Court expert for competition in telecommunications, Djuro Lubura, was a guest on N1 television's morning show Novi Dan on Wednesday, where he spoke about the pending removal of N1 channel from the A1 cable television provider's package. Lubura also commented on the current state of affairs on the media market in Croatia, its regulation, and added that he hoped that a new law would enable vertical integration, which would allow companies producing content to also distribute that content.

Lubura started off by explaining what exactly ‘cartel association’ means.

“It is a situation when two or more market competitors in a given area strike an agreement in order to gain some benefit in the market. For example, if two telecoms agreed to raise the prices they charge customers in a synchronized manner, and without any reason, that would be a cartel,” explained Lubura.

Market situation

He also commented on the state of affairs in the Croatian media market.

“As for the telecommunications market – when we talk about mobile services, we have a highly developed market competition, largely thanks to a member of your group Tele2, or Telemach Croatia, whose arrival had greatly helped customers and showed that competition is extremely important. When we talk about landline services, we do not have a satisfactory level of competition yet, and it would certainly be good if Telemach entered the fixed telecom market. However, when we talk about the television market, approximately 40 percent of Croatians watch television via one of these two telecoms (A1 and HT), and 60 percent watch it in other ways, via terrestrial transmitters or satellite. So these two hold a 40 percent share of the entire local market in terms of the distribution of television content, ”said Lubura.

Lubura also revealed why the situation on the Croatian market is like this.

“The reason is that the prices are relatively high, and a lion’s share of Croatians are simply unable to afford cable TV packages that cost around 250-300 kuna (€33-€40, per month). And these prices are high because telecom operators have relatively high costs of distributing television content. This is how we arrived at the problem (of A1 dropping N1 television) that we are talking about today. I really appreciate N1 television and your work, and I would be very unhappy if I could no longer watch N1. As an A1 subscriber, I was very saddened by this decision of theirs,” Lubura told N1.

“However, telecom operators are free to assess which channels they want to distribute to their customers, just as you (host of Novi Dan, Tihomir Ladisic) as the program director of N1 television, are free to determine whether you want to air a particular program or content produced by someone else on your television channel. It is true that this is a commercial issue between N1 television’s owners, the United Group, and the telecom,” Lubura added.

Current legal framework prevents vertical integration

He also referred to the existing legal framework, which, in his opinion, should be changed “as soon as possible.”

“I support any (future) legal framework that would enable vertical integration. I think that the current ban which is inscribed in the law and which does not allow (mobile phone network) Telemach – a member of your United Group – to enter the telecom market is not good,” said Lubura, and added that in countries that do not have provisions banning content producers to be content distributors that there are still certain obligations such companies must meet.

“These obligations are referred to (by their English-language phrases) as “must-carry” or “must-offer” provisions, which means either that all telecom operators must carry any channel that has a nation-wide broadcasting license, or that owners i.e. publishers of television content with such a broadcasting license or certain viewership rating must offer all cable television providers the opportunity to carry their programming under equal conditions,” Lubura told Ladisic.

The show’s host, Tihomir Ladisic, commented that N1 television is prepared, “if this is in the public interest,” to offer its channel for free so that it stays on offer in the packages of these two telecoms until “some other way is found,” and “for a reasonable period,” Lubura said that he is convinced then it would be so.

“I’m sure no one would be able to get such a valuable and relatively watched channel like N1 for free,” Lubura said, but also adding that this is not the way to do business.

“I think you need to reach an agreement that would pay off for both sides. I don’t think this (offering channel for free) would be good, because if you remain free forever, what would you live on?,” Lubura asked rhetorically.

(Operating in Croatia as part of United Group are the telecom operator Telemach Hrvatska, as well as television channels and websites Sport Klub and N1, Nova TV, Doma TV, and Dnevnik.hr.)