Hanging up on CTM

Telecom industry representatives argue that the gov’t isn’t applying measures to make the market more competitive, after it renewed CTM’s contract.

A collective statement from the telecommunication industry sent to Business Daily expresses ‘disappointment’ that the MSAR government hasn’t offered ‘any specific measures to make the [telecom] market fairer’ after the concession contract between the government and Companhia de Telecomunicações de Macau, S.A.R.L. (CTM) was renewed for five more years.
The statement came after the Bureau of Telecommunications Regulation (DSRT) confirmed this week that CTM will have its contract renewed until 2021, with the agreement only jeopardized if CTM violates the legal terms of the contract.
In the event of the contract being cancelled, the MSAR government would be liable to pay a maximum compensation to the company of MOP1 billion (US$125 million).
The statement considers that the authorities should explain ‘publicly and transparently’ the future master plan for telecommunication development in Macau, and that an agreement be reached with CTM as ‘early as possible in 2017’ in order to offer consumers and the business sector ‘more choices’ and ‘better services’.
“The Macau consumers will have five more years of nightmares. We want to support the Macau government but sometimes it’s a joke. The Macau government was supposed to liberalise the market five or 10 years ago but it didn’t happen,” stated a source with intimate knowledge of the industry, who wished to remain anonymous.
According to the source, “even international telecom companies with businesses in China and Europe” have difficulties operating in the Macau market under the current conditions. This matter has been discussed with legislators and government officials but with “nothing having been done to change the issue”.

Not really competitive
The Midterm Review of Concession Agreement of Public Telecommunications, signed in 2009 by the government, awarded CTM the rights to manage and maintain the telecommunications network of the territory, with the company renting circuit services to the other players in the telecommunications market.
With the circuit being essential for the transmission of communication information, licensed operators consider the tariffs demanded by CTM and approved by the government to be excessive.
According to the statement from the telecom representatives, although in 2016 CTM announced a reduction on leased line costs of ‘between 37 to 50 per cent’, the reductions were only effective for private enterprises such as hotels, with licensed operators only receiving an effective reduction of a ‘single digit percentage’.
The statement sent to Business Daily also adds that the government doesn’t support telecom operators in developing their own networks for international telecom facilities, with operators having to request a permit for the development, while CTM uses government-owned concessionary assets.
“We just want a fair market environment. First of all is the transparency of the concession of government-owned assets, which at the moment only one operator uses. How can we compete fairly when the building is free of charge, the vehicles and the leased line network are free of charge, while we have to rent those facilities at a huge amount of cost every day and every month?” queried the source.
The industry representatives suggest that in order to level the playing field, the government should alleviate taxes on elements such as license service fees, frequency spectrum taxes, transmission link taxes and profit taxes.
The merger between Macau Post and the Bureau of Communications was also criticised, with the industry source telling Business Daily that the industry “knows nothing” about the new organisation and its management.
When questioned by Business Daily, CTM stated that the announced lease line cost rates were “calculated for the easy understanding of the media” but that for each individual enterprise or company, different discount rates are offered depending on the number of years of subscription to the service.
In regards to the use of government concession assets, CTM stated that although it had the right of use for the assets, it did so “on the condition that it maintained their regular maintenance and update,” which represents a cost to the company and not the alleged “free of charge” use of these assets.

Unfair dealings
In statements to local broadcaster TDM, Legislator Ella Lei and the Macau Association of Consumers of Public Utility Companies have also criticised the contract renewal, considering that it doesn’t allow for fair competition in the market, especially for new competitors such as Mtel Telecommunication Company Ltd.
According to the legislator’s statements to TDM, no “extra clauses” were added to a contract that can only be terminated in order to protect public interest.
In its response to Business Daily, CTM stated there was “no need for signing formalities in order to extend the contract” since it is “automatically renewed under the existing terms and conditions”.
“We can’t say if it’s fair or not since it’s private comments from people in the society […] We always supported the government’s liberalisation of the [communications] market and customers will always have a choice to decide which operators they think offer the best service,” a CTM representative told Business Daily.