July 1999

Cyprus Master Report

1. The interaction between business and regulatory constraints

1.1 The regulatory background and developments.

Currently, the Cyprus Telecommunications Authority is by law the sole provider of telecommunications facilities and services (Telecommunications Service Law cap.302 of 1954). Therefore, at the moment there is no legal framework or regulatory authority for the application of transmission infrastructure or "alternative networks" owned by public utilities to Information Society.

1.2. Business Constraints and entry barriers

Given the legal impediments which currently exist to the commercial exploitation of any alternative networks, no organization was found to have consciously developed alternative networks on a commercial basis. Nevertheless, the anticipated liberalization of telecommunications services, as well as the liberalization of data transmission services provide the opportunity in the future for organizations other than the historical operator (CYTA) to do so.

The only organization with an extensive alternative network is the Electricity Authority of Cyprus (EAC) which currently employs its own fiber-optic technology internal telecommunications network for data acquisition and other internal needs of the organization.

It is not anticipated that the commercial exploitation of this alternative network by the EAC would meet with serious entry barriers in a liberalized telecommunications market. This is partly because the network has been developed over a number of years, which means that a large part of infrastructural investment has already been made and fiber-optic technology is already being implemented. In addition, ever increasing production volumes and advancing technology in fiber-optics, have brought the cost of adoption down substantially. Moreover the specific benefits offered by fiber-optic technology, namely more rapid transmission of information with greater security, immunity to all forms of electromagnetic interference, and fewer losses (meaning that boosting is not needed by regenerators), should allow such an alternative network to offer services at competitive rates and function with a minimum level of operational costs.

In addition, it should be noted that there is a number of large companies and industries which would benefit from using such an effective modern alternative network particularly in the financial sector, the oil refineries, and other government organizations. Demand is therefore expected to be high.

1.3 Attitude of the incumbent operator towards alternative network providers

Historically, the Cyprus Telecommunications Authority has developed close working links with the main alternative network provider, the EAC. However, in view of liberalization, CYTA is enhancing its strategic position in telecommunications markets by developing significant activities abroad (besides offering a wide range of telecommunications services and facilities in the local market). In particular, CYTA participates in sub-marine cable systems such as :

• The Sea-ME-WE 3 submarine cable system which stretches from the Far East to Northern Europe, involving 33 countries, offering enormous channel capacity (project due to be completed in 1999).
• The LEV submarine cable system which will link Israel and Italy via Cyprus. The system belongs to MED-1 in which CYTA is a shareholder.
• The Black Sea Fiber Optic Cable System (BSFOCS) which will link the countries of the Black Sea (Bulgaria, Ukraine, Georgia, Russia). CYTA, together with the Greek Telecommunications Organization (OTE) have been the main participants in the preparation of the specifications, the evaluation of tenders for the project and the carrying out of the relevant negotiations.

1.4 On-going regulatory developments concerning alternative networks

A law on the setting up and the operation of an independent Regulatory Authority is currently under review. Regulatory developments concerning alternative networks would be expected to take place following the set-up of such a relevant authority.

2. Inventory of the major "public" utilities with a potential for use in I.S. applications

Currently, there are only three public services networks in Cyprus : the Cyprus Telecommunications Authority ; the Cyprus Electricity Authority ; and the Waters Development Department. Reportedly, the Waters Development Department neither has nor plans to develop any alternative networks.

There are currently 2 pay TV stations (LTV and Alpha), but no cable TV station exists. Furthermore, there are no immediate or short-term future plans for the establishment of such a venture. The infrastructure for a cable TV network is existent, albeit not entirely efficient. Therefore, the potential of a cable TV network is rather limited, at least in the near future.

2.1. Types of companies offering networks : description, choice and strategies

The only public utility which operates an alternative network is the Electricity Authority of Cyprus (EAC). However, in the absence of liberalization in the field of telecommunication services and a regulatory authority, the EAC has to-date used these facilities towards its own internal communications needs and goals.

In the past, the EAC has used its own telecommunications media consisting of Power Line Carrier (an analog system which carries information by using as medium the high voltage transmission lines of EAC) ; optical fiber communication links through the use of its overhead and underground network ; and underground pilot networks.

The key aspect in the development of this "alternative" network is essentially the widespread use of optical fiber technology which has the key advantages of an enormous capacity for carrying information over long distances and immunity to interference. Additionally it carries the benefit of low attenuation meaning that information can be transmitted long distances without the need for boosting along the way by regenerators.

In practice, the EAC has installed optical fibers inside the earth conductor in the case of new overhead transmission lines, is helically wrapped around existing lines, or is installed in the same trench in the case of new underground cables.

2.2 Types of Operators Using the Networks

At the moment, the only operator using the network is the EAC organization itself.

2.3 Types of Services offered by the operators on the networks

Currently, the telecommunications network of the EAC system is being used for inter-linking the outstations (i.e. Power stations, Substations and Area Offices) with the Control Center for the transfer of large volumes of information in both directions ; carrying speech for the private telephone network as well as inter-trip signals for the electronic inter-protection of power lines and transformers of the Authority’s transmission system.

Services which could be offered comprise data transmission ; telemetry ; closed circuit TV ; fixed voice services ; mobile services ; data services ; image services ; management services ; value added services.