“Unfortunately, the subscriber you are calling is out of range”, or the Callers sound the alarm again
Anatoliy Frolenkov, Internet traffic exchange point “1-IX”, telecom, IT, media market consultant
Sometimes I hear complaints about the quality of the connection and the fact that after several hours of blackout there is still a voice connection, but high-speed mobile Internet is starting to disappear and many of us need to switch to a fixed line, which still works.
Yes, indeed, all our telecom operators have been working in extreme conditions since the beginning of the full-scale invasion. To the almost daily physical destruction of networks and cyber-attacks, the problem of prolonged lack of electricity is constantly added.
Since the beginning of the full-scale invasion, when the country experienced the first blackouts, operators began to invest enormously in the energy independence of their networks. For example, the so-called (so-called because the operators have been providing both fixed and mobile services for a long time) big three mobile operators (VF Ukraine PJSC, Kyivstar PJSC and Lifecell LLC) have invested more than 3 billion hryvnias in the energy stability of networks, having updated 370,000 batteries at base stations, purchased 5,400 generators and other sources of uninterrupted power supply.
Ensuring the stability of communication networks in the regime of long-term power outages is a challenge of war that no telecom operator in the world has passed. On this thorny path, operators are faced with the difficulties of purchasing and importing batteries and generators to Ukraine in the required quantity; mobilization of contractors’ personnel – these are the hands that can install this equipment on the network; opposition with the allocation of additional space for generators and batteries (especially on state/communal property); lack of guaranteed electricity supply for critical network facilities.
Only in 2022, according to World Bank estimates, the total losses of the Ukrainian telecom industry amounted to about 90 billion UAH. For example, operators were forced to rebuild thousands of mobile towers, and one such structure costs 100-150 thousand US dollars. One of the large operators recorded about 485,000 war-related accidents at its facilities in 2022 in the East and North of Ukraine. This is 800-850 accidents of various complexity per day.
It is thanks to the daily work of our operators that each of us remains in touch both in the deep rear and in the front-line territories. And this has been for more than 10 years of war. But in the 3rd year of the full-scale invasion, the operators need not only to protect the electronic communications market from Russian attacks, but also to balance in the conditions of increasing demands of their own state, to which it gives significant funds, including through the payment of taxes.
Along with investing colossal funds in the network, operators are a source of constant replenishment of the state budget. Market operators regularly pay taxes, contributing their considerable share to the stable financing of the Defense Forces of Ukraine. For the first half of 2024, only three mobile operators transferred more than UAH 8.1 billion to the state budget. In general, during the great war, this amount has already reached more than 42 billion hryvnias.
However, it seems that this is not enough: the latest initiatives put at risk not only the further development of the industry, but also the further possibility of us, the subscribers, receiving the services we have today.
A new attack on operators from the rear: another destructive draft law
Recently, some legislative initiatives are similar to planned actions with the aim, if not to completely stop the work of the operators of the Ukrainian telecom market, then at least to complicate it as much as possible.
Therefore, in this article, let’s take a look at the new “initiative” – draft Law of Ukraine No. 11431 “On Amendments to Certain Legislative Acts of Ukraine Regarding Regulation of State Supervision in the Field of Electronic Communications and Operational Ensuring the Stability of Electronic Communications Networks.”
In short: it is difficult for the operators, but let’s not help them, but on the contrary, we will finish it – we will add inspections and fines, turn on the regulation valve. In more detail: the document proposes significant changes to the procedure for conducting inspections by the National Commission, which carries out state regulation in the fields of electronic communications, radio frequency spectrum and the provision of postal services (NKEK) and collecting additional fines from telecom operators for violating the requirements of the orders of the National Center promptly – technical management of telecommunications networks (NTSU).
In practice, in accordance with this law, operators “light up”:
- A fine for failure to comply with any order of the NCU in the amount of 0.3% of the electronic communications operator’s income for the last reporting year. Roughly speaking, the management of networks by the NCU – each “I want” can cost the operator approximately UAH 30 million.
That is, for example, the NSU issued an order – in two weeks it is necessary to implement 6G standards, they did not have time – in 16 days pay 30 million. In another week – repaint all the towers (base stations) in white color, they did not repaint – pay 30 million. I specially I exaggerate so that the reader understands the new powers and value of the question.
- The terms of execution of NKEK prescriptions are shortened to 15 calendar days and an accelerated procedure for paying fines is introduced.
Let’s give a more realistic example: the order of the National Center of Ukraine dated 15.07.2024 No. 539/2344 provides for the equipment of 100% of electronic communications facilities with generators or replaceable battery packs to ensure the availability of mobile communication services for 10 hours during long power outages. In order to implement this order, more than UAH 13 billion of additional infusions are needed only in the equipment of operators’ networks. Where to find them so quickly? Is it possible to purchase and bring the necessary equipment to Ukraine in a short period of time? How about concluding lease agreements for its placement? Not all workers in the industry are covered by the reservation from mobilization, therefore, as it sometimes happens, the crew may not reach the place of installation of batteries, but immediately get to the landfill.
As a result, the installation of batteries in such terms cannot be done in any way, and our authorities must understand this perfectly.
But prescriptions and fines cannot affect the laws of physics. The paid fine will not charge the battery if the period of power supply is less than that required to charge the battery. Electronic communications operators do not control either the power of the current or the schedule of fan outages with time intervals that are not sufficient to charge the batteries.
At the same time, the fine paid is the amount by which the operator’s financial capabilities for purchasing and installing batteries are reduced.
Therefore, the introduction of high fines and the establishment of notoriously short deadlines for the execution of orders of the NCU will only lead to an increase in unscheduled inspections and the imposition of fines (a kind of source of replenishment of the budget), but have nothing to do with the interests of subscribers, will not provide them with communication.
Finally, the icing on the cake is a penalty of 1.5% of the amount of the fine for each day of delay and the obligation to pay the fine regardless of the appeal to the court. That is, even if the court cancels the fine, after that a long and complicated procedure will begin for operators to return their funds.
Unlimited power, or Button for the unruly
2024 can be safely called the year of unprecedented pressure on the industry. And if our communicators have learned how to deal with Russian attacks and their consequences, the latest “initiatives” of representatives of the government, which they provide with communication and taxes, put them in a stupor. A new initiative appears almost every month, and a “fresh” draft law creates prerequisites for unjustified administrative and financial pressure on operators, even in the absence of their fault.
At best, this initiative will lead to a decrease in investment and innovation activity in the industry. In the worst case, it will create a kind of closed circle: the NCU issues a new order, inspection, fine, money laundering, which is necessary to ensure the implementation of the same orders of the NCU.
For example, during fan outages, system imbalance begins, a large overload of subscribers, either in the direction of fixed or in the direction of mobile traffic. This greatly overloads mobile networks, which in such a situation cannot provide high-quality services, because they are not designed to pass huge amounts of data. And when the light is turned off, the volume of mobile traffic increases many times, so the capacity of base stations to achieve the quality indicators established by law is simply not enough. And this is another reason for further fines.
Establishing non-enforceable requirements and introducing fines in a situation where operators do everything possible and report to the state every day about the gradual but constant increase in the sustainability of networks is a deliberate laundering of funds from operators, which are necessary for the purchase of the same generators and storage batteries to fulfill the orders of the NCU. This is a closed circle of new fines. In such a situation, it is impossible to even dream of achieving network stability and ensuring the basic needs of Ukrainians regarding communication services during a long power outage. Accordingly, it is not always possible to comply with the order of the National Security Agency, and the minimum fine for a large operator, let me remind you, is approximately UAH 30 million based on the results of just one inspection. But the number of inspections and fines, something tells me, should increase significantly.
Perhaps I, as an apologist of the free market, am exaggerating, but even if we assume that in practice the NCU will be as loyal as possible to operators, how will investors who only decided to invest crazy billions in the economy of Ukraine? It is obvious that increased regulatory pressure will negatively affect the investment climate in the industry. Will a conscious Ukrainian or Western business have the desire to enter the Ukrainian market of electronic communications, which they are trying to suppress with numerous astronomical fines? Here, at least existing investors would not revise their investment plans in the industry. Add the need to appeal fines in the famous Ukrainian courts and seek the return of funds from the state budget in case of successful satisfaction of the operators’ claims. It is clear that such a prospect does not inspire investors to say the least.
We simply do not consider the aspect of European integration. Civilized countries do not have similar practices for regulating the telecom market, they absolutely do not meet international standards. Ukraine aspires to become a member of the European Union. I think that with such draft laws, we are not waiting for integration into the EU’s Single Digital Market, but at best the fate of “eternal” candidates.
And from the last one: NAKC has already conducted an anti-corruption examination of this bill and published an unequivocal conclusion on September 17: the bill contains corruption-inducing factors. The National Agency established that it creates a risk of corruption, does not meet the requirements of current legislation in the field of supervision, violates the rights of business entities, unreasonably increases fines and can become a tool of pressure on business. And this is not just my own reasoning, but the conclusion of a professional.
At the beginning of the publication, a rhetorical question was posed: who and why is trying to destroy the Ukrainian telecom industry? I will leave the question open. For my part, I hope that draft law No. 11431 will remain only a draft, and I will continue to try to draw attention to similar initiatives so that we can always stay in touch!
