April 2000

Bulgaria Master Report

1. The interaction between business and regulatory constraints

1.1. The regulatory background

In July 1998 the Bulgarian Parliament approved the operative Telecommunications Law. In February 2000 a modification of the Telecommunications Law was endorsed which specifies the appropriate responsibilities of the new Ministry of Transport and Communications. This Ministry was established on 21 December 1999 and it is taking in the activities not only of the former Ministry of Transport but the scope of the functions of the former Committee of Posts and Telecommunications as well. The Telecommunications Law 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;
• protection of the national security interests.

The telecommunications activities in Bulgaria are managed by the Council of Ministers, the National Radio Frequency Spectrum Council and by the Minister of Transport and Communications, according to their powers, as specified by the law.

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

The Minister of Transport and Communications should prepare the sector policy in the telecommunications sector and submit it for approval to the Council of Ministers. The Minister of Transport and Communications exercises 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 share holder or a partner. He is carrying 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, professional training, etc. The Minister of Transport and Communications specifies the types of telecommunications activities that are a 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 pursue the Sector policy by regulating and controlling the telecommunications in a way defined by the law. In this respect, some of the main STC’s activities are as follows: to convey a preliminary study of the necessity and technical feasibility of the issue of a licence for the establishment of telecommunications networks and for provision of public telecommunications services; to prepare the documents and carry out the necessary activities relating to the granting of the licences; to grant, amend, terminate and revoke licences for telecommunications activities; to prepare the National numbering plan and to allocate it among the operators; to inform the public and to carry out public consultations and opinion polls on important telecommunications issues, etc.

The approved sector policy defines the main principles and priorities for telecommunications developments. This document declares that the policy in communications will be primarily related to a speedy adaptation to the conditions of a free and competitive market. Thus, the liberalisation has started in the mobile sector, cable TV, data networks, paging and value-added services, etc. The exception is the fixed telecommunications infrastructures where the liberalisation is due to start on 1st January 2003. According to the Telecommunications Law, a state monopoly had been established until 31 December 2002 for provision of an ordinary telephony service (local, long distance, transit and international) between terminal points of the fixed telephony network and for provision of leased lines under publicly announced conditions.

The licensing procedures according to the Telecommunications Law has already started. At the end of 1999, 15 individual licences were granted. Recently the Balkan News Corporation, financed by Rupert Murdoch has received an individual license to develop, maintain and operate Bulgaria’s first private national television network.

The incumbent operator, Bulgaria Telecommunications Company (BTC) plc, is a state-owned public limited liability company, set on 1st of January 1993. BTC has the 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. Some main indicators for the development of the fix telecommunications infrastructure at the end of 1999 are indicated:

• Telephone density on residential subscriber lines (per 100 households) – 86.8 %;
• Telephone density on main subscriber lines (per 100 inhabitants) – 33.8 %;
• Network digitalisation rate for long distance telephone connections – 80.3 %.

The negotiations for selling 51% shares of BTC to Greek/Dutch consortium OTE/KPN are still in progress. One of the main disputable points is the request for some changes in the operative Telecommunications Law. It was officially stated in March 2000 that the talks are in the final stage and will end either with a deal or with a new tender. The Council of Ministers would consult the Parliament if the finalisation of the deal requires broader political support.

1.2. Business constraints and entry barriers

The telecommunications activities in Bulgaria are carried out by telecommunications operators on the grounds of individual, class or general licences or on free regime of operation. According to the Telecommunications Law, the requirements for granting licences shall be equal for all applicants for the same type of telecommunications network, or for the provision of the same type of telecommunications services. The licences issue has to be carried out under conditions of public accessibility, non-discrimination and transparency. There shall be no restrictions as to the number of operators who can be granted licences, except when the resource is scarce for natural or technical reasons.

Presently, the operative licensing framework is as follows:

• individual licensing for: television and radio broadcasting (country wide and local); cable distribution networks for radio and TV signals and other services; mobile cellular networks (analogue NMT and GSM); paging networks and services; analogue and digital mobile TRUNK radio networks with local and national coverage; VSAT networks with control stations on the territory of the Republic of Bulgaria; earth fixed satellite stations; public data transmission networks, etc;

• general licensing for: private data communications networks; mobile satellite terminals; installation and operation of public telephones; value-added services (services supplementary to the basic service for the relevant network), etc.

• free regime: Internet accesses providers; short-range devices; fixed and mobile cellular network terminal devices, etc.

It deserves mentioning that initially provision of Internet access was subject to general licensing. After the public discussion the new regulation procedure was adopted and now the Internet access providers can perform their activities on a free regime of operation.

1.3. Attitude of incumbent operator towards alternative network providers

Till the end of 2002 the public telecommunications operators are obliged to establish their networks using leased lines rented from BTC. In this regard, there are several clauses in the Telecommunications Law aimed to settle fair relationship between operators, namely:

• BTC’s services tariffs 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.

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 on-going activities for modernisation of the national telecommunication infrastructure.

1.4. On-going regulatory developments.

Recently, the Council of Ministers approved recommendations from the working group for reduction and deregulation of the various licensing procedures, included in different national legal documents. Nowadays, these recommendations are subject of public discussion. Concerning the telecommunication sector some of the main recommendations under discussions are:

• To define in the Telecommunications Law the criteria for separation of the telecommunication activities subject to individual and general licences. These criteria should be conformed with EU Directive 96/13;
• To introduce relevant amendments to be made in the sector policy, especially in its parts concerning liberalised services and licensing procedures;

• To include new amendments on the private data transmission networks for own use, installation and operation of public telephones and value-added services (services supplementary to the basic service for the relevant network) to be excluded from the activities and subject to general licensing.

2. Some major participants in IS infrastructures

2.1. Mobile and Data Communications services Providers

Currently there is one mobile analogue NMT 450i operator and one GSM operator in Bulgaria. The second GSM licence will be granted as part of the deal for selling 51% shares of BTC. At the end of 1999 the total number of mobile subscriber in the country was 332 563.

There are three Public Data Networks in Bulgaria. BTC is operating an ATM network in Sofia and two other major Bulgarian cities.

Apart from the network and the services offered by BTC, several other companies targeting data communications services have to be mentioned.

Global One Communications and Information Services Ltd (GOCIS), http://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 X.25 data network, Global Frame Relay, end-to-end management services, X.400 and is one of the major Internet Access providers in the country. Its IP network includes access nodes in 13 cities in Bulgaria. The VPN service offered 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.

Radio Telecommunications Company - RTC Mobikom 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 telephone network, using the NMT 450i standard. The network covers almost 95 % of Bulgaria's population with more than 370 stations and currently has 145 300 subscribers (March 2000). Mobikom provides paging services (32 600 subscribers), value-added and wireless local loop services. Mobisurf is Mobikom's Internet service with access both via fixed telephone network and via its cellular network.

MobilTel AD, http://www.mobiltel.bg, is a joint stock company that is the first and, so far, the only GSM operator in Bulgaria. MobilTel has approximately 200 000 subscribers (March 2000), its network covers 67% of the territory and 89% of the Bulgarian population with approximately 300 stations. The company has contracts for roaming with 158 GSM operators from 73 countries in five continents. In 1999 Mobiltel established a company M-Tel Net AD, http://www.mtel.net, particularly focused for enterprise services and solutions and for providing Internet access through the fix telephone and GSM networks.

Banservice, http://www.bsbg.net, is a joint-stock company, serving the Bulgarian National Bank and 23 commercial banks in the country. The company develops, maintains and operates the Banking Integrated System for Electronic Transfer - the national interbank payment and settlement system. Bankservice operates the data network BANKNET, which provides transport and value-added services for data communication between the banks that participate in the system. It offers Internet access as well.

2.2. Internet Service Providers

Currently there are more than 150 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 increased approximately 4 times. ISP’s use leased lines or Frame Relay services from BTC to provide Internet access in the country. The estimated number of Internet users in the country at the end of 1999 was approximately 120 000. During the international celebration Internet Fiesta 2000 (17 – 19 March 2000) a number of useful Internet events took place in many Bulgarian towns.

2.3. Cable TV

Currently 832 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 Internet services on a trial basis and show their willingness to offer it as a service after obtaining the necessary license.

2.4. Public utilities

The public utilities companies (electrical networks, railway, transport, gas, etc) currently are in of restructuring phase and in accordance 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. One example in this respect is the on-going modernisation and enhancement of the Bulgarian State Railways’ data network.