National Regulatory Agency for Electronic Communications and Information Technology of the Republic of Moldova

The National Regulatory Agency for Electronic Communications and Information Technology (ANRCETI - www.anrceti.md) considers that the Tariffs Adjustment Program for fixed telephony services, proposed by Moldtelecom to be implemented as of March 1, will eliminate the cross-subsidization of services provided by JSC Moldtelecom, which will boost the development of the fixed telephone market, enhance competition and attract new investments in the sector, factors which will bring long term benefits to end users.

A statement to support the proposed actions was made by Sergiu Sitnic, ANRCETI Director. He said the Agency had considered the proposals outlined in the program and regarded the exercise of tariff adjustment to costs for local and international fixed telephone services as necessary and justified. According to him, one of the main goals of this program is to remove the subsidization of local telephone service from other services provided by Moldtelecom, a practice prohibited by the legislation in force. Such practice as cross-subsidization of services, low retail prices and high wholesale prices led to stagnation on the fixed telephony market and the unsatisfactory development of the broadband market.

The Director said that the tariffs for fixed telephone services provided by JSC „Moldtelecom” have not been changed since 2004. In 2002, for the purpose of preparing the telecommunications market for complete liberalization, the Agency approved, after consultations with the Government, the tariff rebalancing plan, for basic public services provided by JSC “Moldtelecom”. Of the four stages planned for tariff rebalancing, only two were implemented: the first – on February 1, 2003, and the second – on February 1, 2004. The partial adjustment of tariffs to costs facilitated the entrance of alternative operators on the market and was an incentive for competition development. In 2004 - 2007 the number of alternative operators increased from 5 to 16, their market share increased from 0,42% to 3,9%, followed by a stagnation, and a decrease after 2008. Currently their market share is 1,1%. According to the statistical reports provided by JSC „Moldtelecom”, the revenues collected from local telephone services make only 55% of the costs incurred by the operator for their provision, while the 45% deficit is subsidized from the revenues generated from international telephone services and interconnection with other operators. The subsidization of services affects the activity of alternative operators, blocks competition on this market, which make the development of telephone services impossible, especially broadband access services, said Sitnic.

In another context, Sergiu Sitnic said that the Agency required that Moldtelecom provide its subscribers with information about the implementation of new tariffs and give them the opportunity, with effect from 1 February 2011 and if necessary, to apply for new subscriptions. In order to choose the right service plan, we recommend that subscribers review the number of call minutes, consumed per month over the past 3 - 6 months, the subscriptions offered and finally make a decision which one is most convenient for every subscribers. We draw the attention of the current owners of Economy and Standard subscriptions to the fact that they will be automatically transferred to the new Standard subscription, unless they apply for other new, more attractive subscriptions (in writing), such as Optimal 300, Optimal 500 or Optimal Unlimited, said Sergiu Sitnic. He noted that subscribers can receive more information on this topic on website of JSC „Moldtelecom”: http://www.moldtelecom.md/ro/news/474/ or in the company’s offices throughout the country.

February 3, 2011