First signs of liberalization in Telekom sector have started to appear. Turk Telekom is stated to be planning a huge reducing in international immobile phone calls. Turk Telekom officials state that this reducing is not a change in the tariff, therefore an authorization from the Institute of Telecommunication is not required.
For international phone calls, Turk Telekom applies different tariffs for countries divided into 4 Charge Bands, presently. When making a call with a first charge band country, time allowed per unit is 5,6 seconds. A one minute phone call with first charge band countries costs 771 thousand 429 TL in automatic calls and 1 million 250 thousand TL in manual.
The reducing for external calls which Turk Telekom will make, is reported to possibly reach a rate of 80%. It is also reported that the reason for such a great reducing by Telekom who had raised internal phone call prices 2 months ago, is “not to loose the market against large and small scaled voice traffic operators that will get into the market after the liberalization.
Actually similar strategies were experienced during liberalizations in other countries. Giant, local and often government-owned telephone companies, so called incumbents attend to affect the competition on their favor by raising prices in internal traffic and reducing the prices in external traffic just before the liberalization. However in those reducing processes the incumbent firms and the regulative organizations in respective countries, being counterpart of Institute of Telecommunication in Turkey, have fixed reducing rates together.
However a stronger step is indicated in Turk Telekom’s strategy. This step is described as a huge reducing reaching around the rate of 80%. Nowadays, it is known that all firms planning to carry voice traffic are making their last preparations for tariffs. These firms form their preparations considering Turk Telekom will make a reducing around a rate of 20-30%. That is the point where Turk Telekom seems to be planning to make a completely shocking operation against such firms by reducing rates around 80%.
An expert of Telekom sector we appealed for his opinion on this matter comments the reducing at a such rate as follows:
We already knew that a reducing would be made, but if such reducing is applied at a rate of 80%, it can have only one purpose: To hit the new firms to enter the sector and don’t let them survive. This will be introduced to public as a reducing by TT, for sure, but where have they been before today? In other words, if they were to make a reducing, why did they raise prices for national calls two months ago? Maybe, in public point of view such reducing will seem very attractive and beneficial but if TT hits new firms to enter the sector with its such strategy and financial power coming from its past, then it can be the only firm standing in long term and become a monopoly over the prices again. For this reason, this matter must be inspected by the Institutions of Competition and Telecommunication.
As it can be seen, on one hand the reducing at such rate for Long Distance calls, compromising 40% of Turk Telekom’s income provides a relief for the use by people/consumers, on the other hand it will completely be a trouble for the firms who are entering this business. And of course in long term – as the market will be dominated by very few firms, maybe only by Telekom – course of this operation will return to users as raising of prices. Meanwhile it is also a matter of question that what operations will be conducted for the commitments to IMF and in budget, in case a reducing reaching around 80% is made.
Another expert of Telekom Sector said:
As TT is likely to make a huge reducing in long distance phone connections, people get concerned with some questions.
- Has there been a decrease in the cost in so much as to make such a reducing?
- If it has, how did that happen?
- If there is no decrease in cost what is the ground, this price reducing is based on?
- Or was the monopoly, whose sole purpose is supposed to be rendering a public service, exploiting the public by providing service for a price much higher than the cost?
- If the reason for the latency in liberalization of telephone services is the need of Treasury for TT revenues, according to the Minister, how can they waive this revenue and reduce the prices? Is the purpose of liberalization, not to give opportunity to the private enterprises?
- Till today, TT used to sell the service it received for $0.02 for a minute to a price of $0.80. For this reason a huge reducing can be made in the selling price. But, in that case what will happen if TT gets out of the money to provide the subvention of TTNet and ADSL connections and support the Treasury? Have these possibilities been considered?
- If competition can bring such good prices to users and release them from being burgled as it is approaching yet, how more beneficial will it be when it is actualized? In that case, shouldn’t TT grant licenses immediately in order to make competition begin as soon as possible?
Here, dear readers, coming days seem to bring hot, exciting days and developments. We will see it all together. Apparently we will be concerned about these challenges between Turk Telekom and firms that are entering or are planning to enter the sector on one side and privatization / liberalization sufferings on the other side. Meanwhile services getting cheaper, diversified and easier and the intentions of us, the people who are Internet users as well, and the intentions of companies will also be points of concerns. We hope that conditions where these will be available, develops.