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CABLE OPERATOR OVERCHARGES CUSTOMERS, FLOUTS REGULATOR - AND GETS AWAY WITH IT

Cable cowboys ignore rules

CABLE television provider UPC Slovakia has made the first payment on a Sk25 million fine for price violations dating from February 1, 2001. The penalty, levied against UPC by a state authority last July, is part of a protracted legal dispute that continues to test the strength of Slovakia's regulatory system
The payment is the first major break in the year-long deadlock between UPC Slovakia, an affiliate of the Amsterdam-based United Pan-European Communications, and the Slovak Telecom Office (TÚ), the state body charged with regulating the telecom market.
UPC was fined by the TÚ following what regulators called illegal price increases dating from the previous February, when UPC customers in some areas saw their bills jump by as much as 40 per cent. TÚ rules limit price increases to the rate of inflation, then around 12 per cent.


CUSTOMERS are still waiting for refunds from cable company UPC.
photo: TASR

CABLE television provider UPC Slovakia has made the first payment on a Sk25 million fine for price violations dating from February 1, 2001. The penalty, levied against UPC by a state authority last July, is part of a protracted legal dispute that continues to test the strength of Slovakia's regulatory system

The payment is the first major break in the year-long deadlock between UPC Slovakia, an affiliate of the Amsterdam-based United Pan-European Communications, and the Slovak Telecom Office (TÚ), the state body charged with regulating the telecom market.

UPC was fined by the TÚ following what regulators called illegal price increases dating from the previous February, when UPC customers in some areas saw their bills jump by as much as 40 per cent. TÚ rules limit price increases to the rate of inflation, then around 12 per cent.

Although UPC appealed the TÚ decision to the Supreme Court in August, they withdrew the appeal in late January this year, agreeing to pay the fine, to refund excess charges to customers and to adjust their pricing system within 30 days. Including fees from February 2002, the UPC is obliged to pay refunds of Sk900 to Sk1,080 per customer, an amount which exceeds Sk25 million.

The TÚ welcomed the payment on the fine, but stressed that although the deadline had passed, UPC had yet to meet its other obligations, namely bringing their prices in line with regulations.

TÚ spokesman Roman Vavro said: "As far as the fine goes, the Telecom Office gave UPC the opportunity to pay this in instalments. The first payment has already been made and this was around half of the total sum.

"However, it is the responsibility of UPC to adjust their pricing structure so that it is in harmony with our price regulations. This hasn't changed," said Vavro

In mid-February, UPC spokesperson Pavla Petrlova responded to complaints about UPC's inaction, saying: "The company is continuing to provide the services our customers are used to. We have a 30-day time period to create a new price plan. We are planning to have this in the foreseeable future."

But in early March, after the deadline had passed, Petrlová said: "I don't know when there will be a new price list. We have given the regulators our calculations, including predictions of proportionate costs, adjusted to the rate of inflation."

Vavro responded: "They have given us only a calculation, with the idea that in the future TÚ could prepare new price regulations. But that still doesn't change their obligation to adjust the current price structure of their services."

In spite of pressure from the TÚ and media criticism, UPC continues to ignore the regulations and to charge what the TÚ says are illegal prices. UPC also has yet to unveil a plan to refund their customers.

The case has underlined what many consider the weakness of government regulatory bodies. While the TÚ is in theory an independent government office, its budget is covered by the Telecom Ministry, a situation some analysts see as constricting.

Dag Storrosten, head of Slovakia's largest Internet service provider Nextra, said: "The TU has not been as effective as we could have wished. The independence of the TU should be strengthened, as they have a big role in ensuring real competition, which is what you need in order to grow the market."

But Vavro said that until market deregulation in January 2003, at which time his Office's powers are to be increased, the TÚ had few tools to bring UPC to heel. "At the moment, we have one possibility - to propose recommendations to the court, and have the court carry out our decision. But the total amount of fines we can give is very small. Another option is to make repeated inspections, but that's a long-term consideration."

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