April 2000

FYR Macedonia Master Report

The following report outlines the state of major regulatory developments with impact on the creation/development of the Information Society in the Republic of Macedonia.

The Republic of Macedonia government has categorically decided that part of the shares (between 33% and 51%) of the telecommunications public operator - Macedonian Telecommunications (http://www.mt.com.mk/index.html) shall be sold by the end of 2000. The government is going to adopt a strategy for the further development of mobile telephony. This strategy should also define the moment of introduction of another mobile communications operator. The competition for granting concessions for radio and cable TV networks will be opened by May 2000.

I. General background

1. General telecommunications policy

According to the Macedonian Telecommunications Act (http://www.srd.org.mk/bc/codes.htm - Official Gazette of RM 33/96) and amended Telecommunications Act (Official Gazette of RM 17/98), the Macedonian Telecommunications shall have the exclusive right, until 31 December 2005, to provide fixed voice telephony services. The exclusive right includes also the provision of telegraphy services, telex services, public pay phone services, leased lines services and to construct own and operate fixed public telecommunication networks.

A concession is required to construct, own or operate a public telecommunication network and to provide public telecommunication services. The Ministry of Transport and Communications shall issue concessions, on the proposal of the Telecommunications Directorate (a body within the Ministry). Concessions shall be public documents, and may be issued to domestic and foreign legal and natural persons. The Directorate may establish different classes of concessions for different types of telecommunications activities.

The Minister of Transport and Communications shall not issue any licenses or concessions that infringe the exclusive rights granted to the Macedonian Telecommunications.

2. Institutional structures in charge of the regulatory issues

2.1 Ministries in charge of the telecommunication issues

2.1.1 The Ministry of Transport and Communications

The Ministry of Transport and Communication:

• implements the policy of the Government of the Republic of Macedonia in the field of telecommunications;
• promotes the development of competition in the field of telecommunications;
• issues the Plan of Frequency Bands Allocation, on the proposal of the Directorate;
• issues the Plan of Frequency Assignment on the proposal of the Directorate;
• prepares and issues the list of Universal Services;
• co-operates with the administrations of foreign countries, performs international co-ordinating of radio frequencies and, within the limits of its jurisdiction, represents the Republic of Macedonia in international telecommunication negotiations and within international telecommunication organisations and conferences in the field of telecommunications.

The Minister of Transport and Communications:

• Determines and assigns concessions in compliance with this Law, on the proposal of the Directorate;
• Determines the amount of the fees according to this Act, on the proposal of the Directorate;
• Issues regulations, which regulate the field of the telecommunications more specifically, on the proposal of the Directorate.

2.2 National regulatory authorities

The Telecommunications Directorate is to be established (see Chapter II - On-Going Changes in the Institutional Structures - below).

2.3 Frequencies allocation authorities

According to the Telecommunications Act, the Telecommunications Directorate shall be established as a body within the Ministry of Transport and Communications. The Directorate shall manage, regulate and assign radio frequencies, prepare radio communication plans, designate frequencies for transmission and reception, inspect and monitor radio communication networks, and ensure that radio stations and devices of a type that has not been approved are not used.

2.4 Office for protection of economic competition

The Office does not exist. The Ministry of Transport and Communications shall develop and implement a long-term plan for introducing competition in the field of telecommunications, which shall balance the competition against the economic, social and other values.

2.5 Consultative councils

2.5.1 Broadcasting Council of Republic of Macedonia (http://www.srd.org.mk/)

In accordance with the Broadcasting Activity Law (www.srd.org.mk/bc/codes.htm), the Broadcasting Council is an independent body, with the following main functions:

• Reviews issues and gives opinions and proposals for the promotion and development of broadcasting activity (Article 22 of the Law);
• Prepares proposals for the competition and draft decisions for the awarding and revocation of concessions concerning the performance of broadcasting activity (www.srd.org.mk/bc/codes.htm) (Articles 14 and 22 of the Law);
• Prepares proposals for the allocation of funds from the broadcasting tax intended for the public and commercial broadcasting companies and independent producers performing their activity at local level (Article 78 of the Law);
• Monitors the implementation of concession contracts (Articles 22 and 83 of the Law);
• Approves the re-broadcasting of foreign programs by broadcasting organisations (Article 43 of the Law);
• Ensures the implementation of the provisions of the Broadcasting Activity Law with regard to program production and broadcasting (Article 83 of the Law);
• Proposes measures to the responsible supervising bodies to be undertaken against broadcasting organisations performing activities contrary to the law and the concession contract (Article 84, Paragraph 1, of the Law).

2.6 Public Telecommunications operators

Makedonski Telekomunikacii A.D. (MT) (www.mt.net.mk/index.html) is the national telecommunications operator in the Republic of Macedonia. MT provides basic telecommunications services in the Republic of Macedonia, including all local, long distance and international traffic, leased lines, cellular mobile services, and value added services including data communications and Internet access.

1999 was the most significant milestone date for the development of Makedonski Telekomunikacii and for the whole Macedonian telecommunications sector. The privatisation process is well under way.

MT is prepared to respond to the rapidly international environment changes in which they operate, such as the reform of the accounting rate system, and the spectacular increase of Internet use. They are preparing to completely re-engineer their business model, eventually built around the Internet model, and introducing e-commerce solutions. MT is aware of the enormous responsibility placed on to carry out all these processes in order target both a successful conclusion and toward full integration into the global telecom environment.

One of their biggest challenges in the period ahead will be to transform the company from technology centred to a market and customer oriented organisation. MT intends to make customers' interest and satisfaction as their top priority and will integrate that into their company mission. The management is fully aware that they also must sustain profitability to the satisfaction of their investors, and at the same time maintain excellent employee relations. They consider their employees and the knowledge and skills they possess their most important asset in the rapidly emerging Information Age.

3. International relationships and agreements

4. Regulatory framework

4.1 Historical overview

Until the end of 1996, the Public Enterprise for PTT "Makedonija", was functioning as a unique state-owned company providing services in the public national and international post and telecommunication sectors. In the beginning of 1997, PTT "Makedonija" entered into a period of profound and far-reaching changes. A transformation process of the organisation has commenced, in order to establish two independent entities, each of which should by its own ways to develop and adapt to the new market conditions and economy. With a decree, adopted by the Government, two new states owned companies are founded. Macedonian Posts (http://www.mp.com.mk) and Macedonian Telecommunications (http://www.mt.com.mk/index.html).

The legal constitution of the public enterprise "Makedonski Telekomunikacii" (MT) was completed in 12.08.1997 defining the MT functions as a separate legal entity.

Triggered by the growing pace of technology development, as well as customer requests and market demands, the MT business system is being implemented according to international standards enabling a successful Republic of Macedonia within European and world integration processes.

MT operates within a new regulatory environment. The new Telecommunications Act and other regulations define the existence of the public telecommunications operator with rights and duties for basics services provisions, while simultaneously defining the conditions for involvement of new operators for all other value-added services.

Until 31 December 2005, no legal or natural persons, except the MT, may have the following duties:

• provide, organise, advertise, promote or in any other way take part in organising call-back services and;
• provide fixed voice telephony services, telegraphy services, telex services, public pay phone services or leased line services and to construct, own and operate fixed public telecommunication networks.

4.2 Present general legislation

The Telecommunications Act regulates the conditions and the rules of activities conducting in the field of telecommunications. This Act regulates the construction, maintenance and the use of the telecommunication networks and facilities as well as the relations between the providers and the users of the telecommunication services.

The competition in the field of telecommunications, the provision of Universal Services, the issuing of concessions and performing telecommunication services by concessions, the management, use and control of radio frequency spectrum, the production, import, sale, use and maintenance of radio stations, terminal equipment are also regulated by the Telecommunication Act.

4.3 Key legislative measures

4.4 Issues

4.4.1 Liberalisation

4.4.2 Licensing

According to the Telecommunications Act, a concession is required to construct, own or operate a public telecommunication network and to provide public telecommunication services. Concessions shall be issued by the Minister of Transport and Communications, on the proposal of the Telecommunications Directorate (a body within the Ministry of Transport and Communications), and shall be public documents. Concessions may be issued to domestic and foreign legal and natural persons. The Directorate may establish different classes of concessions for different types of telecommunications activities. Issued concessions may be subject of such terms and conditions as the Directorate determines to be necessary to achieve the purposes of the Act.

According to the Telecommunications Act the Ministry of Transport and Communications brought a Numeration Plan of the Telecommunication Networks in the Republic of Macedonia. The Numbering Plan is in compliance with the E.164 Recommendation of the International Telecommunication Union. It regulates the distribution and usage of numbers, series of numbers, names and addresses of the public telecommunication networks and the public telecommunication services. An extensive activity on the plan implementation is in progress.

4.4.3 Universal Service

The Ministry of Transport and Communications shall adopt, and the Telecommunications Directorate shall implement, regulations governing the provision of US and the compensation procedures to be used to pay for such services. The Ministry shall designate, through regulation, the initial group of US services. The public telecommunication operator and public telecommunication service providers US obligations shall be regulated by the concession agreements.

4.4.4 Quality of Service

Domestic and international telecommunications shall be accessible to every user under non-discriminatory, objective and transparent terms and conditions, except for those limitations associated with the capacity of the service provider. The user has the right to receive uninterrupted, efficient and regular service, and shall be compensated by the public telecommunication operator or public telecommunication service provider for any shortcoming in the quality of the public telecommunication service that is received by the user. Users have the right to have their requests, complaints or claims associated with the provision of the telecommunication service taken under consideration and resolved promptly and efficiently. Users have the right to have the fees for public telecommunication services invoiced in a way, which shall be easily to understand.

Users receiving radio and television signals over public telecommunication networks intended for the transmission and emission of radio and television signals shall be entitled to receive broadcast reception quality within the optimal technical parameters of the networks.

The Telecommunications Directorate shall control the prices and quality of public telecommunication services.

4.4.5 Interconnection of Telecommunication services

The Telecommunications Directorate shall establish interconnection of telecommunications networks standards, where public telecommunication operators are unable to agree.

A public telecommunication operator must satisfy requests to interconnect its network with the networks of other public telecommunication operators. Interconnection may not be refused if the request is justified and technically feasible. A refusal to provide network interconnection must be fully justified, and the reason for such refusal must be provided to the operator requesting interconnection. Public telecommunication operators shall determine the terms and conditions of interconnection in an interconnection agreement. The Telecommunications Directorate shall establish general conditions for such interconnection agreements. The interconnection agreement shall set out in detail all technical and financial conditions. Where the interconnection agreement is inconsistent with the Telecommunications Act, the regulations issued on the basis of this Act or the general interconnection conditions, the Telecommunications Directorate may require the interconnection agreement to be modified. All interconnection agreements shall be publicly available, except to the extent necessary to prevent the disclosure of proprietary or confidential information.

If a public telecommunication operator refuses to provide interconnection, or if two public telecommunication operators are unable to reach an agreement on interconnection within three months after the initial request for interconnection, either of them may apply to the Telecommunications Directorate to resolve their disagreements.

5. Freedom and Protection

5.1 Copyright and intellectual Property Rights

Industrial Property Protection Office (http://www.ippo.gov.mk) was established on December 1, 1993 by appointing the Director. The office is an organism within the Ministry of Development having a capacity of legal entity.

The Office has two departments:

• Department for Patents and Appellations of Origin;
• Department for Marks, Models and Design.

The main duties of the Office are protection of industrial property and giving services to the interested parties.

Concerning this field, the Republic of Macedonia is party of the following conventions and treaties:

• The convention establishing the World Intellectual Property Organisation;
• The Paris Convention for the Protection of Industrial Property;
• The Madrid Agreement concerning the International Registration of Marks;
• The Nice Agreement concerning the International Classification of Goods and Services for the purposes of the registration of marks;
• The Locarno Agreement establishing an International Classification for Industrial Designs;
• Patent Co-operation Treaty (PCT);
• Hague Agreement concerning the International Deposit of Industrial Designs;
• The Bern Convention for the Protection of Literary and Artistic Works.

5.2 Privacy, Data Protection, Consumer Protection

In accordance with the Republic of Macedonia Constitution, besides the adopted international agreements and general principles of international laws, the Law on Personal Data Protection was adopted also. The Law along with the subsidiary legislation regulates the collection, processing, end-use as well as the supervision and protection of personal data confidentiality.

5.3 Electronic protection, legal protection and security

The Telecommunications Directorate may restrict the access to telecommunication networks or services to protect the security of public telecommunication networks, maintaining the telecommunication network integrity, and ensuring the interoperability of telecommunication services and data protection, in justified cases only, and in conformity with applicable Acts and regulations.

Electronic document interchange is not legally regulated.

5.4 Freedom of expression and information

Freedom of expression and information is guaranteed in the Republic of Macedonia Constitution as a fundamental human right and freedom.

6. Information Society Policies

6.1 Umbrella Policies

In order to promote co-operation and development in the various areas of the Information Society, the Ministry of Science established the Macedonian Information Society Project Office (http://www.ispo.gov.mk/html/about_ispo.html). Macedonian ISPO acts as a bridge-builder between Commission Services and external organisations interested in the Information Society. Main activities are targeted toward raising awareness on the opportunities and impacts of the IS, dissemination of information, collecting information, etc.

6.2 IS Application Areas

6.2.1 Government

The Ministry of Science is in charge of implementation of Information Technology within the governmental institutions through:

• delivering direct services;
• definition and implementation of the governmental methodology for development of Information Systems and quality system;
• consulting, budgeting and co-ordinating of development efforts;
• development of the State backbone network for interconnecting the governmental institutions;
• definition of security standards;
• national of Information Society actions co-ordination.

6.2.2 Education

The both universities of Skopje and Bitola have built their information and communications infrastructure. Besides the regular education programs numerous IS related R&D projects were also carried out.

The Academic and Research Network of Macedonia (MARNET) was established as a public institution to provide communication and information services to educational and research community.

The Open Society Institute of Macedonia as a non-governmental institution financially supports various educational and cultural projects and provides Internet connections in the universities and all levels of education.

6.2.3 Transport

The common sectorial policy has not been yet established. The telecommunications infrastructure of railways is built or modernised in accordance with their own needs.

6.2.4 Medicine

The Health Centre in Skopje and the State Health Fund have developed their own information and communications infrastructure. With the financial support of the World Bank a program for development and reconstruction of the health sector is to be carried out. Significant part of the program is focused on the IT support for the sector.

II. On-Going Developments

1. On-Going Changes in the Institutional Structures

According to the Telecommunications Act, the Telecommunications Directorate shall be established as a body within the Ministry of Transport and Communications.

The Directorate shall account for the performing of the activities within its authorisation and determined by this Act to the Ministry of Transport and Communications. The Directorate shall perform its activities in accordance also with others Acts of the Republic of Macedonia, regulations adopted by the Ministry of Transport and Communications and others competent authorities, and international agreements concluded or acceded by the Republic of Macedonia.

The Minister of Transport and Communications shall approve the annual resources for the activities of the Directorate. The resources must be sufficient to carry out the activities of the Directorate, within the frameworks of its authorisations, in a satisfactory manner.

The main Directorate functions are:

• shall ensure that users have access to public telecommunication networks and public telecommunications services on a non-discriminatory basis;
• shall ensure that all information about consumers which should not be made public is maintained in confidence;
• shall take such measures to ensure the enforcement of the Act, other laws, regulations, concessions, licenses and permits assigned pursuant to the Act;
• consistent with the policies of the Government of the Republic of Macedonia and the Ministry of Transport and Communications, shall develop and implement a long-term plan for introducing competition in the field of telecommunications, which shall balance the competition against the economic, social and other values regulated by the Act;
• shall take such measures and prescribe such safeguards to prevent public telecommunication operators and public telecommunication service providers from engaging in anti-competitive activities;
• shall control the prices and quality of public telecommunication services in accordance with the provisions of the Act;
• shall ensure that no public telecommunication operator or public telecommunication service provider is discriminated against and shall ensure that all operators are provided with interconnection on a non-discriminatory basis;
• shall analyse and regularly report to the Ministry of Transport and Communications regarding the development of the telecommunications sector in the Republic of Macedonia and abroad;
• shall give proposals to the Minister of Transport and Communications regarding the issuing of concessions;
• shall give proposals to the Minister of Transport and Communications regarding the amount of the fees prescribed in accordance with the Act;
• shall issue licenses for telecommunication activities prescribed by the Act;
• shall announce and hold tenders for licences and concessions;
• shall supervise compliance with the terms and conditions of licenses and concessions;
• shall approve the utilisation of radio stations and terminal equipment used in the Republic of Macedonia and shall issue certificates of approval;
• shall establish standards for the interconnection of telecommunication networks, where public telecommunication operators are unable to agree;
• shall approve the standard contract between public telecommunication operators, public telecommunication service providers and users;
• shall manage, regulate and assign radio frequencies, prepare radio communication plans, designate frequencies for transmission and reception, inspect and monitor radio communication networks, and ensure that radio stations and devices of a type that has not been approved are not used;
• shall act as the first instance in the settlement of disputes arising between public telecommunication operators, telecommunication service providers and users, in compliance with the Act;
• shall check the tariffs equipment used to measure the duration of the services;

The Director shall have the power:

• to demand that public telecommunication operators and public telecommunication service providers supply the necessary information, including financial information, the Directorate deems necessary to perform its authorisation under the Act, undertaking not to disclose confidential information.

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

2.1 Privatisation of the National Telecommunications Operator

The government has categorically decided that in the end of 2000, shall sell part of the shares (between 33% and 51%) of Makedonski Telekomunikacii. For this purpose, the government has a contract with high-ranking consulting company to help managing the privatisation process. The government accepted the proposed phased approach of privatisation. The potential partners have been contacted during the current preparatory phase. The first estimate of the market price should be known by April 2000. The government regularly reports to the International Monetary Fund about the privatisation progress.

The government is going to adopt a strategy for the further development of mobile telephony. The strategy should define also the moment of introduction of another mobile communications operator.

2.2 Broadcasting Concessions

At its latest meeting, the Government of the Republic of Macedonia has adopted the suggestion of the Broadcasting Council to prolong the due date for payment of the broadcasting concessions. 37 concessionaires have partially paid their duties and 28 concessionaires have nothing paid in this year. As a consequence and according the Broadcasting Activity Law (www.srd.org.mk/bc/codes.htm) the government is to withdraw the granted concessions and to announce a new tender for concessions.

2.3 Cable Radio and TV Network Concessions

The open competition for granting concessions for cable radio and TV network will be carried out by May 2000 in compliance with the Law on Broadcasting, Law on Telecommunications, Law on Concessions and all other laws that are connected with investments. Advantage will be given to those operators who will offer a greater number of programs, at least 20, as well as those who have signed agreements or letters of intention with owners of radio and TV channels.

Various network capacities are foreseen, i.e. the smallest networks that cover from 100 to 500 households and the largest, covering from 500 to 30000 households. With this competition, the Republic of Macedonia promotes a dynamic model, and the Broadcasting Council has included all of the basic standards recommended by the Council of Europe.

2.4 Satellite Broadcasting

The government is in the initial phase of the implementation of satellite broadcasting in the Republic of Macedonia. Macedonian Telecommunications have provided a special satellite antenna for this purpose. Macedonian broadcasting enterprise will make a contract for 24-hour distribution of radio and TV programs through HOT BIRD 5 satellite channel.