Analysis. What to expect from Romania's telecom sector this year

This year begins with a new face at the helm of the Ministry of Communications and Information Society, as well as a much higher budget for the institution. The effect of some of the measures taken by the new government is starting to be felt by market players. BR outlines the major developments to expect on the communications front in 2017.

Otilia Haraga

The budget for the Ministry of Communications for this year is set to increase 22-fold, to approximately RON 610.3 million.

The highest sum will go on projects using European funds and capital expenses, according to the draft budget published on the website of the Ministry of Public Finance. The pool for financing projects from external non-reimbursable funds is around RON 321.5 million, which is 50 times more than in 2016. Capital expenses will go up to RON 275.3 million, representing a 55-fold increase on the previous year.

Staff costs are set to be around RON 8.2 million, up by about 20 percent on the previous year. Spending goods and services will rise by only around 7 percent to RON 3 million.

At the beginning of January, Augustin Jianu, 30, formerly general manager of the National Center for Response to Cybernetic Security Incidents (CERT-RO), was confirmed as the new minister of communications and information society. He said his term priorities center on the National Interoperability Framework.

The Ministry of Communications has developed the framework with a view to the implementation of the National Strategy for the Digital Agenda 2020. This framework is meant to ensure the electronic transfer of information, both between authorities and public institutions and between these bodies and citizens and companies. This should decrease the time that people and businesses spend on obtaining various public services.

“December 1, 2018 is a very ambitious timeframe by which all taxes and payments made by a company should be carried out online, any form that an economic entity submits must be submitted online and all public institutions’ informatics systems become inter-operable so people no longer have to come with documents and information, and run from one institution to the other. All these could automatically be obtained via informatics systems by public institutions,” said Jianu, quoted by Agerpres newswire.

He added that citizens should trust the digital services they are offered. “That’s why we will also pay attention to the cybernetic security component, and of course, to the infrastructure, because it is obviously necessary to develop internet access in the remaining white areas in Romania,” he added.

Romania is second to last in the EU as far as digital skills are concerned, according to the Digital Economy and Society Index (DESI).

The high number of IT specialists in the economy is one of the reasons why Romania is not last for digital skills. When it comes to integrating technology in businesses, Romania does come bottom, according to the survey.

One major move by the Sorin Grindeanu government has the potential to destabilize or pose challenges to the IT industry. The measure to remove the limit of five average salaries on which pension and healthcare taxes are payable, effective February 1, was adopted without any public consultation. By eliminating this ceiling, the prime minister wants to bring the state budget approximately RON 1.4 billion. The measure is already being contested by the IT industry, which is one of the most dynamic industries in Romania and one of the main ones to be affected, because of its well above-average salaries.

“Companies that work in R&D employ highly qualified senior specialists who are paid accordingly, above the industry average. Given that the largest costs for IT companies are those of human capital, the impact on the company budget is significant,” said Valerica Dragomir, executive director of the Association of Software and Services Industry.

Another measure that the new minister is considering is to transfer the National Institute for Research and Development in Informatics under the umbrella of the Ministry of Research.

“We must carefully analyze the institute’s activity. As far as I know, it is not in a very good financial situation,” said Jianu, in relation to the move.

Meanwhile, the Romanian telecom watchdog, ANCOM, also has a yearly plan that it intends to see through, for the development of the communications sector.

Topping the list are measures regarding the effective application of the stipulations of the new infrastructure law 159/2016, with the aim to reduce the costs of the installation of broadband networks in Romania.

ANCOM will continue this year to make a national inventory of public communication networks and related infrastructure elements. It will also set up a unique point of information regarding the setting, route, type and current use of infrastructure. The telecom watchdog will also set the maximum tariffs for the right to access public property and will evaluate the costs of the physical infrastructures to set some benchmark access tariffs. And it will develop the technological norms regarding the design and make-up of the electronic communication networks.

One of the planned measures is to develop a mobile application to allow users to mark on a digital map the experience they’ve had with the voice and data services of a certain operator, as well as publish data regarding the quality of the communication services offered by these operators. The reason for doing so is the consumer. Catalin Marinescu, head of the institution, said market research has shown that there has been a shift in the mindset of Romanian users, who no longer consider the price to be most important, but the quality of services they are getting.

“We will also expand the Netograf platform (ed. note: which tests the speed and quality of the internet) by launching an application that can be installed on a mobile. We must place at the disposal of the user instruments to help them decide what they are interested in as far as the services they receive are concerned, whether we are talking about voice or internet,” said Marinescu.

Another important topic on the ANCOM agenda within the next year is to decrease red tape and lower the costs of building networks for operators.

Authorizations should no longer be released with a delay by city halls, and the costs of using the public domain or the poles of energy providers should become less prohibitive.

The telecom watchdog also plans to organize a public consultation regarding the allocation of radio spectrum for broadband communication in 450 MHz, 700 MHz, 800 MHz, 1500 MHz, 2600 MHz and 3.4–3.8 GHz. This spectrum should be able to support the efficient development of the networks, given the progress of mobile internet consumption.

Additionally to this new tender allocating national, regional and local multiplexes of digital terrestrial television, in 2017 the authority will check whether the coverage obligations imposed by previously awarded licenses for national and regional multiplexes have been met.

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