Telekom Serbia Loses Monopoly

06/07/2005

Serbia has taken a major step towards deregulating its fixed telephony market. But the public may have to wait to see the benefits.

By Davor Konjikusic for Southeast European Times in Belgrade – 06/07/05

The public is not likely to see lower phone bills, nor improved quality of service in fixed telephony just yet. [AFP]

After years of anticipation, Telekom Serbia has finally lost its monopoly over fixed telephony services. For the time being, however, the public is not likely to enjoy noticeable price reductions or improved quality of service. The only immediate beneficiaries are VOIP service providers, who have been battling Telekom Serbia over whether internet telephony falls under the once guaranteed monopoly.

Although the monopoly has been removed, actual market deregulation won't occur until the new Telecommunications Agency starts issuing licenses to new firms, thus introducing competition. But the agency won't become operational until September.

According to Deputy Minister for Capital Investments Dragan Curcic, customers should be able to feel the difference in about a year's time. "These changes in telecommunications are important, given that a monopoly is being replaced by free competition," he says. "We are expecting a different picture, above all cheaper services for our citizens." The ministry anticipates that long distance services will see the initial reduction.

In the interim, prices for fixed telephony could actually go up, says telecommunications expert Tihomir Zivanovic. "What will happen -- all the companies with cable television will wheel in all big clients, companies, and Telekom revenue will drop by 30 per cent to 40 per cent. In order not to go bankrupt, citizens will have to pay 400-500 dinars of service charges in order for Telekom to survive, for it cannot go out of business."

Telekom Serbia services manager Igor Jecl insists the company is ready for the competition. "The key question is the issuing of licenses. These are state resources, and this is also the job of the regulation agency to state under what conditions licenses will be issued to other operators," Jecl says.

Though cable and Internet operators have signaled their intentions of entering the market, they face a labyrinth of unresolved issues.

"Whether we will be able to provide local or long distance or international telephone services, what will be the legislative framework, what will be the financial framework, someone will have to define the licenses, some permits, some service costs, whether it will be fully deregulated -- at this time absolutely nothing is known, and on the other hand the amount of investment required is huge," says Predrag Milicevic of Serbian Broadband Network, one of the leading cable companies. "It's not just that we have a cable, that anyone can buy a telephone and sign up with us. It's far from that."