April 2000

Bosnia Master Report

I - General background

Following the war in former Yugoslavia, the Dayton Agreement in December 1995 created two administrative divisions (or "Entities"): Federacija Bosne i Hercegovine (Federation of Bosnia and Herzegovina, or FBiH) and Republika Srpska (Republic of Srpska, or RS). FBiH is further divided into ten cantons. There are three major nations (or "ethnic groups") in Bosnia and Herzegovina: Muslims (also called "Bosniaks"), Serbs and Croats and entities' division more or less reflects this. Both Entities enjoy a high level of autonomy (e.g., in the field of army and police forces, border and custom offices, financial agencies, and educational systems) and have their own governmental structures, including a parliament (assembly), government, and a presidency. In addition, they have two separate telecommunications systems.

On 8 March 2000, "The Brcko District" was declared as a single administrative unit of local self-government existing under the sovereignty of Bosnia and Herzegovina. The Brcko District derives its powers of local self-government by virtue of each Entity having delegated all of its powers of governance to the District Government. The Constitution of Bosnia and Herzegovina, as well as relevant laws and decisions of the institutions of Bosnia and Herzegovina, are directly applicable throughout the territory of the Brcko District. The laws and decisions of all Brcko District authorities must be in conformity with the relevant laws and decisions of the institutions of Bosnia and Herzegovina.

So there are in fact three administrative divisions in Bosnia and Herzegovina - both Entities and the Brcko district. Some politicians demand the establishment of another similar district - the Sarajevo district, but for the moment these demands are not taken seriously.

Bosnia and Herzegovina’s parliamentary structure is operational in theory, but in practice a number of obstructions to everyday procedures remain. In a significant percentage of cases there are "dead ends," when normal regulatory and legislative subjects deal with a new proposal for laws/bills/decrees etc. Sometimes there are obstructions by one of the ethnic groups, sometimes the parties are unable to reach agreements, and sometimes the Entities' subjects do not come to the requested conclusions and consequently bills, decrees or even laws fail to become statutory. In such cases the High Representative takes over the control and issues the Decisions or even the Laws as an interim measure. The legal basis for such actions are Annex 10 to the General Agreement for Peace in Bosnia and Herzegovina and paragraph XI.2 of the Conclusions of the Peace Implementation Conference in Bonn in December 1997. Normally the High Representative gives some period to the particular subjects during which they must bring their own according solutions to ensure compliance. If they fail to do so, the High Representative prolongs the validity of his Decisions.

The Office of the High Representative (OHR), appointed by the UN Security Council therefore acts as the additional legislative body in Bosnia and Herzegovina, and has an important impact on the legislative framework (including telecommunications regulations).

1. General Telecom Policy

The war resulted in the telephone network’s partial destruction. Therefore focus in this sector is on reconstruction, modernisation and expansion. In the past two or three years there has been a lot of success in achieving these goals, thanks to international efforts made by the EBRD and the ITU. In urban areas, or areas where damage to the infrastructure was limited, the average waiting time for telephone subscription varies from 30 to 90 days. Installation costs are expensive, but average monthly costs are low compared to other European countries. The operators are working hard to improve their services.

There are three telecom operators in Bosnia and Herzegovina. All of them are state-owned and acting on particular geopolitics areas. In RS there is "Telekom Srpska" from Banja Luka, and in FBiH there are Public Enterprise PTT Bosnia and Herzegovina (covers the Muslims dominated areas) and

HPT Mostar (covers the Croat dominated areas).

There are three mobile telephone systems (GSM) in Bosnia and Herzegovina, two from Bosnia and Herzegovina (both state owned) and the third from Croatia. Each of them covers a separated area, primarily on an ethnic basis. The Croatian CRONET does not comply with the numbering scheme in Bosnia and Herzegovina and in fact works like expansion of Croatian territory. The new system in RS, which started in August 1999, has seen substantial growth. Another two operators announced their mobile phone services, one in RS and another in FbiH. The latter one plans to start in March 2000.

2. Institutional structures in charge of the regulatory issues

The administrative divisions in Bosnia and Herzegovina have created a disturbed picture of regulatory issues.

• The Ministry of Civil Affairs and Communications has regulatory control and authority at the top level. In practice, effective regulatory power lies with its counterpart ministries at entities-level in FBiH and in RS. However, the Ministry is responsible for some basic regulations that govern the whole country, such as the Decision on measures for solving the "Year 2000" computer problem (Official Gazette BiH, March 20, 1999)
• The Office of the High Representative (OHR), appointed by the UN Security Council, acts as the additional legislative body in Bosnia and Herzegovina and has an important impact on the legislative framework, including telecommunications regulations. As parliamentary institutions almost by the rule fail to act efficiently in taking the major decisions, the Office of the High Representative is de-facto the top authority in the country.
• The Chamber of Commerce is responsible for the protection of economic competition, as there is no specific office for this purpose. It is difficult to define and establish proper economic rules due to various programmes of reconstruction. International assistance has often occurred without common consensus on content, priorities and methods for rebuilding the economy, markets, and manufacturing etc.
• Established within the new Law on telecommunications, the Telecommunications Regulatory Agency should act as an independent national regulatory authority. Nevertheless, it will not start to work before March 2000.
• The Directorate of Telecommunications was an office with duties and functions of regulatory agencies and closely connected to telecom operators.

3. International relationships and agreements

3.1 Voice telephony

There is little difference in the international telephone connectivity services offered by the three telecom operators mentioned above.

Bosnia and Herzegovina is connected to international networks via neighbouring countries. A call from one Serbian area to another is routed out of the country through Yugoslavia and then backs again. The RS telecom provision exhibits a strong Yugoslavian influence by both the country and the Yugoslav telecom operator. Similarly, FBiH displays a Croatian influence in the Croat populated region of FBiH. The influence of Yugoslavia and Croatia is so strong that it is sometimes possible to access telephone numbers in Bosnia and Herzegovina using country codes for Yugoslavia or Croatia. This is unusual in the global sense, and as there are very strong presses from the outside community this practice will terminate in short time.

Two years ago there were no links between the three operators networks. Progress on physical interconnections has been made although the number of channels is limited. Moves to increase this interconnection capacity are underway. However, while it is possible to place a call between the different networks, such calls are treated as international rather than national or local traffic. Also, while each operator does offer international communications, only Public Enterprise PTT BiH operates an international switching facility in Bosnia and Herzegovina. Telekom Srpska's and most of HPT Mostar's international traffic is switched via Belgrade in Yugoslavia and Zagreb in Croatia, respectively.

3.2 Internet

There have been several attempts to introduce the Internet using assistance and donations from international institutions. Some organisations have prepaid terrestrial or satellite lines for a determined period (up to two years), with the understanding that after this period they could start up their own lines, and later act as Internet Service Providers.

The largest telecom provider (JP PTT BiH – Public Enterprise PTT Bosnia and Herzegovina in Sarajevo) established "BIHNET" – the first and the biggest commercial Internet Service Provider (ISP) in the country. It is state-owned. The major commercial ISP in RS is INECCO and it is private company. Both companies have their own links to the international Internet community – BIHNET to the USA and INECCO to Norway.

There are also some smaller ISPs – mostly established with donations and help from international institutions (Soros Foundation, WUS Austria etc.). The most important among them are Centar za obuku u Mostaru (Training Centre Mostar) which is sub-provider of BIHNET, and Univerzitetski telekomunikacijski centar Sarajevo (University of Sarajevo Telecommunication Centre) with links to the University of Vienna in Austria.

In 1998 the BIHARNET Centre (Bosnia and Herzegovina Academic and Research Network) was established by all universities in Bosnia and Herzegovina. The BIHARNET Centre has the strongest link to the international community and is connected to the European research network TEN-155 via the similar Slovenian Academic and Research Network (ARNES). It is the only ISP in the country with its own infrastructure that covers the whole country (regardless of Entities). This is achieved by the concept of a strong backbone with several access points. The usage of the BIHARNET network is limited to users from the educational, research and cultural sphere, which enjoy free access. The BIHARNET network is the result of the project funded by the Government of the Republic of Slovenia through the framework of the Donation Programme for Bosnia and Herzegovina.

3.3 International organisation membership

The most of the pre-war international organisation membership was not inherited automatically. Today, Bosnia and Herzegovina is a member of following international organisations: Central European Initiative, Economic Commission for Europe (ECE), European Bank for Reconstruction and Development (EBRD), Food and Agriculture Organisation of UN (FAO), Intelsat, International Atomic Energy Agency (IAEA), International Bank for Reconstruction and Development, International Civil Aviatic Organisation (ICAO), International Development Association (IDA), International Fund for Agriculture Development (IFAD), International Finance Corporation (IFC), International Monetary Fund (IMF), International Standard Organisation (ISO), International Telecommunication Union (ITU), Interpol, Organisation for Security and Co-operation in Europe (OSCE), United Nations (UN), United Nations Conference on Trade and Development (UNCTAD), United Nations Educational, Scientific and Cultural Organisation (UNESCO), United Nations Industrial Development Organisation (UNIDO), Universal Postal Union (UPU), World Health Organisation (WHO), World Intellectual Property Organisation (WIPO), World Meteorological Organisation (WMO), World Trade Organisation (WTO).

Besides, Bosnia and Herzegovina has a status of guest in European Council and status of observer in International Emigration Organisation and Islam Conference Organisation.

4. Regulatory Framework

4.1 Historical overview

War broke out almost immediately following Bosnia and Herzegovina’s declaration of independence from the former Yugoslavia in 1992. After the war, Bosnia and Herzegovina inherited most of its regulations from the former Yugoslavia, but the war had made it difficult for the executive and legislative branches to build a new regulatory system. This is still a primary goal. Tasks for rebuilding the country, e.g., infrastructures, education, health and social care systems, have been given priority. Much work has been done to achieve economic recovery and create a modern market economy. There have been advances in all public utilities - railways, bus lines, roads, navigation, telecommunications, postal services, electricity, water supplies. Many large companies, for example, all electricity power stations, coal and other mines, refineries, metal and chemical plants, car industry, etc., are still state-owned; but the number of small and medium-sized privately owned enterprises is increasing.

4.2 Key legislative measures

The arrangements for external debt and the liquidations of the National Bank have been completed. There has been important progress in budgetary and fiscal policy and in customs and trade. The establishment of the BiH Agency for the Promotion of Foreign Investments is in development. In addition there is an ongoing process for privatisation and liberalisation.

Bosnia and Herzegovina currently contain the densest concentration of radio and television in the world. According to the OHR Report from 16 July 1999 (see http://www.ohr.int/reports/r990716a.htm   par. 96) there are over 270 broadcasters that are using nearly 750 radio and television transmitters. Today there are two major television broadcast companies (up to February 2000 there were three) that are state-owned and should reflect the Entities division, and there is the third that is internationally sponsored alternative TV media:

• RTV FBiH (Radio and Television of Federation Bosnia and Herzegovina) covers both Muslim and Croat ethnic groups in FBiH (with two TV programmes);
• SRT (Srpska Radiotelevizija) covers the Serbian ethnic group and transmits its programme from RS;
• OBN (Open Broadcast Network) is the only cross-entity television broadcaster in Bosnia and Herzegovina and reflects the aims, aspirations and cultures of its people of all ethnic groups. Its programme reaches nearly 80% of the population in both Entities.

Regulations also permit private television broadcast stations, with the result that there are some smaller private television stations, mostly targeted at local areas, like TV Oscar C, TV Mostar, TV Hayat, KIS, etc.

4.3 Issues

4.3.1 Liberalisation

There are three mobile telephone systems (GSM) in Bosnia and Herzegovina. One operates under the JP PTT BiH (Public Enterprise PTT Bosnia and Herzegovina) and is aimed towards the Muslim area of FBiH. In the Croat area of FBiH the GSM service is in fact in the hands of the foreign operator, namely the Croatian CRONET, and does not comply with the numbering scheme - the number prefix is not the Bosnia and Herzegovina's 387 but the Croatian 385. The third one is in RS and started only last year. Until summer 1999, GSM services were covered particularly well in larger cities like Sarajevo, Zenica, Tuzla, Mostar, etc. Today they are covered quite well throughout the country.

Deregulation in the telecommunications market as seen in Western European countries has not occurred in Bosnia-Herzegovina. The "Rule Book of Telecommunications", issued on May 1999 (Official Gazette BiH, No. III/7) still does not clearly deal with the question of deregulation. In the telecommunications sector, current legislation situation prevents competition in the sector of telecom operations and services providers. By the new "Law on Telecommunication" all laws and bills inherited from former Yugoslavia continued in effect but the new laws/bills should be announced within 1999-2000. The monopoly versus deregulated situation is expected to continue for another 5 – 8 years.

As for other sectors, market is relatively liberalised. However, monopoly still exists in the sectors of electricity/power, gas distribution and water supply. There are more then one big company for these purposes but each of them covers its own area and they do not compete between themselves.

4.3.2 Tariff policies

At the Roundtable meeting in Bern, Switzerland on 29-30 April 1999, it was agreed that the Numbering Plan would be a closed Plan. The Plan was designed in such a way as to assure a smooth conversion from an open Plan to a closed Plan in the future. A Closed Plan in simple terms treats the entire country as one large city with "districts", but still takes into account national tariff zones.

4.3.3 Quality of services

There are not yet quality standards for telecommunication services in Bosnia and Herzegovina.

5. Freedom and protection

5.1 Copyright and intellectual property rights

There has been no development in this area following regulations and legal acts. Copyright law and intellectual property rights exist on paper. There are no new laws accepted and those from former Yugoslavia are inherited. It is very difficult to supervise the active situation. International pressure from the United Nations, OHR, OSCE and other bodies ensures that this process is ongoing.

Whereas there is (at least de-iure) an existing legal framework (although inherited from the pre-war Yugoslavia) the main problem regarding copyright and intellectual property rights is the lack of adequate knowledge, application of laws, international conventions and similar regulations, organised and qualified organisations of authors and other copyright owners and the habit of authors and users to regulate their relations without contract and thus protect their respective rights. The only body in Bosnia and Herzegovina that is the closest to the concept of "a national copyright and intellectual property rights agency" is the "Sine Qua Non Copyright Agency", covering both Entities. Registrated three years ago, the Agency has the most eminent experts in these fields and co-operation with Faculty of Law, Academy of Science and Arts, Institute of Economy etc. is expected. The Agency acts as an advising body to all parties in the country, has its own consultancy team and a legal task force working group. Its goal is also to support, empower and strengthen authors' organisations and non-governmental organisations for promotion of intellectual property rights. The Agency started initiatives for co-ordination of educational activities of international organisations that are active in Bosnia and Herzegovina (like OHR, OSCE etc.). They work on compilation of copyright laws, international conventions and other regulation effective in Bosnia and Herzegovina and on translation the EEC directives in the domain of the copyright and the intellectual property rights. The Agency organises open discussions, workshops, round tables, tribunes and conferences.

5.2 Privacy, data protection, consumer protection

There are no specific acts for privacy and data protection, except some well-known articles in common acts, again inherited from the former Yugoslavia.

5.3 Electronic protection, legal protection and security (encryption, electronic commerce)

Electronic commerce is non-existent. Encryption is not forbidden, but no legal acts deal with crypto-security.

6. Information Society Policies

There is no IS activity in the terms we are speaking of. In the last years there were separate individual attempts to collaborate on some European projects regarding IS but without continuous process, mostly due to the war and after-war situation. For example, during the years 1994 - 1997 there was a widely responded to "European Information Society Forum" that was aimed at the Central and Eastern European countries. Several "panels" were opened and there was the panel "Co-operation in Research and Development," and it seems that it especially interested people from Bosnia and Herzegovina, as there were many enthusiastic people willing to attend the panels meetings. Unfortunately Bosnia and Herzegovina never adopted an official approach. The people who expressed readiness and interest and contacted the panel were not always the same. It could be said that the main reason for the failure of collaboration was caused by the political situation in the country, including of course the war.

II - Ongoing developments

1. Ongoing changes in the institutional structures

The High Representative issued a Decision, naming the entire Governing Council of the Radio-Television of the Federation of Bosnia and Herzegovina, in order to expedite the establishment of genuine public broadcasting in Bosnia and Herzegovina. The High Representative was forced to take this step after the Federation Parliament failed to appoint seven members of the 21-member Council as required by the Law, despite repeated appeals from the Office of the High Representative. Any further delay would jeopardise the right of citizens to have access to public broadcasting that operates in accordance with the Law and which fully represents the cultural diversity of Bosnia and Herzegovina. The High Representative has also named the international supervisor, who is obliged to ensure that international principles of public broadcasting are respected and that the Law's key provisions are implemented.

The whole scheme of institutional structure in Bosnia and Herzegovina results from Dayton's Peace agreement. To modernise this whole process and to encourage transparency and accountability the new Electoral Law was finalised by OSCE, OHR and national experts and submitted to the parliament. However, both OHR and OSCE are disappointed by the passiveness of the BiH Parliamentary Assembly regarding the election law. In the middle of February 2000, the Parliament House of Representatives rejected the Draft Election Law.

2. Ongoing changes in the regulatory framework

The regulatory sector is rapidly changing. Most regulatory acts are going through a complete renewal process, and the legislative and executive branches are becoming effective in this area. The Office of High Representative continues to focus its efforts in the area of judicial and legal reform.

On 30 July 1999, exercising the powers vested by the Dayton Peace Agreement and Peace Implementation Council, the High Representative issued a series of Decisions. These were taken following the failure of the relevant local authorities and institutions to reach agreement on a number of issues. The Decisions include:

• Decision on the Restructuring of the Public Service Broadcasting System in Bosnia and Herzegovina
• Decision on Freedom on Information and Decriminalisation of Libel and Defamation
• Law on Amendments to the Law on the Supreme Court of Federation
• Law on Amendments to the Law on the Federation Prosecutor's Office
• Decision on the Reconnection of Pre-Conflict Subscribers to the Telephone Networks in Bosnia and Herzegovina.

Prior to November 15, 1999, there were four major broadcasting systems in Bosnia and Herzegovina. Beside the three already mentioned, the fourth was Mostar-based TV Erotel, covering the Croat population in FBiH. On November 15, 1999, the Independent Media Commission declared its decision to take the Erotel TV off the air because it violated the new legal environment for TV broadcasting and the IMC Provisional Broadcast Licence. In the middle of February 2000, the IMC carried out action to shut down Erotel TV.

A long period was needed to come to the new modern telecommunication law and thus replacing the old one, inherited from former Yugoslavia. In 1997 the "Memorandum of Agreed Principles" was signed and was designed to serve as an interim solution before a new state law could be passed. The Office of the High Representative has been pressing for development of the new "Law of Telecommunications". The "Law on Telecommunications," elaborated under the aegis of the ITU in close co-operation with the European Bank for Reconstruction and Development (EBRD) and Office of the High Representative (OHR) was finally introduced in November 1998 (Official Gazette BiH, No. II/24) on an interim basis. The representatives from the State Council of Ministers of Bosnia and Herzegovina and the Federation and the Srpska Republic signed the draft Telecommunications Law at the end of 1998. The law was adopted by Parliament on 8/9 June 1999. The aim was to provide a clear and transparent telecommunication environment with a view to enlists the support of business and economic partners in the reconstruction efforts. It should also establish which regular services both domestic and foreign operators provide. Many of the associated boards, committees, agencies and legal acts have not yet been established.

With the new Law on Telecommunications now also de-facto acting, there are opportunities for foreign investments (including from private sources) as well as for some donor help that has been already agreed in the past. For instance, a year ago the European Bank for Reconstruction and Development (EBRD) signed its first reconstruction programme, together with some particular countries. There were also three assistance programmes attached: a technical programme to assist in the planning and procurement process; a programme to help in the creation on the initial legal and regulatory framework; and a programme to assist the operators in implementing international accounting methods. A lot of this was arranged quite some time ago, but the accomplishment was conditioned by the acceptance of the new Law.

Summary of the Law on Telecommunications

The Council of Ministers will appoint a Ministry to act as the supreme body to supervise Bosnia and Herzegovina, especially regarding:

• defining the basic conditions for providing international telecommunication services;
• regulation of the "common means" (by definition, "common means" represents equipment for connectivity between public telecommunication networks, frequency spectrum, numbering scheme, information necessary for telephone directories, specifications and standards etc.);
• appointment, planning and co-ordination of radio-spectrum usage;
• assurance of the technical compatibility of networks that are used in providing public telecommunication services;
• promotion of harmonisation of the public telecommunication services;
• representation of Bosnia and Herzegovina in international forums and bodies.

Independent Regulatory Agency for Telecommunications (the "Agency") will be established to maintain regulative functions regarding telecommunications. The Management Board of the Agency will consist of three full-time members, appointed to by the Council of Ministers, two full-time members from FBiH and one part-time member from RS. These members must be experts in the fields of telecommunications, frequency planning, law, economics, business, financing or civil service. Beside these conditions, they must not be related in any way to telecom operators or their partners. If the Management Board cannot come to the conclusion on some aspects, an expert with the internationally recognised reputation, appointed to by the General Secretary of ITU (the "Mediator") will provide his help. If Mediator's contribution will not lead to the final decision of the Agency, then the Council of Ministers has the last word.

Besides the Agency, a special Consultation Group will be established. Its primary goal is to allow various views of the wide area of interests regarding the telecommunication regulations to be heard. The Consultation Group must convene at least four times a year.

The Council of Ministers must issue additional rules that will explain the functioning of the Agency and the Consultation Group in detail. The Agency is responsible for the provision of an effective and economic approach to international telecommunication services. Directives for doing this are yet to be prepared. The applications for providing public telecommunication services must be sent to the regulatory bodies of particular Entity. If there are any items related to the international services, the application must be forwarded to the Agency.

The Agency will take care of the development of the "Directory Data Base" as the "common means". Anybody in Bosnia and Herzegovina will be able to access to the information contained in database(s) of individual telecom operators regardless of the part of country that operator covers.

One of the Agency's responsibilities is the development and implementation of the numbering scheme to make public telecommunication services easier. The country code for Bosnia and Herzegovina will comply with the respective decisions of ITU.

It is illegal to provide public telecommunication services without the proper license. All three telecom operators that were providing telecommunication services prior to this Law continue to provide them. However, in six months the Agency will announce the time limits and additional conditions for providing international telecommunication services. The current operators will lose their rights to provide services if they do not respond to these time limits and conditions within the next six months.

As the Law on Telecommunications explicitly expressed the obligation to adopt the additional rules, the Council of Ministers on May 20, 1998 issued the "Book of Rules on Telecommunications" (Official Gazette, No. III/7). These rules prescribed the detailed ways of functioning of the Regulatory Agency for Telecommunications and the Consultation Group.

The first part of the "Book on Rules" deals with the international telecommunication services. It is said that there will be licenses for international telecommunication services with all obligations and restrictions that the licence holder will have to have. Included in these licenses are directives regarding all conditions for unlimited telecommunication traffic between Entities, cost-related pricing, arrangements for mutual connections between license holder and services in foreign countries etc. All agreements, contracts etc. with international responsibilities of Bosnia and Herzegovina must be turned over to the Agency.

The book also states that time limits and conditions for interacting connectivity between public telecommunication services will be established in such a way that they will be open, efficient and non-discriminatory.

The Agency will consult the Entities and the Consultation Group and then will issue as the Rule the "Numbering Plan for Telephone Services in Bosnia and Herzegovina". The main principles will take care of the sufficient expanse of the numbering pool so that the numbers can be used with no prolongation; there will be no advantage given to any operator. The country code for Bosnia and Herzegovina and the area codes for Entities cannot be changed without prior permission of the Council of Ministers. All other area code changes must be approved by the Entity on which territory would this change take effect.

The second part (in fact one article only) deals with satellite communications. It is said that the use of satellite stations is allowed without a special Agency or Entity's permission if there is a permission for a radio-frequency and the use of the satellite station is limited to the private (closed) network only.

All terminal equipment must be approved according to the rules that have yet to be issued (by Agency or Entity). The Agency and Entities will determine standards for connection of terminal equipment. These standards will take care of the protection of users, the electro-magnetic compatibility, protection of the public telecommunication network etc. Whether the individual attests will be required (as in former Yugoslavia) or the world-wide attests will be accepted is not mentioned.

The last part deals with radio communications, especially with frequencies (including procedures for applying permissions for using radio frequencies).

One of the first results from the new Law was the nomination of an independent Regulatory Agency for Telecommunications. Like in many other similar situations, this nomination was taken for granted just because it has been written in the Law. But in reality the Agency did not exist until September 1999, when the Management Board was nominated. However, as other members were not nominated yet, the Agency itself was still in the process of forming until today.

On September 9, 1999, The Council of Ministers made the final appointments (three full-time members and two of three part-time members) to the telecommunications Regulatory Agency. The Chairman is Mr. Jasenko Lasta. The first appointments to the Management Board of the Telecommunications Regulatory Agency have been made by the Council of Ministers early in 1999. However, of these appointments, one full-time member was unable to take up his position in the near future, and the two appointed part-time members had direct links with the operator, which made them ineligible.

So the Office of the High Representative had to work hard with the relevant authorities to rectify the situation and ensure the proper functioning of the Agency as soon as possible. The first meeting on the Telecommunications Regulatory Agency Management Board finally took place at the end of September. They have not had a chance to deal with any substantive issues yet. The first issue the Agency will focus on is the work on the numbering scheme. The layout has been given by the Roundtable meeting in Switzerland on April 1999, and the numbering system was agreed at the technical level. Although final adoption of the numbering system for Bosnia and Herzegovina is yet to occur, all parties have agreed to an implementation plan. It is the primary responsibility of the Agency to work out details and adopt this numbering plan so that implementation can be completed as soon as possible.

The general agreement was reached on the policy framework for the telecommunications sector of Bosnia and Herzegovina, including state level representation to international organisations in accordance with the new regulatory situation, technical aspects of the numbering plan; and the issue of licences to existing international operators in the immediate months ahead.

While the Agency finally officially started to work at the end of September 1999, in fact it has not yet started to work besides holding the Management Board meeting. The agency is expected to begin working in March/April 2000 when other members (beside the Management Board) will be appointed. First meetings of enlarged Management Boards started only in March. Anyway, there was a pressure from relevant internationally community on the Agency to start to work. After all, the ITU donated a Mobile Monitoring Station (with the value of 3,500 Euro) to the Agency in February 2000.

3. Ongoing changes in IS policies

The rebuilding of Bosnia and Herzegovina's telecommunications infrastructure made further progress at a Roundtable meeting in Bern, Switzerland on 29-30 April 1999. This meeting, convened by the ITU, in close co-operation with the Office of the High Representative (OHR) in Sarajevo, agreed on technical principles concerning a new Numbering Plan. The territorial and administrative structures of the country formed the basis for the Numbering Plan. The major benefits of the Plan for telephone users are: easier interconnection between the two entities (the Federation of Bosnia and Herzegovina and the Republika Srpska); the use of one number for the same service throughout the entire country (mobile phone networks, police, ambulance, information etc.); and the use of one country code (387) to reach all regions and districts in the country. Nineteen national Codes to follow the country code 387 were agreed as well as one national access code for GSM Networks (66). From December 2001 at the latest, the National and GSM access codes will be in force, providing a consistent numbering system for the major regions and cities of Bosnia and Herzegovina.

In April 1999, a conference titled "Non-governmental Organisations as Vehicles for Social and Political Change" was held in Sarajevo, with the participation of over sixty NGOs from across the country. The event was designed to support domestic NGOs with designing their own strategies for assuming more vigilant and responsible roles in BiH society.

The High Representative issued the Decision on the Reconnection of Pre-Conflict Subscribers to the Telephone Networks in Bosnia and Herzegovina. It has been specified that all three telecom operators must reconnect returnees who were subscribers before war at a low cost (maximum cost is determined) and those returnees are not to be charged for any phone bills for the period during which they were not in their homes. Subscribers, who have lost their telephone line because it was cut during the war or re-allocated to somebody else, must be reconnected for free. The deadline for these actions was set for the end of January 2000.

4. Media and telecommunication markets: privatisation, foreign investments, mergers and acquisitions etc

On 30 July 1999, the OHR brought in the Decision on Restructuring the Public Broadcasting System in Bosnia and Herzegovina. By this Decision, the Public Broadcasting System in Bosnia and Herzegovina will be established and will consist of three Public Broadcasters:

• The Public Broadcasting Service of Bosnia and Herzegovina (PBS BiH), which will be a public company of the State of Bosnia and Herzegovina
• The Radio-Television of the Federation of Bosnia and Herzegovina (RTV FBiH), which will be a public company of the FBiH. It is assumed that RTV FBiH will transmit two channels, one for Muslim and one for the Croat ethnic group.
• The Radio Television of Republika Srpska, whose legal form must be established by the Government of RS no later then 15 August 1999. As this did not happen, the High Representative issued the Decision on Amending the Law on Radio-television of Republika Srpska on 31 August 1999, as an interim measure, by which the Public Company Radio Television of Republika Srpska was founded. On March 1, 2000, the High Representative issued the Decision on Amending the Law on Radio-television of Republika Srpska, obviously due to lack of relevant actions form institutional bodies of RS.

The financing of these three public broadcasters shall be supported through a mixed funding system, which includes users' fees, appropriations from the general public budgets, and revenue resulting from advertising. This reconstruction of the public broadcasting system leads to a fully multi-ethnic state-level television broadcaster.

In the context of a loan agreement from the European Bank for Reconstruction and Development it was required that all three telecom operators (JP PTT BiH Sarajevo, HPT Mostar and Telekom Srpska) must have completed and submitted their financial reviews. Both operators from FBiH (JP PTT BiH Sarajevo and HPT Mostar) already did. The reviews suggest that many anomalies and inappropriate accounting practices are present in the financial management of both companies. There will be changes to their accounting systems in accordance with International Accounting Standards, and fully audited accounts should be available in the year 2000. This requirement is urgent in order to enhance accountability of public utilities. Telekom Srpska is still in the process of selecting an auditor.

Telecom and postal sectors of the Public Enterprise PTT BiH will operate separately in first half of this year. The goal of the test separation is to determine whether or not these sectors can operate independently and profitably, which are the main preconditions for the privatisation of telecommunications. The telecom sector should be privatised in the final privatisation stage. The postal sector will no be privatised and the main idea is to make it capable of operating as a legal entity. The true division of telecom and post is expected at the end of the year, when they should be registered as two separate firms. According to information form Public Enterprise PTT BiH the european Bank for Reconstruction and Development (EBRD) wants the division to take place as soon as possible and is willing to provide assistance in that respect. The separation of telecom and post in the Republika Srpska was conducted in 1993, while in the Croat-based HPT Mostar both sectors still operate within the enterprise.

The Framework Law on Privatisation of Enterprises and Banks was adopted on 19 July 1999. The High Representative imposed the Law in July 1998 on an interim basis. The Council of Ministers has adopted the Law in May 1998 with the understanding that the High Representative would establish an independent commission to monitor the privatisation process. The Law, inter alia, ensures the establishment of a secure legal environment for privatisation, protects the principles espoused in the Dayton Peace Agreement and ascertains the eligibility criteria for general claims based on the criteria of pre-war citizenship and permanent residence. To ensure that basic rights embodied in quoted Law are respected, the Office of High Representative issued the paper "Eligibility to Vouchers" that defines the eligibility of citizens for different categories of voucher, considering the differences in the Entity laws.

The Office of the High Representative states in his Report (16 July 1999) that all necessary laws for the implementation of the privatisation process are adopted. This Report further states that this is a good legal basis for the beginning of the process, although laws on restitution as to real estate, which are also essential to the process, remain under discussion.

The process of privatisation (on all sectors) is very slow. In RS, the Minister of Industry appointed a working group to analyse the Law on Enterprises in order to assure its consistency with EU Company Law directives, the privatisation process and modern corporate governance practices. The group also examines related enactments, like the Decree and the Law on Entry in the Court Registry. Proposed amendments will be introduced to the National Assembly. Another working group has drafted 32 accounting standards and Codex based on internationally accepted accounting principles for businesses. A similar package on internationally accepted auditing standards are in the process of preparation. Enterprise preparation has been slow. There are estimated 1600 companies subject to privatisation, but very few of them have reported to have done opening balance sheets and prepared privatisation programs. About 70% of state companies that are expected to require an ownership audit to prepare for privatisation already have compiled.

In FBiH, the Law on Business Companies became effective and all companies must re-register until March 2000. The work on two other important laws for the privatisation process (the Law on Restitution and the Law on Concessions) show no progress. A series of regulations regarding the share registry and investment management companies and privatisation investment funds was adopted. The Share registry adopted its internal operations procedures. The legal framework for privatisation process is in place, but the Federation Privatisation Agency is proposing more comprehensive instructions for international tenders to make the process more consistent and transparent. Like in RS, the enterprise preparation continues to lag behind scheduled legal deadlines. Only 21% of companies that must privatise have done opening balance and 16% prepared privatisation programs.

In FBiH, the main instrument for privatisation questions is the Agency for Privatisation in the Federation of B&H. This Agency also manages a kind of Survey on Legal Framework for privatisation in the FBiH, including texts of laws, regulations, instructions, directives etc.

In February 2000, the US Government has decided to suspend its assistance to the FBiH privatisation program and further technical assistance will be conditioned on proven commitments and progress. Ways to reduce the influence of political parties and to advance the privatisation process are reviewing so that growth led by private sector could replace declining foreign aid.

In spring the privatisation through Public Offering of Shares will start. The recent changes to the regulation of the sale of property and shares of large enterprises allowed their sale in the large-scale privatisation through tender and with a 10-percent cash payment. However, all companies will not be allowed to privatise through tender program and determined financial effects of privatisation. By the same token, a chance is given to companies with poor performance and facing liquidation, but because they have attractive business premises, it would be hard to let them waste, especially if a foreign investor can be provided.

One of the main reasons for slow progress of privatisation process is the transformation process of the Payment Bureaux. Parliament adopted the Law on Amendments to the Law on Internal Payment Operations. Among others, the Law will remove the monopoly of the payment bureaux over payment transactions. In addition, the Law calls for cessation of internal payments in German and Croatian currencies. The current Governing Board of the Federation Payment Bureaux agreed to establish a new Government Board, consisting of five members including the Governor of the Central bank of Bosnia and Herzegovina. For straightening public financial management and improving transparency, Parliament adopted the State Law on Audit.

In RS, the Development Bank forms a legal entity with the RS Payment Bureau, and functions as a combination of a payment bureau and a commercial bank. Before the transformation of the RS Payment Bureau starts, the Development bank should be separated from the RS Payment Bureau. The RS Government will decide the final outcome regarding the Development Bank.