COMMUNICATIONS-LATAM: Private Firms Must Serve Public Interest

By Mario Osava Reprint | | Print |

Mario Osava

RIO DE JANEIRO, Apr 18 2000 (IPS) - Telecommunications regulatory agencies and anti-trust measures to keep competition in the sector open are considered key to ensuring that private companies serve the public interest in Latin America and the Caribbean.

The question of keeping private capital accountable to the social role of telecoms was one of the main focuses of the discussions at the International Telecommunications Union’s (ITU) Telecom Americas 2000 conference and trade fair last week in Rio de Janeiro.

The telecoms sector was swiftly privatised in most Latin American countries over the past decade, and 18 of the 86 regulatory bodies set up in the world over the past 10 years were created in this region, according to the ITU.

Added to the agencies created in the United States in 1934, Haiti (1969), Canada (1976) and Belize (1988), the 18 new regulatory entities brought the total in the Americas to 22, more than in any other region.

The Latin American Forum of Telecommunications Regulatory Entities (Regulatel) was set up two and a half years ago by 16 agencies interested in information-sharing, harmonising national regulations and promoting regional integration.

The agencies should push for universal access to communications to allow developing countries to participate in the information revolution and to reduce the gap separating them from the industrialised world, said the secretary-general of Regulatel, Gustavo Peña-Quiñones from Colombia.

The fear that Internet will widen the rich-poor divide between, and within, countries was raised by participants at the conference, such as Andrés Culagovski, in charge of international affairs in the Chilean Ministry of Transport and Telecommunications.

Chile is one of the few countries in the region that did not set up a regulatory agency when it denationalised its telecoms sector in 1988.

The number of Internet users in Latin America and the Caribbean is growing too slowly to allow the region to catch up to the industrialised North, said ITU secretary-general Yoshio Utsumi of Japan, who pointed out that just 2.7 percent of the population in the region was connected to the information superhighway.

Moreover, access is limited to the richest sectors, which means Internet has become a factor aggravating inequalities in the region, which already has the most unequal distribution of wealth in the world.

The telecoms companies that have most recently acquired public assets in the region have had to commit themselves to installing public telephones in low-income, rural and remote areas, a process that will be overseen by regulatory agencies.

A panel at the Apr 10-15 ITU regional conference concluded that telephony in rural areas could become a lucrative business opportunity in many Latin American countries, after an initial boost from governments. The new mobile cellular and satellite technologies are providing even greater communications opportunities in the countryside.

In Chile it is profitable to install telephones in rural areas, even without government subsidies, said Marcio Andrade, director of CTR, a company controlled by Canadian capital, and one of the firms offering rural telephone services in that Southern Cone country.

However, the availability of telephones does not ensure access to Internet by poor sectors – a goal that falls outside the jurisdiction of most regulatory agencies in the region.

A variety of public and private sector initiatives have aimed at expanding access to Internet, which is considered essential for competing in the future knowledge society.

In order to close the information gap, Colombia is installing 6,500 “tele-centres” equipped with public telephones and computers providing access to Internet, in the interior of the country, announced Communications Minister Claudio Zambrano.

But ensuring universal access to the information superhighway is not an aim of most Latin American telecoms regulatory agencies, whose functions are to award concessions, approve rates, oversee interconnections and quality of services, set technical standards and prevent monopolies.

The agencies set up in the region over the past decade vary widely in terms of their authority and autonomy.

While some also oversee energy and transport, others are focused exclusively on telecoms, with their jurisdiction at times overlapping that of the telecoms ministry, or the ministry of science and technology in the case of Internet.

Most of the agencies, particularly those in small countries, suffer from a shortage of funds which makes enforcement difficult and keeps them from affording a large enough team of highly- trained professionals, who are attracted by the better salaries offered by the private sector.

Most of the regulatory agencies were created by new laws governing communications, with the exception of Argentina and Venezuela, where they were set up by presidential decrees, which limit their independence.

In the past decade, the Argentine government, for example, issued new decrees to replace the director of the National Communications Commission or modify the agency’s authority, functions or make-up.

But an even greater challenge is presented by the mergers and acquisitions which are giving rise to ever-larger transnational corporations in the sector, “a grave situation,” in the words of ITU deputy secretary-general Roberto Blois, from Brazil.

The large consortiums concentrate decision-making power and reduce the capacity of governments to control information flows and outline their own strategies, due to the heavy pressure from the private sector, warned Blois. They also block the competition that can keep rates down and push up quality of services.

But since the companies are transnationals, governments can do little to avoid those problems, he added.

Blois pointed out that Brazil had to take anti-trust action to prevent a near-monopoly over long-distance services that arose from a merger between the US companies Sprint and MCI, because Sprint was participating in the two companies offering long- distance services in Brazil.

The National Telecommunications Agency, which regulates Brazil’s telecoms sector, had to force Sprint to pull out of one of the long-distance companies, in order to keep competition open.