Peru has continued to liberalize its trade regime which, in the context of other reforms and a favourable external environment, helps explain its robust economic performance since its previous Review in 2000 according to a WTO Secretariat report on the trade policies and practices of Peru.
The report from the secretariat on telecommunication services is as follows(*):
(ii) Telecommunications
(a) Features of the market
92. There have been far-reaching changes in Peru's telecommunications sector since it was opened up and reorganized in the 1990s. This process has been accompanied by sustained growth in foreign investment, which rose from US$2,000 million in 1995 to US$4,975 million in 2006. Foreign investment in the telecommunications sector accounted for one third of all foreign investment in Peru in 2006.
93. The liberalization process has been gradual and the sector has not been opened up to full-scale competition immediately but the dominant presence of Telefónica del Perú has been used gradually to adjust rates and promote investment. In 2006, the Spanish company Telefónica controlled 97.2 per cent of the shares in Telefónica del Perú. Under an administrative concession granted by the State, this company has the right to utilize the infrastructure and networks of the public telecommunications services. The concession entails specific obligations on access by third parties to the basic infrastructure and network facilities of this operator. In 2004, Telefónica del Perú's concession agreement was renewed until 2024.
94. In March 2007, there were 66 long-distance concessions, 35 concessions for local carrier services, 23 fixed telephony concessions, 221 suppliers of value-added services and 142 companies listed in the register of service and/or traffic providers. The major competitors in the market are Telefónica del Perú (dominant operator), Telefónica Móviles, Telmex del Perú, Americatel, América Móviles, Nextel del Perú, Impsat, Infoductos, Gilat to Home, and Millicom.
95. According to data from the authorities, in December 2006, Telefónica del Perú had 95.6 per cent of the total number of fixed telephony lines; the remainder belonged to seven other operators. At the same date, the leading mobile telephony operators were Telefónica Móviles, with 58 per cent of the lines in service, América Móviles (38 per cent) and Nextel del Perú (4 per cent). As regards national and international long-distance services, Telefónica del Perú has 66 per cent of the market, while the other 20 competitors share the remaining 33 per cent.
96. The fixed telephony and national and international long-distance markets are highly concentrated. In 2001, one company made a complaint against Telefónica del Perú regarding issues such as obstacles to interconnection and access to networks. The OSIPTEL issued Decision No. 052-2002-CCO/OSIPTEL allowing the complaint against practices that restrict competition in the telecommunications market (long-distance and fixed telephony) by barring entry using legal or technological means or strategic behaviour.
97. Since 2000, Peru's telephone density has made sustained progress and during the period 2000-2005 it was the South American country with the highest aggregate rate of annual growth according to information provided by the authorities. Nevertheless, in the poorest departments and in poor urban sectors, the level of access to telecommunications services is still low.
98. A study by the World Bank indicates that, as a result of privatization, the coverage and quality of the service has increased dramatically and that rates have tended to fall, with some exceptions for new services.98 Use of long-distance and international services has increased for consumers in all sectors. For local services, the increase has been modest within the poorest sectors, as already mentioned. Rates for local, long-distance and international services have fallen but there has been a sharp rise in monthly standing charges. The study finds that there has been a net benefit for consumers in all social strata if the broad expansion in access to telephony services is taken into account.
99. On the other hand, it is indicated that there are still problems in the sector such as the rates per second restricted to a single plan, interconnection charges for cellular telephones, the lack of competition in fixed telephony (because Telefónia's competitors concentrate on corporate clients), interconnection problems and conflict between those entering the market and Telefónica del Perú.99
(b) Regulatory framework
100. As part of its commitments at the WTO, Peru undertook to liberalize voice telephony services (national, long-distance and international) by 1999 at the latest. In the Fourth Protocol, approved on 4 June 1997 by Supreme Resolution No. 129-97-RE, Peru undertook to take into account the Reference Paper on regulation principles.
101. Two institutions have regulatory and administrative responsibilities in the telecommunications sector. On the one hand, the Ministry of Transport and Communications (MTC) is competent for market access issues; allocation, control and monitoring of scarce resources; administration of the Fondo de Inversión en Telecomunicaciones - FITEL (Telecommunications Investment Fund); the national telecommunications plan; the national frequency allocation plan; the adoption of regulations; and approval of monitoring equipment. On the other, the Organismo Supervisor de Inversión Privada en Telecomunicaciones - OSIPTEL (Supervisory Authority for Private Investment in Telecommunications) is responsible for the following: rates applicable to users; competition in the sector; interconnection; quality of the service; settlement of disputes between operators and application of the corresponding penalties; and dealing with complaints from users.
102. The basic regulatory framework for the telecommunications sector is contained in the Single Harmonized Text of the Telecommunications Law, Supreme Decree No. 013-93-TCC and amendments thereto.100 The Law classifies telecommunications services into: (i) carrier services; (ii) teleservices or final services; (iii) distribution services; and (iv) value-added services. Pursuant to this Law, the following services require a special concession before they can be provided: carrier services; teleservices or final services; and distribution services. An authorization, together with the corresponding permit and licence, are required in order to provide private final and radio-communications services and private distribution and broadcasting services. Value-added services that require their own telecommunications networks separate from those of the carrier services or teleservices require special authorization from the Ministry of Transport and Communications.
103. In 2004, the Single Harmonized Text of the General Regulations for the Telecommunications Law, Supreme Decree No. 027-2004-MTC, incorporated regulatory changes such as modified definitions of subscribers, the concession area, the service area and interconnection of networks. In 2005, Supreme Decree No. 030-2005-MTC continued the development of rules for the interconnection of networks, royalties for concession rights, compliance with obligations by concessionaires, incentives for access by independent operators and for developing mobile services, and recognition of users' freedom to set up private networks.
104. Law No. 28295 requires companies to share the necessary infrastructure for providing public telecommunications services where it is not possible to build and/or set up the infrastructure. Supreme Decree No. 030-2005-MTC of 31 December 2005 provided that any independent operator may request one or more telephone lines from a fixed or mobile telephony concessionaire in order to install public or subscriber telephones to be operated by them directly and to be used to back up other services in areas where this service is not available.
105. The rates charged by Telefónica del Perú are regulated by the clauses in the concession agreements signed by the Peruvian State in 1994. Since September 2004, the rates for local and long-distance fixed telephony have been adjusted quarterly by basket of services. Adjustments are made taking into account a formula giving a ceiling that is fixed according to inflation and a productivity factor of -10.07 per cent annually. The productivity factor to become effective in September 2007 has been under consideration since 25 May 2007, as required by the Resolution of the Governing Board No. 027-2007-CD/OSIPTEL.
106. The Single Concession Law, Law No. 28737 of 18 May 2006, introduces the concept of a single concession for the supply of all public telecommunications services so as to lessen the barriers to market access created by multiple concessions. Pursuant to this Law, concessions are granted at the request of a party or following an open competition. A single concession may comprise the possibility of providing more than one public telecommunications service, as well as an authorization to use the radio spectrum and the permits and licences required to install and operate radiocommunications equipment. The concession agreement establishes the time-limit for the concessionaire to commence providing the service. The Law was introduced in response to the problems created by the multiple concessions regime101 including barriers to market access, delays in dealing with concession procedures (an average of four to five months for each procedure), problems in implementing new technologies and deploying networks, and discouraging competition and the entry of new operators.102
107. Likewise, in order to boost promotion and competition policies in the sector, in 2007 Supreme Decree No. 003-2007-MTC and Law No. 29022 were adopted to eliminate obstacles to the infrastructure's expansion.
108. Legislation in the sector gives Peruvian and foreign investors the right to provide telecommunications services in the following forms: (i) public services, with no restrictions on foreign investment; and (ii) broadcasting services.
109. Article 24 of the Radio and Television Law, Law No. 28278 of 23 June 2004, prescribes that legal persons must be domiciled and established in Peru in order to own a broadcasting service. Foreign involvement in legal persons owning a broadcasting service may not exceed 40 per cent of the total holdings, shares in the equity or number of partners. Foreigners may not own a broadcasting service either directly or through a sole-proprietor company.
110. Supreme Decree No. 040-2004-MTC lays down the requirements for granting a concession. No call-back is allowed in international long-distance traffic.
111. The FITEL, part of the Ministry of Transport and Communications pursuant to Law No. 28900, seeks to promote universal access through private investment in regions where demand does not guarantee profitability.103 The FITEL is financed through a contribution made by all companies in the sector corresponding to 1 per cent of the value of their sales.104 The authorities have stated that, in mid-2007, the FITEL had US$134 million to invest over a period of five years in various projects for public telephony, fixed telephony and public access to the Internet in rural areas. Through these projects, it is hoped to double telecommunications capacity by the end of 2009.
(*) Extract from the Secretary Report
NOTES:
98 World Bank (2006c).
99 Fernández-Baca (2003).
100 The General Regulation to the Telecommunications Law has been amended by Supreme Decree Nos. 015-97-MTC, 005-98-MTC, 020-98-MTC, 022-98-MTC, 002-99-MTC, 003-99-MTC, 043-2000-MTC, 029-2001-MTC, 029-2002-MTC, 015-2003-MTC and 012-2004-MTC. See: http://www.mtc.gob.pe/indice/ comunicaciones.asp#c1.
101 Multiple concessions for services such as local carrier, national long-distance, international long-distance, trunking, SCP, mobile, mobile via satellite, fixed telephony, wireless telephony, cable television, MMDS cable television, inter alia.
102 Information from OSIPTEL online. See: http://www.osiptel.gob.pe/Index.ASP?T=T&IDBase= 0&P= %2FOsiptelDocs%2FGPR %2Fel_sector%2FSEMINARIOS%2Ffiles3%2F2daSesion_ManuelCipriano_ MTC.pdf.
103 Information from FITEL online. See: http://www.fitel.gob.pe/contenido.php?ID=36.
