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International Incoming Calls Extremely Rise in Value

Tariffs of international incoming calls, both cellular and landline calls (the so-called city network), have considerably increased.

The bottom margin tariff introduced by the Georgian National Communications Commission (GNCC) in 2012 is said to be the main reason for surge in tariffs, which demonstrate  growing tendencies

GLCC Law Firm is interested in electronic communications field and, for many years, it represents many companies engaged in transit of international calls. At the same time, GLCC protects their interests before administrative bodies and the court.

“Growth in tariffs minimized international calls to Georgia by more than 50% year to year. For example, in 2012 more than 41 million calls were registered every month, while, currently, the figure makes up 14 million calls and this number declines day by day.

Introduction of temporary regulations in March 2012 was inspired by research work conducted under the aegis of GNCC. The research works has showed negative balance between domestic and foreign operators in terms of payments. Namely, more money was withdrawn from the domestic market as compared to inflows to the country”, Irakli Gaprindashvili, managing partner for GLCC Law Firm, noted.

Note that for the purpose of resolving the existing situation, the commission has preferred to introduce temporary regulations and stimulate and promote the market in this way. As a result, the GNCC determined the bottom margin tariff for international incoming calls and set 0.1 USD on international cellular incoming calls and 0.05 USD on landline calls.

The mentioned regulations changed several times and, at this stage, the price of international incoming calls makes up 0.25 USD for domestic influential operators and 0.16 USD for smaller domestic operators. Besides the mentioned regulations, in 2015 GNCC also introduced excise tax on termination of international calls, by making amendments to the Georgian tax code. As a result, the tariff made up 0.15 GEL on cellular calls and 0.08 GEL on landline calls per minute.

The current market realities, including extreme contraction in  international incoming calls, on the one hand (from monthly 41 million per minute to 14 million) and growth in the so-called black traffic, have showed that introduction of regulations has inspired certain companies on the market to use various schemes to conceal incoming calls and sell international incoming minutes cheaper by ignoring the mentioned regulations so as to receive higher profits and revenues, GLCC Law Firm noted.

“Consequently, they ignore introduced excise tax and irreversible damage is inflicted to domestic market and small and medium-sized operators”, Irakli Gaprindashvili said and noted that the temporary regulations adopted by the Communications Commission in 2012 have lost their initial function for preventing negative market tendencies.

One detail should be also taken into account. In the communication sector, the market tendencies have proved that introduction of regulations and adding tax burden on it have, in practice, minimized international calls traffic from the market, however, these calls have not disappeared. They were just removed from official statistical and financial indicators, and the money current that was to remain on the domestic market and  enter the state budget in the form of an excise tax, is hidden through various schemes and it is impossible to control these schemes at this stage, regretfully.

The fact that major influential operators require bank guarantees, deposits or advance payments in exchange for  making international calls through their networks, adds heavier burden onto small companies operating in the electronic communications field. These requirements are very heavy  for small operators amid the above-mentioned high tariffs.

Exp­erts assert that the current situation on the Georgian telecommunications market have led several small and medium operators to suspending operation.

«It is impossible for them to operate in similar market conditions and maintain business profitability»,  the GLCC managing partner noted and added that it is necessary that GNCC control the mentioned issue more strictly and efficiently. Namely, he urges GNCC to introduce new and stronger regulations for the network owner operators to recover the market and take efficient steps  on behalf of all operators or remove the existing temporary regulations  for  equalizing the international and domestic calls that would be a logical solution from the existing situation.