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MONOPOLY OPERATOR WILL NOT BE FORCED TO RENT LOCAL LINES IN NEW YEAR AFTER ALL

ST wins competition reprieve

With five months to go before the scheduled end of Slovak Telecom's (ST) fixed-line monopoly, the company has received a reprieve of sorts with the Slovak parliament's failure to pass an updated Telecoms Law.
In its final session in mid-August, parliament could not muster the necessary votes to override a presidential veto on the controversial law, meaning that the existing Telecoms Law remains valid and ST will still lose its monopoly status on January 1, 2003.
However, ST will not be required to open its local loops to competition for 'last-mile' connections with households and businesses as planned in the law's revision. This means that while competitors will be allowed on the market, they will not actually have access to the cables that connect end users with local telecom hubs.


MANY phones, but only one will be ringing come January 2003.
photo: TASR

With five months to go before the scheduled end of Slovak Telecom's (ST) fixed-line monopoly, the company has received a reprieve of sorts with the Slovak parliament's failure to pass an updated Telecoms Law.

In its final session in mid-August, parliament could not muster the necessary votes to override a presidential veto on the controversial law, meaning that the existing Telecoms Law remains valid and ST will still lose its monopoly status on January 1, 2003.

However, ST will not be required to open its local loops to competition for 'last-mile' connections with households and businesses as planned in the law's revision. This means that while competitors will be allowed on the market, they will not actually have access to the cables that connect end users with local telecom hubs.

It's a two-steps-forward, one-step-back solution which has drawn fire from would-be competitors and consumers growing increasingly unhappy with high telephone bills and Internet access costs.

"According to the law, alternative operators will be able to apply for a voice service license which will, however, be useless [without access to local loops]," said Vladimír Ondrovič, chairman of the Association of Telecom Operators (ATO).

"The original law on telecommunications continues to enable ST to abuse its monopoly without being sanctioned more significantly," he added.

Although parliament passed the revised law in June, it was vetoed by President Rudolf Schuster due to what he saw as excessive fines to be levied by the market regulating Telecoms Office for monopoly abuses.

The delay was apparently fatal for parliamentary support for decisively ending the monopoly. In the June vote, 91 members of the 150-seat legislature supported the law. In August, only 72 backed the measure, five shy of the needed majority.

ST, which had unsuccessfully lobbied for a one-year delay in opening local loops, said that the law itself needed rewriting to harmonise it with new European Union regulations passed in April.

"Within the process of [Slovakia's] accession [to the EU], it is far more important to adopt a completely new law, which is now under preparation at the Transportation, Post and Telecoms Ministry, within the framework of new EU regulations. The new law will be in effect from January 1, 2004," said ST in a prepared statement.

"The current law on telecommunications guarantees [market] liberalisation," the statement continued.

The new EU framework includes guarantees on opening local loops and creates a common regulatory framework, rules on access and interconnectivity, as well as measures on data protection and privacy.

According to EU documents, all 15 current member states will have to implement the changes by July 2003, except for measures regarding data protection and privacy, which are still in negotiation in the European Parliament. Applicant states to the union will have to implement the changes before accession.

While acknowledging that even the revised law would have had to be changed, the Telecoms Ministry was disappointed to see the law die in parliament.

"We are unhappy with the result because the bill favoured the citizens [in providing for lower prices]. We are surprised that members of standard right-wing political parties such as the [Hungarian Coalition Party] SMK and the [Christian Democrats] KDH did not support the bill," said Deputy Telecom Ministry Dušan Faktor.

SMK deputies abstained en masse in both votes, pointing out that the new EU measures would require rewriting the law from scratch.

"We will have to implement [the EU framework] before our accession, which means that by January 1, 2004, we will have to pass a new Telecoms Law," said the head of SMK's parliamentary caucus, Gyula Bárdos, explaining the party's position.

"At the moment, ST has a monopoly only on voice services, which will end on December 31 this year. We are not in favour of a partial solution, but we will support a new Telecoms Law which will enable the use of local loops by alternative operators," he continued.

However, while all seven KDH deputies present at the June vote supported the law, in August one opposed and eight abstained. The KDH has nine deputies in parliament.

"Our voting position came from discussions with experts, in which we listened to strong arguments for supporting and opposing the changes," said Július Brocka, a KDH deputy, explaining that the party had advised MPs to vote according to their consciences.

"We were also aware that liberalisation of the telecom market - and for that reason also a lowering of prices - will start from January 1, 2003, when ST's monopoly ends," he added.

Some, including the ATO, have hinted that the law's failure in parliament has less to do with the fines cited by Schuster in his veto that with secret clauses in the privatisation contract between the Slovak government and Germany's Deutsche Telecom, which bought 51 per cent in ST in 2000.

"It seems as if the president's objections were not at issue, and that it was important to reject the whole new bill as such," said Ondrovič.

While the privatisation contract remains classified, the Slovak press has reported that it contains conditions binding the Slovak government from implementing measures causing ST losses of over 10 million euros.

"These claims are false," said Faktor. "The [Telecom] Ministry submitted a draft, the cabinet approved it, and the ministry pursued the adoption of the bill in parliament to the last minute."

Some opposition politicians, including nationalist firebrand Ján Slota, have called for the immediate publication of the privatisation contract, while many parties and interest groups are trying to make Slovakia's relatively high Internet charges an issue in the run-up to September's parliamentary elections.

ST was criticised heavily for again raising Internet access costs along with fixed-line monthly charges by up to 25 per cent in early August, giving Slovakia the highest price for Internet access among countries in the Visegrad Four.

Internet service providers have repeatedly warned that the slow growth of Internet use in Slovakia is directly related to ST's pricing policies, and the situation can improve only when last mile connections are opened to the competition.

"Unbundling local loops is a basic element of [European telecom] law," said Marián Ďurkovič from the Association of Internet Service Providers (API).

"Real abolition of the monopoly position of Slovak Telecom hinges on this," he said.

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