ECONOMY-VENEZUELA: Telecommunications Monopoly Comes to an End

By IPS Correspondents Reprint | | Print |

Andrés Cañizález

CARACAS, Nov 28 2000 (IPS) - The monopoly that CANTV, a formerly state- run company, exercised for decades in Venezuela over fixed telephony and long-distance calls came to an end Monday, although the process of opening telecommunications up to competition will not immediately benefit subscribers.

The director-general of the National Telecommunications Commission (Conatel), Diosdado Cabello, said Monday that he was confident in the sucess of the opening of the sector, and announced that auctions would be held “to carry the process out in the most transparent manner.”

Conatel is the state office in charge of overseeing the opening of telecommunications to competitors of the CANTV (Compañía Anónima Nacional Teléfonos de Venezuela), which was privatised in 1991 after operating as a public enterprise for decades.

Services like Internet and mobile telephony had already been thrown open to competition.

“We cannot think that everything will change overnight,” said Haydé Cisneros, president of the Chamber of Telecommunications Companies. “It is necessary to understand that what will happen is simply that a wide range of options will begin to open up.”

The telecommunications companies thus sounded the alert against unrealistic expectations, while experts pointed out that only within six months to a year would subscribers begin to feel any changes.

Nevertheless, since last week ads have been loudly announcing “the big change” that would begin to be felt with the arrival of competition for CANTV.

Conatel and the National Council for the Promotion of Investment predict a 10-billion dollar flow in investment into the sector within the next five years, thanks to the opening up of telecommunications and the potential for market growth.

The Andean Development Corporation (CAF), the financial arm of the Andean Community trade bloc, announced that it would launch a study on information technologies in Caracas.

According to CAF, seven billion dollars were invested in Venezuela’s telecommunications sector from 1991 to 1997.

There are already five million cell-phones in this country of 25 million, or an average of one per five inhabitants, and there is still ample room for growth in mobile telephony thanks to third generation cell-phones with Internet access.

Meanwhile, there are 11 fixed telephone lines per 100 people in Venezuela. However, Conatel estimates that in the next few years, that ratio will climb to 20:100, because there are still very few phones in rural areas.

Analysts say the company best prepared to compete with CANTV is Telcel, which dominates more than 60 percent of the mobile phone market. The majority shareholder in Telcel is the U.S. company BellSouth.

“We expect 10 percent of CANTV subscribers to change operators during the first week of the opening alone,” said the president of Telcel, Enrique García.

CANTV has 3.5 million fixed-line subscribers.

Telcel has expressed an interest in fixed telephony and long- distance calls. Genesis (Bell Canada), Digitel (Telecom Italia) and the U.S. company AT&T are also keen on participating in the Venezuelan market.

The opening up of the market to competition coincided with complaints by telecommunications companies that CANTV had been negligent in ares like hook-ups and facilities for Internet service providers.

But CANTV president Gustavo Roosen said Monday that his company had no interest in causing problems for other companies. “The rules establish a mechanism designed to compensate costs with a reasonable profit margin, and the unity of hook-ups will be a powerful source of revenues,” he said.

The competition will of necessity initially use the technical infrastructure put in place by CANTV.

“If there is no transparent system of hook-ups, everything that has been heard about the opening will be merely empty words, and there will be no visible results, not even in the medium- term,” warned Fernando Martínez Mottola, president of New Global Telecom and a former CANTV executive.

Conatel said mechanisms and agreements on hook-ups should be ready within two months, and that if the companies failed to reach an agreement, the commission would take a hand in the matter and issue its own regulations.

Conatel has also made the installation of public telephones and the existence of special rates for low-income groups conditions for those applying for licenses. Another of its aims is to ensure that access to the Internet becomes increasingly widespread.

“We agree with the government’s interest in democratising the use of the Internet, and for that reason in the new stage that is beginning, we will leave behind the concept of ‘telephony’ to talk about ‘telecommunications’,” said Roosen.