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Viewing cable 07ANKARA501, EXCITEMENT AND FRUSTRATION IN TURKEY'S TELECOM SECTOR
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Reference ID | Created | Released | Classification | Origin |
---|---|---|---|---|
07ANKARA501 | 2007-03-06 11:08 | 2011-08-24 01:00 | UNCLASSIFIED//FOR OFFICIAL USE ONLY | Embassy Ankara |
VZCZCXRO6739
RR RUEHAG RUEHAST RUEHDA RUEHDBU RUEHDF RUEHFL RUEHIK RUEHKW RUEHLA
RUEHLN RUEHLZ RUEHROV RUEHSR RUEHVK RUEHYG
DE RUEHAK #0501/01 0651108
ZNR UUUUU ZZH
R 061108Z MAR 07
FM AMEMBASSY ANKARA
TO RUEHC/SECSTATE WASHDC 1219
INFO RUCPDOC/USDOC WASHDC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEHIT/AMCONSUL ISTANBUL 2258
RUEHDA/AMCONSUL ADANA 1712
RUEAFCC/FCC WASHDC
UNCLAS SECTION 01 OF 02 ANKARA 000501
SIPDIS
USDOC FOR 4212/ITA/MAC/CPD/CRUSNAK
FCC FOR A THOMAS AND A WEINSCHENK
SENSITIVE
SIPDIS
E.O. 12958: N/A
TAGS: ECPS EINT EINV TU
SUBJECT: EXCITEMENT AND FRUSTRATION IN TURKEY'S TELECOM SECTOR
REF: A) ANKARA 49
B) 06 ANKARA 6055
ANKARA 00000501 001.2 OF 002
Sensitive But Unclassified. Please handle accordingly.
¶1. (SBU) Summary: Fresh from participation at the annual 3GSM World
Conference in Barcelona, participants at a recent telecom sector
conference in Istanbul were agog with new visions, technology, and
opportunities. Coming back to earth, there was widespread
frustration with recently privatized and still dominant (in fixed
line) Turk Telekom continuing to seek to stifle competition, rather
than seek to increase market share. Moreover, the well-intentioned
telecom regulatory authority is still perceived as slow in
implementing new licenses. Real competition is emerging between
Turk Telecom and the livelier mobile sector, where penetration has
surpassed well over that in fixed line. The President of the
Telecom Board aims to lead a delegation to meet with the FCC in
April. Embassy Telecom Officer gave a speech on Internet regulation
at the conference. End Summary.
----------------------------------------
Brave New World of 3G, WIMAX, and Beyond
----------------------------------------
¶2. (SBU) The 6th "Steam" Telecommunications Conference in Istanbul
February 22-23 brought together a wide representation of Turkey's
public and private telecom sector participants to seek to answer the
question: "Is the (telecom) process meeting expectations?" By
videoconference from Bodrum, Minister of Transportation and
Communication Binali Yildirim emphasized the government's commitment
to developing the newest telecom technology and services in Turkey.
He noted that mobile penetration had reached 73 % (53 million
subscribers) versus fixed line 26% (19 million). He voiced
commitment to increasing broad-band penetration beyond the current
5% (three million).
¶3. (SBU) Telecom Board President Tayfun Acarer said that the
regulatory body was preparing for licensing number portability,
E-signature, 3G, and WiMax. The time frame is imminent for the
first two and six months for 3G. WiMax is still under research.
Another regulator rep stressed that the board was active in moving
forward on value-added services. He asserted that there would soon
be clarification in the three levels of long-distance service (A, B,
and C) and that the Board was finalizing a new basic fixed line
service license.
-------------------------
What is Fair Competition?
-------------------------
¶4. (SBU) Turk Telekom General Manager Paul Doany was very defensive
about steady criticism of Turk Telecom for alleged unfair
competition. He claimed that his company had never delayed any
rulings from the regulator. Doany defended recent price changes
(decrease in long distance, where there is competition, and increase
in local service where there is still a monopoly), claiming that he
was clear at the time of privatization for a need to rebalance
tariffs. He defended Turk Telecom as following the same business
approach of other former monopoly providers like Deutsche Telecom
and France Telecom. Doany complained that Turk Telekom faced
"unfair competition" in high, unfair inter-connection fees with
Turkcell, the dominant mobile carrier, asserting that these charges
were not cost based. He also complained that Turk Telecom's mobile
company AVEA had paid ten times the license fee of others in return
for unrealized promised services.
¶5. (SBU) Representing his own company Satko and long-distance
operators (Telkoder), Mehmet Celebiler engaged in a lively debate
with Turk Telekom's number two, almost coming to fisticuffs over
Turk Telekom's alleged go-slow and say-no approach to competition.
¶6. (SBU) Internet service provider Superonline DG Savas Unsal noted
there was some progress in the six years since the onset of
liberalization, but market participants were unsatisfied. He said
his company had established many WiFi hot-spots at airports and
hotels and was pleased to have a WiMax testing license in
collaboration with Motorola and Alcatel-Lucent for 3.5 GHz operation
in the Asian part of Istanbul. He called for increased public
awareness of WiMax potential and urged the regulatory board to move
more quickly on licensing. Unsal also called for quick action from
the board on 3G licenses. He said that WiMax was a revolution, not
evolution.
¶7. (SBU) Dr. Osman Dur, DG of state-owned Turksat, which inherited
cable service from Turk Telecom's privatization, claimed that
ANKARA 00000501 002.2 OF 002
Turksat "is not a monopoly. We are an infrastructure, and we are
ready to share." He admitted that cable Internet service had much
greater potential than had been realized. He commented that Turkish
private sector licensees could establish their own network, but they
have not pursued this. Critics express frustration that cable could
have opened up greater competition, but the Competition Authority
required the cable business to be split from Turk Telekom to Turksat
ahead of the privatization.
--------------------------------------------- ----
Stifling Competition, Rather than Building Market
--------------------------------------------- ----
¶8. (SBU) In a private conversation on the margins of the
conference, Dogan Telecom General Manager Cem Erkun painted an
overwhelmingly negative story of Turkey's slow liberalization. He
claimed that the Telecom Authority has still not been able to
exercise independence and is slow to intervene or enforce rulings.
Erkun asserted that Turk Telekom aimed to beat up competitors,
rather than increase the market. He complained that Turk Telekom
remains a difficult partner on interconnection, seeking to unfairly
use court cases to infringe Dogan's and others' use of VOIP. Erkun
complained that given Turk Telekom's former government status and
connections, Dogan encounters obstacles at every step and place in
seeking right of way when they consider investing in new
infrastructure.
¶9. (SBU) Erkun said only Dogan Telecom and Superonline have been
successful in re-marketing ADSL broad-band service slots from Turk
Telecom, because of either substantial media (national Hurriyet for
Dogan) or distribution assets. Erkun noted that Dogan began
marketing its service with free modems and Turk Telecom then started
to give away modems. He noted that Turk Telecom still exhibited
large differences in its approach depending on the city, meaning
that in some cities Dogan could not get ADSL slots or reasonable
follow-up. Erkun echoed many of his peers in expressing frustration
in waiting for WiMax. He saw 3G as a dead and distracting
technology, given the lack of success in Europe (too much money paid
for licenses). Erkun noted that Dogan was Skype's local partner in
Turkey and lauded this low margin but high volume business.
¶10. (SBU) COMMENT: Effective competition is now occurring between
mobile (dominant Turkcell plus two other lesser operators) and fixed
line Turk Telekom. Penetration is rapidly increasing in mobile
where there is substantial competition. Turk Telekom continues to
successfully argue that it has made substantial investment in fixed
line infrastructure, so it has maintained its monopoly on local
calls and continues to exercise dominance over long distance. The
wide-eyed excitement about new technology is dampened by Turk
Telekom's delaying tactics and a slow program and limited
independence on the part of the regulator. Telecom Board President
Tayfun Arcarer intends to lead a delegation to Washington to meet
with the FCC in April. Contact between our regulators could be very
useful in empowering and influencing the relatively young Turkish
regulator.
Wilson