Non-governmental Crusade against GNCC
07 February, 2013
Non-governmental Crusade against GNCC
Georgian communication regulatory body is accused of violating competition rules and protectionism. Non-governmental Association of Young Financiers and Businessmen has submitted to the General Prosecutors’ Office of Georgia the corresponding claim that demands to investigate the regulatory body’s activity. Meantime, the Head of the accused office is in a three-month vacation. Another non-governmental watchdog Transparency International Georgia finds such a long-term vacation suspicious and asks the Parliament to examine the issue.
Association of Young Financiers and Businessmen (AYFB) accuses Georgian
National Communications Commission (GNCC) of violating of market competition rules, of protecting of certain market players, and blames Chikovani with the misuse of his power. On January 31, 2013, AYFB submitted an official request at Prosecutor’s Office to investigate the GNCC and Chikovani’s activity.
AYFB indicates on two key violations of competition rules such as unfairly established interconnection tariff rates fixed for cell operators to pay to each other for reaching networks of each other in order to provide thorough coverage service to subscribers; and unfair charging system for administration porting of numbers.
According to Nodar Chichinadze, Chairperson of AYFB, in case of fixing interconnection tariffs GNCC acted in favor of Mobitel [a part of Russian-based VimpelCom Group] largely known as Beeline that enjoyed preferences and has been subsidized by the remainder two market players Magti and Geocell [a member of international cell market player TeliaSonera Group] for around a year that is a discrimination of Magti and Geocell forbidden by law. As a result, instead of 14.8 teteri fixed as an interconnection charge for Magti and Geocell to Beeline the latter paid back almost half-price making 8 tetri. GNCC explains that unlike Magti and Geocell with over 40% of market share Beeline was not a significant market player as its share fell below 15% that is defined by law as a benchmark for the title of significant market player.
Chichinadze assures that Chikovani’s office did not revise the tariff policy even after Beeline crossed the 15% notch by May of 2011 and cut down the said tariff only starting February of 2012 thus gifting almost a year of undeserved preferences to Beeline. However, the new tariff Magti and Geocell have to pay to Beeline today is still by 3 tetri higher that the tariff Beeline pays back.
As to breakages in law made during adoption portable number service in Georgia since February of 2011, AYFB discerns an apparent corruption scheme. First of all, GNCC exceeded its commission by announcing the tender for administrators of porting service in July of 2010 as the law did not authorize GNCC to call for administrator company. The amendment empowering the GNCC with this right was made only in April of 2011 after the tender was completed and the administrator company selected. So the process was not legitimate from the very outset.
Secondly, out of three tender participants, including Ket &Ket Media, Gantek and MediaPro Georgia, GNCC chose the least reasonable bidder: Ket &Ket Media was dismissed due to lack of official paper certifying its experience as an administrator of data basis; Turkish Gantek Group having 24-year background is porting administration that has already developed similar portable numbers administration service in Turkey, was disqualified for demanding high service tariffs. Gantek suggested to charge cell and fixed line operators by EUR 660 thousand yearly on 85 thousand ported numbers. The winner was MediaPro Georgia suggesting to charge by 38 cent per subscriber but all registered numbers irrespective the number is ported or not.
At first glance, Gantek terms looked less reasonable indeed but after in-depth calculation AYFB came to conclusion that the total price paid for Gantek charging only ported number might be four-fold less [as far as there are only 110 thousand numbers ported since introduction of portable numbers in 2010 up to this day] compared to the current price paid to MediaPro Georgia that charges all existing cell and fixed line numbers making around 6 million totally. Consequently, MediaPro with just 3 employees enjoys GEL 5 million of yearly income.
“So the company that GNCC called as a winner in the tender takes GEL 5 million per year while its competitor suggested four-time less payment in fact during the tender that looks suspicious,” Chichinadze told GJ.
There were several attempts made by cell as well as fixed line operators to protest illegal activity of GNCC relative to both interconnection tariff rates and portable numbers charging system. Some tried to solve the issue by claims submitted at GNCC, some went to court but all to no avail. And since the law provides GNCC as an independent regulatory by high level of immunity equivalent to MPs’ immunity GNCC’s activity can be either investigated by Prosecutors’ office on grounded claim or researched by Parliament to which the GNCC is accountable. Even the President cannot dismiss any GNCC commissioner without approval of the legislative body and only after court ruling on a possible appeal by the commissioner is completed.
Chichinadze believes there are sufficient evidences to make Prosecutors’ office interested in GNCC case. On the other hand, Transparency International Georgia (TI Georgia) appeals to Parliament to take an interest why Chairman of GNCC, Irakli Chikovani, has not been in office since November 6, 2012 and is expected back only on February 15, 2013.
Absence of Chikovani at such an important moment when the regulator body is currently involved in several policy processes, including the perusal of the law on broadcast and the most important preparations and discussions on the switchover of digital terrestrial television may affect the GNCC’s ability to act and make policy decisions, TI Georgia reported on January 31, 2013.
Chikovani is paid very well to do his job. He is one of the highest paid officials in the country with a monthly remuneration of GEL 18 thousand per month plus an income of GEL 1. 413 922 from private sector activities in 2011 – and earns significantly more than the government. President of Georgia with GEL 4720 of monthly payment falls by almost four-fold behind Chikovani’s salary.
Moreover, Chikovani, a former director and shareholder of the largest private TV station Rustavi 2 imputed to be patronized by ex-ruling National Movement political party that lost its office after elections of October 1st in 2012, has been a controversial figure. TI Georgia’s earlier researches revealed the conflict of interest of Chikovani’s business as he co-owns Magi Style Media, an advertising agency that, among other services, offers outdoor advertising, broadcast design and the production of TV ads.
“There is nothing illegal in taking vacation as such but when Chikovani takes vacations of 2011, 2012 and 2013 all at once, that means he did not use vacations for over two years and leaves the office now when GNCC has to handle with important issues and regular consultancy with the Head of the Commission is necessary in daily regime. Therefore we recommend the Parliament to follow the developments in the GNCC and to establish whether the chair of the Commission know whether intends to continue working in his current position, and what the reasons for his long absence are,” Mamuka Andghuladze, a media expert with TI Georgia, told Georgian Journal.
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