Tele2 CEO: Telia network prices bar competition

The prices charged by Telia, the market leader in telecommunications in Estonia, hamper other telecom companies that use its fixed network in offering competitive prices to consumers, CEO of competitor company Tele2 Margus Nõlvak said.
"The price at which this is offered is not competitive, and other operators are unable to provide a reasonable price to end consumers under this model. /.../ Tele2 has 480,000 customers, but on this same Telia 3.0 network, we have exactly zero private customers," Nõlvak stated.
While there are three main Internet Service Providers (ISPs) in Estonia, Tele2, Elisa, and Telia, a large portion of Estonia's fixed internet infrastructure belongs to the third of these.
Telia is required to provide wholesale access to its network for other telecom service providers – which it charges for.
These prices are approved by the Consumer Protection and Technical Regulatory Authority (TTJA) , while the company maintains that it is not hampering competition.
According to Nõlvak, the state determines Telia's wholesale pricing based on costs, whereas Lithuania, for example, uses a market-based pricing model.
He noted that in Estonia, a Tele2 package costs €35 per month, compared with €16.90 per month for a comparable package in Lithuania.
Telia's Chief Technology Officer Andre Visse denied unfair pricing or distorted competition in the market.
He said: "The prices have been decreasing year on year. If we compare retail and wholesale prices today, wholesale prices make up 50 percent of our retail prices."
"This means that there is still ample room for any competitor to compete using our service. /.../ Competition is certainly fair for everyone, and all competitors always have the option to invest in Estonia and build their own networks," Visse went on.
Regulatory oversight and government involvement
Under TTJA regulations, Telia is classified as a company with "significant market power," meaning it must provide access to its network while also being allowed to recover the costs of maintaining that.
Oliver Gailan, head of TTJA's communications department, said: "Our interest is to ensure competition in network access, so that companies wanting to use the network can do so."
"While today, our calculations show that at the current access prices, another company can still remain profitable while offering services to consumers," Gailan went on.
MP Jaak Aab (independent), who chairs the Riigikogu's Economic Affairs Committee, said that fair competition does not function equally across Estonia and that some service providers are dissatisfied with the current market conditions.
"Not everyone is satisfied. The telecom companies that provide communication services are not happy because the main network is controlled by a single company, allowing it to dictate prices," Aab said.
"Yes, the TTJA reviews the pricing formula, but the claim is that it is not fair. /.../ We are currently processing amendments to the Competition Act, which would improve and simplify regulatory oversight," Aab went on.
Gailan added that Estonia is in the process of transitioning to a pricing model that moves away from cost-based calculations, and that competition in the telecommunications sector is ensured.
However, the TTJA recently found that a campaign run by Telia which automatically upgrades customers to faster and more expensive packages violates consumer rights.
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Editor: Andrew Whyte, Merili Nael
Source: 'Aktuaalne kaamera,' reporter Toomas Pott