Facilitating telecomms liberalisation

The Malta Communications Authority was instituted at the beginning of the year with the important role of facilitating the opening of the telecommunications market. David Lindsay speaks to MCA Chairman Joseph V. Tabone about the MCA’s role. the sector’s mushrooming marketplace and the liberalisations in the pipeline

What is the role of the Malta Telecommunications Authority and in what areas is it responsible for regulations?

The MCA is a national regulatory agency for telecommunications, which also includes e-commerce and posts. In most countries you traditionally have a combination operator/regulator, as in the UK and in many other countries, with the exception of North America where these services have always been in the private domain.

The UK had led the way in splitting the two in the 80’s with the privatisation of British Telecom and several European countries have followed suit. The main purpose of these regulatory bodies is to ensure a smooth transition to liberalised markets, competition in the market and to ensure the sustainability of those markets.

It’s very difficult to break into markets that have traditionally been monopolised, or that have similar barriers to new market players.

Accordingly, the purpose of these regulators is to remove those barriers with the overall objective of ensuring that competition is sustainable and that value for the consumers’ money is safeguarded.

These objectives pertain to telecommunications and to postal services, while e-commerce is somewhat different as it is a whole new dimension that has been added to the field.

With e-commerce, as far as our responsibilities are concerned, a big part of that is concerned with electronic signatures and the authorisation of agencies that in turn certify companies to have electronic signatures.

What has been achieved in these first 10 months of operation?

As regards what has been achieved up to now, the agency was established on 1 January of this year and the government had articulated the liberalisation programme for telecommunications, which got underway last year with the liberalisation of the mobile telephony market, and a second operator was introduced.

As a result of that, the participation of people using mobile phones has soared - from some 20,000 subscribers in January last year and it’s close to 200,000 at the moment. In addition to that, there are the costs, which have tumbled better that 30 per cent in the space of about six months.

We also hope to see the same thing happening with regards to the Internet. The participation numbers are going up and the services are improving. One thing that I think people don’t realise is that, although the Internet is not exactly essential, it is very much the foundation of many business activities that we take for granted these days.

Subscription levels for Internet service have been increasing greatly over the last year in particular and Internet services have improved - as the result of the regular accessibility to the Internet through the two options available – the Maltacom infrastructure and that of Melita infrastructure. Recently we’ve also seen the cost of accessibility and PCs themselves coming down and we expect to see more people connecting to the Internet.

Having this liberalisation of telecommunications is vital in terms of the economic development of any country, because telecommunications provide the underpinning for many of the things that we do both socially and in business, so it’s really quite different to other types of liberalisations.

In addition to increases in mobile telephony and Internet access, we have also been seeing government making very considerable advancements in information technology. We have practically come in from the wilderness and we have seen some staggering developments in a short space of time.

We’re building on that and over the next two to three years there is a national commitment to information society objectives, whether it’s providing access to the Internet, to better inform our students – 100 per cent of the schools will be connected in a couple of years – providing incentives to business, and providing more people with the option to shop or engage in other activities electronically.

More importantly, a good deal of government services are soon to be made available on-line. As such, Malta is participating in a major European initiative, which is generally termed as e-government. Of course the underpinning of much of this is having a robust telecommunications infrastructure in place and giving people the options to take full advantage of that infrastructure.

Is this telecommunications infrastructure robust enough as it is, or is further upgrading required?

Undoubtedly this is an area in which technology is continuously evolving so there is always scope for improvement and there have been major investments in the infrastructure over the last several years.

Now the means must somehow be found with which to improve our international connectivity, which is a weakness given the fact that at the present time we are dependent on a single fibre-optic link, even though this link does afford us with an adequate capacity. Of course we are anticipating the use of this cable to be increased a good deal over the next few years to come and I think it is very important to have a built-in redundancy and not being completely dependent on the single link.

There are three types of communications there is fibre-optic, satellite and microwave.

Microwave is line of sight, while satellite communications have some limitations regarding certain types of business transactions in which one has high transaction volumes and as such, data can be corrupted. This is why for certain types of business transactions, such as those in the banking sector, you need to have a physical fibre-optic connection in place.

Turning back to the Internet, has the dispute between the group of Internet Service Providers and Melita Cable been resolved or is it still pending?

It has been resolved from the standpoint that the disruption of service was resolved just a few days after it had come to the surface. The issue of access to the Melita infrastructure is still outstanding merely in that it remains a contentious issue with the ISPs concerned. At the base of that contention is the fact that the ISPs would like to have access to the Melita infrastructure, as they feel that Melita has an advantage over them because of its infrastructure. However, Melita cannot be required to provide access to its infrastructure because for this to happen Melita has be to a major player in terms of the provision of data communications. It is a major player in terms of cable services but it doesn’t have the subscriber base for their Internet product to make it a dominant player.

Hopefully within the next 12 months, Melita will be developing further in this area and they should be boosting their subscriber base as it is in their own interest.

What do you see for the future of telecommunication in Malta?

Government is currently in the process of determining how to approach UMTS in terms of providing licenses or otherwise.

In addition to that, we are trying to gauge the scope that there is in such a market for a number of operators. On the one hand you can have an open policy that licenses anyone who applies for a license. At the same time you can have a practice, which has been adopted by several countries, that would allow the market to decide how much competition there should be.

Our approach to that - from the standpoint of sustainability and the better interest of the consumer - is to try to strategically determine how many service providers one can afford to have.

So you would be steering toward the latter option?

It would not be in the interest of the people to have half a dozen service providers, in any line of service, if they then start collapsing.

Do you see room for another fixed line provider for the country?

I think that one would have to see. At the moment I believe that we have very good tariffs, reasonable charges and very good services but we are very much at a disadvantage in terms of our international connectivity. We have rates that are amongst the highest in Europe and we could only bring those down if we have competition and I’m sure that we’ll have competition in the near future as far as international connectivity is concerned.

At the moment there is a monopoly until the end of 2002 on two fronts – local fixed telephony and the international connectivity service provision and all the local operators have to work through Maltacom’s international gateway until the end of 2002. However, this will change come 2003.