The government has granted a monopoly in the fields of fixed-line telephony, mobile telephony, paging services, and cable TV. The government has shareholding only in the fixed-line telephone company (Maltacom – 60%). The other monopolies are enjoyed by private companies.

The Ministry for Transport and Communication is charge of telecommunication issues. However, the Ministry for Economic Services is responsible for the incumbent telecommunications company, Maltacom, which still retains a monopoly and is 60% owned by the Government.

The principal regulating authority is the Office of the Telecommunications Regulator, set-up by the Telecommunications Regulations Act 1997. It took over the functions previously held by TeleMalta (now Maltacom), which were both a regulator and a provider of telecommunication services. Today Maltacom holds a monopoly in the provision of telecommunications services (see below).

The Office of the Telecommunications Regulator has the power to regulate such issues as pricing and fair competition in the sector. However such issues can be brought to the attention of the Office of Fair Trading.

In 1997 a consultative council, the National Commission for Information Technology (NCIT), was set-up with the aim of drawing and updating the national strategy in ICT and provide consultancy services to the government in the field. However the NCIT has not been convened since September 1998 and there has been no official statement from the government regarding the status of NCIT.

Media set-ups are granted a license by the Malta Broadcasting Authority (MBA) under the Broadcasting Act 2000. The MBA is regulated by the Constitution of the Republic of Malta.

Malta is an active member of the International Telecommunications Union (ITU). The ITU's World Telecommunications Development Conference (WTDC) was held in Malta in March 1998, and was attended by delegates from practically every country in the world.

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. (i)

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." (ii)

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.

4.1 Liberalisation

The current scenario (March 2000) of telecommunications in Malta now is constituted by the following players:

1. Maltacom Plc providing fixed line telecommunications services (monopoly)
2. Vodafone (Malta) Ltd, providing mobile telephony over ETACs and GSM900 (monopoly) (iii)
3. Mobisle Communications Ltd, a subsidiary of Maltacom setting up its infrastructure to provide mobile telephony over DCS 1800 and UMTS.
4. Telepage Ltd providing paging (monopoly)
5. Melita Cable providing cable television services and seeking to provide data services (monopoly)
6. Elsacom, Malta's second international satellite services operator
7. Various Internet Service Providers (liberalised)
   

• Mobile Telephony - 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.(iv) 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%, however it has decided to set-up its own mobile operation in competition with Vodafone (Malta) Ltd, using its current licence authorisations particularly for DCS 1800 and UMTS. Mobisle Communications, Maltacom's new subsidiary for mobile telephony, had its applications for frequencies turned down by the Office of the Telecommunications Regulator 'pending a policy decision by the government', which should have been announced by the end of March 2000.
  
• Internet - 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. 
  
  During the 3rd and 4th quarter of 1999 a legal battle developed between Maltacom and 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, five 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 that Melita opposed vehemently.
  
• Paging - 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.
  
• Cable TV - Melita Cable plc 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. It has already announced plans to provide fixed telephony, mobile telephony, and Internet access over its network.
  
  Fixed line Telephony - 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 phone card 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. However, Maltacom on paper lost its monopoly in the field of Internet as a Telecommunications Transport Provider (TTP) under the new Internet and Other Data Networks (Service Providers) Regulations, 1999, published on Friday 8th October. In reality, Maltacom remains in a monopolistic situations since the other company, which gained the status of Telecommunications Transport Provider, i.e. Melita Cable plc, simply refused to abide by the new regulations and launch its Internet access service over cable.

The current scenario of telecommunications in Malta (March 2000), therefore reads as follows: -

4.2 Convergence

In the Telecommunications (Regulation) Act 1997, the term "telecommunications is significantly defined as - "the emission, transmission, routing and reception of signals, messages, sound or light or of visual images, by an electromagnetic system, including cable television, and pay-per-view but excluding broadcasting as defined in the Broadcasting Act 1991".

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 challenges the dividing lines of regulation of telecommunications and broadcasting. vi

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.......vii 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." viii In the converged market, infrastructure and content combine to effectively unite the media and telecommunications market.

4.3 New Telecommunications Regulations

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 and allow the ISPs to offer. Both Maltacom and Melita are considered by these regulations as Telecommunications Transport Provider (TTP). But now that Melita is given this new status, Maltacom is losing automatically its monopoly as the sole TTP.

The new regulations state 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.

The emergence of the Maltese IS was not accompanied by a new legislative framework to sustain and promote the development of both the IT industry and the IS. However, the Maltese government has announced that it will soon issue three acts of law covering Data Protection, Computer Misuse and Electronic Commerce and Transactions.

These drafts, once approved in Parliament, will fill the current lacuna in Maltese legislation that does not cater for such issues. Legislation which could be somewhat related to ICT are the Telecommunications (Regulations) Act 1997 (misuse use of telephone lines, i.e. Internet); the Internet and Other Data Networks (Service Providers) Regulations, 1999 (regulation of Internet Service Provision); and the Copyright Law (copyright on software).

A committee led by the Management Efficiency Unit (MEU), the government’s consultancy body, in particular by the Central Information Management Unit (CIMU), which is directly responsible for the government’s strategies in ICT, is drawing these drafts covering Data Protection, Computer Misuse and Electronic Commerce and Transactions.

So far there have been no public announcements on the contents of these draft. However, informed sources say that the drafts are being modelled on American and Australian models.

The government’s IT strategy at a national level is drawn up in the form of the Information Systems Strategic Plan (ISSP). The ISSP for 1999-2001 was commissioned by the Office of the Prime Minister to establish a direction for further information systems investment within the Maltese Public Service for this period of time.

The proposed policy direction for the Public Service for the period 1999 – 2001 is primary directed towards a process of consolidation, maximisation and optimisation of the IT investment to date. Three thrusts are consequently being undertaken.

• The first thrust is directed towards the establishment of an institutional framework that should result in the inculcation of an information management culture in the Public Service. Consequent to this, steps are underway to initiate a process of capacity building of Information Management Units within three Ministries in 2000 – units which will assume responsibility for management information, strategic planning, IT project management, and central policy and standards implementation within the specific ministry portfolio. In tandem with the need to establish the appropriate organisational framework, an aggressive human resource competency building has been undertaken.

• The second thrust is directed towards ensuring that IT supports the Government’s policy objective to improve delivery of services provided by the Public Service to its clients: whether these are individual citizens, the business community or local councils.

• The third thrust is directed towards establishing the appropriate legislative framework to allow for good governance and nation-wide use and acceptance of IT and IT-based activities such as business and use of personal data. In this regard efforts have been directed towards addressing three fundamental issues: legal use; privacy; and attaining functional equivalence between electronic and traditional methods (signature, documents, records, etc).

At the time of the compilation of this report, the Maltese Government had already announced that by the end of March 2000 it would announce its policies on the liberalisation of the telecommunications sector. The government appointed a committee, chaired by the Minister for Finance, to discuss its ideas about liberalisation with the interested parties. Talks were held in the 1st quarter 2000. At the same time, Malta opened its formal negotiations for accession in the EU and the European Commission announced that telecommunications would be one of the first eight chapters of the Aquis Communautaire to be negotiated with Malta from March onwards. Hence the announcement by the government to announced its policies for liberalisation, which should be in line with the Aquis.

Footnotes

i Act XXXIII of 1997

ii Updated Avis, 1999 para 3.12 at page 29

iii Vodafone's GSM monopoly over GSM 900 is contested by Maltacom Plc. Maltacom claims a monopoly licence over DCS 1800 and UMTS.

Iv Maltacom is contesting the exclusivity of Vodafone's licence in GSM. Maltacom has an exclusive UMTS licence, which Vodafone also claims to have.

V 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.

Vi Rate Mechanism to be applied to Certain Telecommunications Services. As amended a month later by notice No 425 of 26th May 1998.

Vii Regulation 4

viii Regulation 2

ix Telecommunications Law (Butterworths) 1997, David Giles & Roger Marshall.

X L.N. 216/1998