APDC COMMENTED ON INFORMATION ABOUT THE INCREASE IN PRICES FOR INDIVIDUAL TARIFF PLANS FOR MOBILE COMMUNICATIONS

Is the upcoming increase in mobile tariffs justified?

The mobile services market is dominated by a high concentration of state participation and a high share.  There are 3 mobile operators in Kazakhstan, including 2 subsidiary operators of Kazakhtelecom JSC-Kcell JSC (kcell/aktiv) and mobile telecom – service LLP (Tele2/Altel) – with a total market share of 62% and the 3rd participant - Kar-Tel LLP (Beeline) - with a share of a private operator-38%.

In general, these mobile operators have a 100% market share.

The monopoly structure of the market was strengthened by the results of auctions held at the end of 2022 on the distribution of radio frequencies in the 5G network, according to the results of which the Kazakhtelecom group was recognized as the winner, ensuring a 100% monopoly in the provision of services in the 5G network.

Tariffs for communication services are set by telecom operators independently on the basis of reasonable costs in accordance with Article 20 of the law of the Republic of Kazakhstan "on Communications". Thus, the legislator ensured the formation of tariffs only on the basis of justified costs.

As for the notifications of operators about the increase in tariffs, at the moment the agency is conducting appropriate work within its competence: requests have been sent, prices are being monitored. However, the agency can determine the validity of the price increase in the presence of signs of violation of the antimonopoly legislation on setting a high antimonopoly price only within the framework of an investigation.

At the same time, I would like to note that the processes of implementation of response measures by the antimonopoly authority provided for by law are often delayed due to discussions in the courts. For example, the quasi-state JSC "Kazakhtelecom" has now challenged the agency's request (within the framework of consideration of citizens ' appeals) regarding the justification of the reasons for the increase in tariffs for communication services involving mobile communications (the request was recognized as legitimate by the decision of the court of 1st instance dated 23.06.2023, which has not entered into force). Kcell JSC complained about the request of the agency's Department for Almaty within the framework of price monitoring provided for by law. In this regard, the monitoring was suspended.

Are mobile operators obliged to warn the agency about raising prices for their services?

Operators are not obliged to notify the agency, the legislator only obliges to warn customers of the service within a month.

I repeat once again that it is possible to determine the validity of the price increase only during the investigation if there are signs of violation of the antimonopoly legislation on setting a high antimonopoly price. Currently, work is underway to identify signs of violation of antimonopoly legislation.

What will be the agency's actions if the violations of mobile operators are confirmed?

If there are facts of unjustified tariff increases, the legislation provides for administrative responsibility.

According to Article 159 of the administrative code, the abuse by market entities of their dominant or monopoly position by establishing and maintaining monopolistically high prices entails the imposition of a fine on large business entities-in the amount of five percent of the income (income) received as a result of monopolistic activity, with the confiscation of monopoly income received as a result of monopolistic activity for one year.

Do the agency receive many complaints from consumers of mobile services? What is the indicator?

It should be noted that in the current year, prices for mobile operators increased from 8 to 50%, depending on tariff plans. For the period 2021-2022, the increase in tariffs amounted to an average of 13 to 37%.

For example, in April 2023, beeline increased the cost of the Zharkyn tariff plan from 1790 tenge to 2490 tenge (an increase of 39%); Kcell and Tele2 announced an increase in prices for various tariff plans, including the" real limit "(Kcell) from 3390 tenge to 4390 tenge (an increase of 29%)," just super "(Tele2) from 2590 tenge to 3290 tenge (an increase of 27%).

The agency has received more than 200 complaints about tariff increases and the imposition of unclaimed services from 2022 to the present. The complaints of consumers of communication services are reviewed and analyzed in detail by us. But again, I repeat, market entities, exercising their rights, complain about the requests of the agency. Now this issue is being considered in court.

Has the agency taken measures to amend the legislation as part of the elaboration of complaints?

Earlier, the agency found that as part of the elaboration of citizens ' appeals, telecom operators made only small changes in the tariff plan to the volume of introduced services (increasing internet traffic, minutes to different destinations, etc.), which were not requested by subscribers. At the same time, the cost of the tariff plan increased simultaneously.

Definition. For example, the agency's Department for the city of Almaty alone received more than 30 complaints about changes in the volume of services in the tariff plan and a simultaneous increase in their cost at the end of 2022.

Therefore, considering citizens ' complaints, at the initiative of the agency, the Ministry made changes to the rules for the provision of communication services, establishing a ban on changing the terms of tariff plans for mobile communications, with the exception of changes in tariffs on the basis of reasonable costs, as well as a number of other norms aimed at protecting consumer rights to increase tariffs for internet access services for communication, a ban on changing the volume of services included in the tariff plan without the consent of the subscriber.

At the same time, mobile operators are now objecting to the accepted norms of the rules for the provision of communication services in the courts.

Why is it planned to introduce state regulation of prices for mobile communications? Is there a mechanism for state regulation?

As I said, the mobile market is highly concentrated and has a predominant share of the state.

The current situation in the communication market is facilitated by its monopoly position.

In the absence of even competition in the market due to the lack of personal finances, there is a decrease in competition for the client between operators. As a result, there is an increase in prices, complaints about the quality of communication services.

In addition, in 2022, in accordance with the decree signed by the head of state "on approval of the concept for the protection and development of competition in the Republic of Kazakhstan for 2022-2026", it is planned to gradually monopolize the group of companies of JSC "Kazakhtelecom" for subsidiary mobile operators.

Today, the government is carrying out certain work in this direction. At the same time, Kazakhtelecom's work on de-monopolization continues indefinitely.

In turn, this year the agency, together with the ministry, adopted a roadmap for the development of competition in the telecommunications market, which included measures to reduce the share of state participation in the market.

Also this year, the agency has developed a draft decree on the development of competition in the communication market.

In accordance with the current legislation, monopoly activity is regulated and limited by law.

In this regard, in order to provide conditions for the introduction of fair tariff creation in the monopolized market, the agency proposed to the government to temporarily introduce state regulation of prices for mobile services as socially significant markets until the complete monopolization of the market.

In accordance with the norms of the entrepreneurial code, the state regulates prices and tariffs for goods, works, services of business entities in socially significant markets. At the same time, state control over compliance with the procedure for regulating prices and pricing is carried out in order to protect the interests of consumers.

In this regard, if mobile services are included in the list of socially significant markets, tariffs will be regulated by the authorized body in the field of communications – the Ministry, which will ensure transparency in pricing.

In addition, according to operators, one of the reasons for the increase in prices is the increase in equipment and investment costs. In turn, the regulation will allow the Ministry to control the corresponding increase in tariffs in the amount of expenses of the operator.

The information was explained by the deputy chairman of the agency for protection and development of competition of the Republic of Kazakhstan Bolat Sambetov.