I am quite interested with Orange and T-Mobile not wanting to pay the fee to the Slovak telecommunications regulator for the extension of their license because they see it as too expensive. To be honest, I have no idea how it should be priced, but I found one of the arguments given by Orange Slovakia very interesting.
Orange claims in today’s (August 25th) edition of Hospodarske Noviny that it is unfair that o2 (the newest competitor in Slovakia who started operations in 2007) paid 8 times less a couple of years ago when it acquired the license. It considers the measure discriminatory.
From where I stand it looks fair: you use more bandwidth, you pay more. It will be interesting to see o2’s reaction when their license comes up for renewal, but until then, it would have been outrageous to ask for a comparable cost for the license. It would have also been a blow to a free market system.
Competition is the cornerstone of our economies. It is competition that leads to innovation, to better customer experience, and to lower prices that benefit the entire economy in return. Competition is only a problem for companies seeking revenue by doing none of the above. I am not discarding the need for firms to have strong financial results and reward shareholders (I am one myself), but a free market system must be associated with a strong competitive environment.
As there are now the first heated discussions in our four party coalition about next year’s budget, there are some talks on lowering payroll taxes in regards to keeping Slovakia labor costs competitive.
There should be in fact discussions about maintaining or strengthening Slovakia’s competitivity, but not without taking a broader look at all factors leading to increased costs for firms in this country.
Labor costs have been influenced by a rise in salaries (especially in western Slovakia) that was out of control until the first financial crisis of 2008. And these salaries are being pushed up by high real estate and mortgage costs, food costs, and gasoline costs. The best potential employees are on the lookout for better salaries because they need them for their families, and this drives costs for companies up just as much as the payroll taxes.
Let’s take the example of gasoline costs in Slovakia. I tank in all of Europe for my job and Slovakia’s prices never cease to amaze me. Data confirms (according to the webportal natankuj.sk) that even without counting taxes, Slovakia has 0,9 Eurocent more expensive gasoline than the EU average, and 2,6 Eurocents more expensive diesel fuel. Each time I fill up now, employees of the gas stations started giving me window tissue wipers. At current gasoline prices, I feel I would be eligible for stock options to be honest.
In conclusion, I don’t want government controlling prices. We should ask however that our governments (and the EU) make it as easy as possible for new players and innovative ideas to take hold in our markets. And in the case of Orange in Slovakia which finds its license expensive compared to that of a newcomer, well so be it. A market is not some organization’s property.