Demonopolization of communications and the Internet: myth or reality ?
(continuation)
(material prepared by the National Association for Communication and Digitalization)
In the last issue, the National Association for Communications and Digitalization (NACC) spoke about the work begun by the Commission on Demonopolization of the Communications and Internet Market. The NACC prepared special proposals in the form of comments to the initiatives of relevant state bodies responsible for the development of the industry itself and competition. We bring to your attention prepared comments.
During the consolidation of Kcell and Tele2, the goal was to achieve a positive effect by optimizing and integrating their network, which was supposed to improve the quality of telecommunication services provided. However, for 3 years, the integration of mobile operators’ network has not been implemented.
As a solution, B. Musin proposed to demonopolize the groups of companies of Kazakhtelecom JSC by bringing one of the group’s mobile operators to the competitive market. There is an opinion that it is Kcell that will become that very company.
As early as April 5, Prime Minister A. Smailov instructed the ICRIAP, together with the Samruk-Kazyna NWF, to submit a proposal on this issue within a week, but by mid-May it is still not known which company will be brought to the competitive market. At the same time, there is not any mention of the appearance of new players at all.
Today, small operators face difficulties in gaining access to cable ducts and laying their communication lines, since the main part of cable ducts is on the balance sheet and is operated by Kazakhtelecom JSC. Thus, Kazakhtelecom JSC can limit the development of medium and small providers that are ready to provide Internet access services to the population as a “last mile”.
To solve the problem, ICRIAP proposes to legislatively provide for a number of amendments, including the filing of an electronic application and the definition of a clear list of grounds for refusing to provide a service. In addition, in case of complaints in an unjustified refusal, authorize RSE “GRS” to conduct a technical audit, based on the results of which the authorized body will have the right to issue instructions in case of violations. At the same time, it is proposed to strengthen the administrative responsibility of the operator for an unjustified refusal to provide a cable duct service.
The transfer of this exclusive service to electronic format is fully supported by the National Association for Communication and Digitalization (NACC). We believe that it should be provided by “State Corporation” “Government for Citizens” NJSC through public service centers.
At the same time, according to our information, during all this time, cable ducting has become completely outdated in some places. Now it doesn’t practically exist. Therefore, in such places it is always laid almost from scratch. Hence the question: will such a service be needed in such situations? If necessary, then at whose expense should it be carried out and whom should it be transferred to if it is laid? Will preferences or “benefits” be granted in such cases? After all, they are costly. We believe that this issue needs to be clearly understood and resolved as soon as possible.
Some large telecom operators do not stimulate the development of medium and small Internet providers, providing them with unfavorable terms of cooperation. There are facts when, due to unfavorable terms of the dealer agreement, Kazakhtelecom JSC prevents the development of medium and small Internet providers, which negatively affects the development of the telecommunication market and providing the population with access to telecommunication services (out of 828 SNPs, 0 were connected). This, in turn, hinders the successful implementation of the President’s instructions to develop the telecommunication market and provide the population with access to the Internet.
Legislative regulation of prices for access to the networks of Kazakhtelecom JSC and Transtelecom JSC in villages for small telecom operators and the creation of conditions for small operators to lay networks on electric poles will solve this problem.
As far as we know, at present it is not entirely profitable for telecom operators to provide Internet to remote villages. Stations built at their own expense become obsolete in two years. Residents in such villages are often in a small number, whose age is constantly increasing, which affects the further profitability of such undertakings.
As the NACC knows, according to the current legislation, the quality of communication in 3G and 4G formats must be ensured by telecom operators in settlements of more than 10 thousand people, as well as in regional centers. If 10 thousand inhabitants live in settlements, then operators have the right to provide the population with only 2G communications. In order to correct this, the relevant government agency, in addition to the above, needs to amend the legislation taking into account all interests, as well as extend or expand the existing special programs aimed at providing the rural population with high-quality communications, or switch to the satellite Internet communication format.
Additionally, it is proposed to provide for the coordination with the akimats of license obligations of operators, since local executive bodies do not know in which villages the existing conditions will improve. In addition, it is proposed to provide for an obligation for operators so that the envisaged expenses are directed to the regions in proportion to the income received from the corresponding region, and not distributed by operators to other most profitable densely populated regions and districts.
Regarding the provision of the radio frequency spectrum, which is legally defined as a national resource and is exhaustive, it was proposed to hold an auction mechanism, which would ensure the transparency of frequency allocation, as well as the withdrawal of inefficiently used radio frequencies. For example, in Nur-Sultan today there are no free frequencies, and most of the issued radio frequencies are owned by the Kazakhtelecom JSC group, which, in turn, makes it impossible for new players to enter the market.
Previously, ICRIAP worked on making changes to the order of the Minister for Investment and Development of the Republic of Kazakhstan dated January 21, 2015 No. 34 “On approval of the Rules for the assignment of frequency bands, radio frequencies (radio frequency channels), operation of radio electronic equipment and high-frequency devices, as well as the calculation of the electromagnetic compatibility of civil radio electronic equipment” in terms of the organization and holding an auction for the assignment (granting the right to use) of the radio frequency spectrum.
Thus, the amendments proposed to provide for a guarantee fee – a sum of money equal to 50% of the initial lot price, but not less than 80%, which is paid by a legal entity participant to participate in the auction.
NACC believes that the initial price of the lot cannot be less than five times the annual fee for the use of RFS. Moreover, this cost is not substantiated by ICRIAP and was presented without appropriate calculations. In this regard, we previously proposed to establish that the initial price of the lot should be determined by the decision of the collegium of the authorized body.
The events in Ukraine clearly show why competition is needed in the telecommunication industry. Even in such difficult conditions, residents of Ukraine of all categories have the opportunity to access the Internet.
This became possible thanks to dozen companies that are able to provide high-quality services, including broadband with a large number of traffic exchange points.
According to the NACC, the authorized body should develop competition not only in the market itself, but also in the relevant department (the Telecommunication Committee), namely, to give the Committee the right to decide locally, taking into account the nodule, the issues of frequency distribution.
What do we have for today? Only that 28.8 percent of Kazakhtelecom’s shares have been returned to state ownership. To this end, the Kazakhstan Government adopted a relevant resolution on certain issues of the Kazakhtelecom joint-stock company.
In his last message “New Kazakhstan: the path of renewal and modernization” dated March 16, 2022, Head of State Kassym-Jomart Tokayev noted the importance of ensuring fair and open competition. He instructed “to permanently eradicate all artificial monopolies both in the economy and in politics.” As the President noted, “the growth of the well-being of the people is possible only in conditions of genuine competition.”
The National Association for Communication and Digitalization hopes that the ongoing work to demonopolize the telecommunication industry in Kazakhstan will not end only with the transfer of controlling stakes and will not go into oblivion as the Interdepartmental Commission on Radio Frequencies that did not work, but will actually become the result of the emergence of real new players in a fairly lucrative market with turnover of 1 trillion tenge.