Slovak Telecom gets heavy fine

THE ANTITRUST authority (PMÚ) fined Slovakia's major fixed-line operator Slovak Telecom Sk885 million (€22.6 million) for what the PMÚ says is an abuse of ST's monopoly position.

THE ANTITRUST authority (PMÚ) fined Slovakia's major fixed-line operator Slovak Telecom Sk885 million (€22.6 million) for what the PMÚ says is an abuse of ST's monopoly position.

This represents the highest fine that the PMÚ has ever imposed on a company.

According to the PMÚ, Slovak Telecom (ST) abused its dominant position by refusing to provide its competitors, the alternative phone operators, in particular, Internet service providers, access to local loops, often referred to as "the last mile", of which ST has sole ownership.

ST is now obliged to offer its competitors access to the local loops, which can connect households and companies with ST's network within 60 days.

Slovak Telecom has 15 days in which to appeal the hefty fine.

The fixed-line operator denied restricting the access of the alternative operators, claiming that the company operates in line with European legislation. ST has confirmed that it plans to appeal the fine.

However, in a memo sent to The Slovak Spectator, the company said that it would publicly present its position on the fine at a press conference on June 6.

"Until then the company will not provide any information connected to the decision," ST said.

Access to the local loops would mean that the alternative operators could reach their clients at a lower cost. The Internet providers were the first to turn to the anti-monopoly authority to demand access to the local loops.

Though alternative fixed-line operators have been trying to break into the market for several years and become equal competitors to Slovak Telecom, many say that it is only now that the actual liberalization of the market is taking place.

Slovak Telecom said it would provide access to the local loops based on the decision of the Slovak Telecommunications Office, which will be in line with EU legislation.

Although a law on the liberalization of the market that obliges ST to rent its local loops has been on the statute books since 2000, the Telecommunication Office did not have the necessary authority to enforce the legislation.

"Despite two trials to amend the law, until the end of 2003 the Telecommunications Office (TÚ) did not have the authority to oblige the company to publish the reference offer for the access to local loops and provide free access to the loops. The Telecommunications Office also did not have the authority to set conditions for the process," spokesman for the Telecommunications Office Roman Vavro told The Slovak Spectator.

Based on the law on electronic communication, since January 2004 the TÚ has been able to make the dominant operator provide access to alternative operators to the local loops.

"By a decision of March 8, 2005, the TÚ designated Slovak Telecom (ST) as being a major provider on the wholesale market in local loop unbundling (LLU) and obliged the company to take measures to promote efficient competition and development on the internal market," Vavro said.

"ST for example is obliged to provide access to the local loops and publish the reference price of the access, [the basic rate at which networks are connected]" Vavro told the Spectator.

What is a headache for Slovak Telecom is good news for the alternative operators.

"The fact that Slovak Telecom is abusing its monopoly position has been obvious since 2000, when the law on the liberalization of the telecom market came into force and ST refused to sign interconnection agreements with the alternative operators," General Director of Dial Telecom David Bečvář stated in a memo for The Slovak Spectator.

According to Bečvář, the artificial blocking of the liberalization of the fixed-line market had a very negative impact on the development of the whole market and its character.

"Slovakia has fallen behind and now it will have to catch up with the rest of the world," Bečvář said.

The fine levied against Slovak Telecom in fact represents 5.26 percent of its last year's turnover. If the authority had imposed the highest fine, it would have had to pay 10 percent of its turnover, which would have pumped the fine up to over Sk1.60 billion (€41 million).

In March 2005, The Slovak Supreme Court upheld a 2004 decision by the Antitrust Office to fine ST Sk20 million (€532,460) for squeezing out competition on the ADSL Internet market.

The Antitrust Office levied the fine after a 2003 audit. At the time, the watchdog agency also ordered the telecoms giant to improve the competitive environment on the ADSL market.

ADSL provides a continuously available, "always on" Internet connection that uses existing phone lines to transmit data much faster than regular dialup phone service.

"Thanks to our intervention, Slovak customers can now order ADSL Internet connection services with alternative operators," spokesperson for the Antitrust Office Miroslav Jurkovič told The Slovak Spectator in March.

In June 2004, the TÚ ordered Slovak Telecom to stop forcing its ADSL clients to pay for obligatory telephone services as well.

However, this latest fine is in fact the 21st proceeding against the dominant fixed-line operator since 2001.

Seven fixed-line operators have signed agreements on interconnecting their networks with Slovak Telecom. They are Amtel, Etel, Dial Telecom, Globaltel, Slovanet, Nextra, and Železničné telekomunikácie, the railway telecommunications operator.

Some of these telecommunications operators have already started providing services on the fixed-line market; some of them are planning to do so in the near future.

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