In 2004, the Cypriot government passed a number of laws relating to e-commerce, including the Regulation of Electronic Communications and Posts Law (112(I)/2004) and the Legal Framework for Electronic Signatures and for Relevant Matters Law (N.188(I)/2004). The 2002 Law on Radiocommunications was also amended.
These laws included the transposition of the EU's regulatory framework into national law, although Cyprus was slow off the mark in introducing the necessary secondary legislation for the Law on Electronic Communications.
The Cypriot government states that the island is a communications hub and an international business centre in the Eastern Mediterranean region due to the forward-looking policies of the Cyprus Telecommunications Authority (CYTA).
However, the government has failed to act on these words in some ways. The telecommunications sector has remains nationalised, in most respects remains firmly under the monopoly control of CYTA. The Government uses CYTA’s formidable profits to help balance the national budget, and in 2003 CYTA was shamed into refunding CY£20m to its subscribers.
Competitors to CYTA in the mobile phone sector have struggled to make headway. Only in the Internet sector has any significant degree of competition been allowed, where there are a number of ISPs in addition to CYTA itself.
Under deregulation legislation originally introduced in December 2000, a telecommunications regulator has been appointed, although until 2003 he lacked the resources to be effective. No doubt this was largely due to reactionary forces within the government and an industry that wants to preserve CYTA's monopoly for as long as possible.
The regulator is appointed for a six-year term and will determine the procedures for granting licences for telecommunications and postal services and the creation of telecommunication and postal networks. Among his responsibilities, the regulator may grant new telecoms and postal licences and authorise of telecommunications networks & services.
The first substantive change was the decision to issue licences for two mobile phone companies, with the first license being awarded by right to CYTA. Though bidding began late in 2002, in June 2004, the bidding process for a second licence was threatened after Atlantic Crest was disqualified from bidding because it failed to meet minimum tender requirements (a decision also backed by the Attorney General.) Eventually, the second licence was awarded to Scancom, which trades under the name of Areeba Cyprus.
In 2005, a price war began between Vodaphone-CYTA and competitor Areeba; in mid-2005 CYTA refused to accept a Commission ruling that it should reinstate higher prices pending an appeal to the Supreme Court. The Court ruled in July that CYTA must obey the ruling. In 2007, Areeba Cyprus change dits name to MTN Cyprus.
In addition to the Cyprus Electricity Authority (EAC), a handful of private telecommunications companies have entered the Cypriot market under a creeping programme of liberalisation, including MTN, Cablenet, TelePassport, OTEnet Telecom and PrimeTel.
One of the priority growth sectors of the Cypriot government's Strategic Development Plan (2007-2013), is ICT. Specifically, Cyprus welcomes foreign direct investment to expand and/or develop projects on e-government, e-business, e-learning, e-inclusion, e-health and overall ICT services.
Use of e-commerce in Cyprus is at one of the lowest rates in the EU. According to an EU Commission survey, only around 30% of Cypriots use online banking and shopping services. It seems that this is due to a lack of government encouragement to use these services.
Privatisation of the telecoms sector, first mooted in 2001, has still not fully materialised. However, CYTA’s market share in the mobile phone sector has gradually fallen. In June 2009 its market share was 81%, by December 2016 this had fallen to 58%.