Асоціація підприємств інформаційних технологій України

In 2001, the Romanian telecommunications industry could not meet the market demand, even for a medium-term projection: for the next 5 to 10 years it was not expected to meet the needs of the customers.

Opening the market would have caused an influx of foreign investment in the telecommunications sector. At the time, estimates indicated an exponential growth compared to investments in the sectors that were not liberalized. The premise was that, in the future, competition would facilitate the adjustment of investments management, would speed up the reorganization process of the dominant operator, leading to the reduction of the operational expenses and to the growth of benefits. New operators would significantly absorb work force discharged by the dominant operator.

Delaying liberalization would have meant losing those investment opportunities; a lesson that EU member countries had learnt the hard way when they gave in on the pressure from monopoly operators, delaying liberalization until after 1998.

European Development Programs

Liberalization of the Romanian telecommunications sector was a step by step process that was led by the implementation of several EU programs. Here we will highlight the most important ones:

Help from the European Union came starting in 1992 with the General Technical Assistance Program (2,55 million Euro), which concentrated on developing technical and institutional studies in the telecommunications sector. A significant component was conducting a major study – a pre-condition for a EBRD loan for constructing a territorial optical fiber network, as well as for implementing the digital network development plan. Another study included recommendations for improving the analogical network. A strategy for the sector’s development was developed as well.

The purpose of the 1993 program (3 million Euros) was to develop the strategy for RomTelecom (the monopolist operator) to consolidate the policies and regulatory function of the Ministry of Communications and Information Technology and to continue strengthening managerial and technical skills within the Romanian Post Service. The goal of the 1995 Program (6,5 million Euro) was to increase the sector’s attractiveness to private and foreign investors, conform to the regulations and standards of the European Union, as well as to modernize the postal and telecommunications services in Romania.

The program „Strengthening the National Regulatory Authority for Communications and Information Technology” (2,9 million Euro; part of Phare 2001) was created to:
•     consolidate the capacity of ANRCTI to elaborate, promote and apply the EU acquis, as well as to sustain the ICT market liberalization; and
•     create a practical and secured portal as interface between the Authority, the public and the industry.

The program “Improvement of the Institutional Capacity of ANRCTI” (part of Phare 2003; 700,000 Euro)was designed to:
•     adjust ANRCTI’s regulatory instruments created through the new legislative framework to conform with the EU best practices, defined in the implementation process of similar authorities of the Member States;
•     provide technical assistance to the implementation of the Universal Service in the electronic and postal services communications field.

Romania’s program for building a new regulatory framework and for the liberalization of the communications sector

In 2001, the European Union revised the old regulatory framework in the communications field. Romania decided to adopt a legislative package which would support the transition from monopoly to an open market based on competition. In 2002, negotiations on Chapter 19: “Telecommunications and IT” were (provisionally) concluded. Romania imported the entire New European Regulatory Framework in its legislation without requesting for a transition period or a derogation.

The objectives were:

•     to establish clear and non-discriminatory regulations - criteria which regulate the telecommunications market (operators and customers) must be objective, univocal and must not discriminate against any participant or group of participants on the market;
•     to open the procedure for granting licenses – licenses for activities within each telecommunications market’s segment must be issued to any participant who is interested and meets the pre-requisite qualifications required by law. The number of entrepreneurs may only be limited for legally specified reasons. These reasons must be objective and occur naturally (i.e. the limited resource, such as frequency spectra);
•     to appoint an independent supervising (regulatory) body  - this will be conducted by an independent authorized body  that will supervise and review the conditions for qualification, the management of limited resources, and other functions regulating the collaboration between entrepreneurs offering services in the telecommunications network.
•     to establish the principles for collaboration between network operators – defining the principles, as well as the calculation methods for connections prices based on the costs principle;
•     to define more precisely the notion of universality – finding solutions for the Universal Services, in the context of ending monopoly on the telecommunications  market;
•     to liberalize the adjustments of prices (tariffs) – creating the proper conditions for balancing the tariffs and, gradually eliminate them as the competition grows.

Legislative steps – Implementation of the secondary communications regulatory framework

The liberalization of the electronic communication market was completed on the January 1st, 2003 through a set of measures ensuring direct entry on the Romanian communications market on the basis of a simple notification, and regulatory mechanisms for the operators with significant market power, in order to create a balanced competitive environment which would support the development of new operators and lead to the diversification of offers, reduction of tariffs, and improved service quality.

In 2002, regulations regarding the access to, and interconnection of electronic communications networks and associated facilities, covering also essential provisions on unbundled access to the local loop, were proposed to the Government and adopted by emergency procedure.
The regulatory framework was supplemented by the provisions establishing the general framework for activities relating to electronic communications services and networks, the authorization regime for electronic communications networks and services, as well as the specific competition rules governing the electronic communications market. The objectives and attributions of the National Regulatory Authority for Communications and Information Technology (ANRCTI) were also delineated. The Authority started its activity on September 25, 2002, making public its first normative project related to the General Authorization Procedure for Public Electronic Communication Networks Accessibility.

Retrospective on ANRCTI’s most important regulatory activities

2002-2003
•     General authorization regime
•     Definition and analysis of operating principles for specific relevant markets in the electronic communications sector
•     Definition and analysis of specific relevant wholesale markets, and designation of providers with a significant market power
•     Rules for providers with significant market power for interconnection with the public fixed and mobile telephone networks

2004
•     Definition and analysis of specific relevant retail markets, and appointment of providers with a significant power
•     Rules for access to the local loop
•     Designing the models “bottom-up” LRIC for setting up cost-oriented interconnection tariffs with Romtelecom, Vodafone and Orange networks
•     Adjustment of the interconnection regime with Romtelecom network
•     Starting the implementation of the Universal Service

2005
•     Finalizing the cost orientation process for the interconnection tariffs with the Romtelecom network
•     Regulations for retail markets (cost orientation for retail tariffs, carrier pre- selection procedure)
•     Public consultation for revising conditions of the access to the local loop
•     Implementation of Universal Service in the electronic communications sector
•     Changing the calculation model for the monitoring tariff
•     Promoting an improved system of access to the electronic communications infrastructure
•     Permanent communication with the industry and the users

2006
•     Developing, together with the Ministry for Communications and Information Technology (MCTI), a national strategy for the development of broadband services
•     Cost substantiation of the tariffs for call terminations on the public mobile telephone networks Vodafone and Orange
•     Definition of the regulatory framework for number portability
•     Setting up a mechanism for Romtelecom’s retail tariffs control
•     Revision of the regime of unbundled access to Romtelecom’s local loop
•     Revision of the regime for interconnection with the Romtelecom network
•     Monitoring the implementation of the carrier’s pre-selection procedure
•     Continuing the implementation of the Universal Service:
          Creating tele-centers in 200 more eligible localities
         Pilot-auction for the installation pre-paid public phones
•     Information and education of users

2007
ANRCTI initiated the strategic analysis of the Romanian electronic communications sector with the help of the consulting company TASC Strategic Consulting Ltd. The process consisted of market studies regarding end users, collecting specific information from representative sample of operators, meetings with the industry’s representatives, investigating ANRCTI’s informational system, and comparing them with the practices adopted by other states. The analysis of the Romanian electronic communications sector revealed a number of deficiencies that widened the gap between actual practice and the ideal conditions for the sector’s operation. The deficiencies identified as having the greatest impact on the overall development of the sector were: competition level, innovation, and consumer information.

Based on the conclusions of the analysis, ANRCTI drafted the Regulatory Strategy for the Romanian Electronic Communications Sector for 2007-2010, which contains a set of five objectives:
•     to create conditions for sustainable competition based on infrastructures and facilitate wherever deemed efficient the competition in the services field.
•     to promote the development of services for Internet broadband access, especially through multi-product platforms such as IP, and to maximize the user base for these services.
•     to ensure that the end users (natural or legal persons, from urban or rural areas) receive the correct value for the money they pay.
•     to create an environment where information regarding availability, conditions for offers and service prices are transparent and accessible to the entire population.
•     To not interfere with the normal development of the service packages, as long as they do not affect competition.

Dan Georgescu, President of ANRCTI states: „We intended to develop a strategy that is relevant, applicable and useful and that ensures consistency with the national and international strategies in the electronic communications field and other corresponding fields. In time, it became obvious that we need to develop a multi annual instrument that will help improve the coherence and efficiency of the Authority’ decisions, as well as to provide greater transparency and predictability of the regulatory framework."

In 2008, ANRCTI will concentrate on revising the relevant markets in the electronic communications sector and on promoting competition, the interests of the end users of the electronic communication and postal services, greater use of information technology.  ANRCTI will also focus on improving the dialogue with the industry and the end users. The process of revising the relevant markets, one of the major tools available to ANRCTI for accomplishing its mission of promoting competition in the electronic communications sector, will take place throughout the year 2008.  

It will require defining and analyzing the relevant markets and establishing regulatory measures for solving the competition-related problems in these markets. For the first time, this approach will be taken in conjunction with notifying the European Commission and other regulatory authorities of the Member States of the identified relevant markets and the significant operators within it and of the solutions the Authority intends to implement. This year, ANRCTI will finalize the project regarding the number portability, which will be available starting on October 21st, when the fixed and mobile telephone network users will be able to keep their telephone number when they change providers.

The growth of the electronic communications market in the post-liberalization period

Estimates show that the electronic communication market has grown from 2.1 billion Euros in 2000 to approximately 10 billion Euros in 2008.

Until March 17, 2008, 2367 companies have been authorized, of which 2267 provide public electronic communications networks (of these: 2021 fixed, 45 VSAT and 5 cellular radios), 474 provide telephone networks services (of these: 464 via fixed networks, 73 via public land mobile networks, 22 via satellite), 1981 provide services other than telephone networks (of these: 1689 access to Internet, 876 data transmission services, 258 professional mobile communications, 5 radio-paging).

The data presented below reflects ANRCTI analysis with respect to the growth of the communication market (information publicly available on ANRCTI’s website):

Number of interconnection contracts ensuring access to the local loop

Market structure for services of access to a public telephone network (market shares) based on the number of access lines

Structure of the market of services to a fixed public telephone network (market shares) based on subscribers’ figures

Number of interconnection agreements concluded by providers of mobile telephone services with other providers of public telephone networks by 31.12.2007

Dynamics of the total number of ”users” (active SIM cards) during 31.12.2003 – 30.06.2007.  Penetration rate of mobile telephone services

Number of active providers of Internet access

Structure of the total number of Internet access connections

Evolution of the number of active providers of retransmission of audiovisual programs

Dynamics of the total number of subscribers to services of audiovisual programs’ retransmission; evolution of the penetration rate per households

For a detailed analysis regarding the evolution of the Romanian electronic communications market, please access the ANRCTI Report.

All ARCTI’s decisions and normative acts within the secondary regulatory framework, intended to ensure complete liberalization of communications and the creation of a competitive market, were subject to public review . Sector-based associations participated in ANRCTI’s Consultative Council, fostering discussions related to these projects. The associations provided the members’ perspective and pointed out the mistakes occurred during the implementation process of the secondary regulatory framework.