"Washing durty linen in public" Or about the conflict between mobile operators in Azerbaijan

Conflict between the two mobile operators Azercell Telekom MMC and Azerfon MMC (Nar Mobile) is still in progress.

Open resistance between Azercell and Azerfon began on July 21 when Azercell announced on cut of interconnections between the two mobile operators on July 22 at 00:00 [Baku time]. Azercell reported that the company is obliged to take such measures because Azerfon did not pay its 11 million mantas [$13 million] debt under the contract concluded on Feb. 28, 2007. The debt accumulated since July 28 till present.

The local economic court No 1 of Baku has examined the case of Azerfon and Azercell mobile operators. The court decided against cutting interconnections between the two mobile operators on July 21 by the end of the juridical case.

Azercell announced that despite multiple formal applications to cover the accumulated debt, no steps were taken by Azerfon. "Azerfon will be responsible for all consequences which might occur in the mobile connections between the subscribers of the two operators," the company said.

In their turn, Azerfon blames the counterparts, considering the cessation of intercommunication between Azercell and Azerfon as contradictory to the international experience.

Azerfon also blames Azercell in holding "black PR' with regard to Azerfon, because the latter is dynamically developing in the Azerbaijani mobile market. Furthermore, this is not the first case when Azercell as a rival in the Azerbaijani mobile market uses such actions directed against not only Azerfon subscriber, but also Azercell clients.

No matter who is guilty, the essence of the conflict showed the true face of mobile operators who can sacrifice interests of their subscribers and quality of services in chase of their private interests. Inability of two companies to agree upon in size of access rates for networks, i.e. the sum of interconnection charges incurred serious, though temporary, difficulties to subscribers of the two mobile operators in mutual calls.

This is not the first resistance between the monopolists, damaging ordinary citizens of the country. Azerbaijanis well remember the recent conflict between Azersu water supply company and Sumgayit electricity supply company, which left almost 70 percent of residents of Sumgayit and Binagadi district of Baku without water supply due to disagreements in mutual settlement.

More likely, subscribers of third operator may also suffer from this conflict, though Baksell keeps neutral position and avoided commenting on the disagreement between its rivals. It is correct, remaining aside might favor the reputation. Though, Baksell confesses that existing high taxes for access to other mobile operators' network impedes rivalry, keeps offering competitive tariffs to a final user and reflects negatively in the field in whole, but still does not jeopardize launching an open confrontation.

In addition, Baksell give a way to Azercell since the very beginning of the appearance of the   latter in the mobile market. Not every mobile subscriber knows that Bakcell, but Azercell is the first mobile operator in Azerbaijan.

In particular, the Communication and IT Ministry called Azercell and Azerfon mobile operators to solve conflict by talks. This incident must be solved in accordance with Azerbaijani legislation regulating relations of mobile operators. If talks are failure, the ministry can also make certain actions within law. 

The ministry treated both sides negatively, motivating it the violation of users' rights. So, any conflict or disagreement should be settled through talks, or existing legislation. Azerbaijan has a relevant legislative base regulating the organization of activities, services and interoperator relations.

The local economic court No 1 of Baku has examined the case of Azerfon and Azercelll mobile operators. The court decided against cutting interconnections between the two mobile operators by the end of the juridical case.

Otherwise, all responsibility on this case will be imposed on Azercell in line with the existing legislation.

Now the company decided to sit at table of talks to mull tariffs for interoperator communication. Azerfon sit at the table of talks only after the public statements by Azercell on incompetence of business relations with Azerfon. "After the statements by Azercell we carry out all measures not to incur difficulties to our and their subscribers while communications," Azerfon said.

Meanwhile Azercell said that the company opened internetwork communications channels with Azerfon by the end of talks just for convenience of subscribers. The situation raises a question: "Why talks were not held timely, without washing dirty linen in public, when debts have been accumulated since last year?"

Later it turned out that Azerfon and Azercell have been in talks on interconnection for over two years. According to Azerfon manager Aziz Akhundov, despite long talks Azercell cannot reconcile with standard conditions on interim communications specified by the Azerbaijani legislation. "There are interconnection tariffs adopted by the Azerbaijani Ministry of Communications and IT, but Azercell is unwilling to cut prices, accounting debts in line with old schemes, which are unacceptable for us. So, how could we accept debt if there is no agreement," Azerfon inquires.

In accordance with the legislation, the issue of traffic that sides offer each other is regulated by an agreement they concluded. Obviously, the issue was included in an agreement on Communication between Azercell Telekom and Azerfon, dated Feb. 28, 2007. Under the agreement, the operators are eligible to transfer traffic charges each other at the end of each month.

Meanwhile, Azerfon stated that sum of debts announced earlier by Azercell does not correspond to reality. However, they do not mention any sum or difference which does not coincide. 

Azercell has numerously taken such provocative actions. They are directed at preventing the development of the mobile communication market and in general, IT market."

In it turn Azercell the debts represent considerable asset for the company and they are needed to fulfill liabilities to other sides. Furthermore, Azercell has numerously appealed to the Ministry of Communications and IT, but the problem remained unsolved.

Ordinary users should not necessarily know about it. This is a conflict between shareholders and their own investigation. The companies accuse each other of disrespect to subscribers, whilst actions of both operators affected the development of ICT sector in Azerbaijan and damaged this sector's image in the country.

Background information

AZERFON

AZERFON (Nar Mobile trade mark) was licensed by the Ministry of Communications and Information Technologies of Azerbaijan Republic in December, 2005 to provide mobile services throughout the territory of Azerbaijan. AZERFON Company launched its commercial activities in March 21, 2007 under brand name Nar Mobile.

The network coverage of Nar Mobile reaches 80 percent of territory of Azerbaijan Republic. Currently, over 1.200.000 of subscribers use the network of Nar Mobile.

AZERCELL

Azercell Telecom, Azerbaijan's leading mobile operator with 3.5 million customers was established on January 19, 1996. Main shareholders of Azercell are TeliaSonera and Turkcell.

Since Azercell began operations in Azerbaijan on Dec. 15, 1996, offering post-paid mobile services to subscribers. Azercell currently holds more than 60% of the market share in mobile telecommunications.

The network coverage of Azercell Telekom is roughly 80 percent of territory of Azerbaijan. Currently, over 3.700.000 of subscribers use the network of Azercell.

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