13 - 19 July 2000

Change in telecoms is too slow

Vodafone managing director JOSEPH GRIOLI speaks to Franco Aloisio about the present and future of his company and that of the telecommunications sector

This period in the year could be termed as a transition period in terms of the telecommunications sector in Malta.

We had various important developments such as the new Telecommunications Act which was discussed in Parliament, and the setting up of go mobile.

Do you think this is the start of a liberalised telecommunications market?

I believe competition in this area will allow us to increase the demand for mobile services. Last week, the subscriber figures for the UK were published. They revealed that 52 per cent of the British population have a mobile phone. If I where to apply the 52 per cent to our population we would be talking about a subscriber base of 200,000.

At the moment Vodafone Malta has a subscriber base of just under 65,000. If we were to reach British levels of penetration, we could target 100,000 new subscribers. Hence both Vodafone and go mobile face a bright future.

I agree with competition. Ultimately it is a question of who provides the best service and who acquires the largest market share. The scenario has changed, and we will not have Maltacom as our shareholder dictating what prices we should charge.

How do you evaluate the pace of the changes taking place in the telecommunications sector? Do you think it is too slow?

The new law has gone through the committee stage, but we are still not aware of what has been discussed.

We asked for transcripts and we were told we can have them only next month. So really and truly we do not know whether our concerns were taken into account and included in the law. So far the government has decided not to reply to our reactions to the bill. We are living in limbo at the moment until the law is published.

I have never witnessed a law taking such a long time to be debated and passed through Parliament. I am not criticising the government in particular, but Parliament as a whole.

What was Vodafone's reaction to the telecommunications timetable?

The draft bill that was presented to us was ambiguous. For instance, a section of the bill said that, "ideally" mobile operators could set their own prices. What the word "ideally" means is not that clear. Does it mean that we have to apply for a tariff?

The same draft said that the regulator could challenge any tariff and could also consult with the competition and the consumer before forming an opinion on one's application. I find this very strange. Hence, we asked for clarification on a number of points.

Until the present day, Maltacom - your direct competitor - still has a 20 per cent share in Vodafone Malta. How is this affecting your company?

When in 1999 Vodafone International bought Airtouch, our share in another competing German company were placed in a trust which looked after the shareholders' interest.

Hence, we believe that Maltacom's shares should have already been in trust once Maltacom declared its intention to go mobile. I think it is unfair that Maltacom still can block price reductions, which they are doing, and other decisions which the company should be taking in its own interest.

So what stopped your company from taking take legal action in terms of competition on this issue?

We were in a very strange situation where Maltacom declared that it was taking up this right to buy the majority shareholding in this company and at the same time said that it intended having its own mobile service.

How do you see the competition levelled by go mobile so far?

I respect competition and I see them as partners in making the market grow.

ETACS will be phased out in September and at present, Vodafone is offering subsidised mobile sets and free GSM connection fees to its ETACS subscribers. Is this a way to maintain you customer base?

The ETACS network will close down on 1 September. We looked at our customer list, which amounts to 2,000 ETACS subscribers, and we felt that it is only fair that customers who have been with us for 10 years, should be connected to the GSM network and given a set at a subsidised price. Vodafone would have done this irrespective of the competition levelled by go mobile.

go mobile is claiming that it will be offering a quality service, even in view of the problems related to Vodafone's "congested" network. Is your network coping with the ever increasing number of subscribers?

The quality of our network is as good as any network. We would not have had any congestion problems if the Wireless and Telegraphy Department had granted us the frequencies we had applied for in January. We have been returning the frequencies which we do not use any more on the ETACS network, but in return we expected more frequencies for GSM.

We applied with the regulator way back in January. So far, we got half of the requested frequencies only three weeks ago.

Another problem is the delay in the issuing of the Planning Authority permit for the setting up of stations. The PA takes the best of 12 weeks to approve or disapprove your application.

The situation is made even more ridiculous because everytime we apply for the setting up of mobile stations, we have to specify the equipment and state what we will do with it. We need Health Department approval. But what for? The department has already approved 60 of them.

This is simply a waste of time. I do not think Malta is ready enough for this type of industry to develop. The administration and authorities simply do not move fast enough.

Recently a lot has been said about the possible dangers of the mobile transmitter stations. What is Vodafone's view on this matter?

There is no proof whatsoever that mobile phones or antennas cause any harm. This emerges from the UK Steward report. The World Health Organisation established standards of electro-magnetic emissions. We operate within these standards and are far below the threshold set by the organisation.

I cannot understand the way issues are handled and discussed in Malta. For instance, every day I drive my car and many a time end up queuing in a traffic jam behind a bus, lorry or truck emitting toxic fumes - which is definitely hazardous.

However, we do not discuss these everyday hazards. At the moment it is very fashionable to talk about mobile phones. If we want to discuss the possible risks of mobile phones, let us talk about this subject in an intelligent way and not emotionally.

When will Vodafone launch WAP and SMS?

Vodafone is ready to launch the Short Message System (SMS) and Wireless Access Protocol (WAP) over the coming weeks. However, the launch of these new mobile telephony features depends entirely on the Telecommunications Regulator and the new telecommunications law.

SMS could be launched this week once the new Telecommunications Act is passed by Parliament. WAP could be launched towards the beginning of August.

SMS is a feature which all GSM mobile users generally benefit from, but which is not yet available in Malta. It basically allows users to send and receive short messages by means of their mobile.

At present, a GSM user can only receive messages through special internet websites, but messages cannot yet be sent from one mobile to another.

At the moment we cannot offer SMS because we are restricted to do so by the regulator who claims that SMS conflicts with Malta's existing paging systems. This is not the case anywhere in the world. I really do not know why Malta is the only country in the world where SMS is not provided with a GSM phone.

And what about WAP?

The most exciting development which will soon be launched is WAP, which will eventually substitute GSM phones. By means of WAP, a mobile user can access the internet. At present Vodafone is installing the WAP network system. In order to access the internet by means of one's mobile, one has to purchase a WAP-enabled phone, which usually has a bigger display screen.

The information available on a WAP phone will include news, weather reports, stock exchange rates and share prices and other information made available by content providers.

Once WAP is launched, users can access international content, but the amount of local content for WAP users is still very limited.

Does Vodafone plan to launch the latest technology devices such as GPRS and UMTS?

WAP is not the last generation in terms of mobile phone technology. GPRS will be launched towards the end of the year. GPRS is based on WAP, but its access speed is much faster. UMTS, which allows mobile users to download colour pictures and video streams on their set, will be only available in 2002.

Is your company planning to move into new premises once it expands?

We are growing and will continue to do so. We are currently finalising plans to acquire new premises.

What prices are subscribers expected to be charged once the sector is liberalised?

There will be no increases in prices. Regarding a decrease in prices, I can see attractive packages being offered, but we have to be very careful. We cannot have a situation whereby we offer ridiculous prices that will not allow us to invest further. I think we will serve our customer best if we charge fairly. On the whole, I anticipate prices to go down, but will not be smashed down to the floor.