services at household level, directory enquiry services and directories, and public pay phones.
According to ANCOM president's decision 7/2011 a connection must ensure telephony
services at a fixed location, including fax, and functional internet access which allows a best-
effort download speed of at least 144 kbps (best effort). However, the functional internet
access is offered upon request, on commercial basis, and not as part of the universal service.

Currently no universal service provider is designated.

Sharing financing mechanism in implemented in Romania. The universal service fund is

administered by ANCOM which collects from the providers of electronic communications
networks and services whose turnover registered in the previous year was more than
3,000,000 euro, a proportion related to their turnover. No contribution was collected since
2006.

12. NET NEUTRALITY

12.1. Legislative situation

The obligations currently imposed on providers of electronic communication services as

regards net neutrality are the transparency obligations laid down by the Citizens Rights
Directive and transposed by art. 51, 60 and 61 of GEO no. 111/2011. However, ANCOM
intends to detail in 2014, by means of secondary legislation, the existing net neutrality
transparency obligations, by clearly indicating the type of information that has to be presented
to consumers and the ways and means to convey this information.
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12.2. Quality of service

ANCOM is responsible for implementation and monitoring of the quality of service in the
sector, and of specific aspects such as internet speed and other parameters.

ANCOM published its Decision no. 1201/2011 on establishing the quality indicators for the
provision of the Internet access service and the publication of the due parameters.
Consequently, ANCOM will create, manage and make available to the public an interactive
application on its website to measure technical quality of service parameters (data
transmission speed, delay, jitter, packet loss rate). The interactive application will be available
to the public at the end of 2014.