New conflict breaks open over Net City

A new conflict has erupted in relation to the NetCity project, this time over the prices that operators have to pay for access to the backbone run by Netcity Telecom.

The National Association of Internet Service Providers is complaining that the prohibitive prices imposed by Netcity Telecom places it in a monopoly position, which will drive small operators out of business and greatly affect competition.

“In the beginning, the tariff an operator had to pay for access to the Netcity network run by Netcity Telecom was EUR 85/kilometer/month. After various taxes were made compulsory, such as connection, fitting or monitoring taxes, the tariff now amounts to EUR 185/kilometer,” said Mihai Batrineanu, president of the National Association of Internet Service Providers.

The representative of the association accused NetCity Telecom of applying preferential tariffs for some operators such as RCS&RDS and UPC Romania, which pay EUR 7.5 per kilometer per month.

“Netcity Telecom is not impartial and transparent. The operator of the metropolitan network favors some operators while driving others to bankrupcy, via the large tariffs it practices. Ten years since the market was liberalized, we are witnessing a monopoly in the capital,” said Batrineanu.

Eight members of the Association- GTS Telecom Romania, Ines Grup, Mediasat, Allnet, Digicom Systems, Interlan Internet Exchange Association (which represents the interests of neighborhood networks), Prime Telecom and Idilis- have opened a litigation at telecom authority ANCOM, and is ready to resort to the Competition Council and even to Neelie Kroes, vice-president of the of the European Comission for solving the matter.

The NetCity project started in 2008 via public-private partnership. The Bucharest City Hall leased to UTI Systems the underground infrastructure for a 49 year term, in order to set up a support communications backbone that should be able to replace the current cables that are suspended on poles.

UTI Systems should pay the Bucharest City Hall a tax of 12 percent from the revenues it earns from renting the network. UTI committed to invest EUR 202 million within 36 months after signing the contract.

After 49 years, the infrastructure should enter the possession of the Bucharest City Hall.