July 2000

Slovenia Update Memo

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

I. Regulatory Developments

1 Introduction and Summary

During the last three months, telecommunications were in the focus of policy makers, politicians and investors. The Government adopted a new draft Law on Telecommunications and the Ministry of Transport and Communications published a repeated public tender for the selection of a consultancy firm for the performance of consulting activities in the drawing-up of a privatisation programme for Telekom Slovenije d.d.. By adopting the Law on Electronic Commerce and Electronic Signature, clear legal foundations were established for the use of electronic communications in electronic business and commerce. In June, Slovenia became a member of the WTO Information Technology Agreement. The membership was supported by the Slovene IT Association. The Association, which is generally active in promoting the Information Society, also organised a public discussion on the Slovene Information Society action plan: eEurope – A Slovene way to the Information Society.

2 Information Society Policies

2.1 Umbrella Policies and National IS Strategy

Slovenia does not have any umbrella policy on the Information Society. Furthermore, neither Information Society nor electronic commerce were explicitly put into the focus of national economic policy nor national budget priorities for 2000. The long-term target economic growth shall be reached through promoting the development based on saving, new investments, proper use and further development of human resources, technology development, quality, and innovation culture. Apart from ensuring economic efficiency, the economic policy will be based on sustainable economic development focusing on human and environmental dimensions. Based on long-term development priorities, the following budget priorities were set for 2000: technology development, active employment policy, agriculture, regional development and strengthened defence ability.

The Slovene Information Technology Association has stressed several times that Slovenia needs a national IS umbrella policy and action plan. In order to stimulate further discussion on the adoption of the respective documents, the Association organised a public discussion on Slovene Information Society action plan: eEurope - A Slovene way to the Information Society. The participants were discussing the eEurope initiative from the Slovene point of view and proposed key actions for a national action plan. After consolidating the report, the Association shall invite the Government to take a proactive approach and prepare the national IS action plan. The participants emphasised that further delaying of the adoption of this plan could have negative impacts on further economic and social development.

2.2 Telecommunications and Internet

2.2.1 New Telecommunications and Media Laws Preparation

On 29 May, the first meeting of the sub-committee for innovation, a bilateral body between Slovenia and the European Union based on the European Association Agreement, was held in Ljubljana. The meeting was co-chaired by Dr Miro Rozman, State Secretary for Post and Telecommunications, and Mr Jaime Garcia Lombardero, the main negotiator of the European Commission for Slovenia. The sub-committee for innovation is responsible for the fields of education, training and youth, science and technology, co-operation in the sphere of culture, and for audio-visual policies and telecommunications.

According to Jaime Garcia Lombardero, Slovenia must adopt a Law on Media and Law on Telecommunications that would be harmonised with the EU Acquis Communautaire by the end of this year.

The Law on Media has already passed the first reading in the National Assembly and is now being prepared by the Government for the second reading. However, there has been some delay in adopting the Law on Telecommunications. It should be adopted by the end of this year along with the secondary legislation, which would enable Slovenia to establish a framework for liberalisation of telecommunications. Slovenia has to speed up the whole process in order to catch up with the deadlines.

The Ministry of Transport and Communications prepared a draft of the new Law on Telecommunications that was harmonised with the Acquis Communautaire (an earlier draft is available on-line: http://www.gov.si/mpz/4pod/6/pdf/zakon-ta.pdf). The previous Government approved the draft of the new Law on Telecommunications on 1 June and sent it to the National Assembly for adoption. The new Government being endorsed by the Parliament on 7 June, discussed and approved the Law on Telecommunications again at its session on 19 June and passed it to the National Assembly (a fast-track procedure). The draft has not been radically changed. The only major change was probably the inclusion of provisions on the restitution of investments of local communities and individual investors in public infrastructure that the previous Government proposed to regulate by a separate Law that had been submitted to the National Assembly by a member of the National Assembly, Mr Roman Jakic. Both proposals differ in the amount intended for the restitution: while Mr Jakic proposed 400 million Slovene tolars (approx. € 1,9 million), the new Government proposed 20 million Slovene tolars which is almost € 100 million.

The new Law on Telecommunications shall

• govern the transfer of information via telecommunications networks and conditions for the provision of public telecommunications services and operation of public telecommunications networks,
• govern the issuing of licences for the provision of telecommunications services,
• define conditions and procedure for using the radio frequency spectrum and the conditions for network interconnection and connection of users,
• govern the provision of universal telecommunications services,
• define the conditions for using telecommunications numbers and the conditions for using radio terminal equipment,
• govern the funding, organisational structure and operation of the Telecommunications Agency as an independent regulatory organisation and the responsibilities of authorities that perform other administrative tasks governed by the Law on Telecommunications,
• define the tasks of the Telecommunications Council,
• define the rights and obligations of operators of telecommunications services and users thereof,
• regulate other issues connected with telecommunications.

According to Article 2, the purpose of the new law is:

• to ensure competition on the market for telecommunications services and to facilitate reliable telecommunications services, the provision of which is to be co-ordinated with the expectations and needs of users,
• to ensure universal telecommunications services for all at an accessible price, including the requirements for emergency services,
• to protect interests of users of telecommunications services including the safeguarding of secrecy and confidentiality in telecommunications,
• to ensure and promote efficiency and competition among operators,
• to ensure efficient use of the radio frequency spectrum and telecommunications numbering system,
• to exploit emerging technology,
• to safeguard the interests of security and defence of the realm.

2.2.2 Key Legislative Measures

Apart from key regulations adopted during the last three months, another regulation has been adopted recently that would have an important impact on the information and communications technology market, i.e. the Decree on electrical equipment designed for the use within certain voltage limits (O.G. RS, No. 53/00, 15 June 2000). Both importers and domestic producers of information technology expressed their position through their associations that the decree should be entirely harmonised with the EU Low Voltage Directive and the market should be harmonised. The Government however, did not follow interests of businesses and did not remove the administrative barriers.

2.2.3 Audio-visual and Allocation of Resources

At its session on 22 June, the Broadcasting Council discussed analyses of the TV programmes POP TV* and Gajba TV** after the expiration of the term set by the Council to adjust the programmes to comply with regulations on advertising and conditions imposed by radio licences.

On the basis of the analysis of POP TV, the Council ascertained that even after a 30 day extension of the term, the programme had not been adjusted to comply with regulations and the number of infringements of regulations had not been reduced. The Council proposed that the Telecommunications Administration cancel the radio licence to the broadcaster of POP TV for broadcasting the programme via the Trzic II transmission point, which is a less important transmission point. The Council decided that the broadcaster of POP TV had to adjust its programme within 60 days and curtail all infringements of regulations, otherwise the council would initiate a procedure of cancellation of radio licence for another transmission point at Topolsica.

The council also discussed the analysis of Gajba TV. It ascertained that after the expiration of a 60-day term to adjust the programme to comply with the Law on Mass Media and conditions set by the radio licence, the broadcaster had not met any of the requirements set by the Council: to comply with advertising regulations and to guarantee a minimum of 10% in-house production. Therefore, the Council proposed that the Telecommunications Administration cancel the radio licence of the broadcaster of Gajba TV for broadcasting the programme via the transmission point at Krvavec.

* The broadcaster of POP TV is: MMTV d.o.o. / Tele 59 d.o.o. / TV Robin d.o.o. and TV production company PRO Plus d.o.o. Source: Radio and TV programmes in Slovenia, The Broadcasting Council of the Republic of Slovenia, December 1999.

**The broadcaster of Gajba TV is: Euro 3TV d.o.o. / Tele 59 d.o.o. / Idea TV kanal 10 d.o.o. and TV production company PRO Plus d.o.o. Source: Radio and TV programmes in Slovenia, The Broadcasting Council of the Republic of Slovenia, December 1999.

2.3 Competition

Super Plus d.d., whose main shareholder is PRO Plus d.o.o., acquired Kanal A d.d.. PRO Plus broadcasts two TV programmes, i.e. POP TV* and Gajba TV**. The major shareholder of PRO Plus is CME. After the agreeable cancellation of the intended merger between CME and SBS last year, CME announced plans to acquire the TV broadcasting company Kanal A. SBS, which has (through its Slovene subsidiary, Impaler d.o.o.) a 33% shareholding in Kanal A, gave CME the pre-emptive right to buy its shares in Kanal A. The Competition Protection Office initiated proceedings of assessment of the acquisition regarding the market share and the Law on Prevention of Restriction of Competition (O.G. RS, No. 56/99).

* The broadcaster of POP TV is: MMTV d.o.o. / Tele 59 d.o.o. / TV Robin d.o.o. and TV production company PRO Plus d.o.o. Source: Radio and TV programmes in Slovenia, The Broadcasting Council of the Republic of Slovenia, December 1999.

**The broadcaster of Gajba TV is: Euro 3TV d.o.o. / Tele 59 d.o.o. / Idea TV kanal 10 d.o.o. and TV production company PRO Plus d.o.o. Source: Radio and TV programmes in Slovenia, The Broadcasting Council of the Republic of Slovenia, December 1999.

2.4 Electronic Commerce

Earlier this year (on 24 February), the Government approved the Law on Electronic Commerce and Electronic Signature and submitted it for adoption to the National Assembly (a fast-track procedure). The National Assembly adopted the Law on 13 June 2000.

The Law is based on the Directive 99/93/EC of the European Parliament and of the Council of 13 December 1999 on a Community Framework for Electronic Signatures. It governs the exchange of business and commercial information via electronic communications systems and use of electronic signatures. Apart from general provisions, the Law governs electronic messages and data, certificates and certification authorities, technical requirements for secure signature creation, responsibility of certification authorities and their supervision, volunteer accreditation scheme, and legal recognition of foreign certificates.

By adopting the Law on Electronic Commerce and Electronic Signature, a clear framework was established for the use of electronic communications in electronic business and commerce. The established framework could strengthen confidence in new technologies and boost their general acceptance among both consumers and businesses.

2.5 Consumer Protection

The National Assembly adopted the National Consumer Protection Programme on 22 June 2000. The National Programme defines consumer protection policy for the five-year period starting 2001 and ending 2005, earmarking an annual amount of € 1 million for its implementation, almost four times the amount, spent last year. The National Consumer Protection Programme establishes the foundations of the consumer protection policy and priorities for its implementation. It also defines the scope of the public service in the field of consumer protection as well as types of tasks to be carried out on the basis of concessions, and the extent of activities financed or co-financed from the state budget.

3. Institutions and Organisations in Charge of IS Regulations

On 23 March 2000, the Government launched an initiative to establish a regional regulatory telecommunications authority within the framework of the SECI (Southeast European Co-operative Initiative). Slovenia is one of the most developed countries in the SECI group in terms of telecommunications development. With the establishment of such a regional authority Slovenia would become a so-called dispatch centre that would connect the Southeastern European region with other European regions. As the situation in the region is very diverse and differs from country to country (monopolies, political culture, non-adequate legal framework, week educational system) it was suggested that countries should co-operate only in those fields their interests lie. The regional co-operation could speed up investments, economic growth and establishment of a relatively balanced market. In addition, licenses could be issued for several countries. The regional co-operation could open new opportunities for local investors, operators and equipment manufacturers etc. Also, common education and training systems could be established. The Government launched the initiative in order to examine interest in other SECI countries in establishing such an authority.

The recent change of Government might have some impact on the telecommunications sector. However, the Government would concentrate on the implementation of the National Programme for the Adoption of the Acquis Communautaire – including telecommunications and information technology. No institutional changes are expected in the following quarter. The first major change shall be seen with the adoption of the new Law on Telecommunications that envisages the establishment of the Telecommunications Agency – an independent national regulatory authority.

4. International Relationships and Agreements

After successfully concluding negotiations in 1999, Slovenia became a fifty-third member of the WTO Information Technology Agreement (ITA) on 14 June 2000. The Slovene list will come into effect on 1 January 2000. At the Business roundtable on Market prospects for IT Exporters in Slovenia, jointly organised by the Ministry of Economic Affairs, Slovene IT Association and the International Trade Centre UNCTAD/WTO on 7 March 2000 in Ljubljana, members of Slovene IT Association concluded that the ITA would not adversely affect the Slovene IT sector and expressed support to the Government in accession to the ITA.

5 Market

5.1 Privatisation of Telekom Slovenije

The National Programme for the Development of Telecommunications (Official Gazette (OG) of the Republic of Slovenia (RS), No. 23/00, 15 March 2000) envisaged the privatisation of Telekom Slovenije in two phases. In the first phase, which should be concluded by the end of this year, the State should sell up its shareholding in Telekom Slovenije while retaining a 51% shareholding (according to the latest data, the State has a 66,5178% shareholding). By implementing the first phase, the State could bring in a strong strategic partner. The second phase of privatisation should follow after the year 2003. It is not yet known though, what its share of the company would be then.

The Ministry of Transport and Communications published the first public tender for the selection of a consultancy firm for the performance of consulting activities in the drawing-up of a privatisation programme for Telekom Slovenije d.d. in February 2000 (O.G. RS, 14/00, 18 February 2000). No consultancy firm was selected at the first tender, so the Ministry published a new public tender (O.G. RS, No. 48/00, 2 June 2000; Number 2662-1/00-34-0806 Ob-28706).

A public opening of bids for tender took place on 22 June. Three organisations entered the bid, i.e. PriceWaterhouseCoopers, Ernst&Young Consulting and Publikum. The commission, consisted of six members and was chaired by Dr Miro Rozman, State Secretary for Post and Telecommunications, who opened and examined the bids. The commission ascertained that all three bids were valid and complete.

PriceWaterhouseCoopers, London, offered 700 consulting hours and completion of the task in five weeks for the total amount of 25 million Slovene tolars (approx. € 120 thousand). Ernst&Young Consulting d.o.o., Ljubljana, offered 640 consulting hours and completion of the task in seven weeks for the total amount of 29,963 million Slovene tolars (approx. € 145 thousand). Publikum d.d., Ljubljana, offered 840 consulting hours and completion of the task in 45 days for the total amount of 28 million Slovene tolars (approx. € 135 thousand). Publikom also offered additional 37,5 consulting hours.

The envisaged date of publication of the awarding of the contract is 14 July 2000.

II. On-Going Developments

1 New Laws under Preparation

• Law on Telecommunications (c.f. 2.2.1).
• Law on Media (c.f. 2.2.1)
• Law on the Restitution of Investments of Local Communities and Individual Investors in Public Telecommunications Infrastructure; it was submitted to the National Assembly on 11 November 1999 for the first reading by a member of the National Assembly, Mr Roman Jakic. As the restitution of investments is also governed by the new draft Law on Telecommunications, the Government shall propose to the National Assembly to discuss a Law, proposed by Mr Roman Jakic, together with the new Law on Telecommunications.
• Law on Databases in the Healthcare Sector was adopted by the National Assembly at its session on 22 June. The National Council, however, at its session on 27 June by a suspensory veto demanded that the National Assembly reconsiders the Law.
• Law on Changes and amendments of the Law on RTV Slovenia; it was adopted by the Government on 28 October 1999 and is in the proceedings (first reading) of the National Assembly. The proceedings have been withheld.
• Law on Assuring Visibility and Audibility of Programmes of RTV Slovenia and Local Non-Commercial Programmes in Cross-Border Areas with the Slovene National Minority (Porocevalec DZ, No. 72/99, 11 October 1999); it was passed to the National Assembly on 11 July 1999 by a group of members of the Assembly. The proceedings have been withheld.