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ALTERNATIVE INTERNET PROVIDERS SAY INCUMBENT MONOPOLY ST IS CROSS-SUBSIDISING RATES

Anti-Monopoly Office halts ST's high-speed data service launch

SLOVAKIA's Anti-Monopoly Office on June 12 put a halt to fixed-line monopoly Slovak Telecom's (ST) planned limited introduction of high-speed data service, answering complaints by competing Internet service providers that ST had priced out the competition.
ST had launched a four-month pilot programme on June 1 to provide asynchronous digital subscriber line (ADSL) service to limited areas in Bratislava, allowing Internet access speeds on traditional copper phone lines far above what are currently offered through ST's high-speed ISDN service.
However, the Association of Internet Service Providers (API) claimed that ST's pricing plan for the pilot service included internal subsidies which would allow ST's Internet provider ST Online to offer Internet access through ADSL at a fraction of the price that alternative providers could offer for the service through ST's fixed-line monopoly.


INTERNET users are still waiting for high-speed access.
photo: TASR

SLOVAKIA's Anti-Monopoly Office on June 12 put a halt to fixed-line monopoly Slovak Telecom's (ST) planned limited introduction of high-speed data service, answering complaints by competing Internet service providers that ST had priced out the competition.

ST had launched a four-month pilot programme on June 1 to provide asynchronous digital subscriber line (ADSL) service to limited areas in Bratislava, allowing Internet access speeds on traditional copper phone lines far above what are currently offered through ST's high-speed ISDN service.

However, the Association of Internet Service Providers (API) claimed that ST's pricing plan for the pilot service included internal subsidies which would allow ST's Internet provider ST Online to offer Internet access through ADSL at a fraction of the price that alternative providers could offer for the service through ST's fixed-line monopoly.

The API also maintained that ST had violated terms of the Telecoms Law when it published its ADSL price list on May 31, not 31 days in advance of the service which the association says is required by law.

"The proposed prices, at first glance, don't show anything bad, but it's only necessary to look at them more closely," said API head Ján Vigaš, explaining that alternative providers would have to pay ST nearly Sk3,000 per customer-month for the service, while ST Online was offering ADSL connections starting at under Sk1,000.

"If ST offers connection through ST Online at the lowest price plan of Sk999 per month, it is simply a cross-subsidy within the company," said Vigaš, adding that API had initiated legal action through the Anti-Monopoly Office and the Telecoms Office.

"If ST is successful with this test operation according to currently stated conditions, they will be able to do what they want after the introduction of commercial [ADSL] operations, planned for October 1 this year," said Vigaš after the service began on June 1.

On June 12, the Anti-Monopoly Office ordered ST to suspend the new service. Although ST is appealing the decision, the appeal does not defer the ruling.

However, ST maintains that there is nothing amiss with either their pricing plan or with the plan's announcement the day before pilot service began.

"The Telecoms Law does not impose the obligation that a provider of public telecoms services has the duty to announce its price-list together with conditions of granting service 30 days before its introduction," said ST spokesperson Gabriela Nemkyová, in answer to API's allegation.

While preparing the price-list in May, ST's VP for Communications Ján Kondáš also said that "ST does not discriminate against any operator of Internet services in Slovakia. All providers will have the same conditions for operations."

But the civic association Internet for Everyone has also been vocal in its criticism of ST's plans, and pointed out that because ADSL uses existing phone lines, the service could have been introduced long ago, and that foot-dragging by ST was limiting Internet growth in Slovakia.

"ST blocked the implementation of modern ADSL technologies around two years ago when they started to install filters on local circuits, gradually forcing providers to buy expensive digital circuits," said Juraj Bystrický, vice-president of Internet for Everyone.

"ST's pricing is another violation of the market in the area of Internet service, because thanks to cross-financing ST is able to determine prices for services in favour of their monopoly, as well as dictate conditions for initiating cooperation with a provider," he added.

ST's ADSL service offers download speeds (from an Internet server to a user) of 384 kbits to eight Mbits per second, and uploads of 128 kbits to 512 kbits per second. ISDN service delivers a maximum data transfer speed of 128 kbits per second, while analog modems hit 56.6 kbits per second.

ADSL technology was originally developed in the late 1980s to allow telephone operators to compete with cable television providers by offering video on demand, a service which never really took off.

However, as Internet use grew through the 1990s, ADSL emerged as a hot product, particularly because it allows high-speed data access without costly improvements to physical cables.

While not having to upgrade phone lines, Internet providers do have to upgrade their technologies to keep pace with growing demand and higher speeds, and this, says API, is why ST's behaviour is so dangerous.

"Alternative providers have invested no little money into the development of their own technologies, which now are endangered by the abuse of ST's monopoly position," said Vigaš.

"If this doesn't change, we have to ask how to attract further investors to Slovakia when we don't know how to protect their invested resources," he added.

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