Editorial

The two big fixed telephony contenders are now facing each other across the ring.

Maltacom used to be a monopoly but is no longer - in theory. The sector has been liberalised but until there are competitors on fixed line telephony, liberalisation was just an ideological principle.

Melita was a monopoly with regards to cable provision of television services and it still is. It competed with internet service providers on broadband provision (they are now claiming that it did so unfairly) and intends to compete with Maltacom on fixed telephony - once the issue of interconnectivity has been sorted out.

Without interconnectivity, a Melita Hello subscriber cannot call a Maltacom number - or vice versa. Although an agreement has been reached between Melita and Go Mobile and Vodafone, that with Maltacom is pending and, irrespective of protests to the contrary, it is clear that Maltacom is using all the delaying tactics it can. Why? Because Hello will take a considerable share of Maltacom's market at a time when its fixed line revenue is already suffering.

As referee in the ring there is the Malta Communications Authority, who is obliged to ensure a level playing field, one where there is fair competition - for the ultimate benefit of the consumer. Why shouldn't consumers have a choice of fixed line operator that would bring the prices down? Certainly not because it would lower the GDP of Malta, as argued by the Maltacom CEO David Kay!

The MCA did what it could: Certain procedures had to be followed and it could not bark unless there was clearly abuse. With so many legitimate, technical ways to delay the process, it had to wait patiently to make its move. Was it too patient? Perhaps. But more important is that its bite is not nearly scary enough. The fines imposed on Maltacom amount to a paltry Lm80,000 a year, a drop for a company with a turnover from this sector in 2005 of Lm33 million. No wonder Melita went to the European Commission, where the remedies are much higher. If we want a regulator, then we must also ensure it has the right weapons to provide a deterrent factor.

As if the situation is not tense enough, it is an open secret in the industry that another company is waiting on the sidelines, also wanting to offer fixed line telephony. Although the company has not revealed its plans, the scenario would be quite different to that between Melita and Maltacom: The new operator would be buying the services wholesale from Maltacom - and selling them on a retail basis.

From a strategy point of view, it is better for Maltacom to retain the service - albeit on a wholesale basis - than to lose subscribers entirely to Melita. However, it remains to be seen whether Maltacom will drag its feet with this new company as it is doing with Melita. It does not look good. The newly authorised operator has been negotiating with Maltacom since the beginning of the year and there has been little sign so far that agreement will be reached by the imminent deadline.

Whatever Maltacom's past, whatever the service it provided in the decades it was a monopoly, it is now a private company, one declared by the regulator to be a dominant player in the market, a situation that paves the way for the MCA to take remedies to rebalance the competition in favour of the consumer.

Maltacom's new majority shareholder, Tecom, has not done much yet to win public support. Consumers will only believe that the customer will be at the centre of all Maltacom policies, as Mr Kay is insisting, when they are actually given a choice.