4h | Melanie Mingas
Magticom has published an open letter to the national regulator of Georgia claiming that it contains “unfounded and downright false information” in its 2020 annual report.
The letter sent to the country’s parliament on June 22, followed the publication of the 2020 annual report of the National Communication Commission of Georgia (GNCC). The Georgian Parliament has not held a hearing on the 2019 report and Magticom has requested that hearings on both take place “in the near future”.
Magticom wrote: “The communications commission seems to be extremely hostile to almost all companies in the industry. Companies in the industry are embroiled in endless litigation with the Communications Commission. Incompetence, lies, unjustified sanctions (unlawful decisions) and selective “enforcement have become a standard / procedural style advocated by the Communication Commission.
“The sector led by the Communications Commission is being destroyed because the Commission does not understand the importance of the sector, cybersecurity or economic principles.”
The letter stated that the 2020 annual report was “deliberately designed to mislead the public, disseminate false information and discredit businesses”. The letter refuted three specific parts of the report, which dealt with the update of Georgia’s electronic communications law, MVNO regulation and cellular tariffs.
In the latter point, GNCC now has to approve all retail price increases by the Georgian mobile operators Magticom, Silknet and Veon Georgia (Beeline), a step which, according to Magticom, “has a detrimental effect on the sector … Retail tariffs are not regulated by the regulatory authority in any of the countries”. of the EU Member States “.
Magticom continues: “The Commission often tends to misinterpret EU regulations and adapts laws and regulations to its agenda, which poses major problems for the industry. For example, the multiple re-election of the committee chairman for office, the adaptation of competition law to the communication committee for the duration of the term of office of Mr. Bekauri, etc.
“A logical question arises: what is the next adverse action the current Communications Commission could take to further destroy the sector?”
It is not the first time that Magticom has commented on the report. There were earlier comments on June 8th and June 14th.
Kakha Bekauri
This week’s open letter asked MPs to rate “the activity” of the GNCC and to indicate whether its chairman, Kakha Bekauri (pictured) “deserves trust or not”.
Bekauri was elected member of the GNCC in 2014 and chairman in 2017. He was re-elected as chairman for a second term in 2020.
Before GNCC he worked for public broadcaster, TV Mze and Maestro. He was also the director of Channel 9 TV, which belonged to the family of former Prime Minister Bidzina Ivanishvili.
But he’s a mathematician, and under Georgian public broadcasting laws, GNCC members – and chairs – are required to have master’s degrees in economics, public administration, business administration, law, electronic communications, or journalism.
Magticom wrote: “The Commission’s annual report for 2020 makes it clear that the Commission is not, as the Commission calls itself, the ‘architect of the sector’, but actually acts as a police agency that hinders the development of the sector, its pressure and ‘bullying “Affect the development of companies and the entire industry.
“We, the companies, have not devoted our thoughts and efforts to developing the sector, but are limited to responding to inappropriate requests and whims of the Commission.”
Investor Churn
Magticom’s letter comes during a turbulent time for Georgia’s communications industry. The letter recalled how major international investors, including Telia Sonera and Metromedia, have left the country since 2017.
The youngest foreign investor to face problems is NEQSOL Holding, and Magticom’s letter referred to this case.
In 2018, NEQSOL announced plans for a “Digital Silk Road” to establish Azerbaijan and Georgia as hubs for internet and digital services in the Caucasus, Central Asia, the Middle East and China.
NEQSOL said it will develop terrestrial and subsea infrastructure connecting Europe and Asia through “acquisitions, partnerships and construction”. These included a new fiber optic route between Georgia, Azerbaijan and Kazakhstan / Turkmenistan, which would represent an alternative to the current terrestrial routes through Russia, as well as undersea cables.
The route is intended to connect the Internet exchanges in Shanghai and Frankfurt, improve information integration between China, Central Asia and the EU and facilitate e-commerce in the Caucasus region.
As part of the strategy, NEQSOL Holding acquired the local service provider Caucasus Online in 2019, which owns a 1,200 km long fiber optic submarine cable that connects Internet traffic from Europe to the Caucasus.
GNCC alleged that the purchase of NEQSOL violated Articles 26 and 27 of the Communications Act by failing to seek consent to the changes in ownership and, as a result, “violated the legislation of Georgia”.
NEQSOL has always denied these claims.
Last year the government and GNCC officially amended the country’s electronic communications law with two new articles that could be specifically used to force NEQSOL to reverse its acquisition of Caucasus Online.
After a series of threats against the company, GNCC appointed a special manager to lead Caucasus Online last year.
NEQSOL completed the takeover in March of this year – despite the appointment of the special manager – and is currently challenging GNCC via the International Center for Settlement of Investment Disputes (ICSID).
In the same month, the Venice Commission of Europe and the Council of Europe’s Directorate-General for Human Rights and Rule of Law issued a joint opinion on the new powers of the GNCC and concluded that they were “inconsistent with European standards”.
Capacity has asked GNCC for a comment.
