12 - 18 October 2000

The battle begins

It appears that the month of October is taking on a particular significance for the telecommunications industry. Last October, the telecoms industry found itself in turmoil. Malta’s sole cable television provider, Melita Cable, faced the ire of Maltacom and the local Internet Service Providers, after it announced that it would be offering Internet via cable. In less than a week, Melita Cable was forced to put its plans on the backburner due to legal complications and a court injunction filed by Maltacom prevented Melita Cable from using its cables to provide Internet.
Twelve months on, the situation has now turned full circle. Last Friday, the government decided that Melita Cable should be allowed to use its cables to provide cable Internet. This decision caught many by surprise, not least the major players – Melita and Maltacom.
However, looking back at developments over the past few months, it becomes clear that the government has been playing a very difficult game but one it had long planned to win. The decision was not taken on the spur of the moment – it had long been contemplated. Aware that full liberalisation is not possible for the time being, the government had to appease all parties concerned.
On the one hand, it has granted a licence to Mobile Communications to operate as a mobile telephony operator, despite what was seen as an excessive delay. One point to Maltacom. Within weeks of granting that licence, the government decides to overrule a court injunction and grant Melita Cable the right to offer cable over Internet. One point to Melita Cable. The final result: both are happy from the government’s point of view.
Trudging along, however, are the ISPs who now have more reason to voice their concerns. The new regulations regulating the ISPs have not been accepted with open arms. The two main issues – open access to networks and market dominance – have still to be solved.
With Melita and Maltacom now on level ground, the battle for supremacy has begun. The Malta Independent on Sunday reported a few days ago that Maltacom is planning to move into TV transmission. That is good news. Competition can only create a better product for the consumer.
Malta needs to move forward, especially in the telecommunications industry. The government has taken a very important step forward in its plan to liberalise the market by 2003. Minister Censu Galea has acted very cautiously over the past months. His ministry has received much of the flak for what has happened over the past year, however by bidding his time and acting cautiously, Minister Galea has done a good job.

Less expenditure

Various media reports have suggested that next month’s budget will not include across the board tax increases but will instead concentrate on less government expenditure and a better enforcement of tax collection. John Dalli, the Minister for Finance, has also broadly hinted that the government will generally follow this line of thought when preparing the country’s budget.
The Malta Business Weekly has long argued that it is about time that something is done about cutting government expenditure and we therefore welcome this change in direction. In Malta we are already taxed quite heavily, both directly and indirectly, and after the rather hefty tax increases in last year’s budget neither the economy nor the average consumer would be able to take further tax increases at this stage.
The budget deficit obviously has to be tackled but raising taxes is not the way forward any more. The time has therefore come for the government to cut its expenditure and take a fresh look at all its spending programmes. Nothing should be considered untouchable: the budget allocated for health, education, social services, overtime work, subsidies to State-owned industries and many other areas should be re-examined, and where savings can be made, they should be made.
The average citizen is getting fed up of paying high taxes to subsidise an over-bloated and generally inefficient public sector. We have been taxed enough, now it is time to concentrate on cuts in order to reduce the deficit.
The emphasis on a stricter enforcement of tax collection is also very important; this has proved successful so far and one augurs that further progress is made next year.