E-Commerce, E- Commerce Centers Workshop 14-17 May 2002 Bucharest, Romania

1. E-Commerce, E- Commerce CentersWorkshop 14-17 May 2002Bucharest, Romania A L B A N I A Presented by : Irena Malolli General Directorate of Post and Telecommunications Ministry of Transports and Telecommunications

2. Current telecommunications regulation structure in Albania Council of Parliament Ministers Minister of Transports and Telecommunications Telecommunications Regulatory Entity General Directorate of PT Regulation and Licencing Policy and Legislation Telecommunications Market ALBTELECOM AMC OTHERS VODAFONE

3. Telecommunications situation in 1999 - A fully state monopoly in telephony. Only 2 companies, 100% state owned, in the market: Albtelecom in fixed telephony and AMC in mobile telephony; - A very low telephone penetration, due to historical reasons; - Lack of governmental funds to overcome this situation; - Other services, except telephony, liberalised since in the beginning of 1998, but still no results.

4. Telecommunications Sector Reform (1999-2001) The main focus of the reform was to open the market to and to encourage private investments: • Privatisation of state owned telecommunications companies • Gradually market liberalisation, and • Improvement of regulatory framework

5. Telecommunications Sector Reform (Improvement of regulatory framework) The Programme “Development of Albanian Telecommunications Administrative and Regulatory Framework” started in the beginning of 1999 year. Objectives • To draft the telecommunications policy paper; • To draft the new telecommunications act; • To draft the licenses to be issued to AMC and Albtelecom; • To establish the regulation mechanisms on tariff control, interconnection, and fairness competition. • Telecommunications policy paper was approved by decision of the Council of Ministers No. 288, date 16.6.1999 • Licenses were awarded to AMC and Albtelecom • On 14.06.2000 the Parliament adopted the act no. 8618 “On Telecommunications in Republic of Albania”

6. Telecommunications Sector Reform (Improvement of regulatory framework) KEY PROVISIONS OF THE POLICY AND TELECOM ACT (long term goals) The long-term aim of the Albanian Government in relation to the telecommunications sector is the harmonised development of the telecommunications infrastructure of Albania and its gradual extension throughout the country, so as to ensure: • access to basic telephone services at affordable prices • the full range of modern services is accessible by all the population of Albania • competition and choice for users • improved protection of consumers

7. POLICY IMPLEMENTATION Adopted initiatives Initiative 1 A general licence for telephone service providers will be issued Initiative 2A second terrestrial mobile telephony operator will be licensed in the same time with privatisation of AMC.A decision on licensing of subsequent cellular operators will be taken at a later date by Council of Ministers, when the market has had time to develop. Initiative 3 Urban, long distance and international telephony services provided over fixed networks will be open to competition by 2003.

8. KEY PROVISIONS OF THE POLICYLong term goals • In order to implement its long term objectives, the government has chosen to: • introduce competition and liberalisation in the sector • implement EU telecom Directives in Albania • allow/attract foreign investments to support faster deployment of a high quality infrastructure • … But also to allow for a transition period, in order to: • reduce the negative short term impact of tariff re-allignment on the Albanian public • allow sufficient time for operators to accomplish the heavy investment requested upfront • In practice, (fairly) short term implementation of the policy will include: • privatisation of AMC and Albtelecom • granting of an exclusive right to Albtelecom to exploit the local, long distance and international voice telephony services in urban areas over its fixed network until 31 December 2002

9. PRIVATISATION OF STATE OWNED COMPANIES • On July 2000, 85% of AMC shares were sold to Cosmote/Telenor Consortium, through an international opened tender. • The process of Albtelecom privatization is underway and it will be finalized by the end of this year. • 51-76% of shares will be transfered to strategic investor; • Also a GSM licence will be issued to strategic investor.

10. Licencing of the 2nd GSM operator In conformity with provisions in telecommunications policy paper, the tender procedures for licencing of the 2nd GSM operator started in September 2000. Tender was closed in February 2001 and the winner was Vodafone company. In April 2001 the licence was issued to Vodafone, which lauched the services in August 2001.

11. Current telecommunications market structure (1) • Voice telephony: • fixedtelephony operators • - Albtelecom, 100% state owned; • - rural telecommunications operators ( liberalized market; • up to now 31 licenses issued) • 2 cellularoperators: • - AMC (Albanian Mobile Communications); • - Vodafone Albania

12. Current telecommunications market structure (2) • Liberalized services: • 15 Internet Service Providers • 3 POP • 4 Local ISP • 7 Regional ISP • 1 National ISP • 1 National Backbone Operator • 13 Other Service Providers • Shared Revenue Services, Prepaid card service, Free-phone

13. Fixed Penetration (per hundred habitants) • Low penetration (particular in rural areas) • High demand • High waiting list

14. Mobile penetration • Rapid growth of mobile users in 2001 is related with: • privatization of the first operator (AMC); • introduction of prepaid service; • very low fix penetration & high demand; • entrance of second mobile operator, Vodafone in the market (1 August 2001).

15. Rural telecommunications • The smallest unit area for the purpose of licencing is commune. • “First in, first served” licensing regime. • Since 1999, 31 licenses issued for rural operators. • Rural operators in 59 communes • 19.1% of total number of communes • 28.9% of total rural area population

16. Conclusions on reform undertaken Penetration figures given in previous slides, show that “privatisation and liberalisation” approach followed by Albanian Government was the right way for fostering telecommunications development. The contrast between mobile segment, where reform was implemented, and fixed segment, where reform was not implemented, make it more clear.

17. Next challenges • Privatisation of Albtelecom; • Law enforcement, and regulatory strengthening, • Information society

18. Information society Telecommunications are very dynamic. One gap is narrowed, another one appears. While in mobile telephony a lot of progress was done, the Internet usage in very law. There are only 10 thousand Internet users, mostly in Tirana. Some of the identified obstacle factors in Albania are: - high price of a PC comparing to GDP; - lack of Albanian content and services in Internet; - low knowledge of population on PC, etc.

20. Information society Overcoming of these factors needs engagement of the Government through stimulating policies. Albanian Government is fully confident that building an information society will impact and give positive results in economic, social and cultural life of Albania. With the support of ITU and UNDP, it has already started the project for drafting National ICT strategy, which is supposed to be finalised by the end of this year. This document will also identify necessary regulatory acts to be drafted.

21. Information society (Participation in regional projects) Albania is participating in these regional projects: - Stability Pact eSEEurope-initiative; - Italian initiative “E-governance for development” for Mediterian region; - “E-Governance project” between countries: Albania, Cyprus, FYROM, Greece, Rumania, and Yugoslavia.

22. THANK YOU