Wednesday, November 10, 2010

Greek Mobile Operators get slapped with 5 Milion Euro Fine


Published Nov 6, 2010

NRA fines Mobile Operators
antonis hontzeas

Greek mobile operators are facing a five million Euro fine related to a suit from the Greek National Regulator Agency.

According to the November 5 2010 edition of the morning newspaper Kathimerini, the Hellenic National Regulator Agency (NRA) EETT has slapped mobile operators operating in the Greek market Vodafone Hellas and Cosmote with a 2 million Euro fine, and Wind Hellas with a one million Euro fine.

The fines have to do with the fact that, according to the Greek NRA, the three mobile telecom operators (Vodafone, Cosmote and Wind) failed to inform their subscriber base of charge increases that related to minimal talk time, and which took place in the fall of 2009.

A Tough Year for Greek Moble Telecom

The Greek mobile telecommunications market in 2010 is expected to lose about 20% of its revenue, when compared with 2009. In 2009 Greek mobile telecom revenues were down 10% from those achieved in 2008; the result of an indiscriminate price war engaged between the mobile operators operating in Greece, European Regulatory price enforcements carried out by the Hellenic National Regulating Agency (NRA) EETT, government taxation, and the current economic climate have lead to a significant fall in mobile use and average revenue per user (ARPU).

Current 2010 revenue is expected to converge to about 3.5 billion Euro and many mobile operators are already registering heavy losses. For example Wind Hellas has already written off a one billion Euro loss in the first half of 2010 while Vodafone Greece and Cosmote (part of the OTE group of companies) are seeing rapidly diminishing profits.

TIM (Telestet) and Vodafone (Panafon)Wind Hellas (which formerly operated under the TIM and Telestet brands) and Vodafone Hellas (formerly Panafon Greece) were the first companies to offer mobile communciation services in Greece. Telestet (Wind) effectively begun service in late June of 1993, while Panafon (later vodafone Panafon and eventually vodafone) in July 1993.


According to the 2001 OECD reform La Reform de la Reglementation en Grece, the initially offered service was extremely expensive by Greek, and European standards. A cell phone cost about 1000 Euros (or about 400,000 drachmas) while service was rated at about 25 Euro per minute, an activation charge of about 90 Euro and a monthly contract fee of about 40 Euro.

In 1998 the Hellenic Telecommunications Company or OTE was allowed, through Cosmote, entrance into the lucrative field of mobile telecom by the Socialist Government (PASOK) of Kostas Simitis. Cosmote was granted a licence in the GSM 1800 band (referred to at that time, for competitive and regulatory reasons as DCS 1800) while Telestet and Panafon continued to operate in the competitive 900 MHz GSM band.

Although the first year was a trying year for Cosmote, a change in leadership saw company profits take off. In order to rapidly gain market share Cosmote used as a strategic advantage the ready sites offered by the OTE buildings, as well as a ready customer base being the OTE government employees.

Indeed, Cosmote attracted most OTE employees by offering them, and eventually the rest of the market, the lowest priced service (coupled by the best coverage) in the country. While the other two 900 MHz operators were struggling to find sites, and commonly requested in their site quest the not so successful assistance of the infrastructure suppliers, Cosmote lavishly used the existing OTE buildings and thus accelerated country wide coverage.

Since that time mobile communication service, like cigarettes, has become very popular in Greece putting the country in the number one position, per capita, vis-à-vis the rest of the world.

Operators to Appeal NRA Suit

The minimal talk time charge was increased between the months of September and November 2009 from 30 seconds to 45 seconds and according to the NRA, this billing change was done without adequate notification to the registered subscriber base.

The mobile operators are planning to appeal the NRA’s decision.

Copyright Antonis Hontzeas. Contact the author to obtain permission for republication.



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