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Slovak Spectator | 20.01.2003

Alternative operators complain of regulatory weakness as they prepare for operations

By Dewey Smolka
Spectator Staff

ALTHOUGH the monopoly enjoyed by Slovak Telecom expired at the end of 2002, alternative telecoms providers have lashed out at the dominant operator and the state regulator, saying that market liberalisation so far exists only on paper.
Despite a requirement to ensure an open telecom market at the beginning of the year, say officials from the Association of Telecoms Operators (ATO), Slovakia's market-regulating Telecoms Office (TÚ) has done little to ensure free competition.
"The TÚ has, in our opinion, not been functional for a long time," said ATO head Vladimír Ondrovič in a late December letter to Speaker of Parliament Pavol Hrušovský.

"Its inactivity, failure to use even those authorities that it has under valid legislation, and its deep lack of professionalism have seriously hindered the development of the telecom market and are a source of shame for the Slovak Republic," he said.
Telecoms operators, said Ondrovič, "are exceptionally unsatisfied with the means by which TÚ implemented the telecoms law in practice, especially the responsibility to create conditions for fair, transparent, and uncorrupted competitive space in the telecoms market."

According to the ATO, alternate carriers have been unable to establish operations, even after receiving fixed-line licenses, because they have not reached agreement with ST on the use of the operator's local loops - the final connections with end users.

Officials from the ATO also complain that while the TÚ received a proposed 'reference price' - the amount ST estimates service over its lines costs and the basis for charges to other operators - on January 2, they have not yet seen the proposal and were not invited to participate in crafting the price.

"The TÚ is a market regulator, not a partner of the dominant operator. If it really wants to cooperate, it should also talk with the other operators," said Ondrovič.

In early January, however, TÚ head Milan Luknár reacted angrily to the charges, saying that the problem was in the law rather than with the regulator, and that his office had done everything possible to ready the market for competition.
"The TÚ doesn't have any support in the law to compel ST to negotiate with other operators," said Luknár.
"The TÚ has not broken the law, but despite that the chairman of the ATO is continuing this incomprehensible media campaign," he said, adding that the office had begun licensing procedures in July and had granted 12 fixed-line licenses by the end of the year, though they were not required by law to do so.

Luknár also said that the regulators would pass ST's reference price on to alternative operators as soon as the office had studied the proposal.

The war of words between the ATO and TÚ goes back to an August vote in parliament, when, after alleged heavy lobbying pressure from ST, lawmakers failed to override a presidential veto on a revised telecoms law.

That law would have obliged ST to open local loops to competition from the beginning of this year. Instead, full liberalisation has been put off until Slovakia passes an EU-required law on electronic communications, expected later this year and to take effect in 2004.

According to Luknár, that law should establish an open telecoms market, as well as take care of a number of questions at the regulator's office. Alternative operators and TÚ officials have long complained that the office lacks qualified personnel and budgetary independence.

"Some problems come from insufficiently defined rights and responsibilities of the TÚ. But I believe that experience with the application of the present telecoms law will be used to create a new law on electronic communications, which will be passed in 2003," said Luknár.

Slovakia's Ministry of Transport, Post, and Telecoms has also criticised the TÚ, saying in a cabinet report that the regulator had failed to complete certain tasks, including establishing a legal definition for a "carrier with significant influence" - a key factor in implementing regulatory mechanisms.

Telecoms Minister Pavol Prokopovič has stressed the need to establish increased independence for the regulator, which up to now has been funded by his ministry. Prokopovič has also proposed transferring the state's minority stake in ST to a different ministry to ensure regulatory independence.

"It will be necessary to transfer shareholders' rights in Slovak Telecom from the Telecoms Ministry to a different department of the state administration, perhaps the Finance Ministry, in order to achieve complete independence of the creator of national telecoms policy from entities regulated on the Slovak market," he said.

Prokopovič also added that the law on electronic communications expected this year should smooth out whatever wrinkles remain in the liberalisation of the country's telecoms market.

"The EU directive [on open telecoms markets] will be reflected in a new law on electronic communications. The change will be much more substantial [than the rejected telecoms law] and will be devoted largely to the future development of the telecoms sector," he said.

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