July 2000

Cyprus Update Memo

The following report outlines new developments in the past three months and the state of on-going developments.

1 - Introduction and Summary

New developments in the past 3 months relate primarily to new IS policy application areas, specifically the fields of telecommunication tariff re-balancing, e-commerce promotion, education and health. Additionally, the Cyprus Telecommunications Authority has proceeded to sign yet another strategic international agreement with the international organization Equant, for the common provision of International Frame Relay Services.

Regarding general legislation and the liberalization procedure there have been no significant developments.

The following report provides a historical overview, summary of current legislation and the liberalization timetable, and subsequently outlines all the key developments of the past 3 months in IS overall policy and the specific application areas.

2 - Information Society Policy

2.1 Historical Overview and General Legislation

There have been no new legislative measures since March 2000. Additionally, there has not been any substantial progress with regard to liberalization. However, in a latest development in the fully liberalized Internet Service Provision Market, a new player has entered the market, bringing the total up to 5 (compared to 4 in the Quarter IV Master Report).

The following paragraphs and tables provide a historical overview and summary to date of the general legislation

2.1.1 Historical Overview

Media : Up until 1990 and 1992, the Cyprus radio and TV environment respectively was characterized by a monopoly situation. The Cyprus Broadcasting Corporation (Cy.B.C.) being the only organization broadcasting radio and TV programs. Cy.B.C. was and still is a semi-government organization, partly funded by the State, and being the state radio and television of Cyprus.

In 1990 and 1992 the market for radio and TV respectively were liberalized under law 120 of 1990 and 205 of 1991 (radio) and under law 29(I) of 1992 (TV) which provided the necessary authority to the Council of Ministers to issue licenses for the establishment and operation of private radio and TV stations which to broadcast on a frequency determined by the International Union of Telecommunications.

Initially, several radio stations were introduced. Subsequently, privately owned open TV stations also entered the market. Currently, there are 4 TV stations broadcasting on a national basis (Cy.B.C., Antenna, Sigma, Logos), 4 local TV stations (Fred, Extra, Paphos, FM), and 2 subscriber (pay) TV stations (LTV, Alpha). Furthermore, there are 5 national radio stations and in excess of 20 local radio stations operating in Cyprus.

Telecommunications : The Telegraphs Law of 1933 (Cap. 305) granted the Council of Ministers the exclusive privilege of controlling the licenses for establishing, constructing, and maintaining telegraphs and telegraph lines. All the relevant licenses should have to be issued by the Minister of Communications and Works.

The Telecommunications Service Law (Cap. 302) of 1954 is a law which established the Cyprus Telecommunications Authority as a public corporate body. The law granted CY.T.A. the performance of all functions relating to the provision and maintenance of telecommunication services. CY.T.A. was granted the exclusive right for the provision of telecommunication services and the operation and maintenance of a telecommunications network including basic infrastructure.

The Wireless Telegraphy Law (Cap. 307) governs the management of the electromagnetic spectrum and establishes the rights and obligations of the Republic and of the frequency users. The scope of the law covers :

• Frequency management activities relating to radio-communications
• the obligations of the persons who deal with these activities, and
• the manufacturing, establishment, installation, importation, use and maintenance of stations or apparatus which emit or receive electromagnetic energy.

2.1.2 Present general legislation

Media : Under laws 7(I) and 88(I) of 1998, the licenses for the establishment, installation and operation of radio and / or TV stations are issued and reviewed by the "Authority of Radio-Television of Cyprus". All the technical details of the planned stations (number of stations, geographical coverage, broadcasting frequency, power) are determined by the Minister of Communications and Works.

In addition, the House of Parliaments has passed the complementary law 13(1) of 1999 describing the requirements for the establishment and operation of a TV station : the responsibilities of the applicant with regards to the design of the necessary infrastructure ; the quality control of the TV program contents ; the assessment of complaints and violations ; and the framework governing the TV advertisements.

Telecommunications : The basic law governing the telecommunications sector in Cyprus is the Telecommunications Service Law, Cap.302 of 1954. The above law grants CY.T.A. the exclusive right to provide all telecommunications services in Cyprus. The provision of some telecommunications services namely voice telephony, telegraphs, CYTAPAC is governed by Regulations (secondary legislation).

Other laws governing the sector are inter alia the Telegraphs Law Cap.305 (amended), and the Wireless Telephony Law Cap.307 (amended). These laws are accompanied by regulations.

The above legislative measures are not harmonized with the relevant EU Directives.

2.1.3 Key legislative measures

TABLE 1 - Media :

TABLE 2 - Telecommunications :

2.1.4 Liberalisation Timetable

There have not been any substantial changes with regard to liberalisation.

A new player, namely Avacomnet, has now entered the market for Internet Sevices Provision, bringing the total up to 5 (compared to 4 in the Quarter IV Master Report).

2.2 Umbrella Policies and National IS strategy

2.2.1 National IS Strategy and Policy

As described in the Quarter IV Report, the Government has established an "Information Systems Strategy", a master plan for the computerization of all ministries, departments and independent offices of the government Originally conceptualized in 1987. The said Information Systems Strategy which was revised and approved by the Computerization Executive Board in 1997.

The Information Systems Strategy defines a policy framework in three areas : management policies ; technical policies ; and strategic information systems. Within the overall government Computerization Plan, ministries and departments are expected to create their own Information Systems Strategies, and Implementation Programs. At the lowest level, individual development projects will create their own project plans and system documentation. It is estimated that between 1998 and 2001 the expenditure on the Government’s Information Systems Strategy will rise to 64 million Euros.

The main developments of the past quarter with regard to the area of government and administration are outlined in section 2.4 below.

Another key development since the quarter IV Master Report has been the beginning of a policy on the promotion of electronic commerce by the Government, following the appointment of a Special Technical Committee on Electronic Commerce by the Minister of Finance Mr. Takis Clerides. This is described in detail in section 2.6 below.

2.2.2 Umbrella policies

As described in the Quarter IV Master Report, additional to the Government’s Information Systems Strategy, policies on Information Society are driven by a number of state or semi-state organizations and institutions.

The main development in the past 3 months is with respect to the telecommunication tariff re-balancing scheme, following measures initiated by the Cyprus Telecommunications Authority. This is outlined in section 2.5 below.

It should also be noted that the Industrial Training Authority of Cyprus, a semi-government body responsible for assessing needs and formulating training policies (for Cyprus human respources), and for providing information on a wide spectrum of matters to enterprise and the public, has been renamed to "Authority for the Development of Human Capital/Resources". As part of its general role in funding training, a key role of the Authority is to fund courses related to Information Technology and Information Society.

2.3 IS Application Areas

As described in previous reports, under the Government’s Computerization Plan IS is being introduced in a variety of sectors.

In the area of Government, key IS projects under way include the Internet Service, Government Data Network and Office Automation Pilot projects, driven by the Department of Information Technology Services. Additionally, under the envisaged Civil Registration Project, the Ministry of the Interior has announced plans to introduce a Smart Card in order to replace the traditional plastic identity card held by each citizen of the Republic of Cyprus. The project is still at the planning phase.

Another IS application area which has seen developments during the past quarter is Education ; the Minister of Education has announced a Program of Educational Activities focusing on Information Technology as a means of providing academics, teachers and students with the necessary knowledge to fully exploit the benefits of Information technology and Information Society. The program comprises several key aspects as outlined in section 2.7 below.

New initiatives have also been undertaken in the Health Sector by the Ministry of Health in collaboration with foreign medical institutions and the private sector, culminating in the opening of a new Telemedicine Unit at Makarios hospital. This is part of a wider approach to introduce technological developments in the medical field at a more rapid rate. The details are outlined in section 2.8 below.

2.4 Government and Administration

In terms of new developments in the area of government and administration, the first phase of the Government’s Information Systems Strategy has now been completed, and the second phase is now expected to be completed by the end of the year 2000, This will allow the operation of the Data Network and interconnection of all Government Information Systems. Additionally, all offices will be equipped with an Automation System. The aims of the new phase include the improvement of services to the public, the successful implementation of legislation, and better planning, control and assessment of government activities. The new phase also aims at minimizing government sector operational costs, raising government revenue and alignment with European Union standards.

The target date of end of 2000 mentioned above has been outlined by the Manager of the Department of Information Technology Services in his recent address in April 2000, to the Parliamentary Committee of the Government, Parliament and Pancyprian Association of Civil Servants.

Additionally, the President of the Committee Mr.Christos Rotsas has also recommended the establishment of a National Committee to study the transition to the "digital economy" of knowledge, in which it is envisaged that the state, private sector and employees alike will participate.

2.5 Telecommunications and Internet

On June 27th, 2000 the discussion has commenced in the Cyprus Parliament regarding the regulations concerning the Tariff Balancing Scheme of the Cyprus Telecommunications Authority (CYTA). The regulations will be discussed by the parliamentary committee for Communications. In the first session, the CYTA position has been noted in order to allow the various parties to form their opinion and stance. The sheme and regulations will be discussed again after the Summer period when the Parliament reconvenes.

According to the Scheme proposed by CYTA the aim would be to stop the effective subsidization of national calls by international calls, as well as the lending to local calls from inter-city calls.

The tariff re-balancing study and proposal to the Ministry of Communications and Works has already been approved by the Ministry as well as the Cyprus Ministerial Council, but it has just recently begun to be examined by the Parliament.

As described in the Quarter 4 Master Report, the policy calls for the gradual adjustment of telecommunications services tariffs in order for the competitiveness of the Authority to be enhanced. It includes rises in the rates for national and domestic charges on the one hand, and lowering of rates on mobile phone and international calls.

The rise in rates for local calls will be completed in three stage. The first rise is being implemented as from April 1st 2000, the second is planned for October 1st, 2000, while third and final rise will take place on April 1st 2001. With the implementation of the final rise the total increase will amount to just under 400% compared to the initial rates.

Specific measures included in the policy include

• Gradual increase of connection fees from 14 CYPounds to 30 CYPounds
• Gradual increase of monthly subscription rate from 1.25CYPounds to 5CYPounds
• Introduction of an alternative option for subscription of the first line at a monthly subscription rate of 2CYPounds (to be increased up to 2.5CYPounds by April 2001) plus 0.02CYPounds charge for each call
• Free provision of additional telephone facilities
• Reduced local call rates from 20.00 hrs until 07.00 hours the next day
• Gradual increase of the local call rate from 1.3 cents per 4 minutes up to 2cents per 2 minutes for peak hours and 2cents per 4 minutes for non-peak hours.
• Introduction of a single national call rate by April 2001. Towards this all dial numbers assigned to subscribers would be converted to 7 digit numbers.

Additionally, as part of above mentioned re-balancing policy, CY.T.A. has proceeded to lower its international rates (most destinations) by as much as 50%.

Proposals on mobile telephone charges suggest

• Reduction of monthly subscription rates from 10CYPounds to 8CYPounds
• Introduction of charging per second for national calls at 0.1cents per second during peak hours and 0.05 cents per second during non-peak hours.
• Extension of the times for reduced rates in order to align this with that which will apply for fixed line calls as described above.

2.6 Electronic Commerce

The Minister of Finance Mr. Takis Clerides has appointed a Special Technical Committee on Electronic Commerce. The Committee will be headed by Mr.Panikos Pouros, Manager of the Planning Bureau, and will also include representatives from the Ministry of Finance, the Department for Information Technology Services, the Cyprus Telecommunications Authority, the University of Cyprus and the Cyprus Development Bank.

In the course of its activities, the committee will develop a dialogue with private sector officials.

The chief aim of the Committee will be to develop recommendations for direct measures and to initiate a study and strategic plan with regard to the development of electronic commerce in Cyprus. The study will cover vital issues such as the regulatory framework for the development and application of the policy, the legal framework, and the tax environment and laws that will cover electronic commerce. It will also look into the adaptation of business units and the improvement of state services utilizing the potential of Information Technology. There will also be special focus on electronic signatures and security.

2.7 Education and Research

In addition to the previously announced policy for the upgrading of Information Technology teaching in Public Secondary Schools, the Minister of Education and Culture Mr. Ouranios Ioannides has announced on May 18th 2000 a special emphasis on IT teaching in Technical Secondary Schools.

This follows the introduction of IT teaching in Lyceums and technical schools, and the pilot introduction into primary schools. All secondary school students will now have 2 hours of lesson per week on IT starting from September 2000.

Additionally the Minister has announced a Program of IT Educational Activities comprising several key aspects as follows :

• Introduction of IT teaching in the Pedagogical Institute, geared towards teachers who have yet to assume teaching responsibilities, those who currently teach and are being trained to become headmasters, and also towards existing schoolmasters
• Special series of lessons in the Pedagogical Institute on the subject of IT for teachers of the Natural Sciences and Commercial Subjects (e.g. economics, business etc.)
• Seminars offered by the Pedagogical Institute open to participation on a voluntary basis, and focusing on IT as a tool in teaching a wide array of subjects such as foreign languages, history music etc.
• Seminars offered by the Pedagogical Institute during the school calendar. During these, Institute Specialists will offer guidance and teaching on specialized areas for using IT in the school itself.
• Special Program for IT teachers for the school year 2000-2001. The Ministry of Education has established a model for educating IT teachers taking into account the need for on-going education in view of the rapid advancement of new technology.
• Special Program for "Academics Multipliers" for the School Year 2000-2001. In the course of this program teachers and academics from various fields will be trained in such a manner that they can act as "multipliers" within their school, passing on their knowledge to the rest of the academic staff with regard to using IT technology as a tool. This program will be applied to academics of all ranks. A similar pilot program in Technical Schools is nearing completion.
• Special Program for Acquisition of IT skills for Secondary school Lyceum teachers in 2000-2001.

The above program is expected to equip both teachers and students with the necessary knowledge in order to be able to use modern technology and to reap the benefits from the application of IS in Education.

2.8 Health Care

As described in the master report for Quarter 4, IS policy in the health sector, is primarily focused on the computerization of the Health Information Support System, driven by the Department of Information Technology Services in the context of the Government’s Information Systems Strategy. Additionally, the University of Cyprus is heavily involved in driving two inter-linked projects aimed at the creation of a mobile unit for health care provision via telematics support, and the creation of an integrated portable device for emergency telemedicine.

In addition to the above policies, the government , through the Ministry of Health has recently pursued a policy of co-operation with foreign institutions in the medical field and other organisations. The aim is to introduce technological advancements into the medical field at a rapid rate.

Specifically, the Ministry of Health, in co-operation with the Royal Brompton Hospital of London, the Cyprus Telecommunications Authority and the Greek based insurance company Aspis Pronoia initiated a program for the use of telemedicine from public sector doctors and medical practitioners.

The Cyprus Telecommunications Authority has provided the necessary infrastructure specifically with the use of the ISDN network which allows the utilisation of telemedicine at a very low cost.

The efforts have culminated in the recent operation of a Telemedicine Unit in Nicosia Makarios Hospital (June 12th 2000) , donated by Aspis Pronoia.

The policy aims at a higher level of health services, especially given the absence of a medical school in Cyprus. Specifically the aim is to allow patients to have diagnosis and therapy previously carried out abroad to now be carried out locally, thereby minimising the cost to Cypriot citizens. The specific project enables two-way communication in real time, from hospital to hospital, as well as with institutions and individuals abroad, thereby contributing to the processes of diagnosis, exchange of scientific views, tele-education and research.

3. International Relationships and Agreements

The Cyprus Telecommunications Authority (CYTA) has signed a strategic agreement with the international organization Equant, for the common provision of International Frame Relay Services. The agreement was signed on May 31st, 2000.

The services will be provided primarily to Multi-national companies and Offshore companies based in Cyprus, as well as to Cyprus companies based abroad.

It is intended that the agreement will provide prestige and allow expansion of service provision both to international businesses in Cyprus and Cypriot companies operating outside the country.

The agreement will remain in force until liberalization of the telecommunications sector in Cyprus takes place, at which point CYTA will have the option of reviewing the agreement.