Open Tender for Selecting Commercial Broadcasting Multiplex Operators - Challenges of the ongoing process

News 16 June 2014

The tender conditions established by the Georgian National Communication Commission (GNCC), contain certain risks in terms of violation of freedom of expression and media pluralism in Georgia. The regulations under the scope of the competition conditions might prevent proper development of the broadcasting market; hinder the qualitative and quantitative rise of the production of broadcasting content in Georgia.

We are concerned by the fact, that despite the fair promise of GNCC to emphasize the grounds of its specific decision in the study, such fact has not occurred yet. The DTT MUX frequency lots, defined under the tender conditions, include the risk of monopolization of broadcast media from the very distribution stage. There is a chance for free-to-air broadcasting multiple platforms (MUX A-and MUX B) to get under the control of one holder; this may cause development of monopoly in the frames of terrestrial broadcasting platforms.

We are recognizing that one of the most challenging issues is giving the permission of obtaining a license to the companies registered in the offshore zone. It should be noted with concern, that the provision regulating transparency of media holdings and ownerships, submitted in the end of 2011, has had significant changes, sufficiently to the worse.

The law on "Electronic communications” establishes specific reservations on the concentration of radio-frequency band licenses. According to the decision of the commission and in compliance with the provision, the right to use radio spectrum can be restricted to the person partially owning 25 or higher percent of the radio frequency band.

Bearing in mind the competition regulation, which came into force following March 31, 2014 N176/10 decision, two specific problems can be posed to the commission on the stage of assessment:
- after submitting the applications, the difficulty to evaluate affiliation issues due to the lack of information concerning stakeholders of the companies registered in the offshore zones;
- MUX A and MUX B licenses, as separately lots, in combination with (or individually) the toll multiplexer licenses creates 6 lots. Third, the frequency of paid broadcasting platform - MUX5 be reached only in conjunction with MUX A and MUX B licenses. Combined lots of MUX A and MUX B licenses are available either with or without platform for multiplex broadcasting licenses, creating 4 lots. Overall, there are 5 frequencies up for the tender. In case one contestant gets all of five licenses, it will turn out, that there are all following out of total 28 frequencies under one’s control: 250th, 252th, 253th, 255th, 256th, more than 25% of the 259th digital zones; this considers owning 21 -, 22 -, 23 -, 25 -, 26 - th, 27 -, 28 - th, 29 -, 30 -, 31 -, 32 -, 33 -, 36 -, 37 -, 38 -, 39 -, 40 -a, 41 - a, 42 -, 43 - Article 44 - Article 45 - Article 46 - Article 47 - and 48 - numbers of the frequencies.
We consider that the proposed combination of the lot frequencies based on GNCC decision of March 31, of 2014 (N176/10), bearing in mind the specifics and size of the Georgian Media Market, holds sufficient amount of risks and should be changed.

We are emphasizing, that the considered period of the validity of the bank guarantee is not sufficient enough, especially realizing that the testing period, as well as the final term for constructing the charged broadcasting network, is aftermath September 17, 2015.

Regulation considers quite a short term for submitting applications; this, accordingly, decreases the investor involvement probability in the process and prioritizes the interests of local private sector. The submitted applications reaffirmed, that foreign investors have not been involved in the fulfillment of the tender conditions.

We believe that the tender conditions are discriminatory. After submitting the application for participation, the key term for the tender - admission fees and other related issues can become the subject to specifications, cut-offs and etc. The up mentioned reservation puts the impartiality of the commission under question. We strongly encourage the independence of interpretation of the term to possible future specifications to be limited to strictly technical issues and verifications of non-essential terms.

We are considering that setting the minimum fixed price is quite desirable for the budget optimization aims. (Above all, this note concerns to the starting price for obtaining rights on three frequencies considered for commercial broadcasting services).
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