Shortcomings in the Transparency of the Activities of the Georgian National Communications Commission

News | FIGHTING CORRUPTION | INTERNET AND INNOVATIONS | Article 9 July 2020

On August 2, 2018, Georgian National Communications Commission (GNCC) established a non-commercial legal entity “Media Academy”. The role of the organization is to promote the development of media literacy.

 

Media Academy was established under the broadcasting law of Georgia and law on electronic communications of Georgia, to attain purposes of the same laws. Legal obligations of GNCC, as determined by the law, include promoting the development of media literacy, conducting research, training, and even establishing different new platforms for supporting the above-mentioned outcome. IDFI considers that GNCC delegated its public duties to “Media Academy”.

 

It is important that the funds allocated by GNCC to the Media Academy grows gradually every year: in 5 months of 2018 - GEL 501,000, 2019 - GEL 2,469,751, 2020 - GEL 3,092,809. IDFI has requested public information about the list of employees of Media Academy, legal acts defining the functions of its owned platforms: Media Lab, Media Critic, and Media School, activities carried out by them, with referencing the affiliated expenses, budgets of each project, etc. Unfortunately, we were refused to get access to these data on the grounds of Media Academy not being a legal entity of public law, neither in terms of organizational-legal structure nor in terms of functionality.

 

A founder and supervisor of the Media Academy is the GNCC, it also finances the organization from its budget, and the Academy is accountable to it, as long as it was established to carry out precise activities and legal obligations of the GNCC. On this ground, IDFI appealed the decision of the Media Academy to GNCC. Regrettably, the Commission withheld to hear our case, indicating that GNCC is not a superior administrative body to Media Academy.

 

We believe that the aforementioned decision highlights a non-transparent policy of the Commission.  At this point, IDFI continues the legal dispute in the court, to apply publicity standards and requirements for public entities set out by the law to Media Academy.

 

For the basis previously stated, IDFI got interested in the annual reports of the GNCC and some landmark decisions, that we perceive are mostly non-transparent or in some cases, the necessity of the changes made by the decisions lack reasoning. For example: the income of the GNCC in 2019 increased by about 2 million dollars. The increase in overall income was most likely caused by the increase in earnings from the fees collected for using radio frequency spectrum and number of resources. The mentioned fees amounted to GEL 0.10 until December 2018 and it increased to GEL 0.25 from January 2019.

 

The decision of the GNCC to increase the aforementioned fees is connected to another alteration provided by the same bill. In particular, to deter additional obstacles for the companies, the Commission revoked its right to deny a new request for usage of number resource, if the same seeker had not incorporated 75% of the previously issued number resources in the same type of electronic communication services. This led to creating another mechanism for avoiding using too many number resources by one operator - increasing the fee. 

 

It is important that the payment form of the number resources fee also changed in 2018. Previously, seekers of authorization had to pay the fee directly in the state budget, after 2018 these fees have been paid to the account of the GNCC. Unfortunately, no justification for this amendment is found on the webpage of the Commission. Furthermore, none of the changes cited above are mentioned in the 2018-2019 annual reports. 

 

 

 

Notably, a rather important case of LTD “Caucasus Online” is not discussed in the 2019 annual report of the Commission. The report only states the name, outcome, and the parties involved in the case in the listing of disputes (not included in the English translation of the report). LTD “Caucasus Online” sold the shares of the beneficiary owners without concession with the GNCC. As the company is an authorized body in electronic communications, all the laws regulating electronic communications in Georgia apply to it, including the rule obligating every authorized party in electronic communications to get prior consent from the GNCC in case any beneficial owner of the company decides to transfer/acquire or merge its shares. Accordingly, Caucasus Online had to inform the Commission about the upcoming transaction. 

 

In October 2019, GNCC discussed the case and decided that Caucasus Online offended the law by transferring the shares without prior notice to the GNCC. The commission did not use a fine and obliged the company to restore the share distribution as before the aforementioned deal. Caucasus Online did not fulfill the decision and was fined firstly GEL 30,000, secondly GEL 90,000, and finally on the 25th of June 2020 - GEL 270,000.

 

A new noteworthy bill arranged by the Commission to amend the laws on Broadcasting and Electronic Communications of Georgia might be considered in connection with the Caucasus Online case. A bill was initiated in the Parliament of Georgia on the 1st of July and is planned to be discussed on the 10th of July.

 

According to the amendments, the Commission is conferred a right to appoint a special manager in the company authorized in electronic communications without court decision in case the fine imposed by the Commission does not ensure the execution of its decision and the suspension/abolition of the authorization might damage interests of the State, society or customers. A special manager has extensive power, including appointing/dismissing members of the authorized persons governing bodies, questioning their decisions, and performing all the managerial functions.  

 

It is the most alarming that the rights conferred to the Commission by the amendment are not in the scope of its competency. Specifically, managing the subject of its regulation (by appointing a special manager) and unlimited power to transfer its shares. Moreover, the Commission will be able to use covert and overt mechanisms to make decisions on media distribution, internet accessibility, advertising services, and even labour rights. 

 

The bill also states the following circumstances in the occurrence of which the Commission is conferred a right to appoint a special manager in the company authorized in electronic communications: 

 

In case the fine imposed by the Commission does not ensure the execution of its decision and the delay of such execution or suspension/abolition of the authorization/license might damage the safety of the State or the society, economic interest of the state, legitimate interests of the authorized persons in electronic communications or its customers and market competition. IDFI believes that the assessment of the cited damages clearly exceeds the legal mandate granted to the Commission.

 

Above mentioned examples show extensive inaccuracies in the activity and decisions of the National Communications Commission of Georgia. Hence, adopting the draft law in an accelerated manner is especially alarming, while the amendments have not been discussed with the stakeholders. The latter can be confirmed with the statement disseminated by the telecom companies on the 6th of July.

 

__

 

 

This material has been financed by the Swedish International Development Cooperation Agency, Sida. Responsibility for the content rests entirely with the creator. Sida does not necessarily share the expressed views and interpretations.

 

 

Other Publications on This Issue