Emergence of state operator would lead to state monopoly over mobile phone services, independent experts say :: Charter'97 :: News

Independent analysts fear that if the government grants the third GSM license to a company wholly owned by the state as suggested by Aleksandr Lukashenko, this may lead to a government monopoly over mobile phone services. While speaking at Wednesday`s government conference on the development of mobile telephony, the head of state said that awarding the license to a state-owned company would help keep profits within the economy. Mr. Lukashenko gave his government until September to look into the feasibility of establishing a state-owned cellular provider.

The government holds controlling interest in the nation’s two existing GSM providers, Mobile Digital Communications (Velcom) and Mobile TeleSystems (MTS).

Economic expert Valery Dashkevich told BelaPAN that he was concerned about the government’s tendency to assume control over each profitable industry. “It’s certainly possible to create such a company, say, as part of the Beltelecom organization, but it would find it had to compete with the two existing providers.”

Mr. Dashkevich expressed the opinion that the government might try to force Velcom and MTS out of the market, using tax levers. “In this case, we’re in for a government monopoly, which is the worst thing for a market economy.”

Yaroslav Romanchuk, head of the Ludwig von Mises Research Center, said he was certain that bids would be accepted from previously approved companies only, and that the winner would be predetermined. “The winner would enjoy preferential terms, which would enable dumping at the cost of subsidies," he said. "As a result, the existing GSM providers would face unfair competition and the country`s cell phone users would be affected by the monopolistically low quality of service.”

Both MTS and Velcom, as well as BelCel, the country’s sole CDMA provider, have provided no comments.

The Ministry of Communications invited bids for the third license at the end of June. The winner must form a joint venture with the state-run Minsk City Telephone Lines, which would hold a 51-percent stake.