Maltacom holding back competition

In an annual report evaluating the EU telecoms market, the European Commission has referred repeatedly to Maltacom's dominant position which it says seems to be stifling market growth. The main criticism relates to fixed line telephony.

According to the Commission, Maltacom's current high rates for interconnection charges - estimated to be the highest in the EU - are smothering competition.

So far, the conclusion of any interconnection agreement with Maltacom has proved to be rather difficult, particularly because Maltacom's wholesale tariffs appeared to be very high, the Commission said.

"The high interconnection tariffs combined with relatively low retail prices are posing a question of a possible margin squeeze (call termination rate is €0.028 per minute, in comparison to retail €0.125 charged every five minutes) and make the prospects for development of competition on the fixed market questionable."

The report says that as long as the interconnection tariffs are not lowered and balanced in respect to retail prices, no prospects for service-based competition seem to be available in Malta.

Although noting some minor progress, the Commission said that liberalisation has not brought about any advantage to the consumer.

The Commission reports a substantial increase in the broadband market, placing Malta as one of the most advanced countries in this sector, even when compared to the other new EU member states.

Until last October, broadband penetration had reached 11 per cent, at par with the EU average. In October there were 44,819 broadband connections, a substantial increase over the 3.8 per cent penetration rate registered a year earlier.

Significant progress was also reported in the mobile telephony sector with subscriptions reaching the 325,000 mark, an increase of almost six per cent over the previous year.

Even in this sector, however, the Commission complains about Maltacom's resistance to introducing number portability by the end of next month, giving mobile consumers the possibility of changing networks without changing their telephone numbers.

"Despite objections, current mobile operators seem to be prepared to introduce the service by the end of the first quarter of 2006. Maltacom claims it will not be technically ready for the introduction of number portability by that time." This has led the Commission to start infringement procedures against Malta.

On the regulatory system, the Commission said that except for the appeals mechanism, the regulatory environment in Malta seemed to have evolved without great difficulty.

The Commission said that the Malta Communications Authority appears to have all the necessary powers and most of the stakeholders consider its performance satisfactory.

Yet, the Commission has expressed reservations on the appeals board and is currently scrutinising its independence.

"The duration of the appeals against MCA decisions and the alleged lack of sufficient expertise and knowledge of the sector by the appeals body are referred to by a number of stakeholders as a serious problem."

The Communications Appeals Board was created with a chairman appointed by the Prime Minister and consisting of two members selected by the chairman from a panel of persons with relevant experience established by the Prime Minister.