THE CYPRUS Telecommunications Authority (CyTA) and LTV were yesterday fined a combined £145,000 after having been found guilty of restricting competition in the pay-TV industry.
But the Competition Commission’s verdict may turn out to be no more than a slap on the wrist for the two, who in the meantime have initiated a partnership set to make them hundreds of millions in revenue.
The watchdog initiated the investigation back in February, when news emerged that LTV and Alfa would supply miVision – CyTA’s digital platform – with entertainment content.
The move prompted an outcry from other providers, who said that LTV and CyTA were abusing their dominant market position, and the deal was put on ice.
But in June the two organisations got a break when, in a separate case, the commission ruled that LTV’s popular content should be freely available to all providers. Previously, LTV had had an exclusive arrangement with Multichoice.
LTV and Alfa are now available on miVision and PrimeTel, but not on Mutichoice’s Nova Cyprus digital platform due to financial differences with LTV. That has had viewers scrambling to figure out which package offers the best bang for their buck, and as always football coverage is what it’s all about.
Given that the current agreement between CyTA and LTV came about after the opening up of the pay-TV market, this later contract was not subject to the Competition Commission’s initial probe.
The Competition Commission shied away from imposing the maximum penalty of up to 10 per cent of turnover, citing the cooperation of the two companies, such as their commitment to notifying it of any developments.
Commissioner Giorgos Christofides explained yesterday why the watchdog had to pass judgment on the original LTV-CyTA deal, even if it was now defunct:
“There was a need to impose a fine, because failure to issue a decision might have given the impression that this [initial] agreement could have been implemented at a later stage.”
In its lengthy verdict, the Commission said that CyTA and LTV “constrained, inhibited and distorted competition in the markets of pay-TV and digital interactive platform.”
The body also found that, given its infrastructure, the telecom giant would have gained an unfair advantage through the deal since “it is the only corporation which, without any dependencies, may use the digital method to broadcast video (television), audio and Internet-data.
“Competitors, meanwhile, would need to undertake huge investments, which might turn out to be sunk costs, as they seek to create an independent infrastructure for telephony and broadband.”
This point is significant, because at the present time all TV/internet providers in Cyprus are forced to use CyTA’s copper cable network.
Moreover, “only CyTA was in a position to provide LTV with high earnings, thereby allowing LTV to secure popular content that would in turn attract more subscribers.”
Further, the Commission described CyTA as “a financially robust organisation because of the monopoly and privileged position it had for several years in the area of telecommunications.”
The wording harked back to the European Electronic Communications Regulation and Markets 2005 Report, which was especially damning on Cyprus, voicing concern about the absence of political will to create a market environment that can introduce and sustain effective competition.
Established in 1993, LTV boasts over 65,000 subscribers, and has an estimated 30 per cent market penetration of all households in Cyprus.
For its part, CyTA controls 97 per cent of the fixed telephony market, 93 per cent of the mobile telephony, 94 per cent of the internet market and up until recently total control of the broadband service market
The local supervisory body also pointed to a loophole in relevant telecom laws, whereby the Broadcasting Authority does not have jurisdiction to control digitally broadcast content, such as that offered by CyTA’s miVision platform.
What that means is that LTV can effectively run any amount of shows and commercials on miVision without being answerable to regulatory authorities. By contrast, analogue TV stations are subject to restrictions on advertisement airtime.
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