Home Latin America II 1997 Telecommunications Liberalisation in Latin America:The Case of Argentina

Telecommunications Liberalisation in Latin America:The Case of Argentina

by david.nunes
Minister Mauricio BossaIssue:Latin America II 1997
Article no.:6
Topic:Telecommunications Liberalisation in Latin America:The Case of Argentina
Author:Minister Mauricio Bossa
Title:Director, International and Institutional Issues
Organisation:Ministry of Telecommunications, Argentina
PDF size:20KB

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Article abstract

Argentina has left behind having a State provider of telecomms, and today it can focus on meeting the many goals relating to an improved service and the needs of the users and consumers. Although it signed the WTO Agreement, which entails the liberalisation of all telecoms services, Argentina defined a temporary exclusiveness of the basic telephony and international services. Its intention is to follow a calendar of liberalisation which can satisfy the needs of its users first.

Full Article

Minister Mauricio Carlo Bossa is the Director of International and Institutional Relations of the National Commission of Communications, under the Ministry of Presidential Communications of the Republic of Argentina. He has participated in numerous events and conferences, including the final round of the ITU negotiations on basic Telecommunications agreement in February 1997 in Geneva. He is also the vice-president in the Permanent Advisory Committee of CITEL, the Governor in INTELSAT; as well as a Professor in the Universidad Blas Pascal in Cordoba, Argentina. Minister Carlo Bossa is a Political Scientist from the Universidad Catolica de Cordoba, graduated with honours in 1991, and has been active in different studies on leadership, marketing and management. His professional background; both in the private and public sector includes a variety of consultancy undertakings, ranging from market research in telecommunications, personnel, election marketing, public opinion studies to being an Argentinean Constitutional Reform consultant, among other important projects. Telecommunication services in the Republic of Argentina existed until 1989 as a natural monopoly in the hands of a State company without any type of competition whatsoever. This paradigm, which for a long time was dominant in most countries, made ENTel (Empresa Nacional de Telecomunicacion – National Company of Telecommunications) the sole service operator as well as the mechanism in Argentina responsible for taxes, law and control regarding telecommunications. This prevented investment from entering into the sector, making modernisation and maintenance almost non-existent. As a consequence, users of telecommunications services experienced great inconveniences and difficulties. For example, in order to make a simple telephone call from their home they faced very high prices and long delays for the installation of a new telephone line, all of which conspired to make the telephone service very far from ideal. Model for Privatisation With such a situation at hand, a revolutionary transformation was needed. In circumstances where the State was not able to satisfy an already overdue need, the decision was made for the very first time, to grant the private sector the opportunity to intervene. The model used for the privatisation was an open medium-term competition model with limited exclusivity in the provision of basic telephony for a maximum term of 10 years. This meant that exclusivity was granted until 1997 with an option for the year 2000 if the companies complied with the written specifications of the State company. In this legal environment, four private enterprises were established to which ENTel transferred property and service operations. These were: the Northern and Southern Franchised Societies (Telecom and Telefonica, respectively); the Society of Provision of International Service (Telintar); and the Society of Competence Services (Startel), the last two being equal partners. But privatisation itself did not guarantee the modern and extensive infrastructure required by all the regions in the country. To meet this objective, not only were service quality goals included in the privatisation requirements, ‘but participants were also obliged to offer a minimum of public and semi-public services. Regarding the service quality goals, well structured objectives were clearly expressed in the privatisation documents concerning issues of network coverage, cable lines, public telephony lines, call efficiency, information, repair and operator assisted services and the extent and repetition of faulty services. At the time of this radical privatisation, Argentina became a pioneer as few countries had begun this transformation, and its efforts became a model to which other countries could look to for similar experiences. Regime of Competition The opening to competition involved other spheres in this sector, as the National Government decided that every telecommunication service, except the basic telephone service, should be opened to competition. This subsequently brought about the mobile telephony services being next on the agenda. Two bands were assigned and the country was divided into three zones: North, AMBA, and the South. This framework defined ample zones of exploitation, and permitted equal conditions for the companies providing basic services as well as the new mobile telephony companies. This transference was realised through a transparent mechanism based on proposals which took into account the total population coverage, coverage outside the required zones, coverage of total linear kilometres of specified routes, and the speed at which it was possible to begin operations. Among the other services opened to the “regime of competition” apart from mobile telephony, also included trunking, paging, data transmission (via satellite and ground communications), communitary repetition, bi-directional messages, radio taxis, rural messages, multiple chain alarm systems, vehicle localisation, transportation of radio diffusion signals, transportation of digital music via satellite, and video conferencing. Value added services used by telephone lines, such as audiotext, fax transmission and reception services, 0800 services, and many others were also included. This enumeration can appear merely nominal, however, it encircles a concept which must be reiterated: it was the product of the openness towards the private sector which permitted an enormous expansion of the quality and quantity of these services. Under the old scheme of State provision, it would have been unthinkable to reach these present levels. The time-frames the bureaucratic decision making processes, and the criteria used, would not had permitted this. The dynamism, initiative and especially the private investment were the triggers for change based on a clear political decision supported by its citizens through democratic elections. As a consequence, telecommunications services have experienced tremendous growth. Argentina has left behind the experience of having a State provider of communications, and today it can focus on its functions of controlling the many goals relating to an improved service and the needs of the users and consumers. WTO Agreement On an international level, Argentina became part of the World Trade Organisation (WTO) agreement involving the liberalisation in this sector, and therefore encompassing the liberalisation of all telecommunication services. However, it made a clear definition regarding the temporary exclusiveness of the basic telephony and international services. Likewise, no limitations were assigned regarding foreign participation in providing telecommunication services, and a series of regulatory principles were subscribed to, including the protection of competition and interconnection rights. Conclusion It is very important to conclude by saying that the non-existence of free competition schemes in some sectors, such as basic telephony, are only temporary. The calendar of liberalisation will also include this type of sector, so that, by the beginning of the next century, no restrictions will apply to any of the telecommunication sectors. The final aim is to satisfy the needs of the users, both consumers and businesses in Argentina. The way to achieve this is through market liberalisation with the full support of every democratic institution in the country.

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