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AFTER MANY COMPLAINTS, FIRST CALL FOR INTERCONNECTION FINALLY GOES THROUGH

Slovak Telecom losing monopoly

THE DOMINANT telecommunication carrier, Slovak Telecom (ST), which has been enjoying a de facto fixed-line monopoly, allowed the first alternative operator of fixed-voice services to hook up to its network.
ST, now owned by the German telecom giant Deutsche Telekom (DT), signed a network interconnection deal with the company ConnSpec Telekom on November 26; this is the first hook-up deal ever signed in Slovakia between ST and an alternative phone operator.

THE DOMINANT telecommunication carrier, Slovak Telecom (ST), which has been enjoying a de facto fixed-line monopoly, allowed the first alternative operator of fixed-voice services to hook up to its network.

ST, now owned by the German telecom giant Deutsche Telekom (DT), signed a network interconnection deal with the company ConnSpec Telekom on November 26; this is the first hook-up deal ever signed in Slovakia between ST and an alternative phone operator.

ST has been negotiating the interconnection of networks with 13 operators, all licensed to run fixed-line telecom networks in Slovakia. None of them has managed to sign a deal with ST.

Experts warn that the ConnSpec deal does not automatically end the ST dominance, and new operators who might push down phone-call prices will not enter the market until the second half of 2004.

ConnSpec Telekom AG is an Austrian-US telecommunication company cooperating with voice-services provider Telekom Austria and Bell South in the US. Its Slovak subsidiary was founded in 2002.

The company, which had already applied for interconnection in January, will be securing phone connections mostly to North and South America, and Slovak households will continue to use ST fixed phone lines.

"ConnSpec will only be providing international connections through ST. We want citizens to be able to choose the operator for their calls," President of the Association of Telecom Operators (ATO) Vladimír Ondrovič told the Slovak daily Pravda.

ST officials reacted positively to the signature of the first interconnection contract, considering it evidence of the willingness of ST to reach an agreement with alternative operators.

"We are very satisfied with the signature of the first interconnection agreement, which proves for our company, which has long been accused of unwillingness to reach agreements with alternative operators, that if both partners have a serious interest in cooperation we can make a deal," ST President Miroslav Majoroš told The Slovak Spectator.

"The ST reference offer includes standard conditions that are regularly included in similar interconnection agreements in EU countries," he added.

Critics have long accused ST of deliberately holding up the liberalization process in order to consolidate its market dominance.

The ConnSpec-ST deal is a standard contract similar to those that ConnSpec has signed with more than thirty operators worldwide, Heinrich Estrak, a co-owner of ConnSpec Telekom AG, which is the 100 percent owner of ConnSpec Telekom, told the private SITA news wire.

ConnSpec obtained its license in December 2005, but lost it temporarily in August 2003 due to its failure to pay the license fee of Sk100,000 (€2,440). The company appealed the Slovak Telecom Office's (TÚ SR) decision and reclaimed its license on November 26 after paying the fee.

The company, which will initially focus on corporate clients, claims to be able to connect to 40,000 destinations worldwide. "Even to where no Slovaks have called before," ConnSpec officials say.

"Unfortunately, this firm, or any other firm that starts operations, will be our competitor," Majorš says, adding that market liberalization is unavoidable.

However, the true liberalization can start only after the law on electronic communication, which will give more muscle to the Telecommunication Office to regulate the connection conditions that telecom firms offer, makes it through the parliament.

So far, the TÚ SR has issued 15 national and two regional licenses for providing public phone services via fixed public telecom networks.

In early September, two telecom companies, Dial Telecom and eTel Slovensko, signed contracts to interconnect their public networks with mobile network operator Orange. Three other companies - PosTel, GlobalTel, and US Steel - have also begun providing telephone services within Slovakia.

The operators settled with Orange to compensate for their failure to link up to the existing land-based network run by ST.

Slovak Telecom argued that negotiations with alternative operators had been complicated by the unrealistic demands of the operators.

According to SITA, ATO representatives argue that ST is demanding unacceptable financial guarantees from the alternative operators, thus creating too many barriers to interconnection, which contradicts the rules of free competition.

The operators have complained that ST asks for overly high interconnection prices, which are close to prices customers pay, and criticized the draft interconnection agreement that, according to them, puts ST in the role of a market regulator with the right to dictate the rules.

According to the Slovak daily Pravda, only one operator is currently holding intense network hook-up talks with ST, one operator has not even applied to ST for a reference offer, and two operators have requested the offer but have not initiated a meeting. In addition, two operators requested negotiations only recently, two withdrew from talks last week, four operators have taken an offer but failed to attend the first meeting, and four operators are negotiating sporadically.

Telephone service licence-holders must start providing telecommunication services within a fixed period after their license is issued, which puts them under considerable time pressure to hook up to the network of ST or one of the mobile operators.

Most of the operators had been waiting for a revision of the country's telecom law to be passed. The parliament's failure to pass the bill, as it was unable to overrule a veto by President Rudolf Schuster in July, has again set back the liberalisation of the market. The same situation came to pass in 2002, with an earlier draft of the bill.

Alternative operators suggest that the state, which holds the remaining 49 percent of ST, may be seeking to delay full market liberalization in order to keep ST's current market dominance.

Marta Ďurianová contributed to this report.

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