Dr. Jose Alfredo Arce Jofre Issue: Latin America I 1999
Article no.: 4
Topic: Telecommunications Development in Bolivia
Author: Dr. Jose Alfredo Arce Jofre
Title: Director General of Communications
Organisation: Bolivia
PDF size: 64KB

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Article abstract

Since 1985 there have been structural reforms in the Bolivian economy to avoid high inflation and to adjust it to the international economic globalisation. These reforms influenced the telecommunications sector in a major way. The first important change was the privatisation of the State companies in 1995, including the National Telecommunications Company ENTEL. To date; the benefits of the liberalisation process are reflected in the contribution of the sector to the Bolivian GDP.


Full Article

Prior to the reforms in the telecommunication sector in 1995, the Bolivian government, through the Communications and Transport Ministry, was in charge of the provision of services, regulation and definition of norms and policies. At the same time, there was a state monopoly for the telecommunications services, excluding mobile telephones run by the firm TELECEL in Band ‘A’, and the local telephones run by 18 private co-operatives operating at a national level. ENTEL was in charge of the rural areas with limited expansion but subsidised by national and international long distance tariffs; DITER provides their services to rural areas through radio transceptors in High Frequency (HF) as well as the telecommunications co-operatives. Within this scenario, the basic telecommunications service was under-developed due to the lack of resources and the difference between the operatives who had developed very little and ENTEL, which was more developed. The lack of both a modern normative framework and a transparent and independent regulation further delayed developments in the telecommunications sector. Prior to the restructuring within the sector there were around 311,000 lines installed in the country but only the 70% were in service. Recent Reforms Since 1985 there have been a number of structural reforms in the Bolivian economy in order to avoid high inflation and to adjust the country to the international economic globalisation. These reforms had an important impact on the telecommunications sector. The first important change occurred in 1995 with the privatisation of the State companies responsible for the restructuring of the telecommunication sector via the privatisation of the National Telecommunications Company ENTEL.਍ഀ Through the Privatisation Law, the Italian group STET got 50% of the shares of the National company, leaving its administration paying US$610 million. The other 50% were given to two administrators from the Pensions Funds, representing all Bolivians. The Sectorial Regulation System, SIRESE Another modification introduced through the privatisation process was the creation of the Sectorial Regulation System (SIRESE). Its objective is to regulate control and supervise the various activities in telecommunications, electricity, hydrocarbons, transports, water and any other sector, which could be incorporated into this category afterwards. The system works through a series of General and Sectorial Boards with national jurisdiction and autonomy in relation to technical, administrative and economic management. The General Direction of Telecommunications, linked to the Transports, Communications and Civil Aeronautics Under-Ministry, is the Government organisation in charge of defining the norms and policies regarding post and telecommunications. In Bolivia there are 16 local services operators registered, each with an exclusivity privilege of 6 years in a specific geographical area. There is only 1 operator for long distance services that also operates part of the mobile telephone service together with another operator. Installed Capability and Telephone Penetration At the end of 1997, local operators had installed 496,056 lines, with a 75.5% use, which corresponded to 384,530 lines in service. The same year the mobile telephone operators served a total of 123.7 thousand users in Bolivia, shared by ENTEL (64.7%) and TELECEL (35.3%). In December 1997, from the total lines installed 22.5% were not in use. The main co-operatives COTEL, COTAS and COMTECO, concentrate the 77.7% of the total installed lines, ENTEL 4.8%, and the rest contribute with 17.5%. Regarding the lines in service, the main co-operatives that serve the main cities in Bolivia (the central axis) participate with 78.5%, ENTEL with 4.5% and the rest with 17%. Among the co-operatives with more lines not in use are COTEVALLE with 90.1%, COTEVI (58.3%) and COTERI with 41.4%. The cities of La Paz, Cochabamba and Santa Cruz concentrate the 67.6% of the total lines not in use. There are more than 8000 lines for public telephones in Bolivia, of which only 9.6% serve the rural areas. There is a big concentration of services in the cities of the central axis, around 74% of the total national with 6 public telephones in service. The proportion of telephone lines in relation to the lines in service is only 2.8% at a national level. The highest concentration is 13.5% in the rural area, compared to only 1.9% in the urban area. Despite recent developments, the national telephony penetration shows very low levels. The national penetration shows very low levels of development, due mainly to the growth of the rural area over the urban area (10% growth). Challenges for the Future The restructuring of the sector has achieved not only better technology and more investments but also the development of the different networks and a better service. The most immediate challenge is to encourage competition and the incorporation of new services according to the development of the technology and the needs of the users. The Bolivian government with the support of the World Bank has initiated the elaboration of a plan to open the competition. Before November 2001, public international competitions for the provision of the long distance services is expected at the national, international and local level in Bolivia. Until December 1999 there will be two bands for the provision of Mobile Service PCS open to competition. This ‘opening’ will hopefully attract larger investments and better techno’logy to the sector, given the favourable conditions of our country from a normative, regulatory and economic point of view. This will make Bolivia an integrative centre for the telecommunications traffic in the South Cone (ConoSur). SITTEL The Bolivian government, through the 1632 law of 5th July 1995, established a telecommunications law. The following are some of the main functions of the Telecommunications Supervisory Organisation (SITTEL): · Subscribe contract and amend them within the legal framework. · Control and co-ordination in the use of the electromagnetic spectrum and to control the means and equipment through which the electromagnetic waves are sent. To regulate the use of frequencies and protect them against any negative interference. · To establish the necessary technical standard needed to operate and improve the telecommunication services. · To require the necessary information for the implementation of its functions to individual and collective organism that act as telecommunication providers. · To elaborate and maintain the fundamental technical plans defined by the ITU. · To consider, approve or reject the agreements signed by the International Long distance services providers that the tax accounts establish or modify. · To administer the assigned resources in the budget. · To approve the models of contracts between the provider and the users according to the regulations. · To identify under the regulations established in the legal framework the non-competitive services. · Permission to act as necessary in order to implement its functions according to the legal framework. Also specified in the same Law is the possibility to establish limits to the prices in the non-competitive services, as well as the preparation of the telecommunications market for its definitive opening in the year 2001. Importance of Telecoms to the GDP The Bolivian GDP in 1996 was US$3,800 million. The benefits of the telecommunications operators service can be seen from the US$214 million generated which represented 5.7% of the GDP for that year.਍ഀ ENTEL for instance contributed 3.9%. From the total investments of the company, 61% came from services and 35% came from participation through interconnection. The balance came from special services, mobile phone sales and other services. COTEL had as operative profit of 98.7 millions of Bolivian dollars, which represented 0.5% of the GDP. Its main revenue generating stream came from telephone, economic and the interconnection services. COTAS is the second company in terms of importance regarding the generation of benefits. It contributed 0.9% of the GDP last year. Its benefits for basic services and interconnection were superior to the 83%. COMTECO contributed with a 0.3% of the GDP. Conclusion In the final analysis, the implementation of telephone services and interconnection represented more than 86% of the benefits generated. COCET, COTEAUTRI and COTAP contributed to the GDP with 0.09%.