The Parliament of Georgia head the report of Kakha Bekauri, Chairman of the Communications Commission. The meeting was attended by the owners of the largest mobile operators in Georgia - MagtiCom and Silknet, who had criticized the activities of the commission.
One of the main issues discussed at the meeting was introduction of a regulation on a mobile virtual network operator (MVNO), which should come into force on December 31, 2022.
MagtiCom and Silknet are against this regulation.
Giorgi Ramishvili, a businessman and founder of Silknet declares that if the regulation remains in the same form, virtual operators can be formed by holdings associated with banks and win over subscribers from communications companies.
Another issue raised by the Silknet founder was the European experience, which showed that introduction of ex-ante virtual operators was implemented in only 5 out of 27 EU countries, and after 2007, no EU country has adopted the similar regulations.
"I want to clarify some topics to make it clear to the public about MVNO. Ex-ante regulation has been introduced in only 5 out of 27 EU countries. This is a forced and non-European regulation, which has been enacted merely in Cyprus; Ireland; Malta; Slovenia and Spain. This ex-ante regulation has not been introduced in the EU since 2007. This means that it failed. In terms of prices, Slovenia is the country with the lowest per capita income in the EU, which amounts to EUR 16; If we compare it with Georgia, here it is USD 2.5. To say that prices are high in Georgia, it is not so. Georgia has one of the lowest prices. This is the second conclusion we made with the company "Mason". As for the "ex-ante" and "ex-post" regulations, "ex-post" regulations are adopted throughout Europe.
We have been negotiations with with Mr. Kakha [Bekauri] and Mr. Vakhtang [Abashidze] for two years and reached the agreement, which implies that Silknet will do it with “ex-post" regulation.
We signed this agreement on December 3rd and this contract was forwarded to the regulator. We deeply hope that this agreement will work, however we do not take the responsibility for it.
I hope it will be with the "ex-post" system and will not be with the "ex-ante" system. The findings of both Mason and DLA Piper show that "ex-ante" system is accompanied with high risks.
I try to explain it, as there are so many variables and details in this sector, that many people cannot understand them.
For example, the largest part of Georgian banking sector is divided between two banks, the owners of these banks, have the largest leverage to win over the maximum number of good customers with this ex-ante regulation.
To confirm the problematic nature of this regulation, we have also brought the Dentons’ report. We have agreed with the regulator that as soon as the first contract is signed, the regulator will leave the ex-ante regulation. My question is, when will you repeal this regulation? We have already fulfilled our promise and sent the contract," - Giorgi Ramishvili said.
According to Kakha Bekauri, so far, the Communications Commission has not defined the rules by which introducing of virtual operator with “ex-ante” is abolished. Bekaruti notes, that he cannot speak on behalf of the entire commission.
However, Bekauri says that just concluding a contract between the mobile operator and the future operator of the virtual network is not enough and a real example will be if a virtual operator is created. However, in order for the commission to cancel the Ex-Ante rule, the company does not have to be a person related to the mobile operator.
Ex-Ante regulation is not in force today. Its enactment period is set by the decision of the commission from December 31, 2022. The Commission is an independent body that makes decisions by a majority vote of 5 members.
“I will tell you directly my position - you said and stressed that we agree and there is agreement with the commission, obviously this official correspondence exists. The letter states that a precondition for this could be established and the commission would consider revoking the pre-regulation if a non-independent person would enter into a contract with a virtual operator and start practical activities, which would mean access and practical provision of mobile telecommunications services. If we have such data, I repeat today that this will be the basis for us to consider the issue of repealing the Ex-Ante regulation," said the chairman of the Communications Commission.
A mobile virtual network operator (MVNO) is a wireless communications services provider that does not own the wireless network infrastructure over which it provides services to its customers. An MVNO enters into a business agreement with a mobile network operator to obtain bulk access to network services at wholesale rates, then sets retail prices independently. An MVNO may use its own customer service, billing support systems, marketing, and sales personnel, or it could employ the services of a mobile virtual network enabler.
