Taking the side of VimpelCom in a dispute with the regulator

The Federal Antimonopoly Service (FAS) ruled that the State Commission on Radio Frequencies (SCRF) violated antimonopoly legislation by refusing to VimpelCom to obtain radio frequencies for operation in the Far East. According to experts, the FAS decision does not yet mean that the problem of VimpelCom entering the Far East market has been resolved and the final word in this dispute will, in any case, remain with the regulator.

The head of the Federal Antimonopoly Service, Igor Artemyev, believes that the absence of VimpelCom in the Far East market is contrary to antimonopoly legislation
PHOTO BY ALEXANDER MIRIDONOV

Representatives of the FAS recognized the actions of the SCRF as violating Russian antimonopoly legislation. “The actions of the State Commission on Radio Frequencies (SCRF), which refuses to OJSC VimpelCom to allocate radio frequency bands for the organization of mobile communications, violate Article 7 of the Law “On Competition and Limitation of Monopolistic Activities in Commodity Markets,” the message says. “We hope that the SCRF will comply with our instructions and take action to restore the competitive situation in the cellular communications market of the Far East,” Dmitry Rutenberg, deputy head of the FAS department for control and supervision in transport and communications, told Kommersant yesterday. “The decision allows VimpelCom to apply to Rossvyaznadzor to obtain frequencies.”
To date, VimpelCom provides GSM services only in four Far Eastern regions - Khabarovsk Territory, Amur Region, Kamchatka and Sakhalin - through the acquired local operators Dal Telecom International and Sakhalin Telecom Mobile. At the same time, the federal cell phone company did not stop seeking a license for the entire Far Eastern Federal District.
VimpelCom stated that they are satisfied with the FAS decision and expect that the company’s applications to the SCRF for frequencies will be satisfied in the near future. “The Far East is a very attractive region in the Russian cellular communications market, and we believe that our rights to enter this region have been infringed for a long time,” VimpelCom press secretary Yulia Ostroukhova told Kommersant yesterday. “Therefore, we are pleased with the decision of the FAS and expect to resolve the problems with the allocation of frequencies from the SCRF soon and in a pre-trial manner. We will declare our intentions more specifically after we receive the FAS order.”
The Federal Communications Agency (Rossvyaz; this body is responsible for assigning radio frequencies) told Kommersant on Thursday that it was surprised by the FAS decision. And they explained that work on clearing the 1800 MHz range in the Far East and identifying free frequencies began last fall. “The work is still far from complete, and it is not clear how we can be obliged to issue non-existent frequencies? - said the head of the Federal Communications Agency Andrei Beskorovainy. — The results of the ongoing work can be presented for consideration by the SCRF on March 27. ...If the FAS believes that they have a better understanding of the regulation of the radio frequency spectrum and can oblige us to issue non-existent frequencies, then this is a very strange position. Moreover, there is a very strong desire of the antimonopoly department to help a specific commercial structure - VimpelCom. One gets the impression that they only get information about the situation from there.”
Let us note that the antimonopoly authorities have already made an attempt to regulate conflicts with frequencies: in 2002, the Ministry of Antimonopoly Policy considered it illegal for the Ministry of Communications to restrict licenses for the use of the radio frequency spectrum in the 800 MHz region of cellular operators AMPS and CDMA. And although this decision was made almost four years ago, the antimonopoly authorities have so far failed to prove their case in the courts. As Dmitry Rutenberg explained to Kommersant yesterday, the FAS is still suing the Ministry of Information and Communications, proving its position.
Experts reminded us of this yesterday. “The history of the struggle between antimonopoly authorities and the Ministry of Communications has shown that the last word in the market always remains with the relevant regulator,” notes J`Son & Partners analyst Boris Ovchinnikov. “Therefore, now that representatives of the FAS admit that VimpelCom has not been issued permits to obtain frequencies, it is too early to say that the problem of VimpelCom entering the Far East has been resolved.” This point of view is shared by Nadezhda Golubeva from the Aton Investment Group: “Rossvyaz will still establish the availability of frequencies de jure. If they say that there are no frequencies, then VimpelCom will not receive them, and the lobbying efforts of its shareholders, without which the FAS resolution most likely could not have happened, will not solve the problem, but will simply give the conflict a public character.”
It is quite possible that the issue of frequencies in the Far East will become the subject of litigation this time. “We don’t have any official decision from the FAS yet,” Dmitry Parkhomenko, a representative of the legal department of the Ministry of Information and Communications, told Kommersant on Thursday. “If the information about the FAS making a decision regarding SCRF is confirmed, we will study it and decide on the possibility of appealing in court.”
DMITRY ZAKHAROV

Kommersant (Khabarovsk) No. 38 from 03/04/2006

FAS took care of the frequency