This section develops a country snapshot of the national broadband ecosystem in
a historical, institutional and economic context. Different aspects of national
broadband adoption will be covered such as infrastructure, services, market environment,
applications and usage.
2.1 Synopsis of Recent Evolution of Markets and Public Sector Reform
Reform and structural change in the overall ICT and broadband sector started early
with the most important segment of telecommunications. The growth and evolution
of the Turkish telecom industry in the last 30 years had five separate phases:
Infrastructure pickup (1980 to 1984):
Network infrastructure buildup was a priority and public investments played a major
role in this period. As a result, the number of access lines grew by 14 percent
on average; however, despite the acceleration in telecom investments and growth
in the subscriber base, long waiting lines remained during this time.
Fast wire line growth (1985 to 1994):
The late 1980s was a period of ongoing intense infrastructure investment and fast
growth. During this period, the government’s annual telecommunications investments
averaged US$ 656 million and access lines grew by an average of 20 percent annually.
Also, the PTT (“Posta Telefon Telegraf”) was split into postal services and Turk
Telekom. Two GSM 900 licenses were granted in 1993 to Turkcell and Telsim, with
revenue sharing agreements with Turk Telekom.
Wireless revolution (1995 to 1999):
The late 1990s were characterized by explosive growth in wireless phone subscriptions.
In 2000, annual subscription growth exceeded 100 percent, and wireless phone penetration
reached 25 percent. Average annual investment in the wireless subsector was more
than US$ 1 billion. During this period, the government continued investments in
wire line at US$ 560 million per year and wire line penetration reached 28 percent.
There were several unsuccessful attempts to privatize Turk Telekom.
Preparation for liberalization (2000 to 2004): This period is characterized by maturity in wire
line and decelerated growth and increased competition in wireless. Two GSM 1800
MHz licenses were auctioned in May 2000, at a substantially higher fee (close to
US$ 3 billion including VAT, compared to US$ 500 million for the initial licenses
bought in 1999) to end the revenue-sharing agreements. The Telecommunications Law
in 2000 established an independent regulator, the Information and Communication
Technologies Authority (ICTA) and predetermined full market liberalization starting
from January 2004.
The period of post liberalization and broadband revolution (2004-...): The government maintained
its full support for liberalization and privatization of the telecommunications
sector. The ownership of Telsim, a privately owned telecom operator, was transferred
to the government after its owners were convicted of fraud. The operator was afterwards
privatized in an international tender won by Vodafone in December 2005. 3G mobile
licenses were awarded to all three operators, Turkcell, Vodafone and Avea, in 2008
and services began in 2009. This period is also characterized with increasing competition,
declining fixed line penetration and falling voice revenues. Broadband, both fixed
and mobile, have become a major source of revenue and a general technological platform
for overall communication services.
As a result of structural policies in order to liberalize the market competition
flourished, new entrants emerged as strong operators and foreign capital flew into
Nonetheless a distinction should be made between fixed and mobile segments of communications.
As to the national market, the fixed and mobile subsectors have radically dissimilar
configurations in terms of productivity, liberalization, and ownership. Mobile is
more competitive and productive, with a more advanced regulatory structure. On the
other hand, in the fixed subsector, productivity is relatively low.*
As observed in many other developed and saturated markets, fixed-line penetration
is in continuous decline since its peak period of 2001-2004. Consequently, the penetration
rate is down to 23.3 percent in 2009, from around 28 percent in 2004. The penetration
is low compared to EU countries, for example 37 percent in France, 43 percent in
Germany, 46 percent in Greece and 31 percent in Hungary.*
The Turkish mobile telecommunications segment has achieved a considerable growth
with a share of 60 percent within total sector revenue in 2008 and is expected to
continue growing. Mobile number portability (MNP), launched in November 2008, as
well as 3G mobile services introduced in July 2009, have accelerated the competition
between the three market players.
Analysts forecast mobile virtual network operators (MVNO) are also expected to start
operating in the market along with the three mobile operators. Mobile-phone subscribers
are expected to grow at an annual rate of 5.5 percent between 2010 and 2014, following
a fall of 0.5 percent in 2009. This will increase the mobile-phone penetration rate
in Turkey to about 113 percent in 2014, similar to most EU countries, where penetration
rates are generally around 100-120 percent.
2.2 Institutional Setup: Current Policy, Legal and Regulatory Framework
exhibits major institutions and establishments that are involved in the ICT and
broadband sector. The State Planning Organization (SPO) is the leading institution
regarding government policies and strategies for the overall ICT sector. It prepares
pivotal national strategies and programs such as development plans, economic programs
and sector strategies and action plans. SPO is also involved in resource allocation
to e-government projects and applications and has access to private sector organizations
through various mechanisms. The Office of the Prime Minister has lately become a
significant coordinating and a consulting body in terms of e-government initiatives.
In regards to ICT related research and determining the national agenda for general
science and technology policies the Scientific and Technological Research Council
(TUBITAK) is the main body.
The Ministry of Transport and Communication (MoTC) is responsible for sector
oversight in the provision of public services including information and communications
to the end users. The MoTC is also the top official body on issues of safety, quality,
standardization and balanced development of the communications infrastructure. The
Information and Communications Technologies Authority (ICTA), founded in
2000, has the overall regulatory responsibility over communications sector.
A number of non-governmental organizations are also involved in the general direction
and structure of the ICT sector. The most influential establishments include the
Turkish Informatics Association (TBD), Informatics Sector Association (TUBIDER)
and Turkish Informatics Industry Association (TUBISAD).
Turkey’s public sector has a tradition of passing legislation rather than using
secondary regulations to interpret basic laws. In an attempt to liberalize communications,
to regulate provision, diffusion and usage of information and enable e-transformation
different legislation was enacted throughout the 2000s. As to the legal framework
in effect (or pending) the following documents constitute the fundamental architecture
for the nation:
Table 2‑1 Major institutions and
establishments in ICT sector
In the field of Information Society:
Right to Information Law (2003), Inclusion of cybercrime in the Criminal Code (2004),
Electronic Signature Law (2004), Amendments in the Intellectual Property Rights
Law, Universal Service Law (2005), Law No. 5651 on regulating broadcast in Internet
and combating crimes committed through such broadcast (2007), Electronic Communications
Law (2008), and secondary legislation on telecommunications.
In the field of IT and e-government:
Public Procurement Law (2008), Census Services Law, Law No.5942 amendments in the
Traffic Law No.2918, Circulars regarding the payment of taxes online, Draft Data
Protection and Privacy Law (pending in the Parliament), e-Commerce studies regarding
the harmonization of 2000/31 EC, and Draft law covering partial amendments for various
gives a quick snapshot of major national strategies and initiatives targeting e-transformation
in the public sector and broadband adoption at large. Evolution of public policies
with regard to Internet based technologies and e-transformation can be analyzed
under four distinct periods:
Data processing and computerization (1970-1990): During this period the focus of public policy
was mainly on automating back-office functions, such as processing of the census
Building basic ICT capabilities (1990-2000): In the 1990s, there emerged an effort to provide
basic ICT facilities and capabilities from a modernization perspective of the government
sector. The “Turkey: Informatics and Economic Modernization” project of the World
Bank in 1993 was an initiator in this sense. In the second half of 1990s the National
Informatics Infrastructure Main Plan of the Ministry of Transportation was an early
example of the first organized action in the public sector. However the succession
of governments; high inflation and recession; and political and economic instability
prevented much implementation from taking place.
The era of e-government (2000-2010):
Political stability with Development and Justice Party rule following 2002 and negotiation
process with the EU helped government agencies to devise more integrated and organized
frameworks for action which included active participation of private sector and
non-governmental organizations. The E-Transformation Project and the Information
Society Action Plan are good examples of this period. The overall goal in these
documents was defined as promoting Information Society polices to increase Turkey’s
competitiveness. A further goal was to move from labor-intensive production to a
higher-value-added production and from providing a source of low-cost labor to a
highly educated workforce in a knowledge based economy. However going beyond rhetoric,
the real focus was on implementing e-government applications and demand aggregation
policies rather than promoting e-commerce and the digital economy.
Beyond e-government (2010-…):
With increasing diffusion of ICTs into business applications and government operations,
there are now new signals calling for a shift in public policies. Growing businesses
are in clear need of accelerated ICT adoption to leverage their competitive power.
The high level of investment in e-government applications is clearly just one component
of modernizing the public sector. To better harness the transformative potential
of ICTs government agencies are now starting to look beyond e-government. The National
Vision for Broadband Strategy and updating studies of the Information Society Strategy
provide good illustrations of this process.
Box 2‑1 Recent strategies and initiatives related to
e-government and broadband ecosystem
(Source: Interviews with Dr. Ramazan Altınok, Dr. Ertugrul
Karacuha, Emin Sadık Aydın, Furkan Civelek, Ahmet Hasanbeseoglu and Ugur
- “Turkey: Informatics and Economic Modernization” report was prepared by the World
Bank in 1993.
- The Ministry of Transportation published “the National Informatics Infrastructure
Main Plan” (TUENA) in 1998. The plan aimed at developing policy actions and strategies
for enabling transition to an Information Society. The Internet Advisory Council
and The E-Commerce Coordination Council were established in the same year.
- Turkey joined the eEurope+ Initiative, together with other EU candidate countries,
in June 2001. Soon after, Turkey started the eTurkey Initiative, which includes
the same goals as eEurope+.
- A new government of the Justice and Development Party (AKP) took office on 18 November
2002. The Urgent Action Plan (UAP) was developed. This plan included the foundation
of the e-Transformation Turkey Project. The Project initiated in February 2003 with
Prime Ministry Circular. The State Planning Organization (SPO) was assigned to co-ordinate
the e-Transformation Turkey Project. To realize the stated objectives and to ensure
the success of e-Tr, a new co-ordination unit, the Information Society Division,
was established in SPO in March 2003.
- Within the framework of e-TR two action plans were executed: Short Term Action Plan
(STAP) with 73 actions (2003-2004) (completion rate: 47%), 2005 Action Plan with
50 actions (2005) (completion rate: 40%)
- Information Society Strategy (2006-2010) and Action Plan were developed by SPO and
took effect by a High Planning Council decision on 11 July 2006. A new institutional
structure was formed by introducing e-Transformation Turkey Executive Board, e-Transformation
Leaders and an Advisory Board.
- Prime Minister’s Office prepared the countries first National Broadband Vision in
cooperation with relevant stakeholders and participation with private sector. The
National Broadband Vision under three versions (Turkish, English and Arabic) is
to be published before end March 2011.
- SPO commenced studies to update its Information Society Strategy and Action Plan
to finalize before end of 2011, and decided to arrange a separate chapter on broadband
Turkey faces a new window of opportunity with regard to upgrading competition and
productivity by means of better ICT adoption. Promoting and creating a viable broadband
ecosystem is the key to success. The country can either let the market determine
the pace of development or promote a more rapid development of broadband infrastructure,
as has been done in advanced countries. Defining, monitoring, and promoting the
broadband ecosystem with effective means is an important area where more focus should
2.3 Infrastructure Development
One of the fundamental aspects of broadband ecosystems is broadband infrastructure.
As broadband technologies and applications flourish rapidly, providing good infrastructural
capacity has been a key policy concern among government officials. Evaluating infrastructure
developments require analysts to monitor a number of indicators at the same time
since any single dimension will not be sufficient to provide a complete picture.
Broadband is typically defined as a “high-speed communications network” that offers
internet connectivity with download speeds of at least 256 kbit/s. * This definition based on the minimum level of speed
is a matter of debate though it is clear that broadband technologies are significantly
different from dial-up lines in terms of functioning. No distinct definition for
broadband exists in Turkey.
Three basic criteria are incorporated to provide an integrated picture of Turkish
broadband development: Penetration, technologies and prices. A benchmarking
technique is utilized in order to obtain a better picture of the relative performance
of national broadband capacity both across countries as well as over time. In isolation,
there is a tendency to view national growth rates as high, since, as with any new
technology, growth is often in the double digits.
2.3.1 Broadband penetration
Overall performance in making broadband an essential part of daily life has been
uneven and subject to significant variations among nations. The divide in performance
of countries is best reflected by the concept of broadband penetration gap. The
broadband gap is defined as the discrepancy between benchmark countries and
that of host country in terms of adoption of broadband technologies generally measured
in household or population penetration. In the case of Turkey, there is a significant
fixed broadband gap as compared to other OECD members (Figure 2‑1).
A number of factors are important in determining penetration rates but as a general
observation countries with relatively high fixed broadband penetration rates tend
to have relatively higher per capita GDP and well developed communications infrastructure.*
Studies indicate that, though the relationship is not necessarily casual, per capita
income is correlated to fixed broadband penetration with a significant correlation
coefficient of 0.70. Since the Turkish economy has depicted a strong rebound in
the post crisis environment and medium to long-term outlook is promising, rising
per capita income levels should establish a major driver force for broadband infrastructure
2‑1 Fixed broadband penetration gap with selected countries, 2010
Source: OECD broadband portal and author’s own calculations)
Turkey faces a challenge in order to catch up with OECD members in broadband technologies.
Despite growth in broadband infrastructure, when compared to advanced countries,
Turkey has recorded somewhat poor performance and has not been able to close the
broadband gap. As of the second quarter of 2010, in terms of fixed broadband technologies
the leading countries reached penetration levels above 35 percent while Turkey managed
only a 9.4 percent subscription based penetration rate.
Turkey’s fixed broadband growth rate is lagging the OECD area. During 2010 Turkish
fixed broadband growth was 0.83 percent compared to the OECD average of 1.72 percent
compared to major developing economies, Turkish broadband growth is considerably
lower; for instance India is expanding its broadband capacity with a growth of 62
per cent in 2010.
Nevertheless the fixed broadband penetration rate in Turkey still exceeds some European
countries such as Poland, Italy, Bulgaria and Romania, and is very close to the
rates in Portugal, Hungary, Spain and Estonia. On the other hand, the personal computer
(PC) penetration level in Turkey in 2009 was only about 25.3 percent, compared to
77 percent in the UK. Since broadband usage depends on PC penetration, increasing
PC usage and ownership in Turkey are expected to create opportunities for the broadband
Figure 2‑2 Fixed broadband (per 100
inhabitants), net increase, June (2009-2010) (Source: OECD)
Turkey’s relatively well-developed mobile network has a penetration level around
85 percent and provides another means for broadband access (Figure 2-3). Wireless
broadband has shown a significant expansion following the decision of Turkish government
to issue 3G licenses during November 2008, making the market an appealing area for
future investment. Since then 3G mobile Internet subscriptions using data cards
have grown at a rapid pace and as of end 2010 reached 1.5 million subscriptions
(total 3G subscriptions reached 19.3 million as of December 2010 according to ICTA).
The annual rate of growth in this segment of broadband was 265 percent between 2009
and 2010. As a result mobile broadband is growing much faster than fixed broadband
subscriptions (27 percent annual growth as of 2010). Total fixed and mobile broadband
through data card subscriptions reached 8.5 million by the end of 2010.
Figure 2‑3 Selected penetration indicators, per 100 inhabitants
A saturated voice market with declining revenues has motivated operators to rely
on mobile broadband network investments for optimizing profits.*
There has been a considerable growth in the investments to mobile subsector and
more importantly telecommunication operators have changed their strategy significantly
by allocating increasingly far more resources to mobile investments. Building up
of 3G communication infrastructures constitutes a determining factor for this shift
in corporate strategies.
Table 2-2 Broadband indicators, Turkey, 2010
(Source: Adapted from ICTA, Turkstat, Eurostat) (note: Subscription
penetration calculated based on population of 73,722,988 reported by Turkstat at
December 31 2010)
Penetration (per 100 people)
Fixed and mobile through data cards
ICTA. ADSL, Cable modem, FTTP
ICTA. Technical ability to access mobile
broadband without consideration of whether actively using to access Internet
Mobile broadband data cards
% of households
Households with computer
Households with access to the Internet
Households with broadband access to
- of which DSL
Experiences in many countries show that governments should leave the choice of technology
and infrastructure expansion as much as possible to market forces while promoting
a level playing field for different technologies. Turkey is implementing a policy
of increased competition through the privatization of its incumbent telecom operator
(55% was sold to the private sector in August 2005) and implementing rules to increase
competition such as providing competitors access to telephone lines.*
Yet this policy was not transformed into increased competition and a high rate of
growth in broadband infrastructure. Alternative operators accounting for only 7
percent, the level of competition in fixed broadband access is still very limited.*
Table 2‑3 Subscription indicators
by technology (Source: ICTA)
As the National Broadband Vision (2010-2023) highlights, if Turkey wants to develop
its broadband ecosystem rapidly and close the broadband penetration gap with advanced
economies the government should follow an integrated and strategic approach in terms
of broadband policy. * Waiting for growth in household demand for high-speed
Internet access to encourage the development of broadband will take time. The public
sector should consider taking a more pronounced role in stimulating the development
of broadband infrastructure and using this capacity for modernizing the public sector.
Figure 2‑4 Technological configuration of broadband infrastructure,
as percentage shares, 2010
2.3.2 Broadband technologies
Penetration data does not deliver enough information about the quality improvements
in the broadband infrastructure. While the growth rate is slowing down there may
still be considerable internal changes as users upgrade their connections with faster
speeds. This section helps to illuminate Turkish broadband development from a technological
18.104.22.168 Backbone network
Until recently there have been two main technologies or platforms over which broadband
services have been delivered to consumers. The first is Digital Subscriber Line
(DSL) which entails upgrading the legacy public switched telephone network (PSTN).
The second platform consists of the cable-modem technology, which entails upgrading
the cable-tv network.
2‑5 Breakdown of fixed broadband subscribers by access speeds, 2010
According to the recent data there has been a rapid shift away
from lower speed connections.*
The great majority of ADSL subscribers (64 percent) have an 8 Mbps connection. The
share of the subscribers who have 1 Mbps connections has decreased dramatically
from 42% to 26% in just six months of 2010.
22.214.171.124 Local access technologies
There has been an impressive shift away from dial-up Internet connections to broadband.
In 2005, dial-up connections still accounted for 40 per cent of fixed Internet connections
but had already fallen to just 10 percent by 2010.
In Turkey, xDSL is the most widely used technology accounting for 94 per cent of broadband subscribers.* While 3.9 percent of the subscribers use cable
networks and 2 percent of subscribers have fiber technologies for broadband access
the number of xDSL subscribers has touched to 6.6 million by end of 2010. When compared
to EU countries Turkish broadband is relatively far more concentrated on conventional
technologies like xDSL.
Box 2‑2 Leveling the field: The battle of broadband in national
(Source: Atiyas Izak (2010) Regulation and Competition in the
Telecommunications Industry: An Update; and interviews with Dr. Ramazan Altınok,
Dr. Ertugrul Karacuha, Emin Sadık Aydın, Furkan Civelek, Ahmet Hasanbeseoglu and
The incumbent Turk Telekom (TT) provides landline, mobile and Internet services.
It launched ADSL services in 2003, and currently offers Internet services in selected
regions through its subsidiary TTnet. In 2005 in a drive for privatization, the
government sold a 55 per cent stake of TT to the Saudi-owned Oger Group. In March
2010, Oger Telecom declared its interest in acquiring an additional share of the
Government's stake in TT. The Turkish Government plans to divest a further 15-20
per cent of its stake via an initial public offering. The remaining 15 per cent
stake in the operator is already listed on the Turkish stock exchange.
One of the key benefits of TT’s privatization is the fact that it has lost the special
status of a state-owned company and as a result is obliged to follow the same regulations
as any other Turkish telecoms operator. TT is likely to remain aggressive within
the telecoms marketplace and in the regulatory process as it tries to maintain its
leading position. Thus, the low level of competition in the broadband internet is
partly due to the strategic behavior of Turk Telekom to prevent the entry of alternative
Internet service providers. In most countries incumbent operators such as Turk Telekom
have been under the regulatory obligation of allowing new entrants to use the existing
network to provide their own DSL service In a landmark decision taken in November
2008, the Competition Authority has imposed a fine of 12.4 million TL (about €6.2
million) on Turk Telekom for abusing its dominance in the wholesale broadband Internet
market through price squeeze in the retail Internet market. In its decision, the
Competition Board stated that Turk Telekom and its Internet subsidiary TTNet endured
operating without profits for long periods of time and implemented campaigns that
would not cover losses in reasonable amounts of time and that these strategies were
executed in order to monopolize the sector. In a recent decision the Competition
Authority stated that Türk Telekom should provide naked DSL services. Provision
of naked DSL means that Turk Telekom can no longer bundle voice and data services
together and that the subscriber can subscribe to DSL services alone, without having
to pay for voice services as well.
In recent years Turksat with its UYDUNET cable services has increased its market
share by winning some 274 thousand broadband customers as of 2010. However since
the cable TV infrastructure is operational mostly in urban areas and lacking somewhat
more effective business models the company has not made a major breakthrough in
the domestic market.
Another striking development was the introduction of 3G services which had a significant
impact on the broadband sector. The three mobile operators, Turkcell, Avea and Vodafone,
are trying to find new sources of revenue in anticipation of the difficulties associated
with increasing subscriber numbers in the saturating market. All three won 3G licences
in December 2008 and launched 3G services at the end of July 2009. Avea allocated
TRY 1 billion to be spent mostly on 3G network development during 2009. Vodafone
followed suit with a TRY 1.3 billion investment allocation. At the end of December
2010, there were 1,448,020 mobile broadband subscribers, showing a 265 per cent
growth over the last 12 months. At the end of 2010, the number of customers on 3G
networks reached 19.4 million
With the emergence of alternative network technologies TT is now under pressure
for adopting a more business oriented strategy rather than enjoying its domination
in the fixed market. TT introduced its new Internet speed package days before 2011
which enables speeds of up to 32 Mbps with VDSL2 and up to 8 Mbps through ADSL.
TT shall begin offering packages with speeds of up to 50 Mbps and 100 Mbps with
VDSL2 technology, and shall increase the speed up to 16 Mbps with ADSL2+.
TT will need to work hard to retain its market dominance however, as mobile operator
Turkcell is investing in considerable fibre infrastructure through its subsidiary
Superonline. Vodafone Turkey also bought a major alternative operator in late 2009.
Another point is that EU candidacy is prompting Turkey’s telecoms regulator to strengthen
the regulation of the sector and curtail TT’s monopolistic powers.
Turk Telecom is leading provider of DSL and owns all of fixed telephone infrastructure
(16 million connections in 2010). As of 2009 the share of alternative operators
reached to 6.3%. Compared to the previous year, alternative operators’ subscriber
number increased by 29%. Currently two types of Local Loop Unbundling (LLU) namely
‘full access’ and ‘shared access’ have been implemented in Turkey. 163 central offices
have been opened to access of alternative operators by the end of 2009 under the
LLU regulations of the Authority. Currently alternative operators have technical
access to almost 7 million PSTN and 2.6 million ADSL subscribers via the above mentioned
163 central offices. Besides LLU, operators can offer broadband Internet access
services to their customers using Turk Telekom’s other wholesale broadband access
services such as xDSL simple resale and xDSL bit-stream access (BSA) which enable
ISPs to access the fixed broadband network at different levels. Some promotional
campaigns including LLU in the above mentioned wholesale access services have been
approved by the Authority upon Turk Telekom’s proposal in 2009.
Co-location areas and problems encountered at central offices opened to access have
been observed within the central office surveys carried out in June. Moreover the
outdoor DSLAM implementations of the incumbent operator are also observed.
In accordance with the relevant legislation and regulations, a Reference xDSL Resale
Offer has been offered to the Authority by Turk Telekom at the end of June 2009.
The public consultation process regarding to the draft offer has been completed
and approval procedure of the reference offer is ongoing. Besides, some new re-sale
tariffs proposed by Turk Telekom have been included in the existing offer upon approval
by the Authority. In this context, ADSL 2 Mbit/s with 4 GB quota, ADSL 8 Mbit/s
unlimited, MEB ADSL 2 Mbit/s, 4 Mbit/s unlimited, ADSL up to 8 Mbit/s unlimited,
with 4 GB and 6 GB quota, ADSL 512 Kbit/s with 512 MB quota and ADSL2+ 16 Mbit/s
unlimited resale tariffs have been approved in 2009 and included in Turk Telekom
Reference xDSL Resale Offer.
Mobile broadband offers a competitive alternative to fixed broadband. Turkcell,
Avea and Vodafone, the three operators in mobile segment had authorization from
the government to provide 3G services as of December 2008, and became operational
by July 2009. Since then mobile broadband subscriptions recorded an explosive expansion.
With some 1.45 million subscriptions (December 2010) and a growth rate of 265 percent,
mobile broadband holds great promise for Turkey, particularly given the limited
competition on the fixed market. Mobile broadband provided over the UMTS platform
with HSPA extensions came relatively late to Turkey. The 3G market is benefiting
from the deployment of HSPA technology and by the introduction of new smartphones.
Growth has been dramatic and mobile broadband accounted for 17% of all broadband
subscriptions by the end of 2010.
Though the level of competition in fixed broadband is limited compared to more advanced
economies, with a broader definition of broadband including the mobile segment,
Turk Telekom as the incumbent operator is losing its market share rapidly. TT’s
broadband market domination has been somewhat challenged by mobile operators’ (Turkcell,
Avea and Vodafone) success in targeting mobile broadband customers and partly due
to increases in cable and fiber subscriptions. TTNet’s market share in the broadly
defined broadband market was down from 93% to 71% since early 2009. By contrast
the market share of mobile broadband operators grew explosively up to 17% following
the opening of 3G services in the country. It is estimated that mobile broadband
subscribers will occupy an increasingly prominent place in Turkey’s broadband sector.
These are broadband customers who use devices such as netbooks, smartphones and
USB sticks to connect to the Internet wirelessly via a high-speed (3G/HSPA) network.
The share of cable network operator Turksat has also augmented from 1.3 % to 3.2
% during the last two years and fiber connections expanded their share from 1% to
1.8 % since early 2010 (Figure
Turksat provides both satellite and cable television services. It has around 1.2
million cable television subscribers.* Turksat has upgraded
its networks and made cable broadband services available to the majority of homes
in urban areas. Nonetheless the cable network is in its takeoff phase and needs
an effective management model for further expansion. The Turksat “Uydunet” service
provides its subscribers with broadband Internet access through its cable infrastructure
ranging from 1 Mbps to 20 Mbps. One challenge for expanding cable broadband access
is that most TV subscribers in Turkey have a preference for satellite delivery (some
10 million satellite dishes in mid-June 2010).*
2‑6 Shares of technology in total broadband subscriptions, percent, 2010
2‑7 Percentage of fibre connections in total broadband, June 2010 (Source: OECD)
Fiber networks are ideal because the capacity is much higher than traditional copper
lines and relatively easy to expand once the fiber is in place simply by adding
additional lasers to a line. When compared to advanced Asian and European economies
Turkey lags in fiber broadband penetration (Figure 2‑7). However the recent expansion in fiber subscriptions
is very promising and it indicates the demand for high bandwidth network access
could possibly be ready in the country. During 2010, the share of fiber subscriptions
in the total broadband market reached 1.8 percent.
In terms of technology deployment, though there have been outstanding market developments
that reflect the overall potential in demand and supply sides, the majority of Turkish
broadband infrastructure is based on traditional forms of connectivity devices which
do not allow high bandwidth data services such as advanced e-health and multichannel
television. Turkey shifted from a dial up network structure to a broadband dominated
one at a very rapid pace. Turkey’s fiber Internet backbone provides for high-speed
connections, but this has not translated to a high number of broadband users.
In the long run the leading policy challenge for the government would be facilitating
the development of high speed broadband networks most notably fiber. High-speed
broadband has strategic importance and should be promoted. Much as traffic expands
to fill roadway capacity after the building of superhighways, having more broadband
capacity will likely facilitate the delivery of government e-services, provide a
foundation for e-government in whole sectors of government, and stimulate the development
of e-business. Besides the recent rapid shift into high bandwidth subscriptions
and explosive growth in mobile and fiber segments indicate that the future demand
for broadband ecosystems will be strong. Turkish universities have already developed
their own broadband network, as has the National Adjudication Network Project (UYAP).
The e-health initiative is proposing to build its own network for exchanging data.
The lack of a complete and strategic approach would impair this great opportunity.
There are signs of a better understanding emerging in government circles. The National
Broadband Vision has urgently called on the public and private sectors for the development
of a holistic government approach to broadband. SPO is getting ready to update the
nation’s Information Society Strategy and disclosed publicly that it shall prepare
a separate chapter on broadband. A more organized approach should prepare for harder
policy designs to broadband challenges and ensure competition in the national broadband
market since it is the best option and the main driver of continuous improvements.
The Turkish government should also ensure a more effective regulative approach for
broadening competition in the broadband market. The development of competition in
broadband has been extremely slow, primarily because the Ministry of Transport and
the Information and Telecommunication Technologies Authority have been slow in adopting,
implementing and enforcing the necessary secondary legislation. Analysts argue that
Turk Telekom’s influence on the Ministry and the Information
and Telecommunication Technologies Authority’s lack of full independence from the
Ministry are to a large extent responsible for this state of affairs.
Prices are a
crucial indicator in evaluating the state of broadband development in any given
country. Analysis of prices, the level of service, and the range of choice available
to users, can help inform questions about the take-up and use of broadband services
as well as in assessing how competitive broadband access is in individual markets.
While there is still not enough data to systematically examine price and performance
changes, the trend in prices is very much downward; and the trend in performance
is upward. Competition is the main driver of improvements in price and performance.
International comparison suggests that prices of broadband services in Turkey are
among the highest in OECD and EU economic areas. The average broadband monthly price
per advertised Mbit/s in Turkey is about 40 percent higher than the OECD average.
When prices are corrected for purchasing power parity, prices in Turkey are the
Turkey is also lagging behind in high-speed connectivity prices. Prices in Turkey
are relatively cheaper for low speed connections and relatively more expensive for
Figure 2‑2 Broadband average monthly subscription price, Oct.
2009, USD PPP (Source: OECD)
Presenting the latest situation as of March 2011, Table 2‑2
confirms that high prices and affordability are among main concerns in Turkish broadband
market. Turk Telekom offers DSL services with different speed options. The baseline
ADSL offer at 1 Mbps costs US$ 13.2 per month with a 1 GB cap on data transfer.
Higher speed services are much more expensive than EU countries. The highest speed
100 Mbps service is priced at US$ 94.3 per month with unlimited data option and
a fiber 32 Mbps service costs US$ 27.2 per month with a 10 GB Cap. Turk Telekom’s
ADSL2+ 16 Mbps services are priced at US$ 37.3 and USD 20.9 with unlimited and 5
GB Cap respectively. Turk Telekom also offers ADSL technology to consumers with
the highest speed option 8 Mbps going from US$ 69 per month with unlimited data
transfer and decreasing prices for more limited speeds and data cap options.
Among independent ISPs offering broadband Internet services, Superonline provides
DSL and fiber Internet access with different speed options. The baseline starts
with a 1 Mbps speed service at USD 28.7 with unlimited data transfer, and 8 Mbps
speed option goes from USD 24.7 and USD 18.3 with 6 GB and 4 GB Cap respectively.
Among fiber connections the highest option is 100 Mbps costing USD 125.9 with unlimited
As the largest cable TV service provider, Turksat runs its Uydunet to offer broadband
services at different speed options. The baseline is the 1 Mbps speed service
costing USD 18.3 per month with unlimited data
transfer. However higher speed services are priced relatively higher than the average
ADSL services. The 10 Mbps option costs USD 62.6 and the 20 Mbps service costs USD
125.9 per month without any cap on data transfers. Prices per Mbps offered are significantly
higher than ADSL operators.
2‑4 Prices of selected broadband service packages in Turkey, March 2011
(Direct source inquiry to author)
The three mobile operators, Turkcell, Vodafone and Avea are also offering mobile
Internet services based on HSDPA technology and there are quite differentiated service
packages for consumers.
presents a selection of these mobile packages most notably the baseline options.
All three operators offer 1 GB cap mobile data options at around USD 18-19 as of
Since the competition in fixed broadband market has been relatively limited in Turkey,
the general downward trend in prices seems to be somewhat partial. The effect of
taxes on broadband service pricing is another significant variable in assessing
the affordability and performance of the market. As part of the need to augment
the tax base during the economic crises of 2000-2001, Turkey raised taxes on telecommunication
services. While these measures have increased tax revenues, they had a negative
effect on e-services take-up. In 2008 the government considered ways to increase
the affordability and thereby the use of e-services by reassessing telecommunication
taxes but little has been achieved.
The tax rate applied for broadband products and services include the 18% Value Added
Tax (VAT) and an additional 5% Special Communication Tax (SCT) calculated over the
price of the related service including VAT. Compared to the other communication
services, Internet services are taxed relatively lower: SPC rates on mobile and
fixed line communication services are 25% and 15% respectively. Though taxes on
Internet services are relatively low the fiscal burden still accounts for a major
impact on a middle-income household.
One can expect that when Internet access requires a lower share of monthly per capita
income, usage rates increase, everything else being equal. Internet access cost
– measured as the Internet subscription cost as share of average monthly income
– relatively high. According to analysts, middle-income consumers are generally
ready for broadband packages costing less than 3 % of their per capita income.*
In Turkey the Internet access cost of an average broadband package has come down
significantly in recent years but still exceeds 3% threshold with a rate around
National growth performance has created opportunities for broadband expansion and
service affordability. The high growth in per capita income in recent years affected
positively the broadband affordability by increasing the denominator. It is clear
that rising incomes have supported the market and affordability of broadband services
in a country where competition was somewhat imperfect.
Internet use will likely increase significantly if the cost of accessing the Internet
can be reduced. The government should prompt action to reduce taxes on both telecommunication
and broadband services. On the supply side the Information and Communication Technologies
Authority should continue to actively stimulate competition in the telecommunications
sector to promote faster and more affordable Internet access in line with EU initiatives
in this area.
Mobile phones can provide an alternative, less expensive channel for delivery of
e-services to citizens and businesses. Given the high number of mobile subscribers
in Turkey, the government should consider this channel to provide information and
services. In this regard a simple, flat and more affordable tax rate applied to
communication services could be a good and less distortive option.