Hanging on the telephone: candidate countries in fix over ageing networks

Date: 03/10/02

By Peter Chapman

AS LEADERS of the EU's long list of hopefuls sit excitedly at the end of the phone waiting to hear when the Union will let them join, there could be one big problem.

Many of the candidate countries have telecommunications networks that still belong in the Stalin era - hardly the information society that the EU wants to construct.

Erkki Liikanen, the enterprise and information society commissioner, has released figures showing that Malta and Cyprus have similar numbers of fixed phone lines as the EU's current members - around 60 lines per 100 people.

But hop on a plane to most of the other would-be entrants and the sector is far less developed, ranging from 41 lines per 100 in Slovenia to a pitiful 18 in Romania.

There are two main reasons for the fixed phone failure.

One is the steady growth in the popularity of mobiles, particularly in the cosmopolitan cities of Eastern Europe.

In the EU many old-fashioned phone networks were revamped before mobiles took off. In the east, operators saw less need to spend their florints, crowns or zlotys on digitising fraying old fixed systems if they could skip a generation and move straight into the mobile age.

Secondly, the process of liberalising traditional fixed telecom markets - a prerequisite for becoming a member of the Union - includes the need to 're-balance tariffs' to ensure fair competition and transparency.

This means that local phone calls can no longer be charged at artificially low prices, subsidised by exorbitant rates for long-distance calls. This has left some poorer citizens losing out.

'We are told that as prices have been realigned with costs, which is required by EU law and is unavoidable in a liberalised market, some subscribers have been giving up their telephone service because they can no longer afford it,' Liikanen told a telecommunications conference in Pärnu, Estonia recently.

So far only five candidate states - the Czech Republic, Estonia, Hungary, Poland and Slovenia - have actually liberalised their fixed-line telecommunications networks.

The Finnish commissioner insists that liberalisation should not price customers out of the market, adding that everyone should have access to an 'affordable basic service'.

While the unfettered mobile industry is a booming business across the candidate countries, the comparison with the existing EU is as uneven as the signal for a GSM call.

Mobile penetration in the EU-15 is between 60 and 80 in every country, whereas in the accession states it ranges from 18 in Romania to 69 in Slovakia.

With figures like that, perhaps the EU had better forget about phoning through with the good news about enlargement - and post the lucky winners their membership cards instead.

Article discusses the problems facing the candidate countries over liberalisation of their telecommunications networks.