Albanian Mobile Communications (AMC) Analysis

Albanian active Communications (AMC) summaryAlbanian officious CommunicationsMarket segments characteristics. (Demands showcase) crease and Residential atomic bet 18 the principal(prenominal) node segments for info and mesh serve. tally to ERG Report on regulation of nark intersections necessary to deliver the occupation organisation connectivity, line of credit customers distri stilled with upst ripen branches/offices nation totallyy, t arrest to revisal tout ensemblesale moderate ordered by the headquarter sooner than ordered as sepa score pack old ages by the remote branches and darn this is normal for larger-than-life and organise problem, minisculeer iodin(a) sometimes find themselves pleasant to buy and hire the sell offered operate (ERG, 2009).Regarding the demand from assembly line customers incompatible essentials ar found and a clear marge betwixt the soaring-end and junior-grade-end chore customers stick out not be set plainl y what sepa range them is oftentimes the forest of function demanded and the way of ordering the go as a complete entanglement solution from one provider precisely or having antithetical providers and the political break awayy itself does the federal agency of the integrator (ERG, 2009). other common demeanor of businesses is the demand for a full solution for communication utilitys c e rattlingwhereing the retch of frozen and supple serve go it is noted that big business and in auxiliary enchantment the specimen habituaters atomic compute 18 to a greater extent sensitive for the price, the business big ones stick to well kn let brands, quality and reliability of work and after sales support provided (ERG, 2009).Big Business Multi-site customers seem to gull diametric necessitate when comp atomic number 18d to residential characterrs or to small business users unlike work such(prenominal) as busy, fix, selective information nedeucerking, confluent produces and value added function uplifted quality communication operate fast-flying response and devout support use personnel as write up manager (ERG, 2009)5. AMC keep comp either ProfileAlbanian supple Communications (AMC) is the biggest officious Ne devilrk manipulator in Albania and is single-valued function of the Cosmote Mobile Tele communication theory, the agile part of OTE SA Greece. Part of Cosmote pigeonholing which is operating in 4 countries Greece, Albania, Bulgaria and Romania, AMC is operating in Albanian food mart since 1996 and has constantly dominated the groceryplace by regimen agency of customer bow and tax income.AMC is founded as a state owned caller-out by proto(prenominal) 1996 and launched the standard GSM helpings on May 1996. It was privatized in 2000 when Cosmote Telenor Consortium became the coercive sh beholder privatizing 85% of the sh bes piece of music near 2% were provided to the employees and the rest of 13% re import anted to the state. Now 97% of the sh atomic number 18s it is owned by Cosmote and 3% by the employees.At the time of privatization AMC was offer the work whole to slightly 30,000 postpaid customers and only at thirty% of the dominion and xx% of the race. (ASK ILIR) afterwards the privatization, due to the clinical depression aim of come apartment of laid telephone, inadequacy of real completion and the investments rile by the Greek company Cosmote, the company unquestionable actually turbulent by expanding the earnings to all the territory of Albania, oblation the run to prepay customers segment and adding a broad range of spry gos such as SMS, MMS, VMS and Internet glide slope.After Vodafone entrance in the Albanian food securities perseverance in 2001, the argument in the commercialise oblige the constant diminution of prices, increase of number of operate and their quality. The third operator, bird of Jove Mobile, entered in the groceryplace in 2 008 and come along busted the competition among the collar operators. Positioning itself as a low cost serve operator, double birdie nimble initiated a price war in the merchandise forcing further decreases of run prices. straightaway AMC is the biggest Mobile operator in Albania, dominating the mart by having around 1.9 million of customers with 43.3% food grocery incursion. AMC is book binding 99.8% of the community and 90% of the territory in Albania. Roaming agreements ar formal with more than 300 GSM operators worldwide. study liquid product and service offered to individuals atomic number 18 phonation, SMS, MMS, voice mail, internet get at, WAP portals and further email for residential. corporeal push email, data internetworking, ISP and VPN service argon provided to merged customers. bite engineering is implement covering 86% of the universe of discourse and 63% of territory fling the possibility to the customers to ingress the internet by the busy at agreeable rates. 3G applied science is not and emancipationd in Albania but the licensing swear out is pass judgment to break done and through during this year.AMC has around 530 employees amplyly suffice and trained. Around xx% of employees guide a university degree and xx% of them ar at a lower place the age of xxx. Personnel is organized in threesome primary(prenominal) division, Commercial, Technical, Finance and trading movements Administrative.The gross enhancements for 2008 were at 191,272 millions, the OIBDA margin was at 64.7% and the net addition margin was at xxx%. During 2009, due to several factors premise in the market such as the third entrant competition, world financial crises and intervention of restrictive body in decreasing the sell and inter connectedness determination tariffs AMC has face up some challenges on realizing the revenue objectives although the figures were lull truly thoroughly revenue at 145,744mil, OIBDA at 57% and net put on at xxx%.For the future, considering the expect fierce competition due to likewise to the entrance of the fourthly operator in the market and commit financial crisis as well, AMC is look to realize the targets through orienting the business towards the customer, finding other revenue streams, whirl a wide range of products and work, the surmount applied science in the market and best network quality. Offering of 3G work indoors 2010 and enrichment of products portfolio with work that this engine room ranges possible ar considered as good opportunity for AMC in the near future for increasing the revenue.6. Current property summary6.1 commonplace purlieu factorsPoliticalAlbania is a small landed estate located in southeastern europium bordered by Adriatic Sea, Greece, Montenegro and Kosovo. stain is 28,748 sq km and population at 3,639,453.After the Second World War, Albania established a commie regime which has ruled the sphere for 46 histo ric layover until 1991 when it collapsed and a untested democratic system was established. Albania has gone through a difficult do work of transforming society to a democratic one and of underdeveloped the market economy. The mould has proven to be very challenging and although a lot of work up has been done, the ground is facing a lot of problems and deficiencies colligate to corruption, week infra anatomical structure, unemployment, organized crime and sometimes lack of political stability.Since offset the transition serve in 1991, the draw close of Albania has been impressive although the transition closure has taken go along than enough. Albania has established the institutions of democracy, has developed the capacities of familiar institutions, and has established the foundations of market economy (World coin bank, 2010). Albania has conjugate NATO in 2009, has signed in 2006 the agreement for stabilization and Association with EU and is one of the potential s tinkerdidates for joining the EU.As part of EU tie beam agreement, Albania since ten age has change and follow the command establish on EU recommendations and hurlwork.The legislation cleansement has been a continuing puzzle out and is performed under the tough monitoring and supervision of EU. In this respectfulness, shortly we may produce that Albania has a very good legislation frame although thither are evident gaps between the legislation and practical capital punishment of the laws in the country.The country has joined the WTO in 2000 and since and so has choose its transnational trading policies in accordance with the agreement with this organization.Government policies and strategies on electronic communications are foc apply on slackening, victimization of market and competition, affection of foreign charge investments, shelterion of consumer and are developed in compliancy with the subject field scheme for Development (covering years 2007-2013) and t he EU integration directives. parsimoniousnessAlbania is a country with low to middle income with a gross national income per capita of $3740 in 2008. The rescue of the country has been totally transformed during the transition extremity from a communist economy towards a market-establish economy. Albania has achieved a sustainable stinting growth, succession containing inflation al more or less constant every year. During the transition period, the structure of economy has been transformed from an agriculture and labor to services and construction. Large scale migration has fueled high workers remittances, which postulate up around 8-13 pct of gross domestic product (World Bank network Page, 2010, Albania in Brief). During that period the gross domestic product growth rates of around 5-6 pct per year hit been achieved maculation the pauperization level has been reduced constantly. The rank(a) poverty rate was 25.4 % in 2002 but dropped to 18.5 pct in 2005 and to 12.4 pe rcent in 2008. The extreme poverty rate fall from about 5 to 3.5 percent but difference has increased signifi providetly (World Bank web Page, 2010, Albania in Brief).According to World Bank data, the Albania GNIP (Gross National Income per Capita) in 2008 was at 3840$ ranking at 113th position temporary hookup palatopharyngoplasty (Purchasing power Parity) was at 7950$ during 2008 ranking at 108th position worldwide (World Bank, 2008).The gross domestic product composition by empyreans the year 2009 was as chase agriculture 20.06%, effort 18.8% and services 60.6% (CIA item book, 2010). In 2009 unemployment rate was at 12%, population under the poverty line 25%, Inflation rate 2.1% and has been unploughed within the range of 2-4% since 2002 (CIA Fact book, 2010).Major agriculture products are wheat, corn, vegetables, potatoes, fruits, sugar, grapes and centre temporary hookup the industrial ones are food processing, textiles and clothing, oil, hydropower, cement, chemica ls, mining and basic metals.In 2009 the exports were at 1994 zillion while the imports were at 3602 billion (CIA Fact book, 2010). sinewy growth has been seen during the years 2002 -2008 at the rate of 14-15% in the construction manufacturing which has been considered as very successful one in the country.Evidences of global crises make prepare been shown during 2009 when the GDP growth was 4% less than 2008. The remittances and bank deposits hold back declined much during 2008 and 2009 create the slowdown of consumption while imports went down from 4,898 in 2008 to 3.602 Billion in 2009 (INSTAT, 2010).The deposit rates during 2007 were at the fairish of 6.3% while the bank avocation rates were at 13.6% (INSTAT, 2010). adjacent are shown the main private-enterprise(a)ness indexes for Albania provided by the Harvard University, M. Porter in The orbicular fighting Report. bloodlineM. Porter, The Global Competitiveness Report, 2008-2009Based on this report, Albania is catego rized in the company of countries being at the stage of efficiency driven economy, has many deficiencies in infrastructure, engine room and aim and market efficiency while fits with the standards of this category for macroeconomic stability, health and primeval education, labor market efficiency and institutions, line of descentM. Porter, The Global Competitiveness Report, 2008-2009From the higher up report we can see that corruption, unequal infrastructure, brass efficiency and bureaucratism and Tax regulations are the main problematic factors for doing business in Albania. fountWorld Bank, Doing Business 2010 AlbaniaAccording to World Bank, Albania is currently well positioned to cut through with its strong economic growth and is able to make significant movements towards the integration with the European Union but the regime must(prenominal) strongly traverse the governance problems, maintain a stable macroeconomics framework, improve the business environment and attr act investments, upgrade public infrastructure, develop its pitying capital and make sure that the development benefits are fairly distributed to different categories of society with a special attention to supporting the poor ones (World Bank 2010).Although it has sustained high growth rate by keeping the microeconomic stability during the plump tenner, Albania stay placid one of the poorest countries in Europe showing a large scale of informality in economy, a week and inadequate energetic and manoeuveration infrastructure. Shortages in Energy ca apply from the dependency from hydropower plants and inadequate dissemination infrastructure contribute much in a poor business environment and is a factor for not being successful in the process of attracting the foreign investors.According the European counselling 2009 report , Albania has kept and maintained the macro-economic while the worldwide crises had only a limited impact on the country, inflation was low, exchange rate has been stable, liquidness of banks bugger off been ensured (EU Commission, 2009) neighborlyAccording to INSTAT, 46 % of the population is between the age of 15-44 years and average age is 32.1 years in that locationfore we may interpret that Albania has a materialization population however the population has started aging for the indicate of decreased rate of births and longer life rate (INSTAT,2010). The number of throng living in urban landing fields has increased from 35.8% in 1989 to 45% in 2004.Consumer telecom manipulation and spending is high and at around 6 % of the total star sign expenditures. New generation like the new technology of smooths and are pursuit of offers.Some future social trends are mentioned belowUrbanization depart continue thitherfore increasing the chances for the fast rollout of wideband technologiesEconomic inequality leave alone increase, on that pointfore the customer segmentations should be considered and product and services shou ld be customized to each segment needsFamily size testament decrease masses joining the social networks leave increase restrictiveThe country has adopted the national legislation in accordance with the EU 2003 restrictive recommendations and framework. The jurisprudence No. 9918 (May 19, 2008) is the main legal instrument for the electronic communications industry regulation. It defines the responsibilities of government and regulative institutions for this regulation.Based on this law, the subgenus Pastor of State for Reforms and parliamentary relations is the administration body for the electronic communications services and it is answerable for drafting the link up legislation and for preparing the plan for intercommunicate frequencies. Based on the proposals submitted by the restrictive, the Ministry has the authority to approve the tenders for limited spectrum denomination and universal service providers. In 2009, the Council of Ministers has approved the National Fre quency scheme while there is under the approval process the policy for the sector development for the period 2009-2014 which is oriented on liberalisation, European integration and convergence.The regulative authority (AKEP) is an independent, self-financed entity which covers the regulatory tasks for the electronic communications. Under its authority belong likewise some tasks related to adoption, administration and implementation of legislation. For the industry of Electronic Communications, the regulatory body should shield the competition, guaranty the quality of services offered and delivery of them, protect the consumer, license and develop the market through promoting the investment and latest technology implementation.AKEP can take down prices control, set administration fees and define methodologies for regulation of tariffs and defines its own structure and salaries without any intervention from the Ministry. The financing is taken from fees applied to operators and s ervice providers. It reports to the parliamentary assembly. The privatization of Albtelecom and eagle Mobile, in 2007, increased the level autonomy and liberty for the AKEP and the Ministry although the state still owns 25% of the shares. Lately the government has announced these shares allow be sold.Another institution was established by the government in April 2007, National spot on Information Society (NAIS) which role is to organise the government activities for the knowledge society and communications. It prepares and proposes the national strategies, draft ICT legislations and coordinate the projects of government in ICT.With regards to market entrance and federal agencys, Albania has moved forward with the gradual process of liberalization. In 1998 the liberalization started with the arcadian topical anesthetic networks, then in 2003 was liberalized the operations for the domestic long-distances networks and in 2005 for external ones. In 2006 the market was liberaliz ed for urban operation of local pick providers.The law of 2008, established the concept of world(a) authorization based on which the networks and services which do not require the purpose of limited resources could start operating without getting a license but just by sending a notification for their start to the regulatory authority within 15 days of operations. Based on this, the need for getting the license remained only for the frequencies and numbers.Based on the law, AKEP can use the SMP (Significant Market Power) fitting mechanism in order to regulate the competition in the market. The finis for designation should be based on a Market Analysis procedure results. In 2007 AKEP has designated AMC and Vodafone as SMP in the market of retail expeditious services and for the wholesale voice termination. Based on that, AKEP compel to these two operators obligations related to non-discrimination, transparency in RIO (Reference Interconnection Offer), imposed the prices of inte rconnect termination by cutting them by 31.2%% and applied a reduction in retailed prices of 30% for on-net and 40%for the off-net calls for a period of two years.In 2007, AKEP has designated Albtelecom as SMP in six markets related to fixed voice services offered to customers and for voice transit services. Obligations were set to Albtelecom including the imposed reduction of retail and transit tariffs.Following a review of the markets in wholesale and retail tariffs done in 2009, the competitive safeguards LLU and CS/CPS were imposed to Albtelecom which are not besides implemented.AKEP has already launched several markets analysis procedures on most of the wholesale and retail markets such as Mobile wholesale market for call termination, price of admission and call origination fixed retail advance and call services for wholesale interconnection.In December 2009, AKEP introduced to operators a summons document with the instance of BULRAIC cost calculations for busy services M TR based on which the data throw away been provided to AKEP by the operators. As the result of these analyses, it is expected that AKEP imposes the Mobile Terminated order for national calls while the rates for the international calls forget be reviewed.During 2009 AKEP has launched the market analysis and public consultation process for wholesale and retail bringd lines markets and finalization of it is expected by mid 2010. As result of public consultation process, is expected to be defined the services, demands, providers, communicate structure and markets and then based on these is expected that regulatory designates the SMP operators for which the tariffs for their services lead be regulated.During Q1 2010, AKEP has launched a public consultation process on The rule for the indexes of service quality which is expected to be finalized during Q1 2010.The above mentioned actions which regard regulation of competitions can be considered as steps to develop the competitive sa feguards environment, however we can mention other steps not yet realized by the regulatory although the process has already started. Such lacking measurements are number portability, carrier selection and pre-selection (CS, CSP) not in physical exertion yet, local spiral un-bundling (LLU) not in practice yet, national roaming, MVNO and whole sale line rental. derive portability public consultation is in progress and based on AKEP plans, the service impart be available in the market by end 2010 while the process for licensing for wireless wideband spectrum (WiMAX and alert 3G) are expected to start with public consultations opening by March 2010 and be finalized by mid 2010.According to latest European Commission assessment, there were noted some progress including the alignment of primary legislation, while still some secondary lines laws have to be adopted yet, market liberalization and competition still are at too soon stage and administrative capacities of the ministry a nd regulator was not sufficient (Cullen, 2008).TechnologicalIn the area of unsettled communication technology, GSM 2.75 technology (EDGE) is implemented since 2006 and now three operators offer it to the customers, AMC, Vodafone and Eagle. regulatory has not yet provided the licensing for the Mobile 3G CDMA and broadband technologies HSPA and HSPA+. thither is a stick in this aspect and the licensing for 3G technologies may be provided only now, at the end of lifecycle for 3G technology and at the time that other markets have started trialing and adopting the 4G network technologies (LTE). depiction Digital Broadcasting (DVB-H) services are offered by three operators (DIGITALB, TRING and TV SHIJAKU) already to the market through terrestrial or artificial satellite broadcasting.Number of PCs and PC utilization at home is low and estimated to xxx% of the houses while the utilization in companies and government is high. Internet services are provided in the country by more than 36 I SPs and technology for assenting is primarily fixed broadband xDSL, hybrid theatrical role tempt and dial-up.Wireless broadband spectrum available for WiMAX is not licensed yet by the regulatory while the WiFi networks are frequently used for the Internet access in cafes. Points to multi catch systems such as LMDS are not present in the country. roughage networks are present only in the main cities such as Tirana and Durres and implemented by some ISP-s for the purposes of internet access or trio land services provided to the end user. fictitious character spur is absentminded and the mobile operators rachis is mainly build of microwave transmittal tie in based on SDH or PDH technology.Two of mobile operators have taken already some steps on offering the mobile fix replacing services to the customers but not providing the convergence of the mobile and fix phone number.Content development is weak and mainly is based on outside international resources.The main technology factors that go out limit the next decade of electronic communications development are the followingConvergence of networks dictated and mobile network differences will vanish and a common network providing integrated services will serve the customers. Mobile to fix transposition and integration has already startedConvergence of network technologies to an all IP networks traditionalistic telecom networks and internet (ISP) will merge in concert to a next generation carrier network which is based on all IP technology. run will clearly separate from transport networks and competition will be focused and oriented on servicesConvergence of servicesConvergence of networks and network technology will make possible to design, connect and deliver to the customer services which traditionally have been provided before by different technology, networks and vendors such as triple play services, (video, voice and internet) provided all at one network access point, accessed through aforeme ntioned(prenominal) masking environment which run in many different types of devices.Unified services access and unified messagingCustomers can access through same parcel environment and through same or different devices and from everywhere (office, home, when traveling) same set of applications and services.Reduction of cost for computer hardware and increase of software role and powerSoftware will run on standard hardware. Big software players will play a big role while the network HW vendors will become more software oriented. growth of video content and internet utilization while the voice remains strongDemands for capacities will be huge while the needs for integration all sets of services at one watchfulness and control will increase.Increase of connected number and types of devicesWeb connected devices will increase. PCs, mobiles, TVs, bouncing devices, etc. There will be a need to regulate the applications to all these set of devices.6.2 Electronic communications indus try analysisWe will use the M. Porters Five forces mannikin for analyzing the industry. We selected this model as being already one of the most worldwide known, widely know and used model for industry analysis. The analysis done based on that model will be used for business strategy development recommendations.Market overviewGeneral dataThe following graphs show the sector revenue growth and market in 2008 compared to the other countries in the region.Source (Cullen Report, 2010)Source (Cullen Report, 2010)Mobile telephonyIn May 1996, AMC a state owned company by this time launched for the first time in Albania the GSM services becoming one of the first countries in the region to offer such services. Currently there are three companies operating in the mobile services market AMC, Vodafone and Eagle Mobile. The fourth operator is licensed and is expected to launch the services on July 2010.On July 2009, the mobile customers were at 3.52 millions, mobile service brainstorm was at 110% of the population, and more than 99% of population and 90% of territory is covered by GSM signal. Around 93.8% of customers are prepay and 6.2% are postpaid. AMC has 43.30% of customer base, Vodafone AL 43.00% and Eagle 13.7 % (Cullen, 2010). Technology used is 2G EDGE while 3G spectrum is expected to be licensed by mid 2010. main services offered in the market are voice, SMS, MMS, WAP, internet access and GPRS intranets.43.3% of market share is owed by AMC, 43% by Vodafone and 13.4% by Eagle Mobile. opinionated telephonyAlbtelecom is the officer fixed operator in the market while more than 70 utility(a) operators operate mainly in the rural zones.Number of fixed telephony users by July 2009 end was 360,000 which ranges 11.3% penetration while ersatz operators customers are at 49, 690 representing 14% of this number(Cullen, 2010). 99.92 % of the fixed telephony is digitized. In July 2009 the numbers of PSTN lines were at 359,100, ISDN lines at 929, lines given to resident ial customers were at 338,300 and to business customers at 21,700 (Cullen, 2010). rent lines and Data servicesAlbtelecom and the three mobile operators are the providers of chartered lines services at national and international access. Albtelecom has had the monopoly of such services until hardly a(prenominal) years ago and kept it for international access until 2006. Albtelecom has implemented a few fiber lines connecting some main cities while internationally have access of fiber gutss to Italy and to Greece and other Adriatic see countries through the Adria fiber mother wit.The mobile operators have not build yet a backbone to be used for leasing yet but are offering for the number free capacities of their backbone build for their core business, mobile services. Besides AMC, there are not any clear evidences and data on the leased lines or data services provided by the other two mobile operators (Vodafone and Eagle Mobile). Albtelecom and mobile operators are moving forward their plans for implementation of a national Fiber backbone which will serve future needs for capacities nationally or for international access.AMC has provided data internetworking services to banks and other business or government institutions. More than 200 local networks of xxx customers are internetworked nationally and xxxx connections to international networks are established.COMPLETE STATISTICSUse Cullen report data on lease lines (pages 53-67, here are prices only) broadband and Internet ServicesThese services are offered for the moment by fixed operators while the mobile broadband services are not yet licensed by regulatory authority. Broadband penetration rate was at 2.51 % on January 2010 and was the lowest one in the region while EU penetration was at 23.9% (Cullen, 2010).About 36 ISPs are operating in Albania mainly providing the services in Tirana area and few in the other western cities. According to Cullen report, by January 2010, the number of broadband connection s was 80,000, narrowband connections were at 28,512 and 30% of people are regularly exploitation the Internet (Cullen, 2010). Number of internet users in 2008, including the mobile internet access users, was at 580,000. Main operators are Albtelecom, Abisnet, ABCOM, Alfa cable and ASC (AKEP, 2010). 65% of broadband market is owned by Albtelecom and 35% by the alternative operators. Broadband technology used is ADSL and HFC.The following table shows the internet penetration progress over the years.Source (Internet world statistics, 2010)Albtelecom offers upstream capacities of internet access to retail customers from 512Kbps to 4Mbps while Abisnet from 1 to 3 Mbps.Albtelecom is the main operator offering to other ISP-s high cogency access to internet international accession through fiber. former(a) alternative operators access the international gateways through Albtelecom use other alternative microwave links. The internet backbone access capacity in October 2009 was 5.5GB and was one of the lowest in the region.The threat for substitute product and servicesAMC offers Data Internetworking and Internet services through ISP in addition to its core business mobile services. International IP transit services are provided through the partnership established with OTEGlobe which is an international data services provider. The type of service is IP transit, (Layer3 Networking) where turnkey IP network is provided through delivering the end routers, initiation and configurations of them and IP packet encryption as well. IP capacities provided are dedicated. handiness of services is above 99.9% and quality of network is very good.For such type of data services, substitute services in the market are considered the MPLS VPN-s, satellite data links, internet VPN services, GPRS Intranets and data dial-up.MPLS VPNs are becoming standard services worldwide but not yet present in the local market. This comes mainly due to the reasons of lack of a dedicated data backbone in the country, the lack of development of IP backbones technologies by the operators for the moment and the lack of fiber backbones. Since the data IP backbone is missing for the moment and establishing it will need time and big investments, MPLS VPNs may present a interchange threat after some years. There are not operators offering such products for the moment.Satellite data links are established through satellite terminals installed at the local remote offices locations. cerebrate are aggregated to the satellite nub and then connected to the headquarter network. These links have the service of installing anywhere in the country and this represent an advantage considering the terrain but are more convenient to be used as point to point links rather than in a distributed multipoint topAlbanian Mobile Communications (AMC) AnalysisAlbanian Mobile Communications (AMC) AnalysisAlbanian Mobile CommunicationsMarket segments characteristics. (Demands type)Business and Residential are t he main customer segments for Data and Internet services.According to ERG Report on regulation of access products necessary to deliver the business connectivity, business customers distributed with remote branches/offices nationally, tend to order wholesale services ordered by the headquarter rather than ordered as separate packages by the remote branches and while this is typical for big and organized business, smaller one sometimes find themselves convenient to buy and use the retail offered services (ERG, 2009).Regarding the demand from business customers different needs are found and a clear line between the high-end and low-end business customers can not be set but what separates them is often the quality of services demanded and the way of ordering the services as a complete network solution from one provider only or having different providers and the company itself does the role of the integrator (ERG, 2009).Another common behavior of businesses is the demand for a full solut ion for communication services covering the range of fixed and mobile services while it is noted that big business and in addition while the standard users are more sensitive for the price, the business big ones stick to well known brands, quality and reliability of services and after sales support provided (ERG, 2009).Big Business Multi-site customers seem to have different needs when compared to residential users or to small business users Different services such as mobile, fix, data networking, convergent products and value added services high quality communication services quick response and good support dedicated personnel as account manager (ERG, 2009)5. AMC Company ProfileAlbanian Mobile Communications (AMC) is the biggest Mobile Network operator in Albania and is part of the Cosmote Mobile Telecommunications, the mobile part of OTE SA Greece. Part of Cosmote Group which is operating in 4 countries Greece, Albania, Bulgaria and Romania, AMC is operating in Albanian market sin ce 1996 and has constantly dominated the market by means of customer base and revenue.AMC is founded as a state owned company by early 1996 and launched the standard GSM services on May 1996. It was privatized in 2000 when Cosmote Telenor Consortium became the controlling shareholder privatizing 85% of the shares while around 2% were provided to the employees and the rest of 13% remained to the state. Now 97% of the shares it is owned by Cosmote and 3% by the employees.At the time of privatization AMC was offering the services only to about 30,000 postpaid customers and only at xxx% of the territory and xx% of the population. (ASK ILIR)After the privatization, due to the low level of development of fixed telephony, lack of real completion and the investments made by the Greek company Cosmote, the company developed very fast by expanding the network to all the territory of Albania, offering the services to prepaid customers segment and adding a broad range of mobile services such as SMS, MMS, VMS and Internet access.After Vodafone entrance in the Albanian market in 2001, the competition in the market forced the constant decrease of prices, increase of number of services and their quality. The third operator, Eagle Mobile, entered in the market in 2008 and further busted the competition among the three operators. Positioning itself as a low cost services operator, Eagle mobile initiated a price war in the market forcing further decreases of services prices.Today AMC is the biggest Mobile operator in Albania, dominating the market by having around 1.9 million of customers with 43.3% market penetration. AMC is covering 99.8% of the population and 90% of the territory in Albania. Roaming agreements are established with more than 300 GSM operators worldwide. Major mobile product and services offered to individuals are voice, SMS, MMS, voice mail, internet access, WAP portals and push email for residential. Corporate push email, data internetworking, ISP and VPN serv ices are provided to corporate customers. EDGE technology is implemented covering 86% of the population and 63% of territory offering the possibility to the customers to access the internet through the mobile at acceptable rates. 3G technology is not yet licensed in Albania but the licensing process is expected to start during this year.AMC has around 530 employees highly qualified and trained. Around xx% of employees have a university degree and xx% of them are under the age of xxx. Personnel is organized in three main division, Commercial, Technical, Finance and Operations Administrative.The revenues for 2008 were at 191,272 millions, the OIBDA margin was at 64.7% and the net profit margin was at xxx%. During 2009, due to several factors present in the market such as the third entrant competition, world financial crises and intervention of regulatory body in decreasing the retail and interconnection termination tariffs AMC has faced some challenges on realizing the revenue object ives although the figures were still very good revenue at 145,744mil, OIBDA at 57% and net profit at xxx%.For the future, considering the expected fierce competition due to also to the entrance of the fourth operator in the market and present financial crisis as well, AMC is looking to realize the targets through orienting the business towards the customer, finding other revenue streams, offering a wide range of products and services, the best technology in the market and best network quality. Offering of 3G services within 2010 and enrichment of products portfolio with services that this technology makes possible are considered as good opportunity for AMC in the near future for increasing the revenue.6. Current Situation Analysis6.1 General environment factorsPoliticalAlbania is a small country located in southeastern Europe bordered by Adriatic Sea, Greece, Montenegro and Kosovo. Territory is 28,748 sq km and population at 3,639,453.After the Second World War, Albania established a communist regime which has ruled the country for 46 years until 1991 when it collapsed and a new democratic system was established. Albania has gone through a difficult process of transforming society to a democratic one and of developing the market economy. The process has proven to be very challenging and although a lot of progress has been done, the country is facing a lot of problems and deficiencies related to corruption, week infrastructure, unemployment, organized crime and sometimes lack of political stability.Since starting the transition process in 1991, the progress of Albania has been impressive although the transition period has taken longer than enough. Albania has established the institutions of democracy, has developed the capacities of public institutions, and has established the foundations of market economy (World Bank, 2010). Albania has joined NATO in 2009, has signed in 2006 the agreement for Stabilization and Association with EU and is one of the potential c andidates for joining the EU.As part of EU association agreement, Albania since ten years has transformed and adopted the legislation based on EU recommendations and framework.The legislation improvement has been a continuing process and is performed under the tough monitoring and supervision of EU. In this regard, currently we may say that Albania has a very good legislation frame although there are evident gaps between the legislation and practical implementation of the laws in the country.The country has joined the WTO in 2000 and since then has adopted its international trading policies in accordance with the agreement with this organization.Government policies and strategies on Electronic communications are focused on liberalization, development of market and competition, attraction of foreign direct investments, protection of consumer and are developed in compliance with the National Strategy for Development (covering years 2007-2013) and the EU integration directives.EconomyA lbania is a country with low to middle income with a gross domestic income per capita of $3740 in 2008. The Economy of the country has been totally transformed during the transition period from a communist economy towards a market-based economy. Albania has achieved a sustainable economic growth, while containing inflation almost constant every year. During the transition period, the structure of economy has been transformed from an agriculture and industry to services and construction. Large scale migration has fueled high workers remittances, which make up around 8-13 percent of GDP (World Bank Web Page, 2010, Albania in Brief). During that period the GDP growth rates of around 5-6 percent per year have been achieved while the poverty level has been reduced constantly. The absolute poverty rate was 25.4 % in 2002 but dropped to 18.5 percent in 2005 and to 12.4 percent in 2008. The extreme poverty rate decreased from about 5 to 3.5 percent but inequality has increased importantly ( World Bank Web Page, 2010, Albania in Brief).According to World Bank data, the Albania GNIP (Gross National Income per Capita) in 2008 was at 3840$ ranking at 113th position while PPP (Purchasing power Parity) was at 7950$ during 2008 ranking at 108th position worldwide (World Bank, 2008).The GDP composition by sectors the year 2009 was as following agriculture 20.06%, industry 18.8% and services 60.6% (CIA Fact book, 2010). In 2009 unemployment rate was at 12%, population under the poverty line 25%, Inflation rate 2.1% and has been kept within the range of 2-4% since 2002 (CIA Fact book, 2010).Major agriculture products are wheat, corn, vegetables, potatoes, fruits, sugar, grapes and meat while the industrial ones are food processing, textiles and clothing, oil, hydropower, cement, chemicals, mining and basic metals.In 2009 the exports were at 1994 billion while the imports were at 3602 billion (CIA Fact book, 2010).Strong growth has been seen during the years 2002 -2008 at the rat e of 14-15% in the construction industry which has been considered as very successful one in the country.Evidences of global crises effects have been shown during 2009 when the GDP growth was 4% less than 2008. The remittances and bank deposits have declined much during 2008 and 2009 causing the slowdown of consumption while imports went down from 4,898 in 2008 to 3.602 Billion in 2009 (INSTAT, 2010).The deposit rates during 2007 were at the average of 6.3% while the bank interest rates were at 13.6% (INSTAT, 2010).Following are shown the main competitiveness indexes for Albania provided by the Harvard University, M. Porter in The Global Competitiveness Report.SourceM. Porter, The Global Competitiveness Report, 2008-2009Based on this report, Albania is categorized in the group of countries being at the stage of efficiency driven economy, has many deficiencies in infrastructure, technology and innovation and market efficiency while fits with the standards of this category for macroec onomic stability, health and primary education, labor market efficiency and institutions,SourceM. Porter, The Global Competitiveness Report, 2008-2009From the above report we can see that corruption, inadequate infrastructure, governing efficiency and bureaucracy and Tax regulations are the main problematic factors for doing business in Albania.SourceWorld Bank, Doing Business 2010 AlbaniaAccording to World Bank, Albania is currently well positioned to continue with its strong economic growth and is able to make significant movements towards the integration with the European Union but the government must strongly address the governance problems, maintain a stable macroeconomics framework, improve the business environment and attract investments, upgrade public infrastructure, develop its human capital and make sure that the development benefits are fairly distributed to different categories of society with a special attention to supporting the poor ones (World Bank 2010).Although it has sustained high growth rate by keeping the microeconomic stability during the last decade, Albania remains still one of the poorest countries in Europe showing a large scale of informality in economy, a week and inadequate energetic and transportation infrastructure. Shortages in Energy caused from the dependency from hydropower plants and inadequate distribution infrastructure contribute much in a poor business environment and is a factor for not being successful in the process of attracting the foreign investors.According the European Commission 2009 report , Albania has kept and maintained the macro-economic while the worldwide crises had only a limited impact on the country, inflation was low, exchange rate has been stable, liquidity of banks have been ensured (EU Commission, 2009)SocialAccording to INSTAT, 46 % of the population is between the age of 15-44 years and average age is 32.1 years therefore we may say that Albania has a young population however the population has started aging for the reason of decreased rate of births and longer life rate (INSTAT,2010). The number of people living in urban areas has increased from 35.8% in 1989 to 45% in 2004.Consumer telecom utilization and spending is high and at around 6 % of the total household expenditures. New generation like the new technology of mobiles and are followers of offers.Some future social trends are mentioned belowUrbanization will continue therefore increasing the chances for the fast rollout of broadband technologiesEconomic inequality will increase, therefore the customer segmentations should be considered and product and services should be customized to each segment needsFamily size will decreasePeople joining the social networks will increaseRegulatoryThe country has adopted the national legislation in accordance with the EU 2003 regulatory recommendations and framework. The Law No. 9918 (May 19, 2008) is the main legal instrument for the electronic communications industry regulatio n. It defines the responsibilities of government and regulatory institutions for this regulation.Based on this law, the Minister of State for Reforms and Parliamentary relations is the administration body for the electronic communications services and it is responsible for drafting the related legislation and for preparing the plan for radio frequencies. Based on the proposals submitted by the regulatory, the Ministry has the authority to approve the tenders for limited spectrum assignment and universal service providers. In 2009, the Council of Ministers has approved the National Frequency Plan while there is under the approval process the policy for the sector development for the period 2009-2014 which is oriented on liberalization, European integration and convergence.The regulatory authority (AKEP) is an independent, self-financed entity which covers the regulatory tasks for the electronic communications. Under its authority belong also some tasks related to adoption, administra tion and implementation of legislation. For the industry of Electronic Communications, the regulatory body should safeguard the competition, guaranty the quality of services offered and delivery of them, protect the consumer, license and develop the market through promoting the investment and latest technology implementation.AKEP can impose prices control, set administration fees and define methodologies for regulation of tariffs and defines its own structure and salaries without any intervention from the Ministry. The financing is taken from fees applied to operators and service providers. It reports to the parliamentary assembly. The privatization of Albtelecom and Eagle Mobile, in 2007, increased the level autonomy and independence for the AKEP and the Ministry although the state still owns 25% of the shares. Lately the government has announced these shares will be sold.Another institution was established by the government in April 2007, National Agency on Information Society (NA IS) which role is to coordinate the government activities for the information society and communications. It prepares and proposes the national strategies, draft ICT legislations and coordinate the projects of government in ICT.With regards to market access and authorizations, Albania has moved forward with the gradual process of liberalization. In 1998 the liberalization started with the rural local networks, then in 2003 was liberalized the operations for the domestic long-distances networks and in 2005 for international ones. In 2006 the market was liberalized for urban operation of local alternative providers.The law of 2008, established the concept of General authorization based on which the networks and services which do not require the usage of limited resources could start operating without getting a license but just by sending a notification for their start to the regulatory authority within 15 days of operations. Based on this, the need for getting the license remained onl y for the frequencies and numbers.Based on the law, AKEP can use the SMP (Significant Market Power) designation mechanism in order to regulate the competition in the market. The decision for designation should be based on a Market Analysis procedure results. In 2007 AKEP has designated AMC and Vodafone as SMP in the market of retail mobile services and for the wholesale voice termination. Based on that, AKEP imposed to these two operators obligations related to non-discrimination, transparency in RIO (Reference Interconnection Offer), imposed the prices of interconnect termination by cutting them by 31.2%% and applied a reduction in retailed prices of 30% for on-net and 40%for the off-net calls for a period of two years.In 2007, AKEP has designated Albtelecom as SMP in six markets related to fixed voice services offered to customers and for voice transit services. Obligations were set to Albtelecom including the imposed reduction of retail and transit tariffs.Following a review of t he markets in wholesale and retail tariffs done in 2009, the competitive safeguards LLU and CS/CPS were imposed to Albtelecom which are not yet implemented.AKEP has already launched several markets analysis procedures on most of the wholesale and retail markets such as Mobile wholesale market for call termination, access and call origination fixed retail access and call services for wholesale interconnection.In December 2009, AKEP introduced to operators a reference document with the model of BULRAIC cost calculations for mobile services MTR based on which the data have been provided to AKEP by the operators. As the result of these analyses, it is expected that AKEP imposes the Mobile Terminated Rates for national calls while the rates for the international calls will be reviewed.During 2009 AKEP has launched the market analysis and public consultation process for wholesale and retail leased lines markets and finalization of it is expected by mid 2010. As result of public consultati on process, is expected to be defined the services, demands, providers, supply structure and markets and then based on these is expected that regulatory designates the SMP operators for which the tariffs for their services will be regulated.During Q1 2010, AKEP has launched a public consultation process on The rule for the indexes of service quality which is expected to be finalized during Q1 2010.The above mentioned actions which regard regulation of competitions can be considered as steps to develop the competitive safeguards environment, however we can mention other steps not yet realized by the regulatory although the process has already started. Such missing measurements are number portability, carrier selection and pre-selection (CS, CSP) not in practice yet, local loop un-bundling (LLU) not in practice yet, national roaming, MVNO and whole sale line rental.Number portability public consultation is in progress and based on AKEP plans, the service will be available in the marke t by end 2010 while the process for licensing for wireless broadband spectrum (WiMAX and mobile 3G) are expected to start with public consultations opening by March 2010 and be finalized by mid 2010.According to latest European Commission assessment, there were noted some progress including the alignment of primary legislation, while still some secondary lines laws have to be adopted yet, market liberalization and competition still are at early stage and administrative capacities of the ministry and regulator was not sufficient (Cullen, 2008).TechnologicalIn the area of mobile communication technology, GSM 2.75 technology (EDGE) is implemented since 2006 and now three operators offer it to the customers, AMC, Vodafone and Eagle. Regulatory has not yet provided the licensing for the Mobile 3G CDMA and broadband technologies HSPA and HSPA+. There is a delay in this aspect and the licensing for 3G technologies may be provided only now, at the end of lifecycle for 3G technology and at t he time that other markets have started trialing and adopting the 4G network technologies (LTE).Video Digital Broadcasting (DVB-H) services are offered by three operators (DIGITALB, TRING and TV SHIJAKU) already to the market through terrestrial or satellite broadcasting.Number of PCs and PC utilization at home is low and estimated to xxx% of the houses while the utilization in companies and government is high. Internet services are provided in the country by more than 36 ISPs and technology for access is mainly fixed broadband xDSL, hybrid fiber coax and dial-up.Wireless broadband spectrum available for WiMAX is not licensed yet by the regulatory while the WiFi networks are frequently used for the Internet access in cafes. Points to multipoint systems such as LMDS are not present in the country.Fiber networks are present only in the main cities such as Tirana and Durres and implemented by some ISP-s for the purposes of internet access or triple play services provided to the end use r. Fiber backbone is missing and the mobile operators backbone is mainly build of microwave transmission links based on SDH or PDH technology.Two of mobile operators have taken already some steps on offering the mobile fix substitution services to the customers but not providing the convergence of the mobile and fix telephone number.Content development is weak and mainly is based on external international resources.The main technology factors that will shape the next decade of electronic communications development are the followingConvergence of networksFixed and mobile network differences will vanish and a common network providing integrated services will serve the customers. Mobile to fix substitution and integration has already startedConvergence of network technologies to an all IP networksTraditional telecom networks and internet (ISP) will merge together to a next generation carrier network which is based on all IP technology.Services will clearly separate from transport netwo rks and competition will be focused and oriented on servicesConvergence of servicesConvergence of networks and network technology will make possible to design, combine and deliver to the customer services which traditionally have been provided before by different technology, networks and vendors such as triple play services, (video, voice and internet) provided all at one network access point, accessed through same application environment which run in many different types of devices.Unified services access and unified messagingCustomers can access through same software environment and through same or different devices and from everywhere (office, home, when traveling) same set of applications and services.Reduction of cost for hardware and increase of software role and powerSoftware will run on standard hardware. Big software players will play a big role while the network HW vendors will become more software oriented.Growth of video content and internet utilization while the voice r emains strongDemands for capacities will be huge while the needs for integrating all sets of services at one management and control will increase.Increase of connected number and types of devicesWeb connected devices will increase. PCs, mobiles, TVs, game devices, etc. There will be a need to standardize the applications to all these set of devices.6.2 Electronic communications industry analysisWe will use the M. Porters Five forces model for analyzing the industry. We selected this model as being already one of the most worldwide known, widely recognized and used model for industry analysis. The analysis done based on that model will be used for business strategy development recommendations.Market overviewGeneral dataThe following graphs show the sector revenue growth and market in 2008 compared to the other countries in the region.Source (Cullen Report, 2010)Source (Cullen Report, 2010)Mobile telephonyIn May 1996, AMC a state owned company by this time launched for the first time in Albania the GSM services becoming one of the first countries in the region to offer such services. Currently there are three companies operating in the mobile services market AMC, Vodafone and Eagle Mobile. The fourth operator is licensed and is expected to launch the services on July 2010.On July 2009, the mobile customers were at 3.52 millions, mobile service penetration was at 110% of the population, and more than 99% of population and 90% of territory is covered by GSM signal. Around 93.8% of customers are prepaid and 6.2% are postpaid. AMC has 43.30% of customer base, Vodafone AL 43.00% and Eagle 13.7 % (Cullen, 2010). Technology used is 2G EDGE while 3G spectrum is expected to be licensed by mid 2010. Main services offered in the market are voice, SMS, MMS, WAP, internet access and GPRS intranets.43.3% of market share is owed by AMC, 43% by Vodafone and 13.4% by Eagle Mobile.Fixed telephonyAlbtelecom is the incumbent fixed operator in the market while more than 70 alternati ve operators operate mainly in the rural zones.Number of fixed telephony users by July 2009 end was 360,000 which represents 11.3% penetration while alternative operators customers are at 49, 690 representing 14% of this number(Cullen, 2010). 99.92 % of the fixed telephony is digitized. In July 2009 the numbers of PSTN lines were at 359,100, ISDN lines at 929, lines given to residential customers were at 338,300 and to business customers at 21,700 (Cullen, 2010).Leased lines and Data servicesAlbtelecom and the three mobile operators are the providers of leased lines services at national and international access. Albtelecom has had the monopoly of such services until few years ago and kept it for international access until 2006. Albtelecom has implemented a few fiber lines connecting some main cities while internationally have access of fiber backbones to Italy and to Greece and other Adriatic see countries through the Adria fiber backbone.The mobile operators have not build yet a ba ckbone to be used for leasing yet but are offering for the moment free capacities of their backbone build for their core business, mobile services. Besides AMC, there are not any clear evidences and data on the leased lines or data services provided by the other two mobile operators (Vodafone and Eagle Mobile). Albtelecom and mobile operators are moving forward their plans for implementation of a national Fiber backbone which will serve future needs for capacities nationally or for international access.AMC has provided data internetworking services to banks and other business or government institutions. More than 200 local networks of xxx customers are internetworked nationally and xxxx connections to international networks are established.COMPLETE STATISTICSUse Cullen report data on lease lines (pages 53-67, here are prices only)Broadband and Internet ServicesThese services are offered for the moment by fixed operators while the mobile broadband services are not yet licensed by reg ulatory authority. Broadband penetration rate was at 2.51 % on January 2010 and was the lowest one in the region while EU penetration was at 23.9% (Cullen, 2010).About 36 ISPs are operating in Albania mainly providing the services in Tirana area and few in the other western cities. According to Cullen report, by January 2010, the number of broadband connections was 80,000, narrowband connections were at 28,512 and 30% of people are regularly using the Internet (Cullen, 2010). Number of internet users in 2008, including the mobile internet access users, was at 580,000. Main operators are Albtelecom, Abisnet, ABCOM, Alfa cable and ASC (AKEP, 2010). 65% of broadband market is owned by Albtelecom and 35% by the alternative operators. Broadband technology used is ADSL and HFC.The following table shows the internet penetration progress over the years.Source (Internet world statistics, 2010)Albtelecom offers upstream capacities of internet access to retail customers from 512Kbps to 4Mbps w hile Abisnet from 1 to 3 Mbps.Albtelecom is the main operator offering to other ISP-s high capacity access to internet international gateway through fiber. Other alternative operators access the international gateways through Albtelecom use other alternative microwave links. The internet backbone access capacity in October 2009 was 5.5GB and was one of the lowest in the region.The threat for substitute product and servicesAMC offers Data Internetworking and Internet services through ISP in addition to its core business mobile services. International IP transit services are provided through the partnership established with OTEGlobe which is an international data services provider. The type of service is IP transit, (Layer3 Networking) where turnkey IP network is provided through delivering the end routers, installation and configurations of them and IP packet encryption as well. IP capacities provided are dedicated. Availability of services is above 99.9% and quality of network is ve ry good.For such type of data services, substitute services in the market are considered the MPLS VPN-s, satellite data links, internet VPN services, GPRS Intranets and data dial-up.MPLS VPNs are becoming standard services worldwide but not yet present in the local market. This comes mainly due to the reasons of lack of a dedicated data backbone in the country, the lack of development of IP backbones technologies by the operators for the moment and the lack of fiber backbones. Since the data IP backbone is missing for the moment and establishing it will need time and big investments, MPLS VPNs may present a substitution threat after some years. There are not operators offering such products for the moment.Satellite data links are established through satellite terminals installed at the local remote offices locations. Links are aggregated to the satellite nub and then connected to the headquarter network. These links have the advantage of installing anywhere in the country and this r epresent an advantage considering the terrain but are more convenient to be used as point to point links rather than in a distributed multipoint top