Home Latin America 2006 The IP difference: regulating for Colombia’s future

The IP difference: regulating for Colombia’s future

by david.nunes
Carlos Alberto Herrera BarrosIssue:Latin America 2006
Article no.:1
Topic:The IP difference: regulating for Colombia’s future
Author:Carlos Alberto Herrera Barros
Title:Executive Director and Commissioner
Organisation:Telecommunications Regulatory Commission of Colombia
PDF size:192KB

About author

Mr Carlos Alberto Herrera Barros is the Executive Director and Commissioner of the Telecommunications Regulatory Commission of Colombia (CRT, Comisión de Regulación de Telecomunicaciones de Colombia). In the past, he has served as the Head of the Commission’s Office of Competition and Regulation, as the Legal Advisor – within the commission – to the ITU, the International Telecommunications Union. Carlos Alberto Herrera Barros served also as the Legal Advisor of the Communications Ministry and as a lawyer of the Industrial property office at Colombia’s ‘Superintendencia de Industria y Comercio’. Mr Carlos Alberto Herrera Barros earned a Master’s Degree in International Relations, specialised in European studies from Spain’s Ortega and Gasset Institute, Cumplutense University of Madrid. He completed the Program of Executive Development, PDD, at Inalde, Bogotá, specialised in business law and legal studies at Externado University, Bogotá, and the Program on Conflict Management and Negotiation at the University of Toronto in Canada.

Article abstract

The rapid changes in telecommunications technology, especially those due to the convergence of all types of communications on next generation, IP-based networks, are challenging not only for service providers and consumers, but for regulators as well. Columbia’s regulators are seeking to facilitate access to markets, networks and interconnection between the networks of, often, competing service providers on an equitable basis. They have found that the best guide to equitable regulation is to base the rules upon the demands of the market.

Full Article

The rapid technological changes typical of the telecommunications sector impose a wide range of challenges for not only the service providers and consumers, but for regulators as well. These must be overcome to realize the sort of stable market development that benefits the consumer and society as a whole. In order to identify and better understand the new challenges that the market imposes, it is the telecommunications regulator’s duty to reflect upon how to face the changes brought by the new realities. Next generation networks, NGNs, are characterized by the ability to provide voice, data, multimedia, mobile and fixed services using the same platform and transmission channels for all. In Colombia, as in other countries of Latin America, it is necessary to make sectorial decisions that revolve about three basic issues, all highly relevant to the telecommunications sector: 4 access to markets; 4 regulatory focus; and 4 network access and interconnection. Market Access Since 1989, Colombia has passed a series of different laws and decrees that established the legal classification of telecommunications services in accordance with their technical characteristics and, in a wide variety of instances, established market rules that depended upon the nature of the service. The licences to provide voice or data services, fixed or mobile services, only allowed service providers or operators to provide specific service according to the technical regulations stipulated in the authorization granted by the regulatory authorities. As a result of these technical restrictions, equipment service providers and service providers often find it difficult to incorporate new technologies or offer new services and functions. At times, service providers cannot even optimize the use of scarce resources, such as the spectrum assigned, or develop applications that were not specifically contemplated in the licences that were granted, or by the laws that were in effect some years ago. For all these reasons, it is necessary to develop and put into practice a new system with a single, unified licence that allows service providers to incorporate the use of new technologies and optimize the application of the legally assigned resources without fear of violating the terms of their authorizations. Liberalising the service provider’s operating licences and authorisations in this way promotes innovation, investment and the entrance of new market participants. With these new licences, the only limits to service innovation and the ability to attract new users are those internally imposed by the service provider’s own business structure and the willingness, skill and know-how needed to put its plans into action. It is desirable, then, to have a market in which the service providers that have the economic and technological capacity to do so can incorporate in their service portfolios whatever new services that state-of-the-art technology permits. In this way, service providers can compete with other service providers and offer consumers the benefits of mobility, ubiquity and bundled voice, data and video services without fear of violating the terms of their authorizations or infringing old laws or regulations. A new regulatory focus The existence of different sets of rules for each type of service, according to the traditional regulatory classifications, can generate market distortions. Nowadays, unlike with the technology available years ago, the consumers’ communications needs can be satisfied by a variety of service providers and services. If each type of service supplier must operate according to a different set of rules, if the rules of the market are not uniform in terms of prices, interconnections, universal service obligations and the like, service providers will not be able to compete on a fair and equal basis to attract and satisfy the needs of the user. Today, then, several distinct types of service providers can compete within a given market. Nowadays, for example, voice communications between users within the same city might involve interconnections between the competing operators of the traditional local fixed-line phone system, mobile operators, value-added services, service providers that provide voice over IP, VoIP, and others. Distinct types of telecommunications service will continue to exist as long as perceptible differences (quality, terminals, availability, prices…) that appeal to the consumer’s expectations persist. Nevertheless, the economic regulations that apply to service providers cannot continue to be based upon the differences in technical characteristics by which they were legally defined some years ago, since these characteristics change rapidly due to continuing technological advances. The constant advance of technology makes it necessary to migrate to regulations based mainly upon analyses of the characteristics of the relevant markets. Such analysis must take into account the degree to which each competing service provider has significant power to determine, alone or as a group with other service providers, the conditions of the market. In these studies, every type of supplier that satisfies the particular communications needs of the market – regardless of the specific technological platform employed – must be kept in mind. The use of ex ante regulation, based upon market analysis criteria and not the differences between services, permits more flexible regulation. Such regulation can encourage competition and correct failures of the market, as needed, to facilitate its development or to foster promising segments that do not yet have significant market power. Last year in Colombia, the local voice service markets were analyzed to determine the relative strength in the market of the competing service providers. The study covered traditional local fixed phone operators, mobile telephony operators and the VoIP service providers. The study found that although there was a traditional fixed phone operator in the large markets, controlling a market share greater than 70 per cent, there was also strong competitive pressure from the aggressive offerings of the mobile, VoIP and other substitute services. This sort of analysis permitted the elimination of ‘price cap’, maximum price, regulation and to design more flexible rules to control market behaviour. The new rules encourage the creation of different tariffs plans and packages of services for the different segments of the market. Access and interconnection We see then, that to the extent that we can strengthen a variety of service providers with multi-service networks, an opportunity is generated to deregulate retail markets, whenever clear rules guarantee access to, and the interconnection of, the networks for benefit of all users. The technical complexity of current networks raises challenges regarding access and interconnection, not only for the regulators but also for all types of service providers. Today, however, it is not enough to guarantee network interoperability; all the new services and applications must also be compatible and function within a technologically neutral environment, so they can be readily communicated to clients of any other service provider. Furthermore, it is necessary to identify which is the best way one service provider can pay another for the use of its networks given the differences between the technologies employed and the often quite different cost structures involved. The questions that arise can be fairly complex. For example, when one service provider pays to use the network of another by granting the use of its network to the second service provider to run a broadband platform, should the second service provider pay an additional charge to run voice over IP, VoIP, applications on that platform? What sort of models should be used to identify the effective costs – those that take into account the traditional technologies that still account for the bulk of our communications, or those that only recognize today’s high-end technologies and lower cost networks? To resolve all these questions, I believe that both regulators and service providers should adhere to the general principles of non-discrimination, equal charges for equal access, the prohibition of double remuneration for network usage, and the allocation of costs in accordance with the network elements involved. By utilizing rules based upon market principles we will be better able to interpret the new, complex, technological reality. This will help the telecommunications sector continue its advance, just as any other, so that the dynamically changing technology does not threaten the stability of the sector or the sometimes precarious equilibrium among competitors. On the contrary, the utilisation of rules based upon market principles will guarantee new and better opportunities for consumers and competitors alike.

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