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The Turkish Competition Authority’s has ruled that state owned incumbent Turkish Telecom has been intentionally using its monopoly right to dominate the ISP market and has fined it TRL1.1 trillion (E700,000)
Under the country’s Constitution Turkish Telecom has the monopoly right. In 1996, under some arbitrary conditions (e.g. right to access lines from Turkish Telecom), the companies in the private sector were given permission to set up as internet service providers and since then, up to 80 ISPs have started up in Turkey.
In 2001, during the country’s economic crisis, Turkish Telecom’s ISP company lowered fees for customers to around TRL6M (E3.72) a month and TRL36m (E22.36) for the yearly rate.
However at the other end, as the only supplier in the market, Turkish Telecom increased the rates for ISPs accessing the telco’s lines prices. The increased rates in turn changed the prices somewhere between 240 – 400 per cent according to bandwidths. This would not have posed a problem if ISPs had the right to buy from an alternative supplier, however Turkish Telecom holds the monopoly rights until the end of 2003.
In addition, ISPs highlighted how they could not offer DSL and broadband services to their customers as DSL and broadband services were offered exclusively by Turkish Telecom.
During 2001, ISP companies lodged several complaints, mainly to do with cross subvention, with the Competition Authority and an investigation into the matter began on 28th March 2001. Most ISPs took issue with Turkish Telecom’s ISP TTnet, the major competitor to the ISP companies.
In April 2001, while prices for TTnet end-users decreased there was an increase of between 100-400 per cent in leased line and other lines. Since Turkish Telecom is state owned-company, they have to the right to establish the main backbone for internet. All ISPs should get their main access from Turkish Telecom as per constitution.
In November 2001, 6 months after the probe into TT’s pricing began, the Competition Authority warned the telco to increase the end-user prices in line with those of other ISPs. But Turkish Telecom did nothing till August when fees increased to TRL9m (E5.58).
Announcing the decision on Friday, the Competition Authority said that the telco had been intentionally using its monopoly right to dominate the ISP market and that it was preventing fair competition in the sector.
Following the decision a spokesperson for Turkish Telecom said they would appeal the decision to the superior court.
A spokesperson for Tissad, the Turkish ISP association claimed that decision meant that “now ISP companies will sue TT for huge amounts of compensation.”
Although the penalty fee imposed by the Authority on Turkish Telecom is very low possibly due to pressure by the state, the decision will draw more attention to issues of fair competition in the country’s telecoms market. However, the power the Competition Authority holds is still questionable and ISPs will have to wait and see what effect Friday’s decision will have on their futures.
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