Bulgaria Stands Firm on Shady DTT Mux Deals - Report

Business | April 1, 2012, Sunday // 15:20|  views

Bulgaria's Transport Minister Ivaylo Moskovski. Photo by Sofia Photo Agency

Bulgaria will not declare void the controversial tenders for the operation of what will be the country's DTT multiplexes despite pressure from Brussels.

This emerges from Bulgaria's Transport Ministry official statements in response to a list of questions, submitted by local Kapital Daily.

The inquiry came a week after the European Commission issued a final warning to Bulgaria over the controversial mux deals.

The EU executive body told Bulgaria on March 22 that it will face the EU highest court unless it informs it of the measures taken to address the breach of EU law within two months.

"There is to our knowledge no EC requirement for the annulment of the competitions," reads the reply by the Transport Ministry.


Sofia: Brussels Not Clear Enough on DTT Roll-out

The replies however show that the government in Sofia is not aware exactly what steps it has to take to ensure open and non-discriminatory access to the digital terrestrial broadcasting infrastructure market, as required by Brussels.

"If the European Commission wants new players to enter the market, it has to spell out the legal conditions, which will guarantee all players are treated equally," the transport ministry said.

It plans to hold consultations with all competent authorities, including the foreign ministry and a directorate dealing with EU issues within the cabinet.

The government in Sofia believes that the European Commission will not insist on declaring the tenders void.

"The European Commission is well aware that this could prompt the winners to sue Bulgaria for damages, which is hardly a better scenario than being fined by Brussels," the ministry said.

Bulgaria has awarded the licenses for its multiplexes to only two companies - Latvia's Hannu Pro (four) and Slovakia's Towercom (two).

The Commission considers that Bulgaria did not comply with the requirements of the Competition Directive when it assigned in 2009 the five spectrum lots available for digital terrestrial broadcasting via two contest procedures, limiting without justification the number of undertakings that could enter the market concerned.

According to Brussels the selection criteria of the contest procedures were disproportionate and therefore not in line with the requirements of the Competition, Authorisation and Framework Directives.

Applicants were not allowed to have links with content providers (TV channels operators), including operators active only outside Bulgaria, or with broadcasting network operators, the EU executive body said.

Bulgaria now has two months to inform the Commission of the measures taken to address the breach of EU Law and allow effective entry into the Bulgarian digital terrestrial broadcasting infrastructure.

If the national authorities do not reply satisfactorily within two months, the Commission said it may refer the matter to the Court of Justice.


Second Warning

The European Commission decision from last week takes the form of a reasoned opinion, the second step in infringement proceedings under Article 258 of the TFEU.

"It is obvious that the reasoned opinion does not take into account information that Bulgarian authorities provided in January 2012," the transport ministry commented.

Brussels launched infringement proceedings over the DTT licences awarded in 2009 in May 2011. This followed complaints from Austria's transmission company, Oesterreichischer Rundfunksender GmbH & Co KG (ORS) against allegedly conflicting requirements for the eligible bidders in the mux contests, which drove it away.

The requirements in fact made possible a near monopoly on the mux market as all companies which were granted licences are linked in one way or another to Tsvetan Vassilev, majority owner of Bulgaria's Corporate Commercial Bank.

At first it was not clear who stands behind the foreign investors Towercom and Hannu Pro, but soon the names of Tsvetan Vassilev, head of Bulgaria's Corporate Commercial Bank and Irena Krasteva, a media mogul, believed to be funded by the bank and ethnic Turkish leader Ahmed Dogan, popped up in all deals.

Should the case go to the Luxembourg court and the judges rule against Bulgaria, the country will be forced to pay hefty fines, worth up to EUR 200.000 per day.


No Delay for ASO

Brussels' warning will not impact the timing of the analogue switch-off in Bulgaria, which has been scheduled to be wrapped up by September 1, 2013, the transport ministry said.

"The deadline - September 1, 2013 – has been fixed in the latest amendments to the Electronic Communications Act, adopted on December 29, 2011. The transition period will span over six months and will allow both analogue and digital transmission," the transport ministry explained.

According to the ministry there are no grounds for a new delay in the analogue switch-off, which would put the country at a disadvantage in comparison with neighbor countries, which are about the wrap up the transition period, including Romania and Serbia.


New Tender Five Minutes to Midnight

Bulgaria decided at the end of December to hold a tender for yet another multiplex, its seventh, a surprising last-minute decision, which local experts slammed as a mere eye- wash for Brussels.

The European Commission said last month it expects Bulgaria to publish the conditions of the tender as soon as possible, so that potential new entrants can prepare their applications, be selected and enter the market before the date set for the analogue switch off, 1 September 2013.

The Commission says it will monitor that the tender conditions are in line with the Directives and allow effective entry into the digital terrestrial broadcasting infrastructure market.

"We will do our best to launch, together with the Communications Regulation Commission, a tender procedure for the assignment of this spectrum within a few months," the transport ministry said.

Bulgaria's communications watchdog is obliged to prepare the package of documents for the new tender on September 1, 2013 under legal amendments that parliament hurriedly adopted in the last days of 2011.

This is also the deadline for the analogue switch-off in the country.

Until then the government is expected to splurge BGN 150 M on freeing frequencies currently held by the military, but it is still not clear how this will happen and at what price.

"The draft bill, which was published for public debates on the ministry site, shows that the frequencies that the regulator is considering for building a new network, are primarily used by the Defense Ministry," explained the transport ministry.

Bulgaria has repeatedly informed Brussels of the problems it faces in freeing frequencies, it added.

The government has boasted that the new amendments will allow companies such as Austria's ORS, which have TV channels outside Bulgaria, to participate in the new DTT contest.

Experts however say that the new procedure is a mere attempt to throw dust in the eyes of Brussels officials.

The seventh multiplex will be just a collection of frequencies and its holder - in a much more disadvantaged position than Hannu Pro and Towercom, which have already grabbed the lion's share of the market, according to them.

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Tags: ORS, Oesterreichischer Rundfunksender, Brussels, multiplexes, DTT, Competition Protection Commission, Oesterreichischer Rundfunksender, Corporate Commercial Bank, European Commission, Communications Regulation Commission, Bromak, Communications Regulation Commission (CRC), Hannu Pro, Towercom, Gintars Kavacis, Mancelord Limited, Vivacom, Bulgarian Telecommunications Company, BTC, Irena Krasteva, BNT, BNR, Thomson Broadcast, Technicolor, analogue switch-off, Transport Minister, Alexander Tsvetkov, NURTS, European Union Court of Justice, Austria, Latvia, Slovakia, Bulgaria, Transport Ministry


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