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Croatian Regulatory Authority for Network Industries 20 ANNUAL 18_ACTIVITY REPORT CROATIAN REGULATORY AUTHORITY FOR NETWORK INDUSTRIES ZAGREB, JULY 2019 The Croatian Regulatory Authority for Network Industries (HAKOM), pursuant to the Electronic Communications Act, hereby submits to the Croatian Parliament and the Government of the Republic of Croatia its Annual Activity Report for the year 2018. The financial and final statement are integral parts of this Report. HAKOM TABLE OF CONTENTS A word from the President of the Council and the Director ....................4 Summary .......................................................................................................................................... 5 Electronic Communications .............................................................................................9 Postal services .......................................................................................................................... 33 Rail services ................................................................................................................................ 40 RF Spectrum Management ...........................................................................................48 Consumer Protection .......................................................................................................... 57 Inspection ....................................................................................................................................65 HAKOM ..........................................................................................................................................68 Financial statement ..............................................................................................................77 Annexes .........................................................................................................................................83 CROATIAN REGULATORY AUTHORITY FOR NETWORK INDUSTRIES 2018 ANNUAL ACTIVITY REPORT 3 A WORD FROM THE PRESIDENT OF THE COUNCIL A WORD FROM THE DIRECTOR The Council of HAKOM has acted in this composition since the end of April 2018. Considering the The year 2018 was special for HAKOM. The Croatian Parliament appointed a new Council after the ter- discontinuity in the Authority’s management, there has been a delay in making regulatory decisi- mination of the previous Council’s five-year term, and I was entrusted with leading HAKOM’s admini- ons, as well as in the public procurement process. For this reason, the 2018 financial plan was not strative service for the next four years. Despite the changes in the management system, brought by the realized in the planned percentage. Therefore, the surplus funds shall be used in the current and new Council and the Director, our main task was to maintain the stability of business operations and following years. fulfil the goals set for 2018. We were successful in this, thanks to our professionalism, competence and In the regulatory sense, the previous year was primarily marked by the introduction of a new Eu- responsibility of the administrative service employees. ropean regulatory framework in the field of electronic communications which must be transferred HAKOM’s operations span across different areas of activity. I would like to stress our role in resolving to the Croatian legislation by the end of 2020. The new framework encourages the development disputes between end-users and operators, that is, the providers of postal and rail services. This admi- of networks of very high capacities, as a foundation for the development of digital economy and nistrative procedure enables users fast and safe protection. We thus have an insight into the users’ cu- socio-economic welfare. Among other activities I would like to highlight the increasingly intensive rrent problems and this is the basis for the actions we perform in order to prevent bad practices. I would work on building the foundations for the introduction of 5G technology in the Republic of Croatia especially like to emphasize the importance of the work of HAKOM’s inspectors who, through market and the activities related to the analysis of relevant markets. surveillance, ensure that regulations are complied with. HAKOM has been entrusted with the important On the postal market, the amount of letter items has been constantly decreasing, but operators’ task of managing and controlling the use of the RF spectrum – a valuable, but limited resource. Topics incomes have been increasing at the same time, due to an increase in the amount of delivered surrounding the introduction of 5G networks have been the most prominent in our work over the past parcels. In the long term, however, a structural change is needed in the postal system and new le- year, and will become even more significant in the future. A quality 5G network will represent the strate- gislative solutions are required at the European Union level. gic advantage of countries for the introduction of Industry 4.0, and the Republic of Croatia currently has The rail market has slowly been liberalizing, and HAKOM is facing new challenges because of the excellent 4G (LTE) networks. Railway Act, adopted this year in the Croatian Parliament. We determine infrastructure operators and the right of way on real properties, we manage address and HAKOM’s main role remains the development of market competition on the markets it regulates, numbering space, we issue licences for the use of the RF spectrum, building conditions and certificates creation of incentives for investments, protection of users of services and contribution to the deve- of compliance for main projects and we enable public access to the information we have, in particular the lopment of the European Union internal market. information with spatial determinants available through our GIS portals which are continually upgraded. Our wish is to be fast and reliable in the procedures we perform, and for the majority of procedures we have enabled our users to submit their requests online. We wish to fully digitalize our procedures and be the first state authority that will operate entirely digitally. I believe we are on the right track, but we still have many steps to reach our goal. Tonko Obuljen, Council President Miran Gosta, Director CROATIAN REGULATORY AUTHORITY FOR NETWORK INDUSTRIES 2018 ANNUAL ACTIVITY REPORT 4 01 SUMMARY In 2018, HAKOM continued its regulatory activities in all areas of its competence, with an emphasis on creating the conditions for investment, protecting users and passengers and creating the pre- conditions for the introduction of 5G networks. FINANCIAL STATEMENT HAKOM had non-profit organizations accounting until the end of 2017, and on January 1 2018, it was included in the State Budget of the Republic of Croatia as a budget beneficiary, and switched from non-profit organizations accounting to budget accounting. In 2018, HAKOM generated assigned revenue, own revenue and reimbursements from EU institutions, which were sufficient to cover all expenditures for carrying out and developing HAKOM’s activities. At the end of 2018, a surplus of revenue was generated, which is planned to be used in the coming period to ensure the liquidity and financial stability of the business and for investments. Total revenues amounted to HRK 99.1 million and expenditures HRK 73.5 million. ELECTRONIC COMMUNICATIONS The electronic communications market in the Republic of Croatia has been marked by a further incre- ase in data traffic by almost 50 percent in a year, as well as an increase in revenues and investments in broadband infrastructure. Revenue from the electronic communications market exceeded HRK 11.5 billion, a 73 million increase compared with the previous year. Growth in revenues from broad- band Internet service was about five percent, and for pay-TV it was about seven percent. Operators continued to invest in infrastructure development, new technology and services. A total of over HRK 2.5 billion was invested in the market, which is a three percent decrease compared to 2017, but the CROATIAN REGULATORY AUTHORITY FOR NETWORK INDUSTRIES 2018 ANNUAL ACTIVITY REPORT 5 investment in the network and network equipment grew to HRK 1.4 billion. Direct investment in the As the Holder of the Framework Programme, HAKOM continued to fulfil its tasks within the Fra- network is evident in the increase in the availability of NGA broadband Internet access, placing the mework National Programme for the Development of Broadband Infrastructure in Areas Lacking Republic of Croatia on EU average. The number of users of telephone services in the fixed network Sufficient Commercial Interest for Investments. By the end of 2018, 69 drafts for the Plans for the continues to decline, while the number of users of all other services is increasing. Broadband Infrastructure Development (PBID) were received. The project holders and public local and regional self-government units received all necessary support during the whole year, and mee- The largest share in total revenue, around 40 percent of total revenue, is generated from broadband tings and workshops were regularly held in order to cover topics in the preparation and application Internet access. Internet access through fixed networks generated revenue of around HRK 2 billi- phases of projects. on, and through mobile networks over HRK 2.5 billion. Accessibility is almost 100 percent, and NGA access coverage with speeds over 30 Mbit/s has reached EU average and amounts to 83 percent. Regulatory activities revolving around market
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