As part of the public administrative proceedings on the comprehensive study of the fixed internet market, the Communications Commission held a hearing that was attended by representatives of telecom operators, as well as other stakeholders. The Commission will rule on the results of the comprehensive study on 8 August 2024. 

During the hearing, the Commission discussed the results of the Georgian fixed internet market analysis carried out together with EU experts, who found that the market is uncompetitive and requires ex-ante regulation. 

The session also discussed the following findings that point towards Magticom’s significant market power: 

In accordance with the European Commission's market analysis guidelines, the study examined the retail market of fixed broadband services, where competition problems were on hand. The analysis established that 981 of the 994 settlements connected to the fixed broadband network in Georgia have an extremely uncompetitive environment. 

Furthermore, the study established that out of the 994 settlements connected to the fixed fibre-optic internet network, 767 only have access to the services of one operator, 182 have access to the services of two operators, and only 45 have access to the services of three or more operators. 

Based on the results, it was necessary to study the relevant wholesale markets and conduct the three criteria tests defined by the EU legislation to determine whether or not the market is subject to ex-ante regulation. The test revealed that wholesale markets are not prone to effective competition and there are high barriers to entry in these markets. In particular, large operators have infrastructure that is difficult to duplicate. Therefore, a company wishing to enter the market needs a significantly larger investment in order to compete with existing players. Another barrier for operators wishing to enter the market is that large operators are creating economies of scale at the expense of their network size and capacity, thereby reducing their costs. In addition, operators that offer more than one service to customers (for example, a combination of internet and TV) are creating economies of variety and lowering average unit costs for themselves. The same is not possible for the aforementioned new players, which creates unequal conditions on the market. In addition, compared to Europe, local financial lending markets in Georgia have a higher commercial lending rate, which is a significant barrier for new players. Thus, as a result of the three-criteria test, the EU experts found that ex-ante regulation is necessary to rectify the restrictive circumstances on the market. 

EU experts involved in the study believe that there is a lack of competition on the market, and this is unlikely to change without the regulator’s intervention and ex-ante regulation. The experts also found that Magticom is an operator with significant market power on the fixed broadband market. In order to overcome the existing challenges on this market, the experts outlined specific obligations for Magticom. 

In 2022, the Communications Commission, together with the experts of the European Union, with the funding of the European Union and within the framework of the assistance for the implementation of the Association Agreement between the European Union and Georgia (“AA Facility II”), started working on the comprehensive research project on the Georgian telecom market. The project serves to enhance competition on the Georgian telecommunications market, bring the regulatory framework of Georgia closer to the European framework in accordance with the obligations under the Association Agreement, as well as provide diverse, high-quality and affordable services for consumers. The comprehensive study was conducted over two years. Research of this magnitude has not been conducted on the Georgian telecom market before. The study conducted by the EU experts was also revised by the experts of TAIEX (EU Technical Assistance and Information Exchange Tool). 

Based on the comprehensive study of the mobile services market, the Communications Commission decided on 25 July 2024 to declare Magticom an operator with significant market power, and outlined three different access obligations for them in order to rectify the uncompetitive situation on the market.