Greek telecom sector plagued by inadequate rules, high costs

OTE and alternative telecom providers seem to agree that seven years after the full liberalization of the sector, the market still operates under the law of the jungle and blame the policies of the National Telecommunications and Post Commission (EETT). «The existence of some 20 fringe providers in a small market with space for no more than three serious companies puts pressure on EETT to force OTE to maintain them by supplying them with its infrastructure below cost, at prices EETT arbitrarily determines without taking into account OTE’s real costs,» said the president of OTE, Panagis Vourloumis. Alternative providers argue that the persistence of OTE in violating competition rules contributes to «the companies’ suffocation» and has driven Greece to rank last in Europe in broadband Internet connections. The current administration of EETT, under Nikos Alexandridis, has noted that the fake liberalization and the weak institutional framework applied by the previous governments allowed the operation of several impostors; they did not make any substantial investment toward developing their own networks and thought they would prosper by buying connections at wholesale prices from OTE. Indeed, some 20 companies were set up which for several years remained barely alive with just a handful of customers. The delays in investment have been attributed to the inadequate institutional framework for market liberalization and the inability of the EETT to restrain OTE which was trying to maintain its clientele. Greece was actually condemned by the European Court for the delay in applying the institutional framework, and after years of studying the relevant law it has finally been voted in by this government. Some progress The new law and the will of the current EETT administration have changed the situation Vourloumis referred to, although some fringe players have remained in the market and OTE often clashes with them, citing the debts they refuse to pay. Yesterday Vourloumis told Parliament that «EETT obstructs OTE from receiving overdue debts by service providers, creating bad debts of more than -50 million.» He also noted, however, that «it is not the current administration of EETT which is responsible for that, although it maintains it.» Yet at the same time, four or five serious companies have made significant investments in private networks and have created hundreds of new jobs. Total investment by the major players in the sector (Tellas, Forthnet, Vivodi) and newcomers such as On Telecoms comes to hundreds of millions of euros. More than -250 million in investments has been announced by Forthnet, -150 million by On Telecoms and Vivodi recently suggested that so far it has invested about -90 million. The new owners of Hellas On Line (HOL) have also promised a serious investment. Telecom market observers argue that the truth lies somewhere in the middle: «OTE was late in reorganizing and modernizing itself, while the regulations allowed the operation of firms profiting on the margins between wholesale and retail prices for phone lines.» This year promises to be very interesting, as some OTE competitors are promoting new services at very attractive rates.