Turkish ISP Sector Got a Breathe

Competition Authority (Rekabet.gov.tr) is the regulatory body of Turkey, founded in 1997. Main duty of the organization is to establish fair competition in Turkish market. They have made the biggest decision ever last Friday against Turkish Telecom.

Turkish Telecom has the monopoly rights as per the Constitution. In 1996, under some arbitrary conditions (eg. to have access lines from Turkish Telecom) , they gave the right to private sector to establish ISP companies. Since then, number of ISP in Turkey has reached up to 80s.

In 2001, while a deep economic crisis was going on in Turkey, Turkish Telecom’s ISP company put an aggressive marketing scenario to the stage and after 2001 April, the user fees announced as 6 Million TL (that is about 5 $ per month), and yearly price was announced as 36 Million TL (about 2.5 $/per month, 15 $ per year).

But at the other end, as the only supplier in the market, Turkish Telecom has increased the access line prices which are used by ISPs. Those increases were changing the prices somewhere between % 240 – %400 according to bandwidths. Actually that wouldn’t be a problem if ISPs would have the right to buy from somewhere else but Turkish Telecom, which keeps the monopoly rights till the end, of 2003.
The third point from Turkish ISPs were about DSL and broadband lines. Turkish Telecom would not give away the right to sell those services to ISPs. DSL and broadband services were only being marketed by Turkish Telecom.

During 2001, ISP companies made several applications to the competition authority while their number was down to 20s. Investigation began on 28th March 2001. Main claim was cross subvention. Turkish Telecom owned an ISP company called TTnet. So it was the single supplier and the major competitor of the ISP companies.

In April 2001, while a decrease was announced in TTnet end-user prices, an increase came out between % 100-400 in leased line and other lines. Since Turkish Telecom is state owned-company, they keep 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, after 6 months from the beginning of the trial, Competition Authority gave a precaution decision and wanted Turkish Telecom to increase the end-user prices. But Turkish Telecom did nothing till August. In August fees increased to 9 Million TL (4.5 $/month).

Friday was the decision day of that event. Competition Authority announced the decision. While they said “TT used the domination right sourcing by monopoly right intentionally”, wanted to stop the action which are preventing competition. Penalty amount is 1.136 trillion TL (equal 700.000 $) .

Turkish Telecom spokesman didn&’t want to make a comment and just said they will go one superior court.

Tissad (Turkish ISP association) spokesman Prof.Dr.Arif Esin said “now ISP companies will sue TT for huge amount of compensation”

Although penalty fee is very low, some sources said the reason was the pressure by the state. In every condition, that decision is thought as beginning of a fair competition in Telecom Industry. However, Competition Authority power is not clear and public ISP companies are waiting for what to happen next.