Maltacom seeking to double connection rates

Maltacom has asked the telecoms regulator to allow it to double the monthly connection rate for fixed line telephony, to compensate for a requested average 50 per cent reduction in international tariffs.

The request to carry out a rebalancing exercise comes on the eve of the liberalisation of the fixed line and international communications sector, and is bound to stir up some controversy.

Speaking at a press conference to launch the Malta Communications Authority's first annual report, chairman Joseph Tabone said Maltacom was proposing that the connection rate should go up from Lm25 to Lm50 per year and to end the distinction being made between residential and business connection rates.

The company is also proposing that fixed line calls be charged by the second rather than per pulse, and is seeking other "variations" to the local tariff schemes which have not yet been disclosed.

At the same time, it wants to slash international rates by an average 51 per cent.

"Nevertheless, a decrease in international tariffs does not automatically mean an increase in local tariffs," said Mr Tabone.

"At this stage, we are still awaiting further information from Maltacom so that their application can be processed. I assure you that increases will not be sanctioned without their being justified."

Mr Tabone said he was not convinced that there was a need to double the local connection rates to compensate for a reduction in international rates.

He stressed that the international rates needed to be revised because they were exorbitant. At the same time, an increase in the local connection rate would have to be justified.

Mr Tabone said that Maltacom's international tariffs were the highest in Europe, with the exception of Romania, and described them as "outrageous" and "a big disincentive to business".

He said he was aware of business and foreign investors which had been deterred by the high international rates.

"If you are considering investing here and realise that a good chunk of your operational cost will have to go towards paying telephone bills.... you go elsewhere."

Mr Tabone said that besides the business side, there was also a social side to the issue.

"Having such exorbitant rates is limiting people at a social level. For instance, many parents will not be able to afford to call their children abroad."

For this reason, Mr Tabone explained, many international calls originated from abroad.

Mr Tabone said this meant the operator was losing out on potential growth in the sector. It was "a shortsighted policy" because cheaper rates would mean an increase in traffic.

He was expecting "international tariffs" to go down significantly next year because of the liberalisation of fixed line telephony and the international gateway.

"I am sure there will be other operators in this sector offering competitive prices," he said.

Mr Tabone also said the authority had been constrained to start imposing fines on operators who did not abide by the directives issued by the regulator. The authority was seriously considering fining Maltacom for not introducing itemised billing for its customers, though Maltacom is contesting the matter in court.

He said such fines could take different forms, even a charge of up to Lm1,000 daily. The ceiling of any fine was Lm50,000.

Mr Tabone spoke about the "last bastion of protectionism" in the telecommunications sector which was expected to fall by the end of this month. He explained that as from January 1, both fixed line telephony and international communications would be liberalised.

Since mobile telephony had been liberalised, there had been a 65 per cent growth in the sector. Liberalisation was also generating more jobs and proving beneficial to consumers, with mobile phone rates dropping by between 30 and 50 per cent.

He also referred to the demand by Melita Cable to review its rates. The authority had felt the increase was not justified and was constantly monitoring the level of service offered by Melita.

MCA's annual report analyses the various sectors for which the MCA is responsible, namely fixed telephony, mobile telephony, cable television, internet and electronic commerce. The MCA not only gives an account of the work carried out in each sector, but also gives an overview of the relevant market.

The annual report touches on the national numbering plan which took place earlier this year which was spearheaded by the MCA, the liberalisation of the fixed telephony sector, the determination of operators having a dominant market position, as well as the radiation emission testing carried out at mobile phone base stations.

Mr Tabone also said that regulation was also essential to ensure continued investment. Typically, prospective investors needed to see a clear regulatory landscape far into the future.

"Investors need to know not just what the rules are today, but what they will be 10 to 15 years from now".

He also referred to the licence awarded to Vodafone that from next year will enable it to establish and maintain international gateway services that will create the impetus for further competition in the market.

During the year under review, consumers and service providers were given the opportunity to have a say in shaping sector regulation, thanks to the consultative process which precedes any decision taken by the MCA.

Mr Tabone said the enforcement of the MCA's decisions had proved to be an experience for the authority. Indeed, repetitive challenges of regulatory decisions had increased the MCA's workload and the detailed preparation for such appeals was consuming a good part of its resources.