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Unarmed TÚ searching for weaponry in regulatory battle

Milan Luknár has to get by on short rations. A career telecoms professional since graduating from Technical University in Prague in the 1960's and the current head of the Slovak Telecoms Office (TÚ), which regulates the country's telecoms market, he really has no other choice.
Ministry and state-firm bosses typically have chauffeur-driven Audis and BMWs (Telecoms Minister Jozef Macejko is privileged with a blue BMW); Luknár gets an early-90's black VW Passat. Most state bodies have their own headquarters near the centre of town; Luknár and his colleagues sit in a building belonging to Slovak Telecom (one of the very firms they are supposed to be regulating) in an industrial part of town.
He's even disciplined when drinking coffee. As his secretary places a small cup in front of him, Luknár looks sheepishly from the mug filled only halfway, explaining "I take a little less water with my coffee".

Milan Luknár has to get by on short rations. A career telecoms professional since graduating from Technical University in Prague in the 1960's and the current head of the Slovak Telecoms Office (TÚ), which regulates the country's telecoms market, he really has no other choice.

Ministry and state-firm bosses typically have chauffeur-driven Audis and BMWs (Telecoms Minister Jozef Macejko is privileged with a blue BMW); Luknár gets an early-90's black VW Passat. Most state bodies have their own headquarters near the centre of town; Luknár and his colleagues sit in a building belonging to Slovak Telecom (one of the very firms they are supposed to be regulating) in an industrial part of town.

He's even disciplined when drinking coffee. As his secretary places a small cup in front of him, Luknár looks sheepishly from the mug filled only halfway, explaining "I take a little less water with my coffee".

The Telecoms Office, first formed in 1993, was given regulator status last July. Powers it inherited under last year's Telecoms Law include issuing licences (taken over from the Telecoms Minstry) and price regulation (from the Finance Ministry). But the office's effectiveness, Luknár says, has been hampered by a lack of finances, technical equipment, skilled and experienced personnel, and an unclear division of powers with the Anti-Monopoly Office.

"Today I see many problems," he said in his office April 9. "We are at the beginning, our staff is not yet established enough to solve all the problems, and there are only a few of us. We need more people... I don't know where from. When you consider the salaries in the private sector, it is very difficult to find skilled and experienced technicians in the telecom field. We can only offer salaries which average 13,000 Slovak crowns ($270) per month."

According to a salary bench-marking survey for the year 2000 carried out by the HR firm Lugera & Makler, IT programmers in western Slovakia earn an average salary of 23,878 crowns, while IT managers make 30,475 crowns. The average Slovak salary last year was 11,400 crowns.

The result, said Boris Kostík, telecoms analyst at Bratislava brokerage house Slávia Capital, is that the office is impeded in properly regulating the sector. When Slovak Telecom was found to have broken the law after failing to remove 'frequency filters' from lines used exclusively for data transfers, making Internet use on the lines virtually impossible, it was the Association of Private Internet Providers (API) that discovered the violation.

"The Telecoms Office should have their own technicians and equipment to check such matters," Kostík said, adding that the office would be better off if it were truly independent and not funded by the state. "When you are financed by the state, why [would you try to] get better? There's no motivation. They don't get the revenues from licence sales, it all goes back to the state. A private company is motivated by control of their own finances. But there's no motivation for the Telecoms Office because it's not their money."

Luknár admitted as much. "We are financed by the Telecoms Ministry. I personally try to do my best to be independent. The ministry is a representative of the government, and, yes, I must confess there are some consultations between the ministry and us; because I have worked in this area for a long time, my experience is taken into consideration. But the ministry makes the final decisions. They have the right to make the decisions, because all the money earned by the Telecoms Office goes to the state budget. It's not our money."

The ministry, for its part, says that they have been generous with their money. "All budget requests made by the Telecoms Office were accepted by the ministry," said ministry spokesperson Anna Ghannamová. "We are ready to support an increased budget next year if it is shown to be necessary. Maybe their own calculations were not correct, because the ministry gave them all they asked for."

Critics of the office say that its main shortcoming, financially caused or not, is inactivity. During the strife over the ST filters, the API criticised the office for "sitting with their legs crossed" while they should have been ensuring a fair market. "They have to be more involved," said the API's Marian Ďurkovič. "They have to make sure there are no abuses by the dominant players, and they have the power to do this."

Who has the power to do what, and when, are questions Luknár's office itself hasn't yet been able to answer. In the case of a monopoly violation, who rules? The Anti-Monopoly Office (PMÚ) or the telecoms market regulator? These are questions he has no clear answer to.

Presented with the criticism of inactivity yet again, Luknár sighs. "We have to consult on this with the PMÚ and come to a conclusion. We want to create a memorandum of understanding regarding our cooperation, because it seems our duties overlap sometimes. I am still making an analysis of how to improve our work."

Luknár promises change, and says he understands his office's critics. He just asks for patience while his office establishes itself. "We want to be more efficient and capable of mastering all the obligations of an independent regulator," he says.

Later, while driving to a meeting at the Telecoms Ministry, Luknár explains that in order to achieve this improvement, his office is planning a restructuring phase under a project funded by the EU's PHARE plan, and that he has sought advice from the Austrian and Danish telecom offices.

"We know that we must create fair market conditions," he continues as the car pauses in traffic amidst a steady rain. "This year is very critical for us. We need to be better prepared."

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