Cable TV tariff rise boomerangs as subscriptions fall

An increase in cable television tariffs last February has been blamed for a fall in subscriptions and in the average revenue per subscriber, according to the first annual report of the Malta Communications Authority, just published.

Tariffs increased by 4.86 per cent in February 2002 and subscriptions fell by 1.3 per cent in the second quarter of the year. The authority said that the increase may have been the principle cause of the fall in subscriptions. Subscribtions had previously been rising on an annual rate of over five per cent.

Notwithstanding the increase in prices, the average revenue per subscriber fell by 0.83 per cent between June 2001 and the same month in 2002 as a number of subscribers downgraded from the premium service to basic, the report says.

(Later this year Melita Cable submitted another request to raise its charges but the MCA turned it down, arguing that it was not justified on a cost basis. The biggest proposed increase would have been for the reception and entry rates).

The report says the percentage of households served by the cable TV network at the end of 2001 was 71 per cent, compared to 60 per cent in Sweden, 65 per cent in Denmark and 70 per cent in Germany.

The MCA said one of the key tenets of a competitive environment was the principle of access. "Open access" it explained, was a term usually used in relation to cable TV networks that have been upgraded to two-way systems in order to support data services and/or cable telephony provided by multiple operators.

The authority said that over the past year it had set up a project group jointly with Melita Cable to investigate possible approaches to open access from the technical, logistical and regulatory standpoints. Should Melita Cable be deemed to have a dominant market position in the data transport sector, it would be expected to offer access to its network to other service providers at cost-based rates.

"However, achieving this is subject to being able to overcome significant technical and operational hurdles."

The cable TV sector was liberalised in June 2001. Subsequently Techinvest Ltd lodged an application for a licence to operate cable and data services in Malta.

The MCA said it encouraged new commercial initiatives in the telecommunications sector and it was seeking to establish a regulatory framework that facilitated new applications within the parameters established by the law.

Elsewhere in its report the MCA discusses fixed and mobile telephony.

It said the fixed telephony sector was characterised by relatively high rates for international calls, but local call prices compared well with those charged in the EU.

"The implications are that the fixed telephony sector needs to improve on quality and price, with resultant beneficial fallout on the rest of the economy."

Once Maltacom's monopoly of the international gateway came to an end at the end of this year, other operators would be in a position to establish and maintain telecommunications systems between Malta and other countries, it said.

"An additional gateway is a critical milestone in the opening up of the telecommunications sector. It will afford critical redundancy in the event of a breakdown in the existing single link. It creates the impetus for the generation of further competition in the market, which will in turn provide customers with better quality of service, choice and value for money. Moreover, having the requisite resilience in the international link renders Malta a more attractive inwards investment destination."