The Georgian National Communications Commission (GNCC), missing the chairman, failed to reach decision on regulating wholesale market. The Commission, together with internet providers, have been examining this issue for six months now.
Based on the October 17 decision the Commission estimated monthly tariff of GEL 5 thousand for one Gbps for interconnection capacity. According to the same decision 12 internet provides have been named as powerful market players.
Later, on November 2, 2012 the Commission launched a public administrative proceeding over survey and analysis into wholesaler market of internet service. Since then several oral hearings have been postponed, proceeding was suspended and resumed, afterward postponed and ultimately the Commission discussed the issue on March 20, 2012. After a six-month re-launched survey-discussion everything remains sticking to the resolution issued in 2008.
Arguments Presented by Internet Providers
The Commission conducted a survey based on the data provided by Internet providers which shows that 45 percent of internet wholesaler market is occupied by Caucasus Online, 38 percent by Silknet.
According to the calculations presented by companies the Caucasus Online’s expenditure on internet service amounts to GEL 246 per Gbps, Silknet’s expenditure is a lot less – GEL 38. Speaking at the March 20 Commission sitting Vakhtang Abashidze, Head of Silknet’s Service for communication with operators said his company is monthly paying Caucasus Online GEL 5 thousand Gbps interconnection, plus VAT. While according to the estimate presented by Caucasus Online the service expenditure is GEL 249.
“How can that be GEL 5 thousand, how can anyone confirm that according to the presented
Giorgi Chelidze, head of Caucasus Online’s legal service alleges that GEL 5 thousand is a cost-oriented sum. In case Caucasus Online is recognized as a powerful person then other companies will be able to set a higher tariff than GEL 5 thousand and thus resource will transfer to other companies. Chelidze thinks since 2008 the situation on the market has not changed and the new survey was not a good idea to start.
“If the regulations in this direction are needed to be introduced I believe at this stage neither the Commission nor the operators have a clear opinion what we are surveying. Therefore everything should be maintained the way it is now as long as we strictly formulate rules of the game that will be conducive to the development of this market,” said Chelidze.
David Tutberidze, Director of Caucasus Digital Network was attending the meeting. Decreasing tariffs for small providers is not an issue of importance since payments are made with big companies only.
“I don’t think though that GEL 5 thousand is a real price to be paid for service,” said Tutberidze. To regulate the market in a proper manner the segment of the market should be correctly identified since the company might not be occupying 40 percent but playing an important role on the market instead and essential to be interconnected with.
Irina Verdzeulidze, chief specialist for the GNCC’s department of strategic development said the regulation of the market would be recommended.
Commission’s Decision
In the course of the March 20, 2013 sitting the Commission eventually recognized three companies, including Silknet, Caucasus System and Poptnet as most powerful in terms of access to global resources. Accordingly they have been obliged to provide secure transparency and non-discrimination of data.
The Commission did not even discus the regulation issue and on regard to interconnection the Commission raised three issues:
To stop and re-launch proceeding.
The Commission members in regard to the second issue drifted apart. Due to the absence of the Chairperson, which holds a determinative vote the decision was not reached.
Ucha Seturi, expert of the Institute of Development of Freedom of Information (IDFI) believes that due to the Commission’s failure to reach the decision the tariff-related problems on the market are still valid and work cannot be kickstarted on decreasing retailer tariffs.
“It is good though that the applicable regulation was not abolished and monopolists were not granted freedom on the market that would further complicate the conditions of small and medium companies,” said Seturi. The same regulation applied in regard to phone interconnection need to be applied (Article 10, Part 3 of the Law on Electronic Communications) likewise which allows anyone to interconnect and every player is subject to cost-oriented and non-discriminative obligation.
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