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**Figure 7** : _Trade Facilitation Benchmarks for Bulgaria in comparative perspective against the EU-15 average level_

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1.0<br>0.9<br>0.8 Bulgaria<br>0.7<br>Romania<br>0.6<br>0.5<br>Estonia<br>0.4<br>0.3 Lithuania<br>0.2<br>0.1 CEEC-8 average<br>0.0<br>Ports Customs Regulation IT infrastructure<br><!-- End of picture text -->

_Source:_ Wilson, Mann, Otsuki database (2004) and Wilson, Luo and Broadman (2004).

The gap between performances in terms of regulatory environment measures in which Bulgaria’s score is higher than the average for CEEC-8 than on other three indicators of trade facilitation appears to stem from relatively recent vintage of regulatory changes. Better regulatory arrangements usually lead, albeit with some lead-time, to improvements in performance.

Telecommunications is one of these areas where new laws are yet to significantly alter the quality of IT infrastructure. Their availability and pricing of telephone services deteriorated in comparison to CEEC-8 countries in 1999-2002 on all major indicators except in density of telephone mainlines (Table 10). But the latter was exceptionally high in Bulgaria even before the collapse of central planning. It still exceeded the average for CEEC-8 in 2001 and was higher than in Hungary in 2002. Yet, despite a significant fall in the length of a telephone-waiting list between 1999 and 2002, the gap vis-à-vis CEEC-8 had expanded.

The gap in terms of pricing local telephone calls had also fallen, although the telephone average cost of a local call was still well below that in CEEC-8 and Romania in 2002. But such a low cost of local telephone calls—more than five-times lower than on average in CEEC-8 or Romania—is not the result of high efficiency but cross-subsidization. In contrast to Romania, which scored higher than Bulgaria on the indicator of IT infrastructure, Bulgaria’s local rates were roughly the same as the average in SEE-3 economies. But the difference vis-à-vis the CEEC-8 slightly declined suggesting slow movement towards a regulatory structure that allows for increased competition.

Indeed, movement towards a less competition distorting regulatory structure has accelerated over the last two years. Although Bulgarian Telecommunications Company (BTC) still has monopoly on the provision of voice and leased line services until January 1, 2005, two developments augur well for improvement in the quality of IT infrastructure. First, the 2003 Telecommunications Law has introduced greater transparency in the institutional regulatory framework of the Bulgarian telecommunications sector. It also contains a provision allowing rival service providers access to BTC's subscribers to offer cable, satellite or wireless services from the original liberalization date. Second, on February 20, 2004, 65 percent of BTC was sold to Viva Ventures, a wholly owned subsidiary of U.S. Company Advent.<sup>15</sup> While in the absence of competition, privatization alone does not guarantee better services, this may, however, trigger long neglected modernization of the network, which has one of the lowest digitalization rates in the region.

While recent developments suggest possibilities for a significant progress in IT infrastructure, this does not appear to be the case for port efficiency for two reasons. First, port inefficiencies appear to be the 15 See information at http//www.osec.doc.gov/obl/romaniabulgariatrademission/ BulgariaTelecommunications.htm