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ST monopoly Internet abuse appeal rejected

Deutsche Telekom-owned Slovenské telekomunikácie (Slovak Telecom - ST) had an earlier ruling of violating its monopoly status confirmed February 22 by the Anti-Monopoly Office (PMÚ), which ruled that ST's continued practice of placing frequency filters on fixed lines was illegal. The filters limit data transfers for Internet access, and cost users up to five times as much as original Internet connection rates on the same lines.
Last October, one of the installed filters slowed and disrupted the Internet connection of the Slovak Agriculture University in Nitra, and following complaints by the university and a subsequent PMÚ investigation, the body fined ST 10 million Slovak crowns ($213,000) for abusing its monopoly status.
ST promptly appealed the ruling, bringing the PMÚ's February 22 rejection of the appeal. ST spokeswoman Gabriela Nemkyová said that ST "respected the decision of the PMÚ", but claimed that the office had bowed to media pressure in making the decision.

Deutsche Telekom-owned Slovenské telekomunikácie (Slovak Telecom - ST) had an earlier ruling of violating its monopoly status confirmed February 22 by the Anti-Monopoly Office (PMÚ), which ruled that ST's continued practice of placing frequency filters on fixed lines was illegal. The filters limit data transfers for Internet access, and cost users up to five times as much as original Internet connection rates on the same lines.

Last October, one of the installed filters slowed and disrupted the Internet connection of the Slovak Agriculture University in Nitra, and following complaints by the university and a subsequent PMÚ investigation, the body fined ST 10 million Slovak crowns ($213,000) for abusing its monopoly status.

ST promptly appealed the ruling, bringing the PMÚ's February 22 rejection of the appeal. ST spokeswoman Gabriela Nemkyová said that ST "respected the decision of the PMÚ", but claimed that the office had bowed to media pressure in making the decision.

"For the business sector, nothing is worse than the issuance of regulations under strong pressure from the media," she said. "[But] ST respects the bureau's verdict despite not knowing what consequences follow from it."

Nemkyová said she could not comment on whether ST would appeal the decision to the Supreme Court. Nor did she comment on whether ST would continue to place the filters on fixed lines during the possible appeals case.

Illegal filters

After ST appealed the PMÚ's October decision, private Internet providers were outraged when they discovered ST had continued to install the filters while appealing the decision. The Association of Internet Providers (API) on February 14 issued a press release urging the PMÚ to take action against ST. According to the API's Marian Durkovič, ST had continued installing the filters to offset the 10 million crown fine.

"They did it for profit," he said February 23, reiterating that the filters made Internet access more expensive than the original rates. "It's good business for them to break the law. They're making money through the newly installed filters because customers have to pay so much more."

Before installing the filters, ST had warned Internet customers using analogue lines that they would be required to subscribe to ST's more expensive Analogue Plus "service" to continue their Internet connections undisturbed. Customers who didn't subscribe had the filter installed, restricting the amount of data which could be transferred and effectively cutting the Internet connections to 1% of their normal capacity.

At the time, Nemkyová said that ST had "sent out letters to our customers many months ago. If we received no reply, we had no choice [but to install the filter]".

Durkovič said that the filters were illegal "because the lines had been operating without problems before the filters were installed. The filter was not a service, it was just a device to make already functioning lines more expensive".

Monopoly unchecked

Durkovič said the API had been further angered by state bodies who did nothing while ST violated the law. He called on the Supreme Audit Office to investigate the matter and disclose why neither the Telecoms Ministry nor the regulatory Telecoms Office had intervened so far.

"Why weren't they doing anything?" he asked. "It's their job, primarily the job of the Telecoms Office, to maintain a fair market. Were they closing their eyes?"

Telecoms analyst Boris Kostík, with Slávia Capital Brokerage house in Bratislava,said that it was not clear whose responsibility it had been to intervene, but added: "The Telecoms Office in general is responsible for the telecoms market, so they should be the ones [to control ST]."

But the Telecoms Office's Stanislav Vanek said that they could not have interfered in the issue until the PMÚ invited them to do so. "We were promised an invitation to a body regulating this issue, but we were never invited," he said. "The Telecoms Office is not responsible for anti-monopoly behaviour, only for market regulation. But we did not agree with ST's use of the filters."

Telecoms Office Director Milan Luknár added that his office had the "right to exercise control [over a company] if laws or conditions of licence are breeched", but added that in this case - an abuse of a monopoly position - the powers were unclearly divided between the Telecoms Office and the PMÚ.

"We must be more deeply involved in finding solutions between the API and ST," he said. "We have planned a meeting with the API because something is missing here."

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