Econ Ministry opposes deregulating fixed-line communication tariffs
MOSCOW. Oct 22 (Interfax) - The Economic Development Ministry has criticized a proposal from the Federal Anti-Monopoly Service (FAS) to deregulate tariffs charged by the natural monopolies in fixed-line communications.
Instead, the ministry proposes maintaining state regulation under the existing arrangement, with annual indexation of the maximum tariff based on the socioeconomic development forecast, transitioning in 2017 to indexation of the maximum tariff under the formula: inflation minus the productivity improvement factor.
The ministry's response to the FAS initiative and its own proposals are contained in a letter sent to the government administration, the FAS and the Communications and Mass Media Ministry and signed by Deputy Economic Development Minister Nikolai Podguzov.
The head of the Communications Ministry's reform department, Oleg Musienko, confirmed that the letter, a copy of which has been examined by Interfax, was sent.
State-owned Rostelecom and Moscow City Telephone Network , which is owned by Mobile TeleSystems (MTS) , are the biggest monopoly operators in the fixed-line segment.
The Econ Ministry argues that the FAS is in effect proposing the rapid deregulation of the sector despite the lack of a statutory base and without a reckoning of the technological specifics of the communications networks and the negative impact for the sector, subscribers and the state.
The FAS proposes replacing state regulation of tariffs with monitoring. The agency argues that the fixed-line operators in 175,400 localities, which include 97.3% of the population, no longer exert a decisive influence on the market, since access to mobile communications is already greater than fixed-line communications.
But the Economic Development Ministry disputes that idea. Due to variations in consumption and the characteristics of fixed and mobile communications services, it is premature to conclude there is a single communications market, the letter says.
Communications and Mass Media Minister Nikolai Nikiforov has said his ministry is prepared to support the FAS proposal so long as a mechanism for safeguarding consumer rights is found.
But Podguzov notes in the letter that replacement by mobile communications rule out higher tariffs for the fixed-line monopoly operators. He also cites public opinion polls that show consumers oppose deregulation.
State regulation does not restrain competition in the fixed-line segment and protects consumers "from arbitrary and unscheduled price hikes," the letter says.
Deregulation can only be implemented efficiently if "last mile" rules are liberalized or if fixed-line numbers are made portable, Podguzov said.
