Netia called a security threat
Citing the possibility of a threat to the country's national economy, defense and security, the Communications Ministry made an unexpected announcement last Tuesday to once again delay the issuance of a local operating license to telecom company Netia a move that was unfair and likely influenced by a competitor's lawsuit, a Netia official said last week.
"The Ministry (of Communications) refused to give Netia the license for the reason that we are very dangerous for the country and a threat (to) its citizens," said Jolanta Ciesielska, Netia's spokesperson. "We are not satisfied. We are against it."
Netia, Poland's largest independent fixed-line telephone operator, won a second tender for a license to operate local calling service in the lucrative Warsaw metropolitan area after its rival, El-Net, failed to connect any subscribers for more than a year after it won a license in the first tender in December 1998. While Netia already provides service to Warsaw suburbanites, the new license would enable the company to compete with El-Net and Telekomunikacja Polska (TPSA) in providing service to all Warsaw residents.
The Communications Ministry was due to issue the license to Netia on May 23, 60 days after Netia sent the ministry a formal request to grant it the license. The ministry should have issued the license 30 days after Netia's request was filed, but it used its legal prerogative to wait an additional 30 days.
After the 60-day period expired May 23, the ministry issued a rare statement that under article 18 of the current telecommunications law it was not obliged to grant the license as long as Netia's proceedings constituted possible threats to the national economy, defense and security. The ministry said it would issue the license by June 30 after the government determined whether the company posed a threat.
"From a legal point he (Communications Minister Tomasz Szyszko) had a duty to release an official statement," Ciesielska said.
But the ministry's statement provided no explanation as to how or why Netia constituted a threat, Ciesielska said. "This (general reason) doesn't satisfy us because it is unclear," she said. "We are not new on the market. Since 1999, we have had 26 licenses for local telephony, data transmission and internet service. The same minister a week ago gave a license to Netia for long-distance (service). We were not dangerous at that time."
Government officials at the Communications Ministry could not be reached for comment last Friday. When the direct office numbers of Szyszko and Undersecretary Marek Rusin were called, both had the same recorded message that their numbers had been changed to a new common number. When the new number was dialed, however, another recording announced that it was not a valid number. Likewise, repeated calls to the spokesman's office at the ministry went unanswered. When the number to the press office was dialed, the phone rang but the caller was always automatically disconnected after eight rings.
In reaction to the ministry's further delay, Netia sent a formal written complaint to Szyszko last Wednesday requesting that a deadline be set for the settlement of its request for its license and that an explanation for the further delay be provided. The letter said: "It should be emphasized that (Netia) obtained a license to provide telecommunication services back in the year 1992, and so far there have been no reservations about the way the company has been executing the license. The license for which the company is currently applying is of the same type and scope as the existing one. Despite all this, the decision has not been issued."
The letter further stated that Netia might expect financial compensation for further delays in the granting of the license since the company is preparing to offer its shares on the Warsaw Stock Exchange. "An unjustified delay in decision-making and the inactivity of the ministry have a fundamental negative impact on the company's financial activities, which the company might want to compensate," the letter said. "If the current situation lasts beyond the scheduled deadline for setting the emission price of the stocks (June 1, 2000), it could lead to unforeseeable financial consequences."
The letter concluded by saying that Netia would drop its case in the Chief Administrative Court (NSA) and withdraw its subsequent complaint concerning El-Net's license for the Warsaw area. On Nov. 18, 1999, Netia filed a case in the NSA to stop the granting of the first license to El-Net, arguing that El-Net submitted documents rife with legal faults.
Last June, El-Net, the telecom subsidiary of Elektrim, was awarded a regional telecom license to offer service in the Warsaw area. El-Net filed a lawsuit against the Communications Ministry in Warsaw's district court on April 13, 1999 protesting the awarding of the second license to Netia in March. El-Net charged that Maciej Srebro, the former communications minister who conducted the second tender, breached the government's policy of granting only one operating license to an alternative telecom operator in each of the country's regions in addition to the state monopolist TPSA.
Sebastian Bartosik, spokesman for El-Net, said that on May 19 the prosecutor's office started its investigation into its complaint against the ministry as to whether former minister Srebro violated the terms of the ministry's agreement with El-Net.
"We are using all legal and protective action to stop the signing of the concession for the Warsaw license (for Netia)," he said.
El-Net began connecting corporate subscribers in Warsaw in March in conjunction with Millennium Communications, a telephony systems integrator, Bartosik said. El-Net now has a total of 360 lines in three office buildings in Warsaw and is completing additional agreements with corporate clients. El-Net will offer its service to residential clients in the Warsaw suburbs between September and December, he said.
Because of its legal battle with El-Net, Netia believes that its rival's case against the Communications Ministry probably prompted Szyszko to delay the issuance of Netia's license once again, Ciesielska said.
"The Ministry of Communication should open the market and not be involved in a war between two private companies and (should) be a regulator of the market not close the market," she said. "(The minister should) give opportunities for telecom companies to build networks and provide telecom service for subscribers in Warsaw. (But) he's (Szyszko) not for opening the market. He's against this."
Netia expects the ministry to change its decision and issue the license before June 30 because of "the image of our company" and "that we are clear" of any charges, said Ciesielska.
On the same day that the ministry said it would not issue Netia's license, Szyszko handed over a license to Wroclaw-based independent operator Telefonia Lokalna, allowing the company to directly compete with Netia and TPSA by offering service in the Warsaw suburbs. "We are not against competition in the market, we are for it," said Ciesielska about Telefonia's Lokalna's license. "The market should be open, and the company which is better will be chosen by subscribers."
