ESIS extension / Malta / Regulatory Developments / Update Memo 3

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

The publication of new Telecommunications Regulations, court proceedings between Malta’s monopoly fixed-telephony and cable TV companies, and issues related to the liberalisation of the telecommunications sector, were the main developments in Malta between October and December 1999.

In the last few months a legal battle developed between Malta’s monopoly fixed-telephony company Maltacom and the company holding a monopoly in the provision of cable TV services, Melita Cable. The dispute between Maltacom and Melita Cable began when Melita made its first tests on Internet access over its cable network in the summer months of 1999. Maltacom sued Melita on the grounds that these tests go against Maltacom’s monopoly and against the agreement signed between both companies so that Melita could use Maltacom’s ducts to pass cables underground. The Court upheld Maltacom’s request and prohibited Melita from providing cable Internet access.

At the same time, 5 Maltese Internet Service Providers (ISP) lobbied in favour of Melita being forced to open its network and give them the opportunity to provide Internet access via cable, something which Melita opposed vehemently.

The Internet and Other Data Networks (Service Providers) Regulations, 1999, were published on Friday 8th October. The new regulations are aimed at resolving the thorny questions of whether Melita Cable was breaking the law by not allowing the ISPs to make use of its network.

As they stand, these regulations meet the demands put forward by the five ISPs because Melita is being ordered to open its network. Both Maltacom and Melita are considered by these regulations as Telecommunications Transport Providers (TTP). But now that Melita is given this new status, Maltacom is losing automatically its monopoly as the sole TTP.

The new regulations state that a company can only provide Internet access through one subsidiary company. This means that Melita will not be able to open another company and at the same time keep its 50% stake in Video on Line, one of Malta’s leading ISPs. The regulations also state that anyone offering Internet access has to be in possession of a licence, therefore the number of licensed ISPs in Malta is expected to increase to 10 or 11 within the coming months. With regards to pricing, Melita Cable has 90 days within which to provide ISPs with prices for access to its network. If no agreement is reached between Melita and the ISPs, then the Telecommunications Regulator will have to intervene.

Observers of the telecoms industry remarked that these regulations go against Maltacom’s monopoly since they elevate Melita to the status of Telecommunications Transport Provider. However, in an interview on a local newspaper on the 12^th of December, the Minister for Communications Censu Galea said that he has been assured by the Attorney General's office that the regulations do not overturn any other regulation.

Melita’s reaction to the publication of the new regulations took everyone by surprise. "The outcome of these new [telecommunications] regulations is that both the consumer and the country will suffer. We are seriously concerned by what has happened. Therefore, we will not be offering cable Internet," Mr Frank Leiter, Chief Executive of Melita Cable, told journalists in the second week of October. "We will not be offering the service to customers until the regulations change and the government and regulator take action. Only then will we review our position," Mr Leiter added.

As far as other ICT-related legislation is concerned, the Prime Minister Dr. Eddie Fenech Adami announced in November that an Information Practices Act is being prepared by the government. The aim is to strike a balance between the commercial value of information and protecting the privacy of individuals. The Act, which conforms to the relevant EU directives and other international trends, "will set an operating framework that strikes the delicate balance between preserving the commercial value of information as a resource with the protection of individual privacy through appropriate access."

It is envisaged that a White Paper will be published for public discussion and will centre on three main areas: computer misuse, data protection, and electronic communication and transactions. The latter covers a wide range of topics including various e-commerce issues and electronic signatures, for example.

In an interview on Vision, EAN Malta’s quarterly magazine, Maltacom’s Chairman Maurice Zarb Adami said that his company is seeking financial compensation for the premature loss of its monopoly, which is currently guaranteed until 2010. But to comply with the Acquis Communautaire, Malta has to liberalise the telecoms sector by 2003. According to Mr. Zarb Adami, Maltacom is also seeking compensation in the light of the upcoming liberalisation of the telecommunications market which is set to redraw the local scene in the coming months. However, according to Maltacom's chairman, the liberalisation process is moving too slowly.

The Regulator for Telecommunications, which Mr. Zarb Adami described as a 'Government department' in the same interview, has just turned down a request by Maltacom to grant permission to provide mobile telephony services. The official reason given by the Regulator was that he could not meet the request 'pending a policy decision' by the Government as to how many operators would be allowed in the field.

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.