Freeing the airwaves

It appears from several articles carried in The Times that Maltacom is taking a rather negative and defensive stance in connection with the liberalisation process of the telecommunications sector.

Fixed line telephony, which had always been the exclusive domain of Maltacom, was officially liberalised on January 1, a date set under the Telecommunications (Regulation) Act in late 2000. Over the past weeks, two telecom providers have been offering a service which provides the facility of making international calls at extremely low prices by using a technology known as VOIP (Voice Over Internet Protocol).

The rates for these services are in many cases up to 70 per cent cheaper than those being charged by Maltacom. To quote but two examples, while Maltcom charges 57c and 32c per minute for calls to Australia and the United Kingdom, the VOIP providers are offering calls at 5c and 4c per minute respectively. One might argue that the quality of service is inferior to landline technology but it is more than sufficient for most calls.

Maltacom is refusing or at least is reluctant to provide the required bandwidth at a fair price to enable the new entrants to provide this inexpensive service.

Maltacom could be in serious breach of the Telecommunications Act and possibly also the Fair Trading Act. The Malta Communications Regulator has undoubtedly already intervened in this matter and it is hoped that Maltacom will be persuaded or obliged to truly liberalise this very important sector of Malta's economy.

I served on the Maltacom board for a relatively short period a few years ago and I could feel the monopolistic culture that permeates throughout the company.

Does this company still believe it has some given right to make the very handsome profits it was used to making in the past solely due to the monopoly it enjoyed?

Those days are over and the quicker the company realises this the better for all concerned. Maltacom has no option other than to adopt new technologies and compete in the marketplace. If it does not, it will perish, sooner or later.

We need only examine what happened in the mobile telephony sector. The moment MobIsle Communications Ltd (a Maltacom subsidiary) commenced operations, the cost of mobile telephony came crashing down.

Vodafone Malta was left with no option other than to accept a cut its prices and its profits. The other side of the coin is that we have seen an exponential growth in this sector and both operators are now faring very well. Why cannot this scenario happen in fixed line telephony?

The Maltacom management should have used the years leading up to liberalisation to restructure the company and launch new technologies. It should have been the first to offer a VOIP service and not wait until other companies entered this market.

Would it not now make more sense for Maltacom to negotiate a mutually acceptable deal on additional bandwith?

On a more general note, why does the Maltacom board not seek to contain its cost base by curbing some of the lavish expenditure on such items as senior managers' perks, professional fees, consultancies, overseas travel, entertainment etc, which run into the hundreds of thousands of liri annually?

An early retirement scheme alone will not solve the company's problems. In my opinion, the underlining problem at Maltacom is one of culture and attitude.

I tried to get this message across during my term on the board but to no avail. The chairman seems to treat bandwidth as exclusive Maltacom property, which is the antithesis of what the very same Telecommunications Act seeks to establish.

It is indeed a pity that this issue seems to be degenerating into a "battle" between the Maltacom chairman and the telecommunications regulator. As usual, the loser at the end of the day is the consumer.