About tariffs in telecommunications

Yes, the market economy has made a lot of positive for the economy of Azerbaijan. However, even in such a technogenic branch as telecommunications, a lot of random, all-embracing and once-elite sphere, where the intellect, professionalism and continuity has always been valued, is now apparently reserved to the "marketers and dealers" (as it turned out, according to the events of autumn 2015).

The question is reasonable, but how to combine market laws with the values ​​of the communication sector?

A civilized tariff policy conducted by both state bodies and independent regulators (private operators and companies) could have a direct impact on the balance of supply and demand in services and the satisfaction of ever-increasing demands in new communication services to consumers.

Apparently, our system of tariff services is based on a combination of the so-called free pricing principles under market economy with the current state regulation principle (the monopoly operator in the person of MTCHT).

After all, tariffs are set high only if monopoly dominates the communications market, and there is no alternative (for local and long-distance communication), and people (ordinary customers) are forced to accept the tariff prices that are set, because we really are a law-abiding nation and the decision from above is a law for us, although it is likely that the Tariff Council is a formal organization that makes decisions under the pressure of MTCHT (the state-monopoly operator of the country). And an alternative to the Tariff Council could be an independent regulator of communication outside the state structures.

Apparently from the point of view of updating the technical base, MTCHT always wants to periodically raise the level of tariffs for services provided and compensation for the costs of this sector (example of duty for new phones raised from 4 to 30 times).

http://www.turan.az/ext/news/2018/8/free/economics%20news/en/74058.htm

It is likely that earlier in such periods, before the mobile operators of Azerbaijan there were questions of extending their licenses for the continuation of activities on the part of the Ministry of Communications, and this is a telephone war, which is in the competence of an independent regulator of the industry, outside state structures, which we do not have. Suffice it to recall the phone war between Azeurotel and the Ministry of Communications in 1999-2009, as a result of which the activities of a number of services were stopped by Azeurotel JV to its customers.

http://www.1news.az/economy/20090224111711667html

Probably considering the transition period in the economies of the CIS countries, many countries use the principle of "cross subsidization" in the tariff regulation in the communication sector and in many CIS countries the rural telephone network (RTN) is subsidized by international and inter-city talks of the population.

It is believed that the shortcomings of cross-subsidization are a constant fall in the volumes of international and interurban traffic that passes through the networks of the state monopoly, as well as the displacement and discrimination of private operators (apparently something like Azeurotel).

To eliminate this, we need to switch to "time-based payment" for communication services, which requires replacement of customer payment systems (which is not difficult to do if the local telephone network is fully switched to the next-generation network (NGN)), which will completely change our mutual settlement capabilities, as is customary in Europe. And the principle of "cross-subsidization" used for rural and district communications in the past due to long-distance communication has apparently led to dependency in the communications sector.

The statistics of international telephone traffic of the country's interconnection with the outside world is interesting; the volume of outgoing international traffic in Azerbaijan, for example, was nine times less in comparison with Belarus in 2016. (http://www.rcc.org.ru - page 23). The question arises, why, with the almost equal population of our two countries (somewhere around 10 million inhabitants), the traffic of the "developed economy" of Azerbaijan is nine times less than in Belarus?

And vice versa, tariffs for long-distance telephone conversation at a distance of up to 100 km in the CIS countries for 2013 (for 2016 there are no such indicators), it is evident that our tariffs are more than 10 times more expensive than in Belarus (http: // www.rcc.org.ru - page 65). By the way, the same thing is, if we compare tariffs for Internet access in the CIS countries for 2013, which shows that our Internet tariffs are almost 10 times more expensive than in Belarus (http://www.rcc.org.ru - page 69).

Maybe, therefore we should have an independent regulator of the industry outside the state structures?

By the way, among the requirements imposed on Eastern European countries when they are accepted into the European Union (EU), there is precisely the question of stopping "cross subsidization", and a five-year plan for equalizing tariffs is proposed.

The need to introduce a time-based accounting system for calls (connections) on the local telephone network was primarily caused by a significant excess of the customer's allowable load (traffic) on the country's existing communication networks.

In the old technology, the Internet user on average took the network for up to 6-8 hours a day, whereas on average the telephone customer only occupied the network for 20-30 minutes. And today, when almost all of Azerbaijan's telephone communication is at Next Generation Network (NGN), which supports full integration of the three services - voice, data and multimedia, - apparently there are practically no technical problems for the implementation of the time-based accounting system.

It should be noted that, according to experts, the market price of a European telecom operator is 50% determined precisely by the principles of communication regulation in a given country.

That is why in the communications sector, unlike other industries, this factor is much more important than traditional indicators such as the effectiveness of management processes (management); reduction of capital costs (for construction and development), etc.

Therefore, the urgent issue with the market structure of the country's communication network will be the creation of non-state regulatory bodies in Azerbaijan.

Apparently, as soon as a lot of private and government-independent operators and Providers appear on the telecommunications market, the state will certainly be forced to transition to the principle of an independent regulator. After all, the state monopolist divides the operators into "friends" and "others" (apparently this is how the joint venture AzEvroTel has disappeared!).

It should be emphasized that usually the shortcomings of pricing in government structures negatively affect the state of the material and technical base of the communications sector.

The improvement of the existing tariff regulation mechanism on communication networks should be based on the formation of a real pricing system. This will ensure full satisfaction of the needs of communication services on the following principles: coordination of the economic interests of customers (solvency), organization of high-quality communication services (reliability and trouble-free operation), meeting the needs for communication services (including rural), etc.

Therefore, the improvement of the tariff system in the industry is considered possible with respect to the philosophy of telecommunications and taking into account: uniform accessibility of customers to telecommunications services, transparency and objectivity of applied methods of tariff policy in the industry, and the application of an independent (non-state) method of regulating the communication sector in the country.

The point is that, as the real competitive environment is created, the list of telecom-regulated services should be reviewed with a view to developing common principles for setting tariffs that are recommendatory in nature before they are accepted by all operators operating in the country.

As you know, in the past, only one organization was involved in the management of incoming and outgoing tariffs in the USSR, and today, apparently everyone wants to have their own pocket organization (which apparently led to shameful events in the Communications Ministry in 2015). And tariffs become high only when monopoly dominates the telecommunications market, there is no alternative (for local and long-distance communication), and people are forced to accept existing tariffs, and this is not only in the communications sector.

Apparently, the fact that MTCHT is the state monopoly and management organization of the communications sector, the legislative base for this sphere, the state monopolist owner of communications and, at the same time, the state conductor of technical, legal and tariff policies, speaks volumes. The question is whether our Azerbaijani Tariff Council is able to meet the requirements of, for example, the "marginal pricing" method, which specifies the coefficients of the maximum permissible tariff change, for example, for a year?

Further, technical access and use of this access are different things. Today, access to mobile broadband Internet is technically open to 84% of the Earth's inhabitants, and only 47% use them (the reason is high prices, poor quality of services, etc.), which is a serious obstacle for people to enter the digital world http://minval.az/news/123641374

Probably, therefore, the truth about the state of the communication sector of Azerbaijan cannot be subjective. Apparently, it's something open, and it is one for all. Yes, probably not all government agencies operate with exact numbers, and the reason is considered to be the "shadow economy", which is not reflected in official statistics, and we are looking for justice in the tariff policy of telecommunications (and the result is probably in the fall of 2015, with so many people from the Ministry of Communications under investigation for two years).