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Rentals of circuit service create competition controversy

Local mobile operators feel they are competing on unequal terms with CTM because of the price charged to access the circuit service. CTM says it is ‘pleased’ with the ‘full liberalization’ of the sector

The prices charged by CTM (Companhia de Telecomunicações de Macau) to the other mobile operators to rent the circuit services in the territory are making other telecommunications companies feel that they are competing on unequal terms with the Macau-based operator. According to the Midterm Review of Concession Agreement of Public Telecommunications signed in 2009 by the government and CTM, the Macau-based company manages and maintains the telecommunication network of the territory. In turn, CTM provides the rented circuit service to the other players in the telecommunication market. This circuit is used to transmit communication information and is essential for the operators to function. By providing this service, CTM charges a tariff, as defined in the Concession Agreement, which is then approved by the government. However, and in spite of the approval of the government of the tariffs, prices to rent the circuit service are considered too expensive in the sector, Business Daily has learned. Ten times bigger than in Hong Kong “For the other operators, it is a very challenging environment in the territory. The tariff being charged by CTM, with the approval of the government, is just too expensive. In some cases, renting the circuits in Macau can be ten times more expensive than in Hong Kong”, a source in the industry told Business Daily. “The tariffs defined by CTM for public assets are so high that while they can easily make a profit, the other operators have been struggling to have positive results”, the same source added. In 2014, CTM posted a profit of MOP1.11 billion. For its part, the Macau-based operator explained to Business Daily that it is committed to the liberalization of the sector. ‘CTM remains fully committed to the MSAR Government’s telecom policy that is beneficial to the sustainable development of Macau. We are pleased to witness the full liberalization of the telecom sector that will bring diversified services at reasonable prices under intensive yet fair competition’, the company said. Our publication also contacted the Bureau of Telecommunications Regulation (DSRT), on the prices of rented circuit service but by the time the story went to press the Bureau had not replied. Human resources challenge On the one hand, in the telecommunications sector there is a certain feeling that DSRT is failing to properly inspect the market and guarantee equal competition among the different operators; on the other hand, there is a perceived lack of international perspective in the territory due to the lack of experience of the staff at DSRT, the consequence of a limited pool of human resources in the territory. “We have come to this situation because DSRT lacks people with the proper international experience and qualification in international communications. This makes it very difficult for the Bureau to efficiently inspect the sector”, the industry source explained to Business Daily. Besides CTM, the other companies licensed to operate in the mobile telecommunications sector are Hutchison Telephone (Macau), via 3 Macau, China Telecom (Macau) and Smartone Mobile Communications. All operators have licences to run both 3G and 4G services. Controversial inventory list The Midterm Review of the Concession Agreement of Public Telecommunications also stipulated that until the end of 2011 CTM had to send to the government an inventory with detailed information of the concession assets, defined in the contract as “the whole of the facilities assigned to the provision of the public telecommunications services” including ducts, copper, cables and so on. The details on these assets are essential for the MSAR because by the end of the concession agreement which is scheduled to occur at the end of this year (although it can be renewed automatically until 2021) CTM is supposed to hand these assets back to the government. The fact that this detailed list has never been made public has raised concerns among some legislators in the Legislative Assembly (AL). On 4th January this year, legislator Chan Meng Kam delivered a written interpellation requesting the government to clarify if the inventory had already been delivered. The AL member also questioned the Director of DSRT as to why the authorities had perceived that only after the end of the contract there are conditions to make public the list of concession assets. “The disclosure of inventory will not damage the right of the company to manage and its responsibility for maintenance of the assets. On the contrary, it contributes to bringing more transparency to the sector and would allow society to be informed regarding the use of concession assets. This will make inspections easier and promote competition in the sector”, Chan Meng Kam wrote at the time. As of today, the legislator has yet to receive an official reply on his questions from the government. CTM: Obligations fulfilled When asked by Business Daily about the delivery of the detailed inventory back in 2011, CTM said that it had fulfilled its legal obligations. ‘Naturally, CTM is, as ever, in full compliance with its obligations under the relevant licences, including the Midterm Review of the Concession Agreement’, the company asserted to Business Daily. Business Daily also contacted DSRT about the delivery of the detailed inventory but the Bureau headed by Wendy Tam Van Iu had not provided a reply by the time the story went to press.