| The Andean region free trade agreement (FTA) with the U.S. could have a negative impact on the development of Colombia's telecommunications market if approved in its current form.
As the FTA stands, it authorises local loop unbundling, which would allow U.S. operators to lease components of private networks in Colombia. Colombian telecommunications law does not currently authorise private networks to provide services to third parties or interconnect with public networks, former Colombian development minister Eduardo Pizano said in a document to be sent to congress.
Colombian operators are concerned that if U.S. firms are allowed to access local public networks they would be able to concentrate their services in more attractive segments. If such clients migrate away from national operators the state communication fund could receive less income and the profitability of national operators could be at risk. Operators have therefore asked the government to ensure that the regulatory framework will be the same for all national and international firms.
All local operators are obliged by law to cover their entire territory, and need to rely on cross subsidies from higher income segments to provide service to low income users. However, the rule would not apply to US operators.
"Saying no to these restrictions is something that the Colombian government could do. But I don't think they are going to complete talks until 2006 and in the FTA telecommunications is just a small part. So I think we are far away from seeing this agreement finalised," Pyramid Research analyst Marc Einstein said.
This is the second contentious issue in the FTA negotiations as the U.S. government also demanded the privatisation of state-owned operators ETB and EPM.
"But (the US) backed out from that, which is a much larger issue for Colombia's telecoms market. So we have seen flexibility in terms of negotiations," Einstein said.
Intelecon Research & Consultancy Ltd. 11/02/2005
Source: Business News Americas |