ESIS extension / Malta / Regulatory Developments / Master Report

Malta separated the legal regulatory functions from the operation of telecommunications networks and services which since 1975 had been vested in Telemalta Corporation in December 1997 with the enactment of the Telecommunications (Regulation) Act 1997 (Act XXXIII of 1997).

The 1997 law established the office of the Telecommunications Regulator responsible for the supervision of the telecommunications sector, for the issuing of licences for the provision of telecommunications services, for the establishment of a numbering plan, for monitoring interconnection agreements, establishing technical standards and generally ensuring compliance with law. From that law on, any person installing or operating a telecommunications infrastructure or providing a telecommunications service in Malta requires a licence or permit from the Regulator.

In 1998, to emphasise further this distinction between the Regulator and the Operator Government placing the responsibilities for the regulation of Telecommunications and for Maltacom Plc (of which the Government remains a sixty per cent shareholder) under separate Ministries, the Ministry for Transport and Communications and the Ministry for Economic Services respectively.

The European Commission, in its Report updating its Opinion on Malta's Application for Membership in 1999 makes reference to this further regulatory distinction – ">From the institutional point of view, the requirement of the separation of the regulatory function from the state’s control function over Maltacom has been fulfilled: the telecommunications regulator reports to the Ministry of Transport and Communications whereas the ownership function is exercised by the Ministry of Economics." (Updated Avis, 1999 para 3.12 at page 29).

At the same time that the new telecommunications act removed Telemalta as the regulator, Telemalta was succeeded by a public limited company, Maltacom Plc, set up in December 1997. Maltacom Plc was granted a twenty-five (25) year operating licence with exclusivity to provide fixed line voice telephony, data services, DCS 1800 and UMTS, other specified services and all ‘residual’ services up to the year 2010. Maltacom’s licence carried with it the obligation to provide voice telephony services within a reasonable time to all applicants and to provide interconnection to its network to other authorised providers.

In June 1998 the Malta Government, through an International Public Offering (IPO) sold 40% of the equity of Maltacom. Twenty per cent (20%) of the shares were sold on the domestic market and another twenty per cent (20%) were offered for sale to institutional investors on the international market, in the form of Global Depository Receipts (GDR’s). The Company’s shares were traded for the first time on the London Stock Exchange and the Malta Stock Exchange. Slightly over 40.5 million ordinary shares with a nominal value of Lm0.25 were offered in the IPO at Lm0.90 per share. The share offer in Malta was oversubscribed and there are now almost 8000 shareholders, 60% of which are private individuals. On the London Stock Exchange the share issue was subscribed almost five times over.

Vodafone Malta has an exclusive licence to provide mobile cellular telecommunications services until 2010. There are two shareholders: Vodafone Europe Holdings B.V. with eighty per cent of the shares (80%) and Maltacom with twenty per cent (20%). The company has an exclusive licence to provide mobile cellular telecommunications services in Malta until 2010 (Maltacom is contesting the exclusivity of Vodafone’s licence in GSM. Maltacom has an exclusive UMTS licence, which Vodafone also claims to have). Penetration of mobile telephony stands at around 6% of the population. Maltacom has recently exercised an option to increase its shareholding in Vodafone Malta to up to 50.1%, although it is considering a possible second route of setting up its own mobile operation in competition with Vodafone (Malta) Ltd, using its current licence authorisations particularly for DCS 1800 and UMTS.

There are a number of Internet service providers. The market is liberalised but the Internet service licence for operators binds them to use Maltacom’s infrastructure. Section 3.1. ( in .01 and .03) of the licence binds the ISP to connect its subscribers to its facilities in Malta and to international data networks via Maltacom’s telecommunications network and to provide the service of access to international data networks only through the use of Maltacom’s infrastructure. Moreover 3.1.02 of the Internet Service Provider Licence states categorically that the ISP "is not permitted to provide voice telephony services." Internet penetration is calculated at around 5% of the population.

Telepage Ltd - set up in 1994, is a monopoly licensee for the provision of paging service. Maltacom is an eighty per cent (80%) shareholder in the company. The service penetration stands at a very low 1% of the population. The monopoly licence expires on 2005.

Melita Cable Ltd provides this monopoly service over a cable distribution network that is mainly fibre-optic but also includes coax and has passed most households in Malta and Gozo. The company has Maltese and US shareholders.

Maltacom has (till 2010) the monopoly licence over fixed voice national and international telephony from which it derives ninety per cent (90%) of its turnover. Penetration is in the 50% mark. The 1996 licence also grants Maltacom the exclusive right (up to end 2010) in relation to the provision of voice telephony related value added services; non-voice services: resale of telecommunications services: public and private phonecard services; ISDN; UMTS; broadband telecommunications services over a public network; Internet connectivity and services rendered through all types of public cordless terminal mobility technology and wireless local loop technology including DECT. Paragraph 1 of the licence also states that exclusivity is reserved for Maltacom with regard to services in respect of which no other licence had been granted prior to the date of the licence.

1.6 The current scenario of telecommunications in Malta, therefore reads as follows:

Service	Operator	Monopoly	Started	To End
Fixed Telephony	Maltacom	ü	1975	2010
Mobile Telephony	Vodafone (Malta)	ü	1988	2010
Cable TV / Radio	Melita Cable	ü	1990	2006
Paging	Telepage	ü	1995	2005
Satellite Communications (including TV) – from/to local market	Maltacom	ü	1997	2010
Television/Radio	Since 1991, fully liberalised.	Liberalised	-----	-----
Internet	Introduced in 1995. Fully liberalised;	Liberalised	-----	-----

II - The law itself is a framework law which provides the further regulation of a number of areas:

An authorised provided must allow allow another authorised provider to interconnect with its own infrastructure under freely agreed terms and conditions. If agreement is not reached the requesting party may refer the matter to the Regulator and the Regulator shall determine the dispute. The law sets down the guidelines which the Regulator must follow in arriving at his determination (Section 20. The provider is allowed to recover full allocated costs for provision of interconnection on a historical basis plus an additional return on capital; and one-time costs incurred in providing the interconnection; and to make usage charges related to utilisation of the infrastructure and the network elements and resources requested – such charges to include capacity based charges and/or traffic related charges) and empowers the Regulator to grant the complainant an effective remedy.

The Regulator shall establish a numbering plan for telecommunications services and allocate numbers to authorised providers accordingly. No one may sue any other numbering system.

The rate mechanism for charges with regard to telecommunications services are established by the Regulator and published in the Government Gazette. An authorised provider must submit to the Regulator for approval the rates it proposes to charge in respect of any service that it is authorised to provide. The Regulator controls tariffs. Notice No.332 of 23^rd April 1998 (Rate Mechanism to be Applied to Certain Telecommunications Services. As amended a month later by notice No 425 of 26^th May 1998) established a rate mechanism which comes into force on 1^st January 2000 and is applicable to certain telecommunication services including fixed line telephony and national and international leased lines.

The Telecommunications (Universal Service Obligations) Regulations 1998 provide a list of services that comprise the Universal Service Obligation, including basic services, that is, services which, in the absence of an obligation to provide such services, would not be provided due to geographical or environmental conditions adverse to the installation of a telecommunications infrastructure. The USO includes "remote care services", services required by the elderly or otherwise vulnerable or disadvantaged subscribers, provided to give continuous access to emergency services. In this regard, for example, Maltacom operates TELECARE, which, at the touch of a button, provides instant assistance to the elderly and the disabled (together with the Ministry responsible for Care of the Elderly) and TAFDA, providing special terminals, including text telephones, for subscribers with physical impairments.

The Universal service obligation includes the provision by the designated authorised provider, of fault reporting service and emergency services, free of charge (Regulation 4) Maltacom, as the designated authorised provider, also has the obligation to provide maritime communication services which are crucial to maritime activity and can be life saving in certain circumstances. This obligation is to provide telecommunication services and the apparatus necessary to enable telecommunications between ships and those maritime coastal stations established in Malta from time to time (Regulation 2). The Regulator administers the Universal Services Fund, verifying the costs involved in the provision of the universal service and in verifying the contributions to be made by the other operators to the Fund, and to pay out of the fund the sums due to the Designated Authorised Provider. This differs from, for example, the UK where telecommunications operators are left to settle their accounts between themselves in accordance with standard rules set by OFTEL for the calculation of costs and for determining which services provided are "fundable" (Telecommunications Law (Butterworths) 1997, David Giles & Roger Marshall).

The Regulator also has a function of verifying the calculation of the providers’ contribution to the Fund.

The law, regulations and notices governing Telecommunications, besides the Wireless Telegraphy Ordinance, the Telecommunications Act and the Rate Mechanism Notice, mentioned above, are:

In the Telecommunications(Regulation) Act 1997, the term "telecommunications is significantly defined as –

The Regulator of telecommunications is significantly also the regulator (except for the broadcasting element) of cable television and of pay-per-view television in recognition of the technological and market convergence aspects of the communications sector. Of course, convergence relates not only to telecommunications and broadcasting infrastructures but also to the convergence of voice, data and image transmission over the same infrastructure such as in the provision of voice and/or television over internet protocol (IP) irrespectively of whether through wireless or fixed infrastructures. All this renders increasingly blurred and indistinguishable the definitions of telecommunications, broadcasting and multimedia, and challenge the dividing lines of regulation of telecommunications and broadcasting (Convergence of the Telecommunications, Media and Information Technology sectors, and the implications for Regulation was the theme of a Green Paper issued by the Commission in December of 1997).

Examples of this convergence could be home-banking over the Internet, Voice over Internet Protocol, E-mail, data and world wide access over mobile telephony, data services over digital broadcasting platforms, internet or web TV…… (supra., p ii). As the European Commission rightly points out: "Convergence is not just about technology. It is about services and about new ways of doing business and of interacting with society" (ibid). In the converged market, infrastructure and content combine to effectively unite the media and telecommunications market.

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.