Armenian Telecom Sector Further Liberalized

YEREVAN (RFE/RL)–The national telephone company, ArmenTel, will abandon its remaining exclusive rights to telecommunication services in Armenia under an agreement with state regulators that was unveiled on Friday.
The deal, which should lead to greater competition in the country’s underdeveloped telecom sector, came after weeks of negotiations between the Public Services Regulatory Commission (PSRC) and ArmenTel.
The latter will, in particular, cease to have a legal monopoly on fixed-line telephony. Still, officials admitted that this will change little in practice as there will hardly be local or foreign investors willing to spend huge sums on building a second fixed-line network in Armenia.
Far more important is the fact that ArmenTel agreed to give up its grip on external phone connection provided over the Internet. Many Armenia’s use the so-called IP telephony service to make phone calls abroad at prices that are much lower than those charged by ArmenTel for regular phone connection.
As recently as last January, the PSRC reaffirmed ArmenTel’s monopoly on the lucrative service and allowed it to force scores of small Internet phone providers out of the business. The move sparked street protests by hundreds of owners and employees of those firms.
ArmenTel was controversially granted 15-year exclusive rights to all forms of telecommunication when it was acquired by the Greek telecom giant OTE in 1998. The company was forced by the Armenian government to abandon its monopoly on mobile telephony in late 2004 after failing to develop its wireless network and meet growing demand for the service.
Another key monopoly, relating to Armenia’s Internet access to the outside world, was scrapped late last year shortly after ArmenTel’s $500 million takeover by the Russian mobile operator VimpelCom. The monopoly had long been blamed for the poor quality and high cost of Internet connection in the country. Many hope that its abolition will spur the development of information technology, one of the most promising sectors of the Armenian economy.
Officials also said on Friday that ArmenTel will not seek to significantly raise its fixed-line phone fees at least until next April. This means that they will remain unchanged before a presidential election due early next year.
ArmenTel formally asked the PSRC to allow such a price rise in May. The regulatory body rejected the request as unfounded.
ArmenTel’s Russian chief executive, Oleg Bliznyuk, indicated that the telecom operator will again seek higher phone charges later in 2008. “It’s important that the market be not only free but civilized,” he told journalists. “We will take one year to gauge the real work and investmen’s of new companies entering the market as well as the quality of services provided by them.”


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