Telecommunication Regulation & Liberalization

Overview

This section shows the telecommunications regulatory environment in Bulgaria. It serves as supporting information to the Telecommunications Infrastructure Section. BTC was just privatized just privatized in 2004, and there are no measurable results of its impact yet apart from the entrance of new companies in the telecom market.

Bulgaria emerged from Communism as one of the most advanced states in the former Eastern block in terms of telecommunications infrastructure. More people in the country had access to a phone than in almost any other former Communist state. This lead, however, quickly disappeared due to difficult economic conditions, the slow pace of reforms by post-Communist governments, the legacy of poor-quality infrastructure, and the stalled privatization of the public operator. [5]

FIXED TELEPHONY

In terms of fixed-line infrastructure, although the country has an extensive telecom infrastructure, quality is lacking. Digitalization rates have been among the lowest in the region, with the incumbent, state-owned joint stock enterprise, Bulgarian Telecommunications Company (BTC), moving slowly with modernization of the network. BTC enjoys a monopoly on the provision of basic fixed line services in Bulgaria until the market is opened to competition on January 1, 2005. The sector was scheduled to open on January 1, 2003, but in August 2002, a new bill extended BTC's monopoly on the provision of voice and leased line services for an additional two years. The law, however, contained a concession that allows rival service providers access to BTC's subscribers to offer cable, satellite or wireless services from the original liberalization date. [5]

The latest delay stems from difficulties in resolving the sale of part of BTC, which is a prerequisite for liberalization. Following aborted attempts in November 1996 and 1999, the prospect for partial privatization arose again in 2002, when three groups - a consortium of Turk Telecom and a Bulgarian industrial company, Koc Holding; UK-based Charlemagne Capital; and Viva Ventures, a subsidiary of U.S. private equity firm Advent International - submitted bids for a 65% stake. After the State Privatization Agency announced that Viva Ventures' bid of $208 million had been accepted, political opposition over the price and condemnation from the unions over proposed job cuts threatened to derail the sale. Furthermore, questions arose over the legality of the Viva Ventures' bid. In December 2002, the dispute intensified, bringing the sale to an abrupt halt. In 2004, however, the dispute was resolved and Viva Ventures bought BTC, and the former monopoly is now privatized. [5]

REGULATORY ENVIRONMENT

The Ministry of Transport and Communications (MTC) is responsible for the restructuring of the telecom sector, number allocation, and research and development. The new independent regulator, the Communications Regulation Commission (CRC) is responsible for granting and revoking licenses, type approval and the settling of interconnection disputes. The new body is also responsible for bringing the country into line with EU standards while eliminating state interference in awarding concessions. [5]

Tariff rate rebalancing is at a very early stage of development and little progress has been made. The costs of line rental and local calls are exceptionally low, even by regional standards, while international calls are correspondingly exorbitant. BTC aimed to rebalance tariffs to Central and East European averages by 2002. In January 2002, BTC announced that it would raise intra-city tariffs by 17% ($0.037) per minute, and lower long-distance tariffs by 17-50 percent, depending on the destination. Internet tariffs will be reduced as well. [5]