16 - 22 March 2000

A third or fourth competitor would operate at a disadvantage in local mobile market

by David Kelleher

Third or fourth entrants in the local mobile industry could find themselves at a disadvantage if they are granted a licence and frequency long after Mobisle Communcations, a subsidiary of Maltacom plc, starts operations, industry observers said.

Mobisle Communications is expected to be granted the frequencies "very shortly" and should start operating by the end of the year. Sources in the sector told The Malta Business Weekly that the company was "quite lucky because it was given precedence over other possible entrants in the local mobile market".

"The government's plans to liberalise the telecommunications sectors are known to all however it was not expected that Mobisle Communications alone would be granted the frequencies. What would be interesting to see is whether a third or fourth player would be given a licence and frequencies at the same pace and relative ease," the sources told The Malta Business Weekly.

However, other industry analysts pointed out that Malta would not be the first country in the world to have only two competing mobile companies, citing as examples Luxembourg and the UK. The latter started off with two companies before opening the market.

These questions come about after Mobisle Communications signed a deal worth US$24m with Nortel Networks to build a turnkey DCS 1800 and GPS network in Malta that will allow the latest wireless mobile telephony in Malta. Mobisle Communications Ltd will be able to provide state of the art wireless communication services based on ETSI GSM phase 2 plus standards. The contract will provide Mobisle Communications Ltd with the infrastructure for the provision of personal communications services in Malta.

Earlier this week European Commission sources told The Malta Independent that a duopoly is not the ideal solution for consumers since it brings rise to an almost monopolistic situation.

However, Malta's case might be different because of its small size and it could be a question of whether it would be economically viable to have more than two operators in mobile telephony, fixed line telephony and cable television for example.

However, the sources said anyone who is ready to enter the market and believes that it is viable should be given a chance. Observers also added that Maltacom was abusing of its dominant position since it is forcefully entering the mobile sector and not allowing others to follow suit.

Maurice Zarb Adami, Maltacom's chairman, announced that Mobisle will be in a position to offer wireless services by the last quarter of the year. He also said that Maltacom would at first compete with Vodafone and only later would it compete with other operators.

This was deemed by the observers as a clear indication of the way government would proceed with the liberalisation of the sector.

According to its agreement, Maltacom already has a licence to provide mobile services, including UMTS, the next generation of mobile

telephony.

However, the company has not been granted the frequencies by the Telecommunications Regulator.

Although the government has till 2003 to liberalise the market, and thus can act as it deems necessary until that date, observers said that what is of concern is that a duopoly is practically the same as a monopoly and offers the same problems for consumers.

"Take flights as an example. It is only when a third operator comes in that the price of flights is pushed down," the sources said.

Minister John Dalli, when addressing the recent Federation of Industry annual general conference, said that "realistic prices would be available across the board", in reference to mobile telephony charges. The agreement last week was only confirmation that they would be given the frequencies.

"No company or shareholder in his right frame of mind would enter into such an agreement without having guarantees that he would be allowed to operate. It would be too high a risk... and Maltacom is not in a position to take such a risk," sources said. The project incorporates all aspects of network planning, delivering commissioning and testing.

Nortel Networks will also provide a fully integrated billing and customer relationship management solutions, enabling Mobisle Communications Ltd to deliver on its promise of becoming a reliable and distinct provider of wireless communications services, always accessible to its

customers.

The contract also foresees the supply of a complete Nortel Networks UMTS trial network by year-end 2001, which would allow Mobisle to fully evaluate the potential benefits of the technology and to smoothly migrate its network towards next generation wireless internet services.

UMTS is the system for the next generation of mobile communication networks.

It provides the infrastructure that allows fast data transmission over mobile phones thereby enabling the proliferation of services such as video conference and all applications that require ample bandwidth and high speeds.