Last week I tabled the Malta Communications Authority annual report in Parliament. I believe that one has to look at this report from two main aspects. On one hand one must look at the valuable work carried out by the MCA over the past 12 months and on the other hand one can see how recent developments will continue to translate into increased take-up by consumers and new technologies being introduced onto the market.

During the past 12 months, the communications industry – comprising postal services, electronic communications and eCommerce – continued to contribute significantly to economic activity in Malta.

Mobile telephony

The past year was characterised by continued upward growth in the mobile market. Subscriber growth in this market for the period under review was encouragingly steady, in spite of the fact that subscriber penetration was already extremely healthy over the previous year. Local figures compare well with the rest of Europe, with a promising penetration rate of approximately 73 per cent of the population.

In terms of financial turnover, the increase was far more robust, growing by Lm5.9 million during the period July 2003 to June 2004 to reach Lm44.2 million – a staggering increase of 15.4 per cent. Increases in the use of mobile phones, as a result of new favourable price plans and the launch of innovative services for consumers, contributed to this dramatic increase in turnover. This augurs well for the future of the local mobile market.

Fixed telephony

Last year was also characterised by a decline in the fixed telephony market, both in terms of subscriptions and traffic. However, promotional offers on international calls and subsequent reduction in international tariffs, as a result of the tariff rebalancing exercise by Maltacom – the incumbent fixed-telephony operator – continued to increase the volume of international traffic.

This trend in international calls confirms the importance, if not the necessity, for individuals and businesses residing in Malta to communicate with friends, relatives and other businesses abroad. In fact, as from June this year, Maltacom reduced their international charges by an average of approximately 50 per cent. Tariffs to the more frequent destinations such as United Kingdom, France, Italy and Germany were reduced even further.

Internet

Another very encouraging development in the electronic communications sector during 2004 was the internet market – more specifically the take up of broadband services by both business and home users. The advantage of broadband is that it allows users to be online at all times and encourages increased use of the internet.

Both the government and service providers in this market have placed great emphasis on the importance of information technology (IT) literacy and internet usage. The results of this consolidated effort are evident. The market has seen a surge in internet subscriptions, particularly broadband subscribers, with a level reaching over 31,000 connections at the end of September 2004.

The past year has seen both asymmetric digital subscriber line (ADSL) and cable internet service providers aggressively targeting the market with a number of promotions and discounts, an approach that seems to be reaping dividends in terms of subscriber growth and traffic. Malta stands near the EU average for broadband penetration. However, with the focus that is being placed on this service in particular, it is expected that this benchmark will soon be surpassed.

The introduction of an additional international gateway by Vodafone will have a further positive impact on internet users. This is because internet service providers (ISPs) now have an alternative supplier for international bandwidth. The advent of competition has already translated into price falls in bandwidth rates for ISPs and an improvement in the level and quality of service offered to end-users. This second international link represents a very important strategic development for Malta.

Voice over internet protocol

VoIP is a service which essentially enables voice conversations to be undertaken across data networks such as the internet, instead of traditional switched telephony systems, at substantial cost savings to users.

VoIP has become synonymous with the rapid change in the electronic communications sector. The VoIP user still uses the traditional telephone set to make the call but the call is carried over the internet rather than through traditional telephony systems. Consequently, this area of the market has seen unprecedented growth in the last year, which shows little sign of abating.

In order to ensure the best possible acceptance and alignment of this new technology within the existing communications sector, the MCA published a consultative document entitled Voice over IP: Regulatory Principles for Innovative Services in July 2004.

The aim of this document was to consult on issues such as providing VoIP access to those with disabilities, access to emergency services, cooperation with law enforcement agencies and consumer education and protection as well as a reform of inter-carrier connection regimes.

The goal is to ensure that the right environment exists to encourage the adoption and transition of this new technology to enable the maximum beneficial economic effects. However, this has to be achieved in a manner that is equitable and that respects operators’ investments and their right to make a suitable return on their capital outlay.

3G mobile telephony

3G mobile networks are capable of transmitting both voice and data at higher transmission rates, thus allowing new and innovative services like video messaging and internet browsing from new 3G mobile handsets.

The advent of mobile electronic communications has caused a profound change in the method and frequency of how people communicate. This demand for communication has led to the evolution of new standards in mobile communication networks, primarily third generation mobile telephony (3G). In June 2004, the MCA published a consultative paper entitled 3rd Generation (3G) Mobile Telephony.

It outlined proposals leading to the development of a supply-side regulatory framework that would support the successful deployment of next generation mobile telephony in Malta. This transition will allow the provision of new and enhanced mobile communication services that will serve to strengthen the already well-developed local mobile telephony market.

National broadband strategy

Broadband-based technologies heralded the introduction of high-speed, always on, internet connection. They provided the cornerstone for the development of an information-based society, which will underpin social and economic growth in future years.

Consequently, the national broadband strategy, a co-development of the Investment, Industry and Information Technology Ministry and the Malta Communications Authority within my Ministry, was released for consultation in April 2004.

This document focused on a number of strategic objectives, both from a content and an infrastructure perspective, which sought to encourage the proliferation and increased usage of broadband services to bring about increased economic activity within the business sector and a better quality of life for users.

In conjunction with the national broadband strategy, the MCA published an additional, specific supply-side consultative document entitled Broadband Blueprint – Supply Side Initiatives in May 2004. This document provided a more in-depth analysis of the differing infrastructure and technological options for broadband development and adoption, in the context of local market sustainability concepts.

The successful attainment of the objectives laid out in both consultative documents will see Malta building ubiquitous, highly-available and cost-effective broadband infrastructures that will be used to deliver reliable, affordable, secure, enhanced and value-added services in the fields of education, health, business and government. This will in turn amplify the economic, cultural and social benefits derived from broadband connection.

Censu Galea is Competitiveness and Communications Minister.

The second part of this article will be carried next Monday.