Interview of Samvel Arabajyan, Member of the Armenian Public Services Regulatory Commission (PSRC), to Mediamax Agency and Itel.am portal
- At which stage is the process of demonopolization of the Armenian telecommunication sphere?
- The process of demonopolization is stage-by-stage, and a part of it is already accomplished. In the first place, the license of “ArmenTel” company was edited and its monopoly rights were abolished. Then documents were elaborated, which regulate the market of real services as to spheres, and this became a bases for the entry of new players in the market. Within the framework of the given process, licenses were issued, processes of interconnect and rent of channels were initiated, as a result of which an environment and opportunities for work in the competitive field were presented. Then the stage of formation of an investment field and entry of more serious players in the market followed.
After all this, we expect formation of a more real competitive field in all directions of the telecommunication sphere, after which the role of PSRC will mainly be to protect and to secure an equal competitive field.
The first two stages are already accomplished, and after editing “ArmenTel” Company’s license, the first competitive Voice over Internet Protocol (VoIP) market was formed, which does not require volume investments. In this sphere, PSRC issued about 100 licenses, the fact allowing companies developing successful competition in the market. These companies played their positive role in the market, contributing to decrease of tariffs for outgoing calls. However, this does not satisfy PSRC, since this market does not contribute to development of infrastructures. This is why the Commission elaborated more serious documents, which regulated the relations with the historically dominating player – “ArmenTel”, and gave providers an opportunity to integrate their new infrastructures with the already existing ones.
Just recently we observed the entry of the second WiMax operator in the market. The first operator – “Cornet-AM” Company, already provides services of wireless internet connection in 18 towns of Armenia. The second company – iCON, also officially announced the launch of its services and already today its services enjoy great demand. In the course of 3 months, another company will officially announce its entry in the market.
These companies represent serious organizations, which contribute to establishment of real infrastructures and availability of broadband internet not only in the capital city of Armenia, but also in the regions and individual villages. One can say with confidence that the process of demonopolization has lead to the fact that after 10 years’ telecommunication “hunger”, we gained the opportunity to satisfy the growing need for internet services with application of best technologies.
Besides, implementation of modern technologies will allow internet companies also providing services of landline telephone connection. To this very end, the Commission made a number of decisions on providing and classifying number capacities and codes. This process was preceded by work with the International Telecommunication Union (ITU) on provision on non-geographic codes to meet the domestic demand. We expect that by the end of the year, serious competition among 3-5 new companies will unfold in the market. They will form their network infrastructures all over the country, and this will allow also providing Virtual Private Network (VPN) services, the fact being extremely important for developing the country’s economy. This service is irreplaceable for organizations, which have branches in various marzes of Armenia, since it allows operatively sending and receiving data and managing those.
- How do you assess the interrelation of PSRC and “ArmenTel” in the process of demonopolization?
- I believe that positive and balanced relations, directed to fulfillment of mutual commitments and rights, have already formed between us. It is noteworthy that the new shareholder of “ArmenTel” – Russian “VimpelCom” Company, played a significant role in abolition of monopoly rights, provided for by license 60. And after that Armenia entered the stage of forming a new legal field, which should secure a competitive environment. Further on the necessity occurred to use infrastructures of the historic operator, and in this context serious problems occurred. In this connection, there are certain sharp angles in our relations, and it will take time and definite actions to even them out. In developed countries, certain stages of reforms lasted for 10-15 years, but Armenia does not have that much time, since we strongly fall behind the world developments. We have to travel this path in one-two years, taking into account the best international practice. We should take up many efforts to avoid deformation of the market.
- Is absolute demonopolization of an individual sphere possible, or should this take place in complex with other sectors of economy?
- Of course it is possible. But today we talk about the telecommunication sphere, which implies own infrastructures and provision of own services. Of course, there are and there will be services, which, even given great desire, it is impossible take into the competitive field because there are no corresponding infrastructures and capacities, and this phenomenon is characteristic of not only Armenia.
Today, the telecommunication sphere needs reformation, protection and formation of a comprehensible legal field for the investors to understand where the regulation policy leads to.
- How do you evaluate the level and methods of competition between two mobile connection operators of Armenia?
- In the given market, there is good dynamics observed today, but the regulatory body, naturally, cannot be comfortable with correlation of 4:1, which exists between the operators (“VivaCell-MTS”-“ArmenTel”). This is why PSRC that the Armenian government announced an international tender to provide a license to the third operator of mobile connection, in which France Telecom won.
This process gave double effect: firstly, we will have the third operator, which will build a network and will establish infrastructures; secondly – for the first time, Armenia managed to demonstrate that it can be attractive for investments in telecommunication sphere, and 51.5mln euro, paid for the license, vividly evidence this.
- At present, both operators are in the process of talks concerning the new contract on interconnect. Does PSRC play only the role of an observer in the given process or you participate in the process?
- Both companies are obliged to present the terms of interconnect to the approval of PSRC, and we have informed both operators on this in a written form. By the way, this issue has a wider contest, since we talk not only about the arrival of the third operator or about the interrelations of companies. We expect serious competition also in the market of landline connection and this means that “ArmenTel”, “VivaCell-MTS” and “Orange” should publicize their offers on interconnect for the companies, which provide services of landline connection to be able to provide their subscribers the opportunity to contact the subscribers of other networks. We sent notifications, and the companies promised to present their offers, after which PSRC will discuss and will make the corresponding decision, since, as to both landline and mobile connection we see problems, which should be solved.
- Early this year it became public that PSRC discusses the issue of implementing Mobile Number Portability (MNP) service in Armenia. At which stage are those discussions? And when can we expect the decision to be made?
- Yes, the decision will be made, but I find it difficult to name the dates, since this is a very labor-intensive and complex process. I will note that in many countries the transition to MNP service lasted 5-10 years. There are also countries which did not make a transition to this system. We really need formation of markets and infrastructures, the presence of which will allow implementing MNP service in future. At the same time, this does not mean that we will not work in the given direction and will not try to implement MNP quickly. We need consultation help, for which we have turned to donor organizations. To my mind, it will take no less than 1-2 years to make the final decision.
- General Director of “ArmenTel” stated recently that MNP implementation “is appropriate only given 130% saturation of the mobile connection market”. “However in Armenia there is not such level of market saturation and it will be possible to consider MNP implementation as a “green light” for one of the players”, Neicho Velichkov stated. How will you comment on these words? (The interview was recorded before Neicho Velichkov’s resignation from the position of “ArmenTel” Head - Mediamax).
- I will not comment on any statements of a company, licensed by us, since I have my own stance, which I have presented. Of course, we will take this path, of course, we will implement this service, irrespective of fact, whether it is beneficial for anybody or not. We will undoubtedly take this step, since it is imply necessary to preserve competitive conditions and secure convenience for subscribers. It is another issue that at the moment we are not yet ready for that.
- Recently, PSRC issued number capacities to a number of companies to provide landline connection services. What, according to you, should those companies do to make real competition “ArmenTel”?
- They should build quality networks, make the necessary investments, and provide quality services and quality maintenance.
- Recently, new players loudly entered Armenian market of internet services. It is not ruled out that in the nearest future other companies will enter the market as well. Can we say that Armenian market of internet services lives through a certain boom?
- I hope this is the case. Taking into account the global financial-economic crisis, I am pleased with the volumes of investments, realized by companies, and I am also familiar with the investment programs of certain providers, which are planned to be realized by the end of 2010. I think that we will have progress, coverage and infrastructures all over Armenia, including villages, which will allow securing availability of services. Today the saturation of internet connection in Armenia makes 50-51%, and this means that half of the country’s population are potential consumers, but they do not have the opportunity to use services, since there is no corresponding offer.
