1

THE ROLE OF MOBILE TELEPHONYIN BROADBAND CONVERGENCE

56 Kifissias Ave., Maroussi 151 25 Telephone: 210 63 00 066

Fax: 210 610 60 93e-mail: info@eekt.gr

George Stefanopoulos

General Manager of ΕΕΚΤ

ACHIEVEMENTS and CONTRIBUTION of MOBILE TELEPHONY in GREECE

OPPORTUNITIES and PROSPECTS – “THE BROADBAND CHALLENGE”

ELEMENTS OF DELAY and OBSTACLES

CONDITIONS for GROWTH and FUTURE CONTRIBUTION

CONTENTS

Source for the Presentation Data

Study by the Athens University of Economics and Business (ΟΠΑ) & the ICAP Group

«Social-Economic Assessment of the Mobile Telephony Sector in Greece»

The Corporate Reputation Index (TRI*M) is composed of 5 factors for the Sector: Overall Reputation, Favourable Opinion, Trust, Success, Quality of Products & Services - SourceTNS ICAP

ACHIEVEMENTS and CONTRIBUTION of MOBILE TELEPHONY in GREECE

Corporate Reputation of Mobile Telephony in Greece

70

50

30

10

59

43

2738

21

34

Δείκτης Εταιρικής Φήμης: Α.Ε. – Ε.Π.Ε.

Αρνητική Εταιρική Φήμη

Θετική Εταιρική Φήμη

496Mobile

Telephony

494Fixed

Telephony

498Banks

481Airline

Companies

473Shipping

458Food &

Beverage Sector

70

50

30

10

5345

7

3422 18

70

50

30

10

5244

8

31

1322

Δείκτης Εταιρικής Φήμης: Ο.Ε. – Ε.Ε. - ΕΛ.ΕΠ

Αρνητική Εταιρική Φήμη

Θετική Εταιρική Φήμη

496Mobile

Telephony

499Fixed

Telephony

497Banks

469Airline

Companies

475Shipping

480Food &

Beverage Sector

General Public

Αρνητική Εταιρική Φήμη

Θετική Εταιρική Φήμη

971Mobile

Companies

994Fixed

Telephony

953Banks

858Airline

Companies

896Shipping

967Food &

Beverage Sector

Large Enterprises Small Enterprises

The Sector enjoys the highest Corporate Reputation Index among other sectors – quite a fair outcome

Mobile Telephony – Contribution to the Economy

The Mobile Sector’s Gross Value Added, produced within Greece, amounts to €3.305 million

The Gross Domestic Product of the Sector and its suppliers amounts to €4.404 million

Source: Merrill Lynch (2008) European Wireless Matrix Q3

The Sector’s contribution to the economy is close to 2% of GDP, the second best percentage figure in the EU

Contribution of Mobile Telephony to State Revenues

• The State and the Social Security Funds absorb 41% of the total turnover produced by the Sector in Greece

• Contributions by the Sector to State revenues and social security funds amount to €1,8 billion, or 0,8% ofGDP

Government revenues(in thousand euros)

444.712

191.592229.600

79.082

247.036

83.997

28.85369.167

423.995

0

100.000

200.000

300.000

400.000

500.000

VAT Corporate tax Income tax Mobiletelecoms salestaxes and other

Social securitycontributions

Taxes and contributions from theprovidersTaxes and contributions from therest of the value chain

Based on the 2008 Budget figures, the Sector’s contribution to State revenues corresponds to the sum of the investment budgets for

Education and Industry

Contribution of Mobile Telephony to the Labour Market

Productivity per employee employed by the Sector’s enterprises amounts to €246.000 and the average annual gross salary to €36.000 (relatively to €26.900 on average for the Greek economy)

Employment

31.213

32.55891.755

6.613

24.600

27.983

0

20.000

40.000

60.000

80.000

100.000

Provide

rs

Suppli

ers &

retaile

rsValu

e Chain

Total

Indire

ct ben

efits:

Public

secto

rMult

iplier b

enefits

Total

Gross labour income (in thousand euros)

2.542.054

856.375

875.814

809.866

615.843

240.5320

700.000

1.400.000

2.100.000

2.800.000

Provide

rs

Suppli

ers &

retaile

rsValu

e Chain

Total

Indire

ct ben

efits:

Public

secto

rMult

iplier b

enefits

Total

The Sector contributes to employment creating 92,000 jobs with a total gross income of €2,5 billion

Prices of Mobile Telephony Services

Mobile telephony appliances and services show the greatest cumulative decrease in prices (56,4% and37,5%, respectively) relatively to all other 652 goods and services that made up the Consumer Price Index

basket between the years 1999 and 2007

-60%

-40%

-20%

0%

20%

40%

60%

Mob

ile te

leco

ms

equi

pmen

tM

obile

tele

com

s se

rvic

esW

irele

ss te

leco

ms

equi

pmen

tFi

xed

tele

com

s se

rvic

esFi

xed

tele

com

s eq

uipm

ent

Audo

visu

al e

quip

men

t -Au

tom

obile

sH

ouse

hold

equ

ipm

ent a

nd re

pairs

Phar

mac

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als

Mus

ical

inst

rum

ents

- La

rge

Fina

ncia

l ser

vice

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hite

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d ta

blew

are

Furn

iture

- Fl

oor c

over

sPe

rson

al c

are

Hom

e an

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rden

tool

s &

Non

alc

ohol

ic b

ever

ages

Hai

r & b

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y sa

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Smal

l rec

reat

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equi

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ouse

hold

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pplie

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ing

Alco

holic

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Pric

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Rec

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serv

ices

Oth

er s

ervi

ces

Hom

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pairs

Insu

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emiu

ms

Foot

war

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ition

Soci

al s

ecur

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ervi

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Med

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& d

enta

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acka

ges

Wat

er s

uppl

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and

Res

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Tran

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Ren

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Mai

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city

, nat

ural

gas

and

oth

er

Contribution in holding back the CPI (cumulative effect of -2,34% for the period 2000-2007). More and more affordable prices to everyone

8

Global use of Mobile Telephony Services in Greece

Economic Assessment

Turnover: €4,6 billion (2007)Job creation: 92.000 positionsGDP Contribution: €4,4 billion (≈2%)Contribution to state revenues: €1,8 billion (as much as the 2008 Gov. Budget for education and industry together!)

Penetration

Depth: 168% (in 2008), starting from zero basis 16 years agoGeographic coverage: 100%Users within the population: 82%

Limited network coverage Network coverage at 99% of population Continued reduction in prices

High cost of services Rapid growth of subscribers Development of new technologies

Penetration with business customers Significant declines in prices and services

Source: Analysis by ICAP

Evolution of Mobile Telephony in Greece

Maturation and development of 3G

servicesRapid growth stage

Introduction of Mobile Telephony

in Greece

- 48 167 273 555 940 2.056

3.894

5.932 6.934

8.606

10.600 11.304

12.431

14.081

16.000

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

HSDPA technology

(for high speed data transfers)

Creation of 2G networks in Greece

SMS services

Early pre-paid card phones

3GUMTS

services

GPRS (2.5G- WAP, MMS)

services

Num

ber o

f act

ive

mob

ile c

onne

ctio

ns (0

00)

To date, no other sector in the Greek economy has achieved such high market depth and accelerated penetration

9

Mobile Telephony compared to other SectorsReturn on Capital Employed

Return on Capital Employed - Greece 2007No of ROCE

Industry € mil. Companies %Trade in pharmaceuticals, cosmetics & cleaning 448 295 26,3Trade in chemicals, gases, colours and explosives 185 186 25,8Tobacco manufacturing 106 5 25,5Trade in medical and lab supplies 193 230 24,6Trade in various goods 304 433 21,7Oil and coal products 603 18 17,8Trade in electrical and electronic goods 150 272 17,5Trade in clothes, footware and leather goods 215 495 14,4Retail trade (Supermarkets) 261 233 14,1Business services 141 647 14,0IT 148 310 13,6Investment companies 140 13 13,6Mobile telephony 883 3 13,2Non metallic mineral products 464 477 10,9Pharmaceuticals, cosmetics & cleaning supplies 365 97 10,8Health care 216 258 10,0Holding 1.175 154 9,0Trade in fuel, lubricants and gases 118 117 8,9Beverages 323 143 8,7Transportation services 418 289 8,6Transportation equipment dealers 193 726 7,5Metal products 238 436 7,0Food 325 772 5,1Real estate 521 847 4,9Metallurgy 110 29 4,2Technical - Construction 383 1625 2,4Energy - Water 329 99 2,0Leasing 113 12 1,8

Sources: ICAP Data Bank, ICAP Analysis; Industries with profits greater than €100 mil.- gaming and banks have been excluded

Profits before taxUseful life of capital expenditures in different sectors

Source: AT Kearney - Mobile Industry Observatory 2008

Years7

20

25

40

41

54

60

80

80

0 10 20 30 40 50 60 70 80

Mobile telephony stations

Fixed telephony (copper)

Power stations (thermo-electric)

Power stations (lignite)

Power sub-stations

Power networks

Water processing units

Water reservoirs -Adequacts

Water supply pipelines

The Sector’s return on capital employed is average although net income is high, due to high capital expenditures with very small useful life

10

Freedom of immediate communicationAccording to the general public (66%), the main advantage of mobile telephony is the sense of freedom gained from using the mobile phone

SecurityThe sense of security is also a significant advantage because communication is possible from any place as well as in emergency situations

Perceived benefits / advantages from using the mobile phone - Spontaneous

66

10

4

1

34

37

21

Freedom to communicate anywhere and at anytime

Sense of security of being able tocommunicate from anywhere

Safety and even being saved in emergencysituations (such as health, earthquake, fire etc)

Ability of being located anywhere

Efficient management of personal andbusiness affairs

Can be used as an appliance for carrying out various activities from any place, such as

internet use and e-mail messaging

Substitute for various other appliances (suchas listening to music at any time)

Contribution of Mobile Telephony to the Public

People acknowledge the sense of freedom and security as the most basic benefit of using the mobile phone

11

OPPORTUNITIES and PROSPECTS – “THE BROADBAND CHALLENGE”Mobile telephony and Broadband The mobile phone as a broadband appliance

There are inherent variations in Greece regarding access to the internet via computers:•Geographically: possession of a computer and access to the internet is far higher in Attica than any other area in the country

•Educationally: possession of a computer and access to the internet is far higher among population groups that have secondary and university education than groups with basic or primary education

On the contrary, the possession and use of the mobile phone does not show any geographical or educational dependency, which makes the mobile phone an ideal “vehicle” to attract towards broadband applications and services the population groups which are presently cut off or are inferior

Broadband penetration per country (EU 2007) . .

Source:: 13nth progress report on communications in the EU (January 2008)

35,60%34,60%34,20%

31,20%29,80%

25,70%25,60%

23,80%23,64%23,30%

19,00%18,30%

17,40%17,30%17,10%

16,10%14,60%14,20%

9,80%9,10%8,80%8,40%

7,60%

0,00% 10,00% 20,00% 30,00% 40,00%

DKFI

NLSENOUKBEDE

EU-15FRATESIESIIT

PTCZHUROGRSKPLBG

There is enormous potential to eliminate the digital divide by means of mobile telephony

12

7/10 small enterprises and 8/10 large enterprises claim that it is impossible/ considerably difficult to carry out their business activities without the use of a mobile phone

Necessity of the mobile phone for the operation of an enterprise

13 1018

9 9 5 10 9 14

1717

17

18 1514

15 14

21

6463

6068

63 70 6360

52

6 10 5 614 12 13 18 14

Total (n=158)

Industry(n=30)

Commerce(n=60)

Services(n=68)

Total (n=422)

Industry(n=103)

Commerce(n=164)

Services(n=126)

Tourism(n=29)

Impossibleto carry outbusiness

Quitedifficult tocarry outbusiness

would bequite easy tocarry outbusiness

no need

Small Enterprises Large Enterprises

Contribution of Mobile Telephony to the Enterprises

The mobile phone has become an irreplaceable work tool – a fundamental condition for the professional success of Greek users

13

Mobile Telephony and new technologies9/10 enterprises agree that mobile telephony brings the enterprise closer to technology and development

Sense of security and efficient managementThe majority of enterprises also acknowledges the reduction in the insecurity and uncertainty of communication as well as the more efficient management / organisation of business matters

92

81

80

79

78

77

76

66

63

49

97

90

89

91

86

85

86

70

84

80

53

55

48

84

88

84

Has considerably benefited the freelancing

Mobile telephony brings the enterprise closer to technologyand development

Uncertainty and insecurity is reduced given the possibility ofaccess at work and everywhere

Leaving mobile phones ON at meetings is annoying

Work activities are organised more effectively

Mobile telephony has changed the operation of the enterpriseto the better

Improves customer relations

Use mobile phones at work for personal reasons keeps theemployee from doing his work

The enterprise operates more efficiently

Can move work anywhere by using the mobile phone

Use of mobile phones at work for personal reasons causesproblems to the enterprise

Noise in the working environment has greatly increasedbecause everyone uses his/her mobile phone at any time

Use of mobile phones for personal reasons must be permittedonly in specific areas of the enterprise

Small Enterprises (n=500) Large Enterprises (n=500)

Mobile Telephony, Enterprising and Technology

Assessment of mobile telephony’s influence on enterprises

The two highest scales(4=agree and 3=probably agree)

Mobile telephony has brought the Greek enterprise closer to technological developments and will continue to do so

14

New technologies and developmentsOverall recognition regarding the influence of mobile telephony on society with respect to parameters involving issues of familiarization with new technologies and developments, issues ofimprovement of the standard of living (as for people who live in remote areas or people with special needs and the elder) and even issues of crisis management (since mobile telephony can significantly help the work of authorities and carriers in emergency situations)

Assessment of mobile telephony’s influence on society

93

87

85

83

82

79

75

73

72

92

93

90

Mobile telephony brings us closer to technology anddevelopment

Mobile telephony has made life easier to inhabitants ofremote areas

Mobile telephony helps considerably the work of authoritiesand carriers in emergency situations

Mobile telephony has familiarized Greeks with the newtechnologies

It is annoying that some people do not turn off their mobile incinemas, theatres, presentations etc.

People with special needs and disabilities have benefittedthe most from the growth of mobile telephony

Feel unsafe because many drivers drive without using Bluetooth technology

Has specifically benefitted the elderly who live alone

It is annoying when people talk loud on their mobile in publicplaces (public transport, restaurants etc.)

Mobile telephony has changed our lives to the better

Noise in public places and public transport has increasedtremendously because everybody uses his/her mobile any

where and at any time

In general mobile telephony has brought people closer

The Public’s familiarization with technological developments

The two highest scales(4=agree and 3=probably agree)

Mobile telephony has a very positive influence on society. The familiarization with technology that it offers makes the mobile

phone ideal for broadband applications

15

Mobile vs Fixed Telephony

Usage level

Greece has the 3rd highest usage of total telecom services (fixed plus mobile) in Europe

mobilefixed

Minutes of use per person per month in fixed and mobile telephony (EU -2007)

Sources: OMSYC;IDC;Wireless Intelligence; A.T. Kearney analysis; ICAP analysis

7446

78

69

8781

100

122

105143

119

113

156153

145

238

16467

156

94

229136

150

125153

58

63

38

55

4262

62

62

92104

148

163

121135

156

65

139241

155

225

97196

184

192

264249

19

157

30

0 100 200 300 400

Slovakia

RomaniPoland

Czech

Bulgaria

LithuaniEstonia

Hungary

Portugal

SloveniBelgium

Netherla

UK

SpainFrance

Ireland

LatviaAustria

German

Italy

LuxembFinland

Switzerl

Denmar

GreeceSweden

Norway

minutes (time)

Mobile Telephony is becoming the main mode of communication as its usage has

already surpassed the usage of Fixed telephony in most European Countries

16

Growth of Data Services

Ανάπτυξη συνδρομών 2G και 3G σε 4 έτη, απο 20εκ. συνδρομές

0

20.000.000

40.000.000

60.000.000

80.000.000

100.000.000

120.000.000

140.000.000

1993/2002 1994/2003 1995/2004 1996/2005

Mobile 2G Mobile 3G

OECD mobile 2G and 3G, four year grow th from 20 million subscribers World-wide Growth of 3G

World-wide the adoption of 3G networks follows the initial growth of the 2G networks with a time lag of approximately nine years

3G usage in Greece

One in five (5) Greeks has used data services through the mobile phoneOne in eight (8) Greeks has experience in using the mobile Internet (through mobile phones or other portable wireless access appliances)

Use of data services through mobile appliances will make the economic and social convergence a reality

Use of mobile data services in Greece(Jan 2009, n=928, research by ΟΠΑ)

Non-users

Users

Trough service menus Through the internet

Growth of 2G and 3G subscriptions within 4 years, starting from 20 million subscriptions

17

Mobile Telephony and BroadbandImportance and Broadband Penetration

Greece lags considerably in Broadband penetration contrary to its successful course in mobile telephony

• Fixed broadband access lines: 9,1% in Greece relative to 20% in the Ε.U. (beginning of 2008)

• DSL Coverage: 10% relative to 89,3% in the Ε.U. (end of 2007)

• Percent of Population with internet access: 22% in Greece relative to 58% in the OECD countries (2008)

Broadband penetration is so important that this specific index is one of the 13 indices used to assess the degree of innovation within the economy of a country (the sole index with relevance

to telecommunications)

Correlation of productivity and broadband in the EU 2001 - 2004

100

200

300

400

500

600

0 10 20 30 40 50 60 70 80 90 100

% of workers with access to broadband

Prod

uctiv

ity per sector (base=100)

The spread of Broadband is a precondition for the technological development of Greece

18

Scenario A: Without revenue growth from new services:

• Contribution to GDP: 16% Reduction (1,61% in 2013 relative to 1,92% in 2007) • Contribution to employment: 12% Reduction (81.000 jobs relative to 92.000) • Contribution to State revenues: 18% Increase (€2.152 million relative to €1.819 million)

Scenario B

Scenario A

Estimated Future Contribution of Mobile Telephony

Scenario B: With revenue growth from new services:

• Contribution to GDP: 3,6% Increase (1,99% in 2013 relative to 1,92% in 2007) • Contribution to employment : 9% Increase (100.000 jobs relative to 92.000) • Contribution to State revenues : 46% Increase (€2.654 million relative to €1.819 million)

Estimate of sector's contribution to national GDP in 2013

5,91%

2,84%

6,50%

2,97%

-0,01%

3,55%

-1% 0% 1% 2% 3% 4% 5% 6% 7%

Average annual GDPgrowth (2008 - 2013)

Average annual change ifsector's GDP contribution(2008 - 2013): Scenario A

Average annual change ifsector's GDP contribution(2008 - 2013): Scenario B

current prices constant prices

Growth of broadband services Growth of the Sector Contribution to the economy

19

OPPORTUNITIES and PROSPECTS – “THE BROADBAND CHALLENGE”

CONCLUSIONS

• The ease of immediate access to unlimited sources of information through mobile broadband , at any place, establishes broadband mobile telephony as the technology of the future. The State should not remain inert to this challenge.

• The continued growth in mobile communications, particularly in the next generation of mobile broadband services, has a fundamental role to play in helping the Greek economy to overcome the present global challenges. Access to advanced communications throughout a challenging geography is a critical national objective for Greece and the Mobile Network Operators in Greece are committed to making this happen.

20

Sensitivity regarding issues of health and mobile telephony antennaeThe majority of people claim that there is a connection between danger to the health and mobile telephony antennae.However, 1/5 state that they can not know what is actually true, specifically due to the contradicting scientific studies or the insufficiency of scientific data.

Opinions regarding the dangers related to mobile telephony antennae

78 77 79 75 78 78 77 79 81 82

1 2 12

1 2 2 118 17 17 14 11 8

6 6 6 5 6 5 6 5 6 8

16 14 1515

Total(n=1000)

Men(n=491)

Women(n=509)

15-24(í=168)

25-34(í=184)

35-44(í=170)

45-54(í=151)

55-64(í=129)

65-74(í=126)

75+(í=72)

It has not been proven yetthat there is danger butsufficient data for this issueis still missing

Do not know what isactually true because thereare scientists who claimthat there is danger butothers who do not

There is no danger for thehealth of people who liveclose to a mobile telephonyantenna

There is danger for thehealth of people who liveclose to a mobile telephonyantenna

ELEMENTS OF DELAY and OBSTACLESPublic Concerns

Despite the recognition of the mobile telephony’s positive influences, users state that there is danger for the health of people

who live close to mobile telephony antennae

21

Are you concerned of possible consequences to health from radiation ? (very much/quite so)

(source: Eurobarometer)

As well, 87% of Greeks state that they are «not satisfied» with the information that is provided regarding any possible consequences to health from radiation, while the European average is at 42%

Eurobarometer 2007, Electromagnetic Fields

http://ec.europa.eu/health/ph_determinants/environment/EMF/ebs272a_en.pdf

There is more concern in Greece than in Europe

86% of Greeks are concerned about possible damage to health from radiation, while the European average is at 48%

22

Greece is last regarding broadband and turnover from related services

Source: Merrill Lynch (2008) European Wireless Matrix Q3

Share of revenues by data services

Degree of Usage

Greece still lags Europe 15 with respect to the portion of turnover produced by data services

23

ELEMENTS OF DELAY and OBSTACLESCONCLUSIONS

• Consumers must be informed of the safety and potentials of the technology they use on a daily basis for their communication and briefing (i.e. their mobile phones/computers) and the Investorsas well as the Employees of the Sector should enjoy the support of the State towards the development and viability of their Sector.

24

Reduction of bureaucracy and creation of an attractive environment for investment towards the development of 3G networks

Improvement and simplification of the legal framework respecting the development of networks and the licensing of Base StationsPolitical and social consensus based on the reports of the scientific communityTargeted campaigns for informing the publicFair tax treatment of the mobile communications services and reduction of the tax divide with the rest of Europe (annulment of the “special mobile tax”)

National targets for mobile communicationsTargeted growth of applications within the Public Administration and promotion of electronic governance with emphasis on wireless and mobile servicesFull exploitation of the digital dividend towards the attainment of real convergence of mobile communications, fixed communications and content servicesDevelopment of synergies with European policies and actions

CONDITIONS for GROWTH and FUTURE CONTRIBUTIONS

25

CONCLUSIONS

Mobile Telephony is an important and

dynamic Sector with a lot of prospects

• For years it has been the fastest growing sector of the economy

• It has contributed in essence towards the development of technological enterprising, specifically of Mass Media and of new businesses

• It has contributed in essence towards the development of suburbia and the familiarization of Greeks with the new technologies

Mobile Telephony may be the catalyst for

broadband convergence if

combined with the appropriate national

policies

• The digital divide of Greece from the rest of Europe may be bridged through the development of a “broadband culture”, specifically in remote areas of the country and for population groups with special sensitivities

• Today, the mobile phone is the only broadband appliance with global acceptance and use in Greece

Mobile Telephony must become a “priority sector”in the drawing up and the

implementation of national policies regarding

broadband

26

THE ROLE OF MOBILE TELEPHONYIN BROADBAND CONVERGENCE

56 Kifissias Ave., Maroussi 151 25 Telephone: 210 63 00 066

Fax: 210 610 60 93e-mail: info@eekt.gr

George Stefanopoulos

General Manager of ΕΕΚΤ