ANRC Imposes New Obligations on the Operators with Significant Powers on the Market

On Friday, December 19, 2003, the National Regulatory Authority for Communications (ANRC) adopted and communicated to the companies Romtelecom, Mobifon and Orange Romania the following decisions:

· Decision no.1379/2003 regarding Interconnection for Leased Lines-Terminal Segments with the Public Fixed Telephony Network (communicated to S.C. Romtelecom S.A.)

· Decision no.1380/2003 on the Approval of the Regulation for the Elaboration of the “Top-Down” model for the Calculation of the Long Run Incremental Cost, by Romtelecom S.A.

· Decision no.1381/2003 on the Approval of the Regulation for the Implementation of Accounting Separation, within the Internal Cost Accounting System, by Romtelecom SA

· Decision nr.1384/2003 on the Modifications and additions to the ANRC President’s Decision no.147/2002 on the Principles and Prerequisites of the Reference Offer for Interconnection with the Public Fixed Telephony Network (communicated to S.C. Romtelecom S.A.)

· Decision no.1383/2003 on the approval of the Regulation for the elaboration of the “Top-Down” model for the calculation of the Long Run Incremental Cost, by Orange Romania S.A.

· Decision nr.1382/2003 on the approval of the Regulation for the elaboration of the “Top-Down” model for the calculation of the Long Run Incremental Cost, by Mobifon S.A.

On grounds of the decision 1379/2003, Romtelecom has the obligation to include in the Reference Offer for Interconnection (RIO) with the public fixed telephony network it operates a minimum set of interconnection services for leased lines–terminal segments, together with the conditions, including tariffs, under which these services are offered to the beneficiaries. The negotiation deadline for concluding an interconnection agreement for leased lines-terminal segments based on RIO will be of two months from the date Romtelecom receives a request in this respect. By February 1, 2004, Romtelecom will submit to the approval of ANRC the tariffs for the provision of these interconnection services.

According to the decision 1384/2003, Romtelecom will have to complete in at most 15 days the current RIO in order to allow indirect interconnection and to offer other operators the possibility to provide to Romtelecom’s subscribers intelligent networks services – long-distance and international telephony through pre-paid cards and access to free numbers. Also, Romtelecom will publish a standard interconnection contract with the fixed telephony network and if the operators accept the terms of this contract, the deadline for the negotiation will be of 30 days from the date the request is received.

Romtelecom, Mobifon and S.C. Orange Romania S.A have the obligation to realize a “top-down” LRIC cost calculation model. The “top-down” model is based on the cost accounting sheets of each company, operates current cost adjustments and realizes networks improvements in order to reflect the activity of each effective operator. Based on the reconciliation between the “top-down” models realized by the operators and the “bottom-up” models realized by ANRC two hybrid cost calculation models will be obtained (one for the fixed operator and one for the mobile operators), which will be used for determining the effective interconnection tariffs. On grounds of the decisions 1381, 1382 and 1383/2003, Romtelecom will develop and implement the Cost Calculation Model until August 31, 2004, and the two mobile telephony operators – until July 1, 2004.

The decision no. 1380/2003 sets out the method for carrying out the accounting separation by Romtelecom for the activities related to interconnection and access to its network or its associated facilities. The regulation comprises detailed rules about the elaboration, publication and audit of the separated financial statements, the methodology for cost allocation, the incomes and capital employed within the accounting separation, as well as the transfer charges system applied to the products and services provided among business units and sub-units. The separated financial statements prepared for the financial year 2004 will be published within 4 months from the publication of the statutory financial statements.