OREANDA-NEWS. September 17, 2010. Regarding the draft Federal Law “On Introducing Amendments to Article 2 of the Federal Law “On Communications” (in the part of clarifying the concept of a “provider with an essential position within a public telecommunications network)”, prepared by members of the State Duma of the Russian Federation, the Federal Antimonopoly Service (FAS Russia) finds it necessary to specify the following, reported the press-centre of FAS Russia:

The draft Law intends to introduce state tariff regulation of the services for traffic connection and transmission, rendered by cellular service providers to other providers.

As was reported earlier, FAS Russia did not agree upon this draft Law and the draft of the official opinion of the Government of the Russian Federation, formulated by the Russian Ministry of Communications.

According to FAS Russia, the proposed changes unreasonably expand the range of providers subject to government regulation, in particular, expanding it to cellular service providers.

The market of telecommunications services is rapidly developing, with most prominent results typical for competitive markets. Since 2002 the number of subscribers of mobile telephone communications in the Russian Federation has increased by a factor of twenty, while the rates for these services have fallen down tenfold. The rates for traffic transmission offered by cellular providers do not differ from similar rates applied by the “essential” providers.

Introduction of tariff regulation is only possible in case of considerable market distortion in specific sectors of the economy (for instance, natural monopolies), Price regulation of competitive markets will drive up companies’ production costs, which will have adverse consequences for consumers and create additional unjustified administrative barriers for entry to the telecommunications market. Such changes can also adversely affect investment climate both in the telecommunication sector and in Russia in general.

This is not the first attempt to expand state regulation to particular segments of the telecommunications market by introducing amendments to the Federal Law “On Telecommunications”. Earlier FAS Russia repeatedly issued negative conclusions about similar draft laws, and the FAS’ position was supported by the industry regulator and the Government of the Russian Federation.

The draft Law prepared by members of the State Duma of the Russian Federation does not cover the tariffs for the services of mobile telephone communications in roaming. In September FAS Russia will consider the relevant antimonopoly case initiated against “MTS” OJSC, “VympelCom” OJSC and “Megaphon” OJSC.

As far back as 2001, when discussing the new version of the Federal Law “On Communications”, FAS Russia proposed that service providers subject to government regulation should be determined on the basis of dominant position rather than purely technical criteria, which is much more in line with world best practices.

Currently the largest providers are subject to regulation under the law on natural monopolies, the law on competition and the law on communications. The criteria used to classify a service provider as an “essential” provider fail to meet international standards.

At the moment FAS Russia is elaborating its proposals for modernizing approaches to state regulation. According to the proposals, the concept of “a providers that has essential position” should be abandon as such, and under the law on natural monopolies tariff regulation should be applied to companies – natural monopolies. Companies that have dominant market position should be subject to control and enforcement under the antimonopoly law.

In the near future FAS Russia’s proposals will be forwarded to the Government of the Russian Federation and the relevant federal executive bodies.