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Main regulatory aspects regarding telecommunications industry in Ukraine
Автор: Юрій Котляров
Джерело: Lexology, 10 липня 2018 року

Over the past year Ukraine has experienced developments that will undoubtedly shape the future of its telecom industry.

2018 is the year when 4G services was launched in Ukraine. Three mobile operators – Kyivstar, Vodafone Ukraine and lifecell – were successful in their bids for radio spectrum in 2.6 GHz and 1.8GHz bands.

Ukraine has also adopted its own Digital Agenda. One of its main aims is to overcome digital divide by ensuring widespread deployment of broadband networks in rural as well as urban areas and across all of society.

Thus, we may expect the take-up of very high-capacity fixed and wireless broadband networks across the country.      

Besides these developments, the regulatory framework remains fairly stable with no fundamental changes being made over the past years.

Legislation

The key legislation governing telecommunications industry includes: Law on Telecommunications and Law on Radio Spectrum.

The Ukrainian regulatory authority in telecommunications is the National Commission for the State Regulation of Communications and Informatization (the "NCRCI"). 

Precondition for market entry

Only legal entities incorporated under Ukrainian law or individual-entrepreneurs having permanent place of residence in Ukraine have the right to provide telecommunication services and/or operate and maintain telecommunications network within Ukraine.

Sector-specific legislation does not provide for any restrictions on direct or indirect foreign ownership interests in Ukrainian telecom companies. However, other legislation, for instance, Law on Sanctions may have a restrictive effect on having ownership interests by persons from specified foreign countries.       

Under Ukrainian law a branch or representative office of foreign entity does not qualify as a separate legal entity and, therefore, cannot provide telecommunication services and/or operate and maintain telecommunications network within the territory of Ukraine.

Two type of suppliers

Telecommunications legislation divides suppliers of telecom services to "operators" and "providers".

Operators render their services under a license and have the right to maintain and operate telecommunication networks and to lease telecommunication channels.

Providers supply services under (i) agreement with an operator and (ii) copy of operator's license issued by the NCRCI. Unlike operators, providers have no right to maintain and operate telecommunication networks and to lease communication channels.

Access to market

Ukrainian sector-specific legislation provides for three kinds of market entry regimes: (i) general authorization, (ii) individual licenses for provision of specific kind of services and (iii) individual licenses (permits) for scarce resources.   

Any undertaking intending to carry out activities in the telecommunications either as operator or provider must submit a notice to NCRCI to be included in the Registry of Telecommunication Operators and Providers.

If such activities are subject to the licensing requirements, then an undertaking must also apply for an operating license.

The Law on Telecommunications sets forth an exhaustive list of services that are subject to operating licensing requirements:

(i)         fixed telephone communications (local, long distance, international) with the right to maintain and operate telecommunication networks and to lease telecommunication channels;

(ii)        fixed wireless telephone communications (local, long distance, international) with the right to maintain and operate telecommunication networks and to lease communication channels;

(iii)       mobile telephone communications with the right to maintain and operate telecommunication networks and to lease communication channels;

(iv)       technical maintenance and operation of telecommunications and broadcasting networks.

If the provision of telecommunications services requires the use of scarce resource (spectrum, numbers), Undertaking may also apply for individual license/permits to use such resources.

Generally, NCRCI grants licenses for the use of radio frequencies on the first-come-first-serve basis. If demand for radio spectrum exceeds supply, then licenses are awarded under tender or other competitive procedure.      

Neither operating licenses, nor radio frequencies licensing are transferable. Spectrum trading is not allowed.    

NCRCI grants permits to use numbers and network identifying codes only to operators with operating licenses. Operators may use numbers for the provision of their own services as well as to allocate them to providers.     

Internet

Internet access services are regulated similarly to other telecommunications services. In particular, the provision of internet access services is subject to the general authorization requirements.

The regulation of VoIP services follows the same rules as other telecommunication services. They are subject to a general authorization procedure. If VoIP services qualify as a provision of the licensed services, the licensing requirements governing that type of service apply.

There are no specific “net neutrality” rules as such yet.

Regulation of market power

The ex-ante regulation of undertakings with significant market power employs similar approaches to the EU. In particular, under SMP regime the NCRCI must follow a four-step procedure: (i) selection of a relevant market; (ii) market analysis; (iii) SMP assessment; (iv) choice of regulatory remedies.

Under Ukrainian legislation NCRCI may select and analyze only the following markets: (i) wholesale call termination on mobile network; (ii) wholesale call termination on fixed network; (iii) wholesale call transit on fixed and mobile networks and (iv) lease of telecommunications channels.

NCRCI is limited in its choice of remedies. In particular, NCRCI may impose only the following obligations on undertakings with SMP: (i) compliance with the rates set forth by NCRCI for call termination and transit on the SMP networks; (ii) application of rates for termination on non-SMP networks at least in the amounts set forth for call termination on SMP networks; (iii) publication of reference interconnection offers and ensuring interconnections at points indicated in such offers; (iv) compliance with tariffs set forth for lease of telecommunications channels.

Price regulation

Subject to SMP obligations operator and providers, in general, are free to set prices for their services. 

However, regardless of whether operator or provider has SMP or not, the prices are controlled for the following services: (i) retail tariffs for universal telecommunications services (access to public telephone network, local telephony, calls to emergency services, reference information services, and communication via public payphones); (ii) tariffs for the use of ducts of telecom operators.

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