ESIS extension / Cyprus / Regulatory Developments / Update Memo 6

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

New developments in the past 3 months relate to new IS policy application areas, specifically the field of telecommunication tariff re-balancing where a package has been decided on for offer to lower income households.

Regarding general legislation and the liberalization procedure there has also been some preliminary work completion on the new telecommunications legislation which would ultimately lead to liberalization of the wider telecommunications market.

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.

There have been no new legislative measures since June 2000. Additionally, although there has not been any substantial progress with regard to liberalization, in a latest development the Ministry of Communications and Works completed work on the new telecommunications legislation which would lead to liberalization of the wider telecommunications market.

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

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 :

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.

Key measures	Objective	Date
Law 120/1990 and 205/1991	Liberalize the market for radio, determine the frequency range and other technical parameters and set the code of conduct for radio stations.	1990 to 1991
Law 29(I)/1992	Liberalize the market for TV, determine the frequency range and other technical parameters, identifies the Council of Ministers as the body entitled to issuing relevant licenses and set the code of conduct for radio stations.	1992
Law 7(I)/1998 and 88(I)/1998	Appoint the Authority of Radio / television of Cyprus as the body responsible for issuing and reviewing licenses for TV stations, and supervising their operation.	1998
Complementary Law 13(1), 1999	Establish requirements for the establishment and operation of a TV station, and the responsibilities of the applicant with regards to infrastructure design, quality control of TV programs contents, assessment of complaints and violations and framework governing TV advertisements.	1999

Key measures	Objective	Date
Law 302	Telecommunications Service Law. Describes the legislation governing the telecommunications services in Cyprus	1954
Law 305	Telegraphs Law. Describes the legislation governing the telegraph services in Cyprus	1954
Law 307	Wireless telegraphy Law	1952
Regulations 1955 - 1994	Wireless Telegraphy regulations	1955
Regulations 1973 - 1995	Telecommunications Regulations	1973
Regulation 136 / 89	Terminal equipment	1989
Law 92(I) / 96	Protection of Secrecy in Private Communications	1996
Law 7(I) / 98	Radio and television Stations (see table 1)	1998

On August 8^th 2000, consultants to the Ministry of Communications and Works completed work on the new telecommunications legislation which would lead to liberalization of the wider telecommunications market. The new legislation will subsequently be presented to the Attorney General for technical legal refining and will subsequently be submitted to the Ministerial Council and laid down in Parliament for discussion and approval.

Otherwise, there have not been any substantial changes with regard to liberalization.

	Liberalization status	Comments
Infrastructures
Public telecommunication network	State monopoly
Local networks for voice telephony	State monopoly	Liberalization is being discussed in the House of Representatives
Leased lines	State monopoly
Alternative infrastructure	State monopoly
Broadcasting and subscriber (pay) TV	Fully liberalized market	Law 29(I) of 1992
Cable TV	Non-existent
Voice telephony
Local communication	State monopoly
Domestic long distance	State monopoly
International communication	State monopoly
Provision of voice services to closed user groups	State monopoly	Liberalization is being discussed in the House of Representatives. In parallel, the establishment of a Regulator is also being discussed.
Mobile communication
Analog	State monopoly
GSM digital	State monopoly
DCS 1800 digital	State monopoly
Paging	State monopoly
Satellite communications	State monopoly
Data transmission	fully liberalized market
Value added services	fully liberalized market
Internet services provision	fully liberalized market	5 providers : CYTANET, Spidernet, Cylink, Logosnet, Avacomnet
Equipment provision	fully liberalized market

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.

As described in the previous reports, 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, as outlined in section 2.5 below.

Additionally, the Authority of Radio and television is expected to issue permanent (i.e. 10 year) licenses to radio and TV stations early in the year 2001, under the "Plan for Radio and Television Coverage" which is to be implemented by the Ministry of Communications and Works and the Ministry of the Interior. The plan does not allow for any new TV stations of nation-wide coverage.

Discussion has been also raised in Parliament on the gap and the need for legislation to govern the operation of Digital Television.

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.

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 Parliamentary Committee for Communications has agreed on September 26^th,2000, in principle to include a special package in the context of the Cyprus Telecommunications Authority’’s tariff re-balancing scheme, for lower income households, specifically for those that run bills of less than 8 CY Pounds per month. The key aspects of this package would include the following : every natural person would have the option of participating in the special rate, if he/she selects, paying 1.50 Cy Pounds rather than 5 CY Pounds monthly subscription with an additional 2 cent charge per successful call.

The Committee also discussed the wider re-balancing scheme and regulations following the pause of the Summer period.

As mentioned in the previous quarter report, 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.

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 stages. The time-frame for the re-balancing scheme has been revised to the following :

The first rise is to be fully implemented as from December 1^st 2000, the second is planned for August 1^st,2001, while the third and final rise will take place on December 1^st 2001. With the implementation of the final rise the total increase will amount to up to 300% compared to the initial rates, in many cases.

Proposals on mobile telephone charges already implemented since August 1^st,2000 include a

Additionally, CY.T.A has proceeded as from August 1^st,2000 to lower international rates by up to 78%, and ISDN subscription rates by 33%.

In another development, Cytanet, the ISP service of the Cyprus Telecommunications Authority has completed its work on extending the connection with of the Authortiy’s network with the telecommunications Authority Teleglobe America, to 16 Mbp/s. This extension form part of the Cyprus Telecommunication Authority’s continuing focus on investment.

New legislation is being prepared to be submitted in October 2000 to Parliament concerning privacy and private data protection, as announced by the Deputy Attorney General, Mr. Petros Clerides

The aim is to secure private personal data protection, not only of "sensitive data" (e.g. religion) which are already protected by law, but also of "non-sensitive" data on which the keeping of archives is allowed, but not their publicizing.

2.17 Freedom of expression and information as far as the distribution via electronic networks is concerned

The Cyprus Telecommunications Authority has submitted to the Ministry of Communications and Works, its alternative proposal to the regulations which are currently being discussed in parliament for the Telecommunications Regulator. The key recommendation is that the Regulatory Authority in the Telecommunications Sector be a legal person of public Justice, consisting of one person (and one deputy). This would be independents of other departments and controls, and would be appointed by the President of the Republic with the approval of parliament.

In another development, as from July, 2000 new presidents have been assigned as follows : Mr. Efstathios Papadakis, president of the executive council of the Cyprus Telecommunications Authority, and Mr. Antonis Drakos, president of the executive council of the Cyprus Broadcasting Corporation

The Cyprus Ministry of Communications and Works (through Minister Averof Neofitou) and its Greek counterpart (through Minister Christos Varelis) have agreed on the set-up of national committees to include participants from both ministries. The committees will meet on a bi-monthly basis and discuss telecommunications issues. The move is targeted at greater technical assistance to Cyprus from Greece drawn from Greece’s experience in the liberalisation process. Ultimately business co-operation and exchange of shares is anticipated between the Cyprus Telecommunications Authority and its Greek counterpart OTE.

5. Market: Privatisation, foreign investment, mergers, acquisitions, call for tenders

Please note that this report has been prepared under the sole responsibility of the ESIS II contractors.
It does not necessarily reflect the views of the Commission, nor does the Commission accept responsibility for the accuracy or completeness of information contained herein.
The ESIS Team of contractors welcomes any additional information or corrections.