Russian Operators Opposed Monopolization in the Telecom Market
The major players of the telecom industry gathered at the expanded Round Table in the Chamber of Commerce and Industry chaired by Head of the RF CCI Council for Development of Information Technologies and Digital Economy; they discussed the issues of profile market regulation and improvement of legislation.
Participants of the event discussed the draft concept of development of television and radio broadcasting for the coming years. According to the operator business representatives, current version requires significant improvement in terms of the technology development and established business practices securing the interests of society and the state.
According to Nikolay Komlev, Chairman of the RF CCI Council for Development of Information Technologies and Digital Economy, creation of the fundamental concept for the entire industry implies the broadest circle of participants. Moreover, it needs to be updated regularly, since the market experiences boosting changes in the times of accelerated digitalization of economy.
As Komlev noted, some of the solutions proposed evoke categoric disagreement among operators. For example, the concept implies introduction of uniform software provider, which contradicts the market principles, because a market participant acting as a uniform supplier, receives absolute priority.
Moreover, the model implies total monopolization of video content distribution services, resulting in the risk of declining broadcast quality even with minimal signal failures. “Any problems occurring inside the infrastructure or software will lead to global accidents that would affect population of the entire country,” — added Oleg Karadzhi, Director of the Department for Media Information Systems Development of Vimpelcom PJSC.
According to the draft concept provided, monopolization of the measurement system of video content distribution on the Internet is envisaged. Today, owners of audio-visual services apply their own effective measurement systems, and their data may be used by other market participants under the existing legal conditions. Centralization of measurements appears to be redundant, and will limit development of content distribution on the Internet, said Olga Laneeva, representative of MTS PJSC.
According to German Klimenko, Co-Chairman of the RF CCI Council for the Development of Information Technologies and Digital Economy, centralization in the broadcasting market will lead to market competitiveness loss. Many operators have already budgeted for the risks from such centralization, having suspended a number of projects to develop business of their own, as well as the industry. “Telecom develops according to its own laws, and it is not necessary to reverse the rivers,” — Klimenko summarized. He is sure that “one-window” mode and obligations for operators to work only through the uniform supplier will eventually lead to higher TV maintenance costs for the state. At the same time, the remaining projects beyond the scope of state services will move to the Internet environment completely.
Meanwhile, as they noted in ER-Telecom Holding JSC, the strategy has not sufficiently elaborated the problems of infrastructure development, while introduction of digital television in the Internet space catches up with performance indicators of on-air broadcasting. Digital infrastructure is a key factor in development of video and television viewing. “Operators annually invest 10-20% of revenue in infrastructure projects; infrastructure development is the significant factor that must be taken into account in terms of strategic documentation”, — summarized Maksim Fayazov, Head of Interaction with State Authorities of ER-Telecom Holding JSC.
Experts agreed that the concept version presented takes into account the broadcasters' interests most, and seems to ignore the processes most important for operators.
Thus, representatives of MegaFon Company have focused on the principle of uniform version of TV channels in all environments, regardless of the type of device and content distribution environment. “In the new environments which include OTT, video content must be broadcast unchanged, fully repeating the on-air version. This is beneficial both for citizens who receive a uniform version of TV channels, regardless of the type of equipment used for viewing, and for communication operators, as it provides them with an additional opportunity of developing the contemporary OTT services. It is equally beneficial for broadcasters and advertisers: audience grows due to new environments, the opportunity to monetize targeted advertising in OTT arises”, — commented Nikita Danilov, Head of Legal Relations with Executive Authorities of MegaFon PJSC.
Special attention was paid to the governmental support issues. Current version of the strategy implies subsidies for multiplexes — packages of digital television channels which operator is obliged to provide to the public free of charge. “The first multiplex provides the public with all the necessary socio-political information, whereas the second multiplex was originally created and continues to operate as entertainment television. At the time of creation of the second multiplex, it was assumed that coverage of on-air broadcasting costs would be provided at the expense of the broadcasters own funds. But in practice, to fund that package of channels, the state allocates billions annually. Thus, the issue of feasibility of creation and financing another, third multiplex which is also included in the concept, arises” – said Vladislav Luzgin, Head of Tricolor Cluster for Interaction with State Authorities. “The state will be forced to allocate billions of rubles annually, to support TV channels of the third multiplex. Huge costs will be also incurred by operators. Let's judge by the example of satellite operators: satellite capacity is limited, so they will be forced to disconnect some of the available channels in order to raise the third multiplex channels to the satellite. As a result, we will get an immensely negative effect for the industry, and the cost of maintaining additional TV channels will fall on the taxpayers' shoulders”, — emphasized Luzgin.
Operators cleared their position stating the need to involve in broad industry discussion and concept development of all business sectors engaged.
Summarizing the meeting, participants of the discussion prepared certain proposals concerning the restating strategic document. Resolution with recommendations will be delivered to the industry ministries and departments, as well as to the Committee on Information Policy, Information Technology and Communications.