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Yugoslavia: Dispute Ignites Over Kosovar Mobile Phone Network

A recent move by the UN administration in Kosovo to grant the French firm Alcatel with the mobile telephone franchise in the province has prompted criticism of the methods used to award the contract. The critics include the head of Kosovar Post and Telecommunications. Balkan analyst Fabian Schmidt -- a regular contributor to RFE/RL -- files this report.

Prague, 24 November 1999 (RFE/RL) -- Earlier this month, the general director of the Kosovar Post and Telecommunications, or PTK, criticized a decision by the UN Mission in Kosovo to award the contract to Alcatel. Agron Dida told the newspaper Koha Ditore that approval of the contract was a "serious violation" of procedure.

Dida said PTK experts object to the Alcatel proposal and want to conclude a contract with the German company Siemens instead.

The UN mission in Kosovo (UNMIK) rejects charges that it violated procedures in awarding the contract. Pascal Copin is the UNMIK official in charge of telecommunications. He says Alcatel provided the best offer. He stresses that -- unlike Siemens -- Alcatel will finance the system without money from the Kosovars and "will bring much money into Kosovo."

Copin also stresses that Siemens was not certain it could install the system in seven key cities and at Pristina airport within 12 weeks, as Alcatel promised. He says Alcatel has also pledged to cover the entire territory of Kosovo within one year.

Copin says UNMIK has chosen to solve the telephone problem in Kosovo quickly, rather than developing major long-term projects. He acknowledges the Siemens offer is much more ambitious, but says it would have taken longer to carry out.

But for the PTK, a part of the share of revenues from operating the mobile phone system is at stake. The difference in the contracts offered by Alcatel and Siemens lies in key details.

The Alcatel contract envisages that the company will provide antennas and transmission equipment, basic logistical equipment, cellular phones, and a system for accounting, which the PTK will manage. According to the deal, all cellular phone calls -- even those made within Kosovo -- will run through a central Alcatel switchboard in Monaco. Thus, the PTK will not be the owner of the cellular network in Kosovo, but only Alcatel's contractor for customer services.

Dida of the PTK says Kosovo wants to build its own telephone network, with revenues reinvested inside the province.

The dean of the electro-technical faculty of Pristina University, Ilir Limani, also objects to the Alcatel deal. He says Alcatel's offer is no different from that of the Macedonian Mobile Telecommunications, which had offered to expand its own network into Kosovo. He stresses that the PTK will lose its ability to function as an equal and economically independent operator. He also notes that interest payments proposed by Siemens were lower.

Analysts say that -- while PTK officials may fear losing authority over the lucrative cellular phone business -- only a liberalization of the telecommunications market in Kosovo will bring real benefits for customers.

In Albania, a veritable monopoly in the cellular phone network has been enjoyed since 1996 by state-owned Albanian Mobile Communications (AMC). To date, there is no competition on the mobile phone market, and AMC is dictating the prices.

International mobile phone calls from Albania are about twice as expensive as similar calls from Italy. And they cost over one-third more than those from the Czech Republic, another Eastern European country that has liberalized its telecommunications market.