OSLO, Norway-Norway’s Ministry of Transport and Communication made a surprising intervention Thursday, halting a Norwegian Post and Telecommunications Authority (PT) ruling granting sub-operators cheap access to Telenor’s short message service center (SMS-C) network.
The postponement, or “delayed implementation,” kills an incipient SMS price war and could spell the end of operator Teletopia, which has invested heavily in a five-year battle to lower messaging costs.
The decision was an unexpected bright spot for Telenor, which announced pre-tax losses of more than 5 billion Norwegian kroners (US$720 million) for 2002, mostly due to manpower cuts and writedowns, an expected reversal after record profits of 10.3 billion kroners (US$1.5 billion) in 2001. According to Chief Executive Officer (CEO) Jon Fredrik Baksaas, Telenor’s turnover was up 2.8 billion kroners (US$403 million) compared with 2001, and he predicted rising core earnings and turnover for this year.
Norway’s Ministry of Transport and Communication released a lengthy document describing the reasoning behind the postponement of the PT ruling to lower the price for use of Telenor’s SMS network to 0.30 kroners (US$0.04) plus tax, from Telenor’s offered 0.70 kroners (US$0.10) plus tax.
Although the ministry found Teletopia’s arguments persuasive, it concluded it was not unfair to postpone the rate until Telenor’s complaint is processed and that market development and competition are not necessarily aided by price slashing.
The Telenor stance, earlier argued by industry analyst John Strand, is that comparing Norway’s SMS price level to Denmark’s is unfounded. Telenor Mobil’s comparison showing Norway’s pricing is low compared with the European Union gave the ministry cause for concern.
Teletopia’s reaction pulled no punches. Director Robert Hercz told Norwegian news agency NTB the decision made it clear “that the ministry wishes to protect Telenor from competition in the SMS market.” Hercz said the ruling, if permanent, would likely put Teletopia out of business.
In a message to customers on its Web site, Teletopia claimed reports by technical specialists conclude that Telenor’s real costs per SMS are 0.04 kroners (US$0.006).
Teletopia is Norway’s fourth telecom operator and focuses on intelligent network (IN), SMS and interactive television services.
Telenor is about 80 percent owned by the Norwegian state.
