DLA Piper Intelligence

Telecommunications
Laws of the World

Overview of legal landscape

Ukraine
Ukraine

In order to commence the provision of telecommunications services, both legal entities and individual entrepreneurs are to be added to the register of operators and providers of telecommunications, and shall obtain licences and/or permits, as required by the law.

The telecoms market is mainly regulated by the Law of Ukraine "On telecommunications" as of 18 November 2003 No. 1280-IV ("Telecom Law") and on a significant number of subordinate documents of the National Commission for the State Regulation of Communications and Informatization ("NCCIR") and Administration of the State Service of Special Communication and Information Protection of Ukraine ("Administration of SSSC").

NCCIR is the state regulatory authority responsible for ensuring compliance with laws in the area of telecommunications by market players.

Administration of SSSC is an authority responsible for the development and implementation of state policy in the areas of special communications, information security, telecommunications and use of the radio frequency source of Ukraine ("RFS").

Last modified 6 Mar 2017
Overview
Ukraine

In order to commence the provision of telecommunications services, both legal entities and individual entrepreneurs are to be added to the register of operators and providers of telecommunications, and shall obtain licences and/or permits, as required by the law.

The telecoms market is mainly regulated by the Law of Ukraine "On telecommunications" as of 18 November 2003 No. 1280-IV ("Telecom Law") and on a significant number of subordinate documents of the National Commission for the State Regulation of Communications and Informatization ("NCCIR") and Administration of the State Service of Special Communication and Information Protection of Ukraine ("Administration of SSSC").

NCCIR is the state regulatory authority responsible for ensuring compliance with laws in the area of telecommunications by market players.

Administration of SSSC is an authority responsible for the development and implementation of state policy in the areas of special communications, information security, telecommunications and use of the radio frequency source of Ukraine ("RFS").

Last modified 6 Mar 2017
Laws and regulations

The regulatory framework for the Ukrainian telecom market is mainly established by Telecom Law, which outlines the rights, obligations and liabilities of the telecoms market players and authorities of NCCIR.

Further, a Law of Ukraine "On Radio Frequency Source of Ukraine" as of 01 June 2000 No. 1770-III ("Law on RFS") regulates the use of radio frequency source of Ukraine ("RFS").

Finally, there are also a number of subordinate acts which contribute to the regulation of the telecoms market by detailing provisions of the above laws. In particular, the main subordinate acts are as follows:  

Last modified 6 Mar 2017
Regulatory bodies

NCCIR

NCCIR is the state regulatory authority for telecommunications, informatisation and use of the RFS.

Within its specified areas under law, the NCCIR exercises powers of a licensing, regulatory and state controlling authority.

Among other things, the NCCIR has the following responsibilities:

  • to ensure the compliance with telecommunications laws by market players;

  • to grant licences for telecommunications and use of the RFS;

  • to establish rules for business activities for telecommunications, and to adopt decisions which are obligatory to telecom market players;

  • to allocate, assign, and account for the numbering resource, to issue and withdraw permits, and supervise the use of the numbering resource;

  • to define the relevant telecom markets, conduct an analysis of these markets and determine incumbent operators;

  • to regulate cooperation between telecom operators through network interconnection, including traffic transmission services; and

  • to establish the procedure for traffic routing.

    Address: 22, Khreshchatyk Str., Kyiv 01001, Ukraine; website: http://www.nkrzi.gov.ua/

Administration of SSSC

Administration of SSSC is a state authority which, among other things, has the following responsibilities:

  • to set technical specifications to telecom networks; and

  • to determine the list of technical means which may be used in public telecommunication networks.

Address: 13, Solomianska Str., Kyiv 03680, Ukraine; website: http://www.dsszzi.gov.ua

Last modified 6 Mar 2017
Regulated activities

Broadly speaking, Ukrainian telecommunications law regulates relations arising between telecoms market players in respect to telecommunications networks and the provision/consumption of telecommunications services.

The Telecom Law defines the telecommunications network as a set of technical means of telecommunications and facilities designated for routing, switching, transmission and/or receipt of signs, signals, written text, images and sounds or messages of any kind via radio, wire, optical or other electromagnetic systems between end user equipment.

TheTelecom Law defines telecommunication service as the product of an activity of an Operator and/or Provider of telecommunications which is aimed at meeting the needs of consumers in the sphere of telecommunications.

The Telecom Law differentiates between the following market players:

  1. operators and providers of telecommunications;

  2. consumers of telecommunications services; and

  3. manufacturers and/or suppliers of technical means of telecommunications.

The main difference between operators and providers of telecommunications ("Operators" and "Providers") is that Operators may conduct activities in the area of telecommunications with a right to technical maintenance and operation of telecommunications networks, while Providers may conduct activities in the area of telecommunications but without a right to technical maintenance and operation of telecommunications networks.

Last modified 6 Mar 2017
Registration / licensing

Operators and Providers are obliged to conduct business activities in the area of telecommunications only upon their registration with the Register of Operators and Providers of Telecommunications ("Register") and, if provided by law, under respective licences and/or authorisations.

Business entities willing to carry out business activities in the area of telecommunications shall, at least one month prior to the date of commencement of such activities, submit to NCCIR an application on their registration with the Register ("Application") in a form approved by NCCIR.

Further, the following activities in the area of telecommunications are subject to licensing:

  1. provision of fixed telephony services with a right of technical maintenance and the operation of telecommunications networks and leases of such electronic communication channels as: (i) local; (ii) national long-distance; and (iii) international;

  2. provision of fixed telephony services by use of wireless access to a telecommunications network with a right of technical maintenance and the operation of telecommunications networks and leases of such electronic communication channels as: (i) local; (ii) national long-distance; and (iii) international;

  3. provision of mobile telephony services with a right of technical maintenance and the operation of telecommunications networks and leases of electronic communication channels;

  4. provision of services of technical maintenance and the operation of telecommunications networks, On-Air TV and Radio Broadcasting Networks, Wired Radio and TV Networks; and

  5. use of radio frequency resource.

If the Operator needs a numbering resource for the provision of services under its respective licence, it may apply to NCCIR for authorisation.

Last modified 6 Mar 2017
Establishment

Only residents of Ukraine - legal entities and private entrepreneurs - may be registered as Operators or Providers.

Last modified 6 Mar 2017
Interconnection/roaming

Ukrainian telecom regulations provide for a number of technical, organisational and economic requirements regarding the interconnection between Operators. Among other things, the requirements are as follows:

  • operators shall not create obstacles to interconnection;

  • interconnection is to be negotiated between the concerned Operators according to the established procedure under law;

  • agreement on interconnection shall be in written form and include all provisions which are specified by NCCIR as applying to such agreements (e.g. location of an interconnection point, data protection obligations, etc); and

  • economic conditions and tariffs for interconnection, as well as tariffs for traffic transmission services, are to be calculated in accordance with the procedure approved by NCCIR.

There are some additional requirements for interconnection with those Operators recognized by NCCIR as having significant market power ("SMP Operators") in traffic transmission markets. Among others, the following requirements apply:

  • SMP Operators may not refuse to interconnect with another Operator (except if the network of such Operator does not meet the requirements of Law on Telecommunications); and

  • the fees for services of traffic transmission to the networks of SMP Operators are established by NCCIR.

Last modified 6 Mar 2017
Consumer protection

From the perspective of the Ukrainian telecoms law, both individuals and legal entities (which need, order and/or consume telecommunications services for their own needs) are considered consumers of telecommunications services and the same telecoms regulations apply to the provision of services to both of these groups. Apart from that, individuals are also protected by general consumer rights legislation which does not extend its effect to legal entities.

Further, certain obligatory requirements with respect to the provision of telecommunications services and its content are established by the Basic Requirements to the Agreement on Provision of Telecommunications Services approved by Decision of NCCIR as of 29 November 2012 No. 624.

Apart from the above, under the Telecom Law, Operators/Providers are obliged to protect data about:

  1. a customer obtained upon conclusion of the agreement;

  2. telecommunications services that this customer has obtained (the scope and volume of services, routes of data transmission, etc); and

  3. data about the location of the customer's end user equipment.

Such data can only be transferred if required by the law or with the customer's prior written consent.

In addition, personal data protection requirements must also be complied with.

Last modified 6 Mar 2017
Taxes and fees

TAXES

Generally, Operators pay value added tax (VAT), corporate profit tax (CPT), personal income tax (PIT), unified social contribution (USC) and some other taxes and duties.

VAT

Telecommunication services are generally subject to VAT at the rate of 20% of the services' value. If the services are rendered abroad, VAT is not applicable.

CPT

Operators and Providers of telecommunication services pay corporate profit tax at the standard rate of 18%.

PIT

Operators and Providers of telecommunication services shall withhold personal income tax at the rate of 18% of the income payable to their employees and military duty at the rate of 1.5% of the income payable to their employees.

USC

USC shall be paid by the Operators and Providers of telecommunication services at the rate of 22% of the income payable to their employees and this shall be the cost of the Operators and Providers of telecommunication services.

Radio frequency rent

Those Operators and Providers which use radio frequency when rendering telecommunication services, and which obtained the respective licence/authorisation, shall pay rent for their use of radio frequency. The base for rent payment is calculated by reference to radio frequency bandwidth. The rent shall be calculated by the Operators and Providers based on the fixed rate established in the Tax Code of Ukraine and which depends on the type of radio connection, radio spectrum and bandwidth.

Pension Fund duty

Those Operators which provide mobile communication services must pay a 7.5% Pension Fund duty on the value of mobile communication services. Duty is included in the price of mobile communication services and is paid by customers as part of the price.

FEES

Provision of telecommunication services

Various fees are established for issuance of the licences depending on the type of telecommunications service, including in particular for the:

  • provision of international fixed telephony services (on the whole territory of Ukraine) - UAH 8,993,000.00 (approximately USD 333,320.00);

  • provision of intercity fixed telephony services (no less than for 2 regions) - UAH 340,000.00 (approximately USD 12,601.00) for one region;

  • provision of local fixed telephony services:

  • UAH 1,700.00 (approximately USD 63.00) - in case the network capacity is less than 1000 numbers;

  • UAH 8500.00 (approximately USD 315.00) - in case the network capacity is less than 10000 numbers;

  • UAH 51,000.00 (approximately USD 1,890.00) - in case the network capacity exceeds 10000 numbers;

  • UAH 102,000.00 (approximately USD 3,780.00) in case of using the wireless access;

  • UAH 5,800.00 (approximately USD 215.00) in case of using the wireless access with DECT technology; and

  • UAH 340.00 (approximately USD 13.00) in case of services provision in rural area; and

  • provision of mobile telephony services - UAH 340,000.00 (approximately USD 12,600.00).

Allocation of the numbering resource

Operators are obliged to pay a fee for the allocation of numbering resources. The amount of the fee depends on the type of numbering resource (e.g. the national identification code of the mobile communication network).

Use of radio frequency resource

Depending on the type of radio connection, range of radio spectrum, and region of Ukraine, there are different fees for a licence for the use of radio frequency resource.

Last modified 6 Mar 2017
Enforcement

Compliance of telecom market players with the requirements of telecommunications laws and the respective licence conditions is controlled by NCCIR by means of its scheduled and unscheduled inspections.

Based on the results of inspections, among others, NCCIR may issue decisions regarding:

  • inaccurate information in documents submitted by the entity for licence granting;

  • transfer of a licence or its copy to another legal entity or individual for the operation of business;

  • a failure to execute an order on elimination of violation (breach) of licence conditions by the Operator/Provider;

  • repeated refusal of the Operator/Provider to provide access to representatives of NCCIR for conduction of inspection(s), as well as making other obstructions for a full inspection; and

  • repeated violation of licence conditions by a licensee.

On the basis of any of the above incompliances, the NCCIR may annul the Operator's licence.

The administrative offence protocol is a basis for administrative proceedings conducted by NCCIR in accordance with the Code of Ukraine on Administrative Offences. The main administrative offences and respective sanctions are as follows:

  1. a breach of conditions and rules regulating telecommunications activities and the use of radio frequency. This entails the imposition of a fine on officials of the entity in the amount (approximately) of USD 62 to 124;

  2. a breach of the conditions of the provision of services in public networks. This entails the imposition of a fine on officials of the entity in the amount (approximately) of USD 31 to 62;

  3. a breach of the requirements for interconnection of public telecommunications networks. This entails the imposition of a fine on officials of the entity in the amount (approximately) of USD 62 to 186;

  4. a failure to comply with the demands of NCCIR. This entails the imposition of a fine in the amount (approximately) of USD 62 to 186;

The repeated commitment of the above offences may lead to increases of the amounts of the fines.

Finally, under Ukrainian law, the revenue earned by the Operator/Provider (i) arising from business activities and which is not reported to NCCIR, (ii) without obtainment of the appropriate licence or permit for use of numbering source, (iii) as a result of a breach of the tariffs set by NCCIR, shall be withdrawn and transferred to the State Budget of Ukraine.

Last modified 6 Mar 2017
Contacts
Natalia Kirichenko
Natalia Kirichenko
Senior Associate
T +380 44 490 9575
Natalia Pakhomovska
Natalia Pakhomovska
Partner
T +380 44 495 1789
Last modified 6 Mar 2017