October 1999

Bulgaria Master Report

1. The regulatory background

In July 1998 the Bulgarian Parliament approved the new Telecommunications Law. It provides conditions for liberalisation of telecommunications activities and services, establishment of a free market and loyal competition, fair and non-discriminatory treatment of the operators, provision of universal service on the territory of the entire country at affordable prices. The telecommunications activities are managed by the Council of Ministers, the National Radio Frequency Spectrum Council and by the Committee of Posts and Telecommunications, according to their powers, as specified by the law.

Thus, the liberalisation has begun in the mobile sector, cable TV, data networks, paging and value-added services. Concerning the fixed telecommunications infrastructures, the liberalisation is due to start on 1 January 2003. The full text of the Telecommunications law can be obtained in English from www.cpt.bg.

The Council of Ministers is supposed to lay down the state policy in the field of telecommunications by approving a Sector policy statement. The Sector policy should determine the strategy, principles and stages of the development of the telecommunications sector and will contain the types of activities and services as well as the time schedule of their liberalisation.

The Committee of Posts and Telecommunications (CPT) should prepare the sector policy in the telecommunications sector and submit it for approval to the Council of Ministers. This policy will comply with the telecom policies in EU as far as possible under the circumstances in Bulgaria. The CPT will exercise the rights of the capital owner in the State-owned companies, as well as in those companies in telecommunications sector where the State is a shareholder or a partner. The CPT will carry out activities related to: restructuring of the sector; research and development in telecommunications; development of the Information society; Euro-integration; management of the budget funds for the professional educational institutions, for professional training, etc. The CPT Chairman specifies the types of telecommunications activities subject to individual licensing, class licensing and free regime of operation.

The State Telecommunications Commission (STC) is a state authority with the Council of Ministers. The STC will pursue the Sector policy by regulating and controlling the telecommunications in a way defined by the law.

According to the Telecommunications law, a state monopoly had been established:

• to provide an ordinary telephony service (local, long distance, transit and international) between terminal points of the fixed telephony network until 31 December 2002.
• to provide leased lines under publicly announced conditions until 31 December 2002.

On 25 February 1999 STC submitted a licence for the above mentioned activities to the Bulgarian Telecommunications Company (BTC) - the Public telecommunications operator.

Bulgarian Telecommunications Company (BTC) plc. is a state-owned public limited liability company, set on 1st of January 1993. Thus, BTC has exclusive rights for establishment, operation and maintenance of the National Public Telecommunications Networks on the territory of the Republic of Bulgaria and for provisioning of International and Domestic telecommunications services until 31 December 2002.

According to the agreement, signed in July 1999, Hellenic Telecommunications Organisation SA (OTE), Greece's fixed-line telephone operator, and Royal KPN NV from the Netherlands will buy 51% stake in Bulgarian Telecommunications Company. It is expected that the purchase will be finalised by the end on this year. Within the same deal, the license for second GSM operator will be given to KPN/OTE.

2. Entry barriers

The alternative networks are subjects of licensing. CPT had announced its plans to implement the following actions:

• individual licensing for: television and radio broadcasting (country wide and local), Cable TV networks, Mobile cellular networks (analogue NMT and GSM), Paging networks; VSAT with control stations in the country, etc;
• class licensing for detached data communications networks, Internet access providers, mobile satellite terminals, etc.

The licensing procedures according to the new Telecommunications law has already started.

In order to offer alternative networks for public use till the end of 2002, the public telecommunications operators are obliged to establish their networks using leased lines rented from BTC or to apply for a license for liberalised service (i.e. VSAT).

In this regard, there are several clauses in the Telecommunications law aimed to settle fair relationship between operators:

• BTC’s tariffs of services are determined according to the methodology developed by STC and adopted by the Council of Ministers;
• Each person may request to lease lines without the right to release them;
• BTC refusal to provide leased lines may be appealed before STC;
• When BTC is unable to provide leased lines, and the requesting party is a licensed public telecom operator, then it may ask STC to allow it to construct its own lines;
• Public telecommunications operators are obliged to provide interconnection to their networks for the private telecommunications networks of operators in whose licenses the possibility for such connection has been provisioned etc.

The other barriers arise from the inadequacy of telecommunications infrastructure and the quality of telephone services, especially in some regions and rural areas. Some improvements are expected as a result of the implementation of access network (n x 64 Kbit/s) for business services (first stage was put in operation in August 1999); the extension of the international connectivity; accelerated digitalisation of the big city networks; National centre for network management, etc.

3. Major participants

3.1 Apart from the network and the services offered by BTC, several companies that target data communications services and Internet access have to be mentioned.

• Global One Communications and Information Services Ltd. (GOCIS), (www.gocis.bg), is a joint venture of Global One Communications Ltd. (60 %) and BTC (40%). The company offers a wide range of services, including X25 data network, Global Frame Relay, end-to-end managed services, X400 and is one of the biggest Internet Access providers in the country. Its IP network includes access nodes in 13 cities in Bulgaria. The new VPN service is based on GOCIS backbone and allows transmission of voice, fax and data traffic. GOCIS aims mainly at the large companies and institutions and provides Internet bandwidth to other ISP.

• The Radio Telecommunications Company - RTC Mobikom (www.mobikom.bg) is a joint venture of Cable & Wireless (49%), the BTC (39%) and Radio Electronic Systems (12%). Mobikom is the only operator of the countrywide analogue cellular phone network, using the NMT 450i standard. The network covers almost 96 per cent of Bulgaria's population and currently has over 100 000 subscribers. Mobikom provides paging services (over 23 000 subscribers), value-added and wireless local loop services. Mobisurf- RTC is Mobikom's Internet service with access both via fixed telephone network and via the cellular network.

• MobilTel AD (www.mobiltel.bg) is the first and, so far, the only GSM operator in Bulgaria. It is a joint stock company and has approximately 100 000 subscribers. MobilTel has a 100 % European roaming GSM coverage and 145 commercial roaming partners. The revenue growth for 1998 is 159 %. In 1999 Mobiltel established a company M -Tel Net AD (www.mtel.net) particularly for enterprise services and solutions and for providing Internet access and services. M-Tel Net offers a dial-up access to the Internet in 10 cities in Bulgaria, with a deployment plan to cover all of the regional sites by the end of the year.

• Bankservice (www.bsbg.net) is a company, serving the Bulgarian National Bank, the State Savings Bank and 30 commercial banks in the country. Bankservice develops, maintains and operates the Banking Integrated System for Electronic Transfer - the national inter-bank payment and settlement system of all the Bulgarian banks. Bankservice develops, maintains and operates the banking X.25 data network BANKNET with nodes in 28 cities in the country. BANKNET provides transport and value-added services for data communication between the banks that participate in the system. It offers Internet access as well.

3.2 Internet Service Providers

Currently there are more than 170 Internet Service Providers (ISP) in Bulgaria, which are offering country wide, regional or local services. 16 of them have their own international connection(s). Total Internet international bandwidth in the Bulgarian market (as declared by ISP) is approximately 36 Mbps – 12.5 Mbps access via international leased lines and 23.5 Mbps satellite access (mainly VSAT). Satellite Direct PC is used as well. For the last 18 months this bandwidth has grown approximately 4 times. ISP’s use leased lines or Frame Relay services from BTC to provide Internet access in the country.

3.3 Cable TV

A number of cable TV operators offer country wide, regional or local services. According to the expert estimations, 20 % of Bulgarian population are subscribers to the cable TV. At the moment, as a result of the new requirements of the Telecommunications law, a new procedure for licensing of cable TV operators is carried out. Several cable TV operators offer an Internet service on a trial basis and show their willingness to offer it as a service after obtaining the necessary license.

3.4 Public utilities

The public utilities companies (electrical networks, railway, transport, gas, etc) currently are in the phase of restructuring according to the demands of the market-driven economy. Some of them are modernising their telecommunications facilities and networks but at least for the moment, they plan to use them mainly for internal purposes.