Maltacom`s international tariffs "far too high"

Maltacom`s international tariffs are far too high and they need to be brought down to more normative levels, according to telecommunications regulator Joseph V. Tabone.

In an interview with The Times, Mr Tabone, the chairman of the Malta Communications Authority, which was set up last year, said that in general Maltese consumers were currently getting a fair deal in the different areas of the communications sector.

However, he immediately mentioned Maltacom`s international tariffs as one of his major concerns in this respect.

Mr Tabone said he believed the rates were also discouraging potential foreign investment from being attracted to Malta: "When a potential investor, particularly a telecommunications dependent firm, discovers that it would need to spend, let`s say Lm100,000 every year on telecommunications bills, it would have to take this into account in its feasibility assessment of doing business here.

"From my experience potential investors say that they would rather use that kind of money for business development purposes. They argue that with Lm100,000 they could hire half a dozen people. They say they do not want to blow such money in communication bills."

What was keeping them so high?

He said: "We do not yet have any competition in this area. Consumers have no choice. When we will have a choice next year, things will be different."

How much do the international tariffs need to come down to be realistic?

By a sizeable amount, he replied, by as much as a third or a half to be realistic.

Did he discuss this with the management of Maltacom?

"My view is very well known and I have made it clear to everyone."

With regards to fixed line telephony, Mr Tabone believes that the local connection service rates provided by Maltacom are very reasonable and that in general Maltese consumers are getting a "pretty fair deal".

He said the liberalisation process of telecommunications was the best thing that could have happened for consumers and was a very good example of the benefits of competition. A case in point was the mobile telephony sector. Since the second operator came on the market, the rates were coming close to realistic levels, he said.

Consumers were also seeing the two mobile telephony operators competing with each other to provide a better quality service.

However, he stressed he would like to see a fall in the interconnection charge - the rate operators charge each other.

Overall, Mr Tabone`s wish is to see people becoming more assertive "in demanding good quality and decent standards of service".

Speaking about the role of the authority, Mr Tabone explained that one of its major tasks was to oversee the government`s liberalisation programme in telecommunications.

"In addition to internet service provision, which has always been liberalised, we have so far witnessed the opening up of the mobile telephony sector. There isn`t a better example of the benefits to the consumers than what is happening in this sector.

"Throughout the course of 15 months of competition, you had the people owning a mobile telephone rising from 30,000 to 230,000. The reason why you had that is that both operators are providing a much better service and the cost of owning a mobile phone has declined by between a third to a half."

The biggest challenge for the authority was to make sure there were the right conditions and the right climate for attracting more investment in the communications sector.

"It could be investment by entities already operating in the local market seeking to upgrade their infrastructure, or attracting new operator investment.

"Government made a massive investment in this area throughout the past 10 years and there is more room for the private sector to exploit the capacity of the technology."

The liberalisation of international connection and fixed line telephony will go ahead as of January 1. Mr Tabone said Melita Cable had an option on a fixed line telephony licence, which it had shelved for the time being.

Other utility providers, like Enemalta, might also decide to explore such opportunities especially since they already had an infrastructure going into every household and business premises, he said.

Asked whether there were any developments with regard to the issue of how Maltacom will divest itself of the shares it holds in Vodafone, Mr Tabone said it was regrettable that the process had taken so long. "What is encouraging however is that things are moving now."

He agreed that it was both against the law as well as unhealthy to have the present situation where one operator had a shareholding in its competitor. "The process to sell these shares is underway and we should know the results before long."

On Melita Cable, he said one of the developments no doubt having an impact on the company was unfair competition by the rampant illegal use of satellite cards.

He said he was naturally concerned about the situation and the authority was monitoring developments closely.

At the same time, Mr Tabone did not mince words: Melita had to ensure it was providing its subscribers value for money.

Did he think it was doing so?

"It is a very difficult question to answer, both because it is not easy to gauge but as well because this is an example where economies of scale work against us.

"However when you compare what the local subscribers get in relation to the money they pay to what subscribers abroad get for their money, I believe subscribers abroad may be getting a better deal.

"Having spent most of my life outside Malta I know what I used to get in return for the money I used to pay for the cable service. I also know what I get here in terms of quality and currency of offerings.

"Once again I wish to emphasise, to be fair to Melita Cable, that due to our size it costs proportionately more for Melita to enter into agreements for its programming packages."

However, Mr Tabone believes that the illegal use of satellite cards does not make for a level playing field in this area.

"There are two issues involved so far as satellite is concerned. The first is that some people pay a licence fee for their satellite installation while many others do not pay any licence.

The second issue was even more serious, he said. The illegal use of cards constituted theft. "It is proving to be rampant and may be harming the country`s image and having a negative effect on the economy."

Melita Cable was only one example, and other enterprises in the leisure industry - cinema, video/record stores - were affected too.

"It costs money to produce and deliver content. If the intended revenue for this is not realised, then it is putting such investments in jeopardy.

"Service providers are becoming increasingly sophisticated in a bid to eliminate or reduce as much as possible the level of abuse. There has to be a level playing field and the authorities have the responsibility to tackle the issue. The issue has to be looked at seriously. We have to inform and educate people that what they are doing is tantamount to a criminal act."

Mr Tabone said that the authority was now also working on a comprehensive strategic plan: "It is very important for every organisation to have a strategic plan to highlight its objectives. I believe in having what I have always called a road map identifying your aims and objectives and charting a course to get you there. A strategy will also help you to measure along the way whether you are making progress towards your objectives."

Operators in Malta include Maltacom in the fixed line telephony sector, Vodafone and go mobile in mobile telephony, Melita Cable in cable television and data services, internet service providers and specialised companies.

The authority is dealing with various technical issues such as licensing, market development, tariffs, finance and regulatory accounting and the numbering plan.

So far as access to internet was concerned, Mr Tabone believes that Malta compared well with the average levels in southern Europe but is below the participation levels in northern Europe and north America: "But it is the trend even within the EU that there are higher participation levels in northern Europe when compared to the south of Europe."

What will be the effect of EU membership - or of not joining - on this sector in Malta?

Mr Tabone did not want to enter the political fray but explained there was the potential of obtaining funds for infrastructural investment.

He also said the fact that there was no consensus on the issue was creating some uncertainty as potential investors needed to know what was going to happen.

"They need to know whether Malta in the future will be on its own or whether it will form part of a bigger entity."