Regulator: ST still dominates

ALTHOUGH the former monopoly fixed-line provider, Slovak Telekom, has signed contracts linking its network with those of alternative operators over the past year, the market is still not fully competitive, according to the market regulator.

ALTHOUGH the former monopoly fixed-line provider, Slovak Telekom, has signed contracts linking its network with those of alternative operators over the past year, the market is still not fully competitive, according to the market regulator.

In its recent market analysis, the Telecom Bureau (TÚ) stated that Slovak Telekom remains a dominant player on all seven telecom retail markets, and that competition on those markets is still not effective.

Slovak Telekom is also a dominant player on 7 out of the country's 11 wholesale markets, according to the TÚ.

The company and its rivals disagree deeply about the current level of competition on the fixed-line market. The alternative operators complain that the conditions under which they are forced to do fixed-line business are still far from those enjoyed by Slovak Telekom.

"Slovak Telekom is still a dominant player on the fixed-line market," Ivica Hricová, PR manager of Slovanet, told The Slovak Spectator.

"Real competition will only be possible after the complete unbundling of local loops by Slovak Telekom. Their last proposal in this area is absolutely unworkable because the wholesale prices that they offered are higher than the current retail prices."

Hricová added that Slovak Telekom's competitors are trying to make up for the current lack of unbundled local loops by building their own optic or FWA networks. However, these solutions are only cost effective for business customers.

According to Slovanet, Slovak Telekom does not always offer clients a free choice of services, but for example binds its Internet and phone services. "If Slovak Telekom allowed alternative operators to compete with it effectively, households could have cheaper phones and Internet," Hricová said.

On the other hand, Slovak Telekom is convinced there is already healthy competition on the fixed-line market, not only as regards data and Internet services, but also in the area of voice services.

"After the liberalisation of fixed telephone lines and the gradual interconnection of alternative operators' networks with Slovak Telekom's network, new companies started operating in the market. They now offer a wide range of telecom solutions and services. Increasing competition has had a positive effect for customers," said Ján Kondáš, director of communications for Slovak Telekom.

Alternative providers say they are convinced that the TÚ is at least partially responsible for the situation. They believe the office should be tougher in safeguarding competition in the market.

Hricová of Slovanet said that the TÚ was ineffective as a regulator, and that its activities were completely insufficient.

"The regulator is often late to act, it is too passive, and it often only responds to a situation that already exists. The office often does not use all the possibilities the law allows. Currently, its activities have fallen off so much that it is not even fulfilling its legal obligations, and it is not responding to motions filed in the field of market competition."

Hricová urged the TÚ to be more pro-active in the future. "In this way it could contribute to the development of healthy competition on the fixed-line market," she said.

TÚ spokesman Roman Vavro defended the Bureau, saying that without its work, contracts to link the networks of Slovak Telekom and alternative operators would not exist.

"The interconnection fees would be several times higher in some cases than they are now, and ST would not face several obligations to support competition," Vavro said.

"Each of our critics is welcome to apply for a job with the Bureau if they think they can contribute to the success of its work."

ST has received several fines from the TÚ for abusing its dominant position on the market, including a fine of Sk890 million issued last year. The company also takes a dim view of the TÚ's qualities, although it expresses greater sympathy for its limitations.

According to Kondáš, "our company accepts the regulator and its role in the process of liberalisation." However, he added, "in some cases, sometimes pertaining to our company, the Telecom Bureau issued decisions that were not objective, due possibly to the pressure of time or the media. The Bureau should first of all employ professionals from the telecom field, and it should also be better financed, which would allow it to function better."

Apart from its problems with competition, the Slovak fixed-line market is also in decline, as part of a trend affecting fixed-line markets around the world. Both ST and alternative operators are thus trying to find new business opportunities.

Slovanet, for example, is among the leading alternative operators in providing phone services through the Internet.

ST says it feels greater competition from mobile phone operators than from alternative operators, however.

"The end-user regards the mobile phone as a replacement for a fixed line, and mobile operators with their products and prices represent direct competition for our company," Kondáš said.

Slovak Telekom intends to compensate for the decrease in its fixed-line business with new activities on the wholesale business market, and by providing complex solutions. "We believe that we will manage to reverse the outflow of customers from the fixed-line network, which is happening all around the world, thanks to an attractive offer of products and by further developing our modern voice and data services based on IP technologies," said Kondáš.

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