New Telecom Law calls for separate market regulator

Slovakia's current Telecommunications Law is set to receive a major overhaul, said Telecom Ministry officials, and a new law should be enacted by the end of this year. The new version is expected to create an independent body to regulate the Slovak telecom market, as well as to update a law that is currently not up to European Union standards.
The current law was originally drafted in 1964, and was revised slightly in 1993 following the break-up of the former Czechoslovakia, said Milan Luknár, director of the Telecom Ministry's Post and Telecommunications Section. Since 1995, Luknár said, the ministry has been trying to revise the law with no concrete results.
But now, with the privatisation of the state-run telecom monopoly Slovenské Telekomunikácie (ST) drawing ever closer, Luknár said the ministry felt a sense of urgency to have a new law drafted this year and in force before a foreign investor is chosen.

Slovakia's current Telecommunications Law is set to receive a major overhaul, said Telecom Ministry officials, and a new law should be enacted by the end of this year. The new version is expected to create an independent body to regulate the Slovak telecom market, as well as to update a law that is currently not up to European Union standards.

The current law was originally drafted in 1964, and was revised slightly in 1993 following the break-up of the former Czechoslovakia, said Milan Luknár, director of the Telecom Ministry's Post and Telecommunications Section. Since 1995, Luknár said, the ministry has been trying to revise the law with no concrete results.

But now, with the privatisation of the state-run telecom monopoly Slovenské Telekomunikácie (ST) drawing ever closer, Luknár said the ministry felt a sense of urgency to have a new law drafted this year and in force before a foreign investor is chosen.

"The telecom market has developed quite rapidly, and the environment has changed dramatically," Luknár said. "The law was updated [in 1993], which created a regulatory body outside the ministry [called the] Telecom Office, but they must have all the responsibilities shifted to them, such as the issuing of licenses or the calling of tenders." Luknár explained that the 1993 revision of the law had not transfered all of these powers to the Telecom Office, but instead had left many of them in the hands of the Telecom Ministry.

The state has declared that an investor will be permitted to buy a maximum of 49% of ST shares, meaning that the state will remain the majority owner. For that reason, Luknár explained, it was imperative that an independent regulatory body be created; only in this way could transparency be ensured in the future and scandals avoided, such as the recent furores over the failed GSM 1800 mobile tender and the selection of an advisor for the ST privatisation.

"Simply put, we [the ministry] cannot both own Slovenské Telecomunikácie and regulate the market," he said. "We must create a regulatory body that is financially and politically independent."

The law revision process is being vetted by White & Case, a legal consulting firm which is also a member of the Deutsche Bank consortium selected by the ministry to advise on the ST privatisation. J. Russell McGranahan of White & Case said that clarity would be the major priority of the new law.

"[The existing law] does not provide clear rules," he said. "The law has to be clear and concise, even if it means being harsher and more disadvantageous. I think that investors would favour it more as long as it is clear."

Balancing the objectives of clarity and fairness in the new law, McGranahan said, will be no small feat because the many different parties active on the telecom market or affected by the law will surely complain if the terms of the new law do not suit them. "We expect criticism from every quarter," he said. "We're not going to be able to please everyone."

But the law must be changed, and the change must occur before any foreign investor can be expected to invest money into ST. "The law needs to be in force before the contract is signed," he said. "Potential investors will not pay before the new law is enacted."

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