Cyprus shaping up for EU telecom competition

Published March 8th, 2001 - 02:00 GMT

Coming out of a cabinet meeting, Wednesday, March 7, Cypriot Minister of Communications and Works Averof Neophytou announced that the forum has decided to push forward legislation ending state-monopoly in the telecom sector, according to the Cyprus news agency, CNA.  


The Cypriot telecoms market is currently in a state of partial liberalization. While all voice telephony and mobile communication are monopolized by the state organization Cyprus Telecommunications Authority (CYTA), certain services like data transmission, value added services, Internet services provision, and equipment provision are liberalized. 


The new Telecommunications Authority Bill, if passed through Parliament next week, will transform the semi-government CYTA into a state-owned company. The government ultimately aims to break the incumbent network operator CYTA into two separate entities — an independent regulator authority and a service provider company.  


Faced with opposition voicing concern over job-losses, the minister stressed that CYTA is not to be privatized, and that its staff will be offered a six-percent stake in the company with all their rights safeguarded.  


Such moves to modernize the Cypriot telecoms sector are all part of the country’s efforts to join the EU. As an applicant country for European Union (EU) membership, Cyprus must adopt 25 EU telecom directives, including at least partial privatization of its national telecom monopoly, and separating the regulatory from operational telecom entities. 


EU demands aim at ensuring technical compatibility between different systems with the European Commission standards, and at encouraging competition via liberalization of service provision in the field of telephony, satellite services, mobile phones  


In March 1998 the EU opened formal membership negotiations with Cyprus, as well as with the Czech Republic Slovenia, Estonia, Poland, and Hungary. Although there is no deadline for entry, it is believe that the most advanced countries could join the EU beginning in 2003. 


EU enlargement negotiations determine the applicant’s status in terms of enacting and implementing all EU rules. Despite initially requesting a transition period for telecom liberalization, which gives the country extra time to apply the rules after membership has been granted, Cyprus has announced already in 1999 that it will meet the original timetable, committing to end state-monopoly in telecommunications by January 1, 2003. 


As part of EU harmonization efforts, in addition to adopting EU telecom directives, Cyprus must work to make its telecom industry more competitive. In January 2001, international call charges were dropped 25 percent in line with a CYTA policy of ending the subsidizing of local calls through high charges for overseas calls. The new overseas rates vary according to destination, with calls to more popular counties still much cheaper.  


Cyprus has a telecom penetration rate (number of lines per 100 inhabitants) that is higher than the EU average, according to European Commission figures. It’s 758,000-strong population enjoys a 64.75 penetration rate of conventional lines and a 28.8 penetration rate of mobile phone lines. However, despite high penetration of fixed and mobile lines, Cyprus still has a long way in terms of changing legislation to allow competition.  


The basic law governing the telecommunications sector in Cyprus, the Telecommunications Service Law #302 of 1954 establishes the CYTA as a public corporate body. The law granted CYTA the exclusive right for the provision of telecommunication services and the operation and maintenance of a telecommunications network including basic infrastructure. In providing some telecommunications services, namely voice telephony and telegraphs, CYTA is also governed by secondary legislation, in the form of regulations. 


During the last quarter of 1999, the Cyprus government has decided to take the first steps towards the drafting of a new telecommunications law. In August 2000, consultants to the Ministry of Communications and Works completed work on the new legislation, leading to the liberalization of market, aligning national law with EU standards and privatization of CYTA. 


Cyprus still has a long way to go before successfully aligning its telecommunications laws with EU regulations. Now that the government has made significant progress in adopting the necessary laws, it must be assured that effective implementation of the new laws doesn’t lag far behind. — (Albawaba-MEBG)

© 2001 Mena Report (

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