Bulgaria Stands Firm on Shady DTT Mux Deals

Business | January 25, 2013, Friday // 07:27|  views

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

Bulgaria's government said it was surprised by Brussels decision to take it to EU court over the controversial tenders for the operation of what will be the country's DTT multiplexes.

"We have complied with all requirements, set by the European Commission," Transport Minister Ivaylo Moskovski told reporters after it emerged that Bulgaria will be referred to the EU's Court of Justice over the assignment of digital broadcast spectrum.

"We have two or three months during which we can appeal the decision, but the current regulations ensure equal treatment to all operators, which want to bid in the next tender," he added.

According to the minister the problems most probably dated back to the term of the previous Socialist-led government, which approved the legislation and organized the competitions for selecting the operators.

He however turned a blind eye to the fact that the current government of GERB was expected to break the alleged cartel in Bulgaria's digital switchover, but refused to do so.

Bulgaria Referred to EU Court

On Thursday the European Commission said that the procedure followed by Bulgaria was based on disproportionately restrictive award conditions, leading to the exclusion of potential candidates.

This hampers competition in the future Bulgarian digital terrestrial television (DTT) infrastructure market, in breach of the applicable EU Directives on electronic communication, the European Commission said in an official statement.

The efficient reallocation of radiospectrum as a result of the transition from analogue to digital broadcasting (the 'digital dividend') is part of the EU's policy objectives under the Digital Agenda.

"In order to ensure that this process leads to the entry of new players capable of enhancing competition in the market and expanding viewer choice, the Commission has adopted a set of rules for the allocation of this extra spectrum capacity. These rules require that spectrum is allocated under open, transparent, objective, non-discriminatory and proportionate criteria."

The Commission considers that Bulgaria did not comply with these requirements of the mentioned Directives when it assigned in 2009 five DTT broadcasting spectrum lots via two contest procedures, limiting without justification the number of companies that could potentially enter the market.

Moreover, it said, the selection criteria of the contest procedures were disproportionate, refusing applicants that had links with content providers (TV channels operators), including operators active only outside Bulgaria, or with broadcasting network operators, in breach of the three directives.

Should the judges at Luxembourg court rule against Bulgaria, the country may be forced to pay hefty fines, worth up to EUR 200.000 per day.

The Second Warning

The European Commission issued in March a final warning to Bulgaria over the tenders and said the country will face the EU highest court unless it informs it of the measures taken to address the breach of EU Law.

It demanded that the country ensures open and non-discriminatory access to digital terrestrial broadcasting infrastructure market.

The deadline for Bulgaria's replies expired on July 21.

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

Brussels launched the infringement procedure in May 2011 following conflicting requirements for the eligible bidders in the mux contests, which drove away Austria's Oesterreichischer Rundfunksender GmbH & Co KG (ORS).

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.

New Tender

In a bid to prevent legal action by the European Commission, Bulgaria decided at the end of December 2011 to hold a tender for yet another multiplex, its seventh.

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.

The Commission welcomed Bulgaria's recent announcement of the launch of a tender procedure for the assignment of this spectrum.

The Commission however said 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, September 1, 2013.

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

Local 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.

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 even though a new delay is very likely.

Until then the government is expected to splurge BGN 300 M on freeing frequencies currently held by the military.

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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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