Silknet questions optic fiber cable tariffs
26 May, 2011
Silknet questions optic fiber cable tariffs

Silknet, a monopolist of fixed line cable infrastructure, hates to pay non-contracted increased tariff to Georgian Railway LLC, the state owned railway monopolist owning also the trunk optic fiber cable that provides all three South Caucasus countries with the internet.

Georgian Railway assures tariffs were increased to Silknet through the contract.
Georgian National Communication Commission (GNCC) has to solve the tariff-and-contract dispute between Georgian Railway and Silknet unless sides will not achieve an agreement till May 31, 2011.
The dispute emerged after Georgian Railway raised annual transmission tariffs fixed as GEL 300 thousand for its optic fiber cable to roughly GEL 800 thousand in 2010 under the pretext that prices at the market increased generally and Silknet, that within itself is a monopolist owner of fixed line underground cable network throughout the country, increased similar tariffs to other Internet Providers (IP) that use Silknet service.
Silknet was founded in 2010 through merger of three companies including United Telecom of Georgia (UTG) that actually owned the fixed line cable infrastructure covering entire Georgia and enjoyed the largest fixed line consumer coverage, Wanex –an internet provider, and Ajara Elektrokavshiri [Ajara Electrocommunication] – a fixed line provider in Ajara region. UTG also started IP business in summer of 2007 and beforehand raised its tariffs fixed for broad band cable service as GEL 3.5 per DSL unit to GEL 21 in April of 2007. However GNCC cut the tariff to GEL 11.68 ultimately.
Commensurately, Silknet including the UTG within itself enjoys these tariffs at the moment and Georgian Railway that is responsible for management and maintenance of the main optic fiber cable running alongside the entire length of the main railway line [that is a part of Caucasian railway corridor and takes 1323, 9 km] and provides with the internet Azerbaijan and Armenia as well believes it has full right to enjoy higher tariffs too.
“The contract empowers Georgian Railway to oversee tariffs each year based on the decision of international audit we carry on each year,” Irma Stepnadze, PR Manager of Georgian Railway, said.
The cable consists of 12 line pairs out of which Silknet owns 4 pairs and one is owned by Railway Telecom LLC, a Georgian Railway asset handed to the Ministry of Economy and Sustainable Development of Georgia in 2010. The state structures including interior and defense ministries are allegedly using the remainder line pairs, but Georgian railway neither approved nor denies the information.
Silknet assures that the raised tariffs are not valid as they  were not built in the contract of 2010 as Silknet finds the tariff hike groundless and refuses to pay it. To escape possible halt of service Silknet appealed to communication regulatory body with the request to ensure its admission right to the optic fiber. Silknet does not make official comments till the two-week negotiations with Georgian Railway are completed. But a trustful Silknet source informed Georgian Journal that Georgian Railway cannot claim for as high tariff as the Silknet as far as the optic fiber cable infrastructure that exposes on the surface and frequently is damaged differs from the well-secured underground cable infrastructure of the Silknet laid deeply in the ground.
“The optic fiber cable is not laid underground throughout the entire length and is not as protected as the underground cable infrastructure of the Silknet, in some places it runs in the air, or across the rails at bridges, or is laid only at depth of 20 centimeters while our cable network is deeply laid in the ground and is absolutely secured. You all remember how a woman digging potatoes in the yard cut the optic fiber cable accidently leaving the entire region without internet recently. Commensurately our services differ very much and similar tariffs cannot be fixed on them,” The Silknet source told GJ.
GNCC confirms that these two cable infrastructure are not similar but refrains to make more in-depth comments till the negotiation period required by disputing sides expires.
Georgian Railway assures that the new tariff was proposed to the Silknet in full observance of contract terms, and that it has full right to increase tariffs based on annual international audit data.
According to GNCC, the disputed contract was not signed in fact and GNCC will undertake due efforts to regulate the conflict without court.
Georgian Railway legal experts say they already sue Silknet through court and the court decision will be made public.