Home Latin America I 1998 Progressive Liberalisation of Latin AmericanTelecommunications and Foreign Investment

Progressive Liberalisation of Latin AmericanTelecommunications and Foreign Investment

by david.nunes
Mr. Volker ZieglerIssue:Latin America I 1998
Article no.:16
Topic:Progressive Liberalisation of Latin AmericanTelecommunications and Foreign Investment
Author:Mr. Volker Ziegler
Title:Information Technology Specialist
Organisation:Telecommunications and Informatics Division of the World Bank
PDF size:16KB

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Article abstract

The last decade has witnessed significant changes in the structure of the telecommunications sector in Latin America. Privatisation and liberalisation – the lowering of barriers to entry to new operators in the telecommunications sector – have been pursued by most countries, although some relevant exceptions remain. As a consequence, the number of service providers, the pattern of ownership, the sources of financing and the regulatory environment have all changed dramatically. The growing role of foreign capital in this industry will probably continue in the countries that are committed to progressive liberalisation.

Full Article

Although privatised, telecommunications operators in most countries still enjoy the status of quasi-monopolies in basic services (including long-distance). Chile and Mexico are the only telecommunications markets in Latin America that are fully liberalised and where there are no significant regulatory impediments to convergence between voice, data and video traffic. The level of competitive pressure that is being built up by potential new entrants in the telecommunications market is illustrated by the number of new cellular and cable television subscribers in South America. It surpassed the number of new main telephone lines in 1997 and is forecast to continue to do so. This development signals a significant shift in the investment portfolio towards wireless and cable television infrastructure in the region. Generally speaking, the trends of convergence and increased competitive pressure are expected to expand throughout the region, providing a new impetus to foreign direct investment flows into telecommunications-related activities. In this context, the participation of Latin American countries in the World Trade Organisation (WTO) negotiations on basic telecommunications merits attention. Almost all Latin American countries participated in the WTO’s Negotiations on Basic Telecommunications and most of them have made commitments to further liberalise their telecommunications service industry including voice telephony, mobile services, and satellite services. Overall, these commitments confirm that in many countries the trend toward full-fledged competition is likely to proceed. Conclusion The post-privatisation era for the Latin American telecommunications sector will be characterised by significant interest of foreign-investors in the region. New business opportunities opened by technological progress in telecommunications will continue to foster foreign investment.

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