Maltacom demands protection from VOIP challenge

Maltacom is insisting that the Malta Communications Authority moves to redress the loss it is making due to Voice Over Internet Protocol operators, that have cost the company Lm2.4 million in international traffic revenue over the past 15 months.

Maltacom is arguing that VOIP providers are offering the public extremely cheap international rates by using its network and not contributing a cent.

"We are facing a situation where the VOIP providers are supplying the service at our expense - a process which is hurting the company and will continue to do so unless the regulator addresses the situation," Maltacom chairman Saviour Portelli said.

Mr Portelli, flanked by group chief executive Stephen Muscat and chief operating officer Joe Azzopardi, was yesterday reacting to the MCA's decision on the proposals it submitted.

The MCA on Monday said it approved Maltacom's request to drastically cut its international rates but only approved minor changes to local tariffs.

Mr Portelli said Maltacom had a right to appeal against the regulator's decision on the VOIP issue, though he stopped short of saying whether it was an option the company would take.

"VOIP is classified as data service, such as internet, but in the majority of cases this system is being used as alternative telephony without contributing anything to the infrastructure we provide," he said.

Maltacom said this situation had to be rectified and whoever was using the company's lines should contribute to its excess deficit.

Mr Portelli said that overall Maltacom "pretty much agreed" with the authority's decision, which was the result of months of talks between the two sides to reach the best possible options.

He explained that Maltacom had first submitted its proposals for a rebalancing exercise in July 2002. These had anticipated the effect VOIP would have on the market of international telephony.

These proposals were turned down and Maltacom returned to the drawing board and subsequently, in July 2003, it entered into discussions with MCA to modify its suggestions.

"This whole rebalancing exercise which will come into force on June 1 is revenue neutral. By reducing international tariffs drastically and slightly increasing local rates, the company will be making no income," he insisted.

Mr Portelli pointed out that the residential phone rental in Malta was, and will remain after June 1, the cheapest in Europe. On the other hand, business phone rental compared with the average rates in Europe.

"We have increased the domestic phone rental by 1c3 a day - the first adjustment in nearly 11 years," he said.

Mr Portelli also pointed out that Maltacom had not touched the rates of its 5,000 subscribers considered to be social cases. On the contrary, it was giving these subscribers a maximum credit of Lm30 a year.

"We do not consider the decision as an increase but as a tariff rebalancing which we feel will not burden our users, especially since over 90 per cent of the calls made last between three and five minutes," he said.

On the other hand, Maltacom's international phone rates have been drastically cut, up to 80 per cent in some cases, in order to compete with the present rates offered by the VOIP providers.

For example, an international call from a residence (in the standard time window between 8 a.m. and 6 p.m.) to the US has gone own to 7c9 from 54c; to the UK its now costs 7c1 instead of 30c; while to Australia and Canada rates plummeted to 7c1 from 54c.

Despite such drastic cuts, rates of VOIP remain cheaper.