Wednesday, February 02, 2005

Interconnect battles - the Great Satan resurgent :) ?

Around 40 minutes into an angry press conference called by the Latvian Telecommunications Agency (LTA) on February 1, I remarked to the panel of speakers that "some of us have to hurry to another press conference by the Great Satan." This drew some smiles and giggles, as most of the small crowd of Latvian telecom & IT hacks was also heading for a briefing, coincidentally scheduled an hour later by the incumbent Lattelekom.
The events were sort of about the same issue. The LTA 's president and Baltcom board chairman Peteris Smidre and LTA managing director Janis Lelis launched both humorous and angry diatribes against an interim decision by Latvia's Administrative Court to suspend a ceiling of LVL 0.08 per minute on all interconnect charges imposed on Lattelekom by the Public Utilities Regulatory Board (hereafter, the regulator, as I keep varying the English translation for this outfit). The interim ruling, pending a full hearing of an appeal by Lattelekom on the merits, apparently put several alternative operators in Latvia in a bind -- they had already factored the up to 80% cut in interconnect charges (for national long distance connects) into new tariffs.
Smidre lambasted the decision as typical of a country that was "a circus with clowns" while Lelis, with uncharacteristic passion, called the interim ruling a "catastrophe" for the non-incumbent telecommunications industry in Latvia. He even went so far as to say that the suspension of the lower charges could torpedo the planned auction of Latvia's third UMTS and GSM licence (although the two incumbent operators, Latvian Mobile Telephone /LMT/ and Tele2, have prospered with the interconnect arrangements hitherto, which are different than for fixed line operators -- I think /?/). Smidre read parts of the court ruling, which I have not seen, and indicated that he thought the judge was a buffoon who blatantly sided with Lattelekom.
Inna Steinbuka, the chairman of the regulator was an invited guest to the LTA's panel. She called the ruling "an affront to the professionalism" of the regulator. Later in the day, the regulator said it was filing a pleading to (weird Latvian name - blakussudziba/ "side-pleading" ?) to overturn the suspension imposed by the Administrative Court. It also demanded that the court sit with a new panel of judges, excluding judge Kaspars Berkis (the man lambasted by Smidre).
Raimonds Bergmanis, director of the Ministry of Transport's Communications Department, the main telecoms policy unit, also sat in the LTA's panel and said the court ruling would not advance the national policy of fostering competition.
At its press conference, "the Great Satan" presented figures from an EU report showing that Latvian telecommunications charges tp consumers were low to moderate compared with the rest of the EU. The line subscription charge to households, in euro, was the lowest in the EU and other charges compared favorably. Lattelekom officials did admit, however, that interconnect charges were high for "historical reasons" and that for international fixed line calls, Lattelekom did not have the lowest prices on the Latvian market, though it could claim better coverage and quality.
So what is the battle about? Obviously, the alternative operators would like interconnect charges pushed lower. As Baltkom's Smidre said, the charges even when capped are still almost twice what the EU average is 1.14 eurocents instead of 0.59 eurocents. The issue of whether the cap of LVL 0.08 is correct, however, is an issue to be decided on the merits, and the real issue here is procedural. Should a disputed norm be applied when it has an immediate UNAVOIDABLE effect only on one party -- in this case, Lattelekom "The Great Satan" in the eyes of the alternative operators. Lattelekom was obliged to cut its interconnect rates from January 1. The alternative operators had a choice whether or not to risk cutting their tariffs accordingly, since it was, as the Latvian saying goes, like "amen in Church" that Lattelekom would appeal the regulator's action and that there could be procedural demands to suspend the disputed regulation until a hearing on the merits. The slashed interconnect rates by some accounts would have decreased Lattelekom's profits by 10%. Now some, like the LTA, say that Lattelekom's earnings are quasi-monopolistic, but that goes to the merits of the case, not the issue of whether a one sided (whether you like the side or not) impact should be delayed.
According to my informants, a court date for a hearing on the merits of Lattelekom's appeal against the regulator will be set for some time in March.


Anonymous said...

Cik tad iisti? 0,08 vai 0,008?

Juris Kaža said...

It is 0.8 santims or 0.008 Lats
0.8 santiimi vai 0.008 lati, cik garsh tik plats.