Telecommunications in Albania: More Costly than Anywhere

27 November 2006

The legal framework in Albania is covered by the Telecommunication Regulatory Entity, the regulatory body on telecommunications and development policies. Although legally its task was to regulate the telecommunications operations and it aims to protect public interests and create transparent regulatory environment, which assists in inciting investments and free competition situation in the telecommunication market in the country is still monopolized and with many abuse cases and corruptive affairs.

Telecommunication technology is now digital and coming closer to European standards but mismanagement and unfair inter-connection agreements between the operators active in Albania have caused incalculable damages for consumers and the country alike.

Landline telephony
Albtelecom Sh.a. is the biggest operator that offers telecommunication services on landline telephony in Albania. Albtelecom offers local, national and international telephone services for its network subscribers and at the same time it supports and links other telecommunications operators in Albania. The main activity is focused on sales of telecommunication services, by offering dedicated lines and broadcasting capacity, internet services, as well as interconnection for all telecommunication operators active in Albania.

Being the only company with national coverage, the Albanian consumers keep suffering the consequences of its monopolistic position, lack of fair competition and obstacles to other companies� entry on the market, which would surely decrease the prices of services.

Apart from this company there are some other rural operators, constantly tolerated by Albtelecom, in spite of the fact that they cost the company millions of euros in lost revenue each year. Seemingly, the landline telephony has lost its competition battle with private Lilliputians, thanks to their good relationships with one or other local or national leadership and the absence of official reactions and sanctions. In 2001 a number of operators entered the market, mainly in rural areas (villages) with a limited number of subscribers � 500 to 1000, 20 of them still operating to this day. In towns, Albtelecom remains the only operator. The only operator from the smaller ones which has a considerable amount of subscribers with around 5000 of them is Hermes, which covers a part of Tirana and Durr�s villages, since during 2001-2004 it has been privileged by the agreements on entry and exit traffic � the percentage of profit for the national and international traffic which is mainly done through Albtelecom equipment discriminated Albtelecom, a matter which has been made public by the State Supreme Audit report.

Albtelecom has around 240,000 subscribers, more than a half of whom are in Tirana. The waiting period for installation of new line in Tirana can reach several months, unless one finds �a friend who has a friend who knows somebody� or pays three to four times higher than the actual charge for installation. Bigger towns remain a problem regarding capacities offered by Albtelecom, especially its main exchanges� links to the subscribers. In smaller towns, the situation is reversed, the capacities are there, but no demands. Taking into the account that number of requests is high and the problem of network and subscribers modules at the exchanges (no capacities); the second ties employees (technical staff) abuse their duty and offer lines at alternative prices.

In December 2003, this company increased the price for local calls from 0,012 euros to 0,024 euros per minute, but this decision was strongly opposed by the citizens, NGOs and political opposition of that time. For this matter, the Citizens Advocacy Office and �Mjaft� Movement organized protests supported by the huge numbers of citizens of the country, which pushed the government to bring down the prices to previous levels. These protests were widely covered in the mediums such as Gazeta Panorama and in many online forums like the Albanian Forum.

In 2004, a tender competition for privatization of the company was prepared by the Government, which later caused numerous accusations of corruption because of the many violations of tender procedures. It didn�t have anything to do with actual liberalization of markets or increased competition, but was designed rather to change the ownership of the company, and transfer the company from public to private hands. The tender for privatization of Albtelecom was conducted in mid-2005, and was won by Turkish company �Calik Enerjie�. All serious companies withdrew from the tender and the sale price was 120 million euros, including here the license for the third mobile operator. Compare this with Montenegro Telecom, which got the same price, albeit its subscribers� base is 50% less then Albtelecom.

The change of government led to the Parliament sanctioned external audit of the privatization, in October 2005. The company contracted to conduct the audit was the Czech �Deloitte Czech Republic�, which detected numerous violations of the tender procedures. Currently, the Albanian government is negotiating a review of the sale contract points with �Calik Enerjie�. If negotiations fail, a new tender will be announced for sale of Albtelecom. A group of Albanian businessmen have promised that they will offer a bid of 200 million euros to the Government in case the agreement with the Turkish company is annulled.

Albtelecom has continually been an object of control by different structures, such as: Supreme State Audit, Parliamentary Inquiry Commissions, People�s Advocate and International Telecommunication Union (ITU) which have concluded procedures violations, abuses and harmful agreements to the prejudice of the company. During its control during 2004, SSA concluded violations and abuses caused by the high managers of Albtelecom, seven of whom were submitted to criminal procedures and 27 others were asked to be relieved from their duties. Abuses were found in the currency exchange financial actions by the company in a single bank, in employees� health insurances, in salaries, diets and rewards given without any criteria.

Mobile Telephony
A similar situation dominates the mobile telephony market. The two active operators in Albania, AMC (Albanian Mobil Telecommunications) and Vodafone have established a duopoly situation thus setting tariffs to their interest. Studies made by the field specialists and conducted verifications have concluded that tariffs of mobile telephony applied in Albania are the highest compared with European market, but also with the tariffs applied by the neighboring countries thus paying 0,5 euro for each minute of national call talk.

Civic and different NGO movements haven�t been lacking for changing of this situation. On June 8 this year the protest �Turn of your mobiles� was organized by the Anticorruption Network and it was massively supported not only by the citizens but also by different politicians.

Since 2002, the People�s Advocate has reacted on several occasions to the Telecommunication Regulatory Entity and the Ministry of Transport and Telecommunications about the unjustifiable rises of mobile telephony prices by the two companies which currently operate in the Albanian market. In July this year, members of the parliament and representatives of company shareholders held a hearing session with the Ombudsman about this problem.

As an outcome of increasing pressure of civic movements and NGO�s, the Competition Authority declared AMC and Vodafone as Operators with Sensitive Power. According to ERT, AMC and Vodafone offer services that cover half of the Albania population and as such they meet the legal conditions to be declared Operators with Sensitive Power in the Market which resulted that in September this year the two companies had to decrease their tariffs into 0,34 euros for each minute talk in national level, though they still remained in high levels.

Aiming to bring down the duopoly effect of these two companies it was decided that the third license is given to Albtelecom, EagleMobile but works of this operator haven�t started yet.

Internet Service Providers
According to INSTAT (Institute of Statistics) only 1,5% of Albanian families have internet installation at home, and only 33,7 percent of families which have a landline telephone, have also an internet connection in their home. Such households are predominantly found in the bigger towns and cities.

According to ISPs, there was a great rise in numbers citizens interested in these services, resulting in a constant growth of number of subscribers. However, the majority of subscribers are private companies, banks, enterprises, state institutions, schools and universities and foreign companies. Households mainly use Dial Up connections, while institutions and private companies in main towns use broadband connection.

Albaniaonline
Albaniaonline SP is the first company which offered internet services at very high prices, so that only a limited number of people could afford them. This company operates mainly in Tirana with ISDN, ASDL and fiber optic while in other towns it offers Dial Up connections. For setup of broadband internet, AOL charges 500 euros fee, with a monthly subscription of 199 euros while the speed of the service offered is 128 kb/sec.

This company has extended its services in the telephony market based mainly on VoIP, a much discussed service for unfair agreement with Albtelecom. AOL has signed an agreement with Albtelecom for prepaid card service with numeration 0801XXXX and it doesn�t function. It has included in the market VOX card without a license and out of the agreement obligations it has with Albtelecom. Two AOL telephone numbers, 251644 and 251660, work around the clock and the call is registered as local traffic call with very low tariffs, while their traffic is de factointernational. Traffic which has been alternated from AOL into national, in cooperation with these 5-6 rural operators, towards Albtelecom and all other rural operators, has been equated in the national and regional traffic which Albtelecom does with 240 thousand subscribers, at a level of 3 million minutes per month. As a consequence, entering international traffic in Albtelecom fallen from 6 million to 3 million minutes per month.

Abissnet
Abissnet is a non-virtual ISP and it offers high speed bandwidth. This company is applying Internet Wireless Broadband service for the general public in urban and distant areas where installation of network cabling is impossible or costly. Prices of this company vary from 100 to 200 euros a month and from January 1 this year it has launched the �Internet for Education� project, offering such free internet for all public secondary schools with computer labs.

Other companies which offer internet service in Albania are: ADANet, Inter Alb, Albania Business Communication, etc. which use different technologies; cable and Dial Up.

Currently the internet service in all Albania is offered by Albtelecom through Dial Up at a price of 0,5 euros per hour, but speed is far from desirable. Albtelecom remains better alternative for citizens (only in Tirana) as far as the market price with 50 euros monthly subscription for 256 kb/sec, a price which is duly to decrease during the next year. Most of the internet cafes in Tirana have changed ISPs, moving to Albtelecom because of the price offered. Albtelecom aims to decrease its price to 20 euro in the following year.

Albanian citizens will still remain far from internet since the tariffs offers by all the existing ISP�s are not affordable by random Albanian families.