Western Wireless sues Slovene government

17-12-2004

The US mobile phone company Western Wireless has accused the Slovene government of failing to ensure a free market in the telecommunications sector. It is suing the state for 174 million euros in compensation.

Slovenia's population of roughly two million may not sound like a particularly attractive market, but it is for telecom companies. The country is saturated with mobile phones: 1.94 million Slovenes (over 90% of the population) are active mobile phone users.

Currently, the dominant force in Slovenia is government-owned Mobitel, which controls 80% of the market. The second-largest operator, Simobil-Vodafone, has about 300,000 users, making its market share roughly 23 percent. Vega, which is owned by U.S.-based Western Wireless International, and has been active in Slovenia since 2001, has only managed to grab two percent of the market - a number they blame on the failure of state regulators to create a level playing field. Now they have decided to sue Slovenia for damages, to the tune of 174 million euros. Denis Ostir, public relations manager for Western Wireless, explains:

"The conditions in the telecommunications market in Slovenia, especially with our case in mobile phones, are ridiculous. We have a market where the regulator is not doing his job, we have a market where the incumbent still retains 80% of the market share, regardless of the fact that we have had the designation of a so-called significant market player, where different sets of rules apply for it in order to prevent it from abusing the position it has. Nothing has been done. What we would essentially like to see is what we pointed out 20 months ago - to see this market regulated."

The government insists that the fault is with Western Wireless' general business plan. Slovenia's then Minister of Communications and Technology said he was shocked by the lawsuit and insisted that Western Wireless was trying to blame its "unsuccessful business policies" on the government.

But in one attempt to address the issue, Mobitel offered so-called asymmetrical pricing models to its two competitors. This model means that calls from government-run Mobitel to Simobil are more expensive than vice-versa. Simobil agreed to the terms, a decision that is expected to add about four million euros to Simobil's bottom line, according to the Slovenian business daily "Finance." Vega, however, rejected the offer as too little to help. Mr. Ostir:

"It's like taking a watchmaker's screwdriver and fine tuning the market to enable the small players to increase their market share slightly to make migration of customers normal, but in Slovenia the market is so distorted it needs huge hits with a hammer, not fine tuning with a watchmaker's screwdriver."

Western Wireless International is demanding that competition be ensured until the first of January 2005. If this does not happen, the company might leave Slovenia altogether, in which case it will make a claim for even more damages.

17-12-2004