The telecommunications sector is expected to undergo far reaching changes in pricing policies during the next few days or weeks.
On the one hand, the Telecoms Regulator will at last announce directives fixing the price range that CyTA can charge locally, while independent operators await the verdict of the Competition Commission on their anti-dumping charge on CyTA’s latest price cuts on international call rates.
Deputy Regulator Panayiotis Kakkouras told the Financial Mirror that his office will “in the next few days” issue its directives, fixing the price range for retail packages that CyTA will be allowed to charge, as well as the inter-connectivity rates that CyTA will charge other service providers.
Since last September, when CyTA handed detailed costs to the Regulator in order to secure permission to change its tariffs on fixed and mobile telephony, the Regulator has been accused of stalling, in order to allow CyTA’s mobile phone competitor, areeba, to gain a bigger foothold in the market.
Kakkouras rejected the charge and said the delay to issue the orders was necessary as the Regulator’s office completed its own studies and was not related in giving areeba a head-start.
Once the directives are released, CyTA is expected to announce a new pricing policy, whereby it will charge customers based on the time they talk, with the discount factor widening as the number and duration of the calls rises. CyTA is also expected to announce major reductions in the prepaid Soeasy call rates and fixed line telephony rates, but at the same time, the monthly rent per line is expected to increase sharply from CYP 5 to CYP 8, plus VAT.
ANTI-DUMPING
Meanwhile, CyTA faces fresh allegations of anti-dumping, or selling its services below cost, following the massive price reductions in international call rates.
The eight-member Association of Independent Telecom Companies, representing areeba, OTEnet, Thunderworx/Primetel, CallSat, Logosnet, Telepassport, Spidernet and Teledome, have filed a complaint with the Competition Commission, charging that CyTA has deliberately reduced its international call rates to drive them out of business.
The independents say that because CyTA controls more than 75% of the market, it has a dominant position and it should not be allowed to slash call rates for the most popular countries like Greece and UK from 3.9c per minute to 2.40c after discounts and 2.10 for its 1018 service. The independents charge that CyTA’s pricing effectively squeezes their profit margins and is abuse of the latter’s dominant position in the market.
Kakkouras of the Telecom Regulator’s office says the fact that there are many firms engaged in offering international call rates led his office to refrain from imposing price targets in an attempt to allow the healthy development of the market.
The Managing Director of one of the independent firms told the Financial Mirror that CyTA’s price reductions are only intended to kill the competition in the market.
“Once they drive us out of business, then they will increase the rates,” said the Manager, adding that the independent firms need sufficient margins in order to survive and broaden the range of services.
For example, he said that in the UK market, which has been deregulated for 20 years now, BT charges 20p/per minute for calls to Cyprus, while in Greece, which saw its market deregulated 3 years ago, OTE charges calls to Cyprus at 0.195 euros per minute, whereas call rates from Cyprus to these countries, costing 3c to 2.4c/per minute are at a fraction of the charges levied from abroad.
“Do you think the Brits are stupid and would hold the rates at high levels at the expense of the public. Or are they trying to give the newly entrants into the market enough margin to compete head-on with BT, which in Cyprus is CyTA?”
Nevertheless, Kakkouras said that the Telecom Regulator’s office has and will cooperate with the Competition Commission in the current investigation, and if requested, will provide all the costing information that it has received from CyTA to help in the investigation of the case.
Asked if the European Commission is following the slow pace of deregulation of the market and if they have complaints, Kakkouras said the EC is closely following developments and applying the necessary pressure.
“We plan to start up to 18 researches in markets/sectors determined by the EC and then see if the level of competition is satisfactory. The first phase will start shortly,” said Kakkouras.
