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Cablegate: Colombia: Section 1377 Telecom Trade Agreements

This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 03 BOGOTA 002001

SIPDIS

DEPT FOR WHA/EPSC, EB/CIP
STATE PLEASE PASS TO USTR: KENNETH SHAGRIN, ARROW AUGEROT
FCC INTERNATIONAL BUREAU FOR ETALAGA

E.O. 12958: N/A
TAGS: ETRD ECON ECPS CO
SUBJECT: COLOMBIA: SECTION 1377 TELECOM TRADE AGREEMENTS
REVIEW

REF: 05 STATE 26652

1. Per reftel, Econoff met with appropriate Colombian
government authorities, including the GOC's
Telecommunications Regulatory Commission (CRT), and provides
the following responses to complaints about excessive mobile
to mobile termination rates, excessive fixed to mobile
termination rates, and excessive pricing and provisioning
delays for access to leased lines:

2. Q: Are the rates for mobile termination services
regulated?

Answer: The rates for mobile termination services are
regulated in Colombia by Resolution 463 of December 2001.
This resolution established maximum rates that mobile
companies can charge for termination services during
2001-2005. In 2005, CRT plans to issue a new mobile
termination services resolution with new maximum rates for a
subsequent five-year period.

3. Q: If so, how are the rates determined? What cost
methodology is used to determine rates?

Answer: Resolution 463 determines the rates on a network
capacity basis or a charge-per-minute basis. The
capacity-based rate for cellular operators, including
Personal Communication Systems (PCS), applies only to calls
from international long-distance carriers or cellular
operators. A TELRIC (Total Element Long Run Incremental
Cost) methodology determines the maximum rates. This
methodology calculates rates by adding long-term incremental
costs to a fraction of the common costs. The
charge-per-minute methodology is applied to domestic fixed
line operators. According to CRT, the new mobile termination
services resolution will provide domestic fixed line
operators the opportunity to use similar cost methodologies
currently offered to cellular and international long distance
operators.

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4. Q: Is the process to determine rates transparent? Are
the results made public?

Answer: Yes, the process to determine rates is transparent
and the results are made public. The CRT organized three
public fora and published technical studies two years prior
to issuing Resolution 463, in order to allow public debate
and discussion of the regulations.

5. Q: Are the rates tending upward? If so, what explains
this trend?

Answer: Yes, rates are tending upward. Under Resolution 463,
incremental maximum rates were established yearly, between
2001-2005, because CRT claimed that Colombian
mobile-to-mobile termination rates were too low for
international standards. In 2005, the CRT plans to issue a
new mobile termination services resolution with new maximum
rates for a subsequent five-year period (2006-2010). The
same TELRIC cost methodology as well as the charge-per-minute
rate will be used.

6. Q: Does the mobile termination rate differ based on
origin of call? (i.e. domestic vs international)?

Answer: Yes. A CRT study claims that for international calls
terminating on a mobile phone, the rates are competitive
(approximately US 4 cents per minute) and lower than other
Latin American countries (US 7 to 27 cents per minute) and
European countries (US 12 to 23 cents per minute). However,
the CRT determined that such rates should increase over a
5-year period to meet average international rates. For
domestic mobile-to-mobile calls, the CRT asserts that the
rates are one of the lowest in Latin America (US 2 cents per
minute), and competition between mobile operators is intense.
CRT asserts that there is room for rates to decrease even
more in the domestic mobile-to-mobile market. However, for
domestic fixed-to-mobile calls, the CRT claims that the
termination rates are too high (approximately US 38 cents per
minute). According to the CRT, mobile operators charge fixed
operators a high termination fee to discourage the use of
fixed lines. Resolution 463 does not limit the termination
fees a mobile operator can charge a domestic fixed operator.

7. Q: Is the regulator/ministry considering taking any
action, including on an interim basis, with respect to mobile
termination rates?

Answer: Although CRT plans to issue a new resolution on
mobile termination rates in 2005, CRT has not published a
draft of the new resolution. CRT mentioned that the new
resolution should establish maximum termination rates for
fixed-to-mobile calls or require mobile operators to charge
outside users rates similar to the rates they charge their
own network subscribers.

8. Q: Is there any ratio between rates charged for
termination on fixed networks and rates charged for
termination on mobile networks that reflects the disparate
costs of the different networks? What would be a reasonable
ratio?

Answer: CRT does not have a standard ratio between rates
charged for termination on fixed networks and rates charged
for termination on mobile networks that reflects the
disparate costs of the different networks. Termination rates
on fixed networks are a lot less than on mobile networks.
Currently, termination rates on mobile networks vary
depending on what originating source requests termination and
if the originating source has an affiliation with the mobile
network or is a direct competitor with the mobile network.
Although there is a maximum termination rate for mobile
networks, CRT does not have a current standard ratio to
measure the disparate costs between fixed and mobile networks.

9. Q: Are the wholesale (carrier) rates being charged for
leased lines used by carriers (e.g. two megabit link between
a carrier's network and its customers) regulated?

Answer: Yes, regulations oblige carriers to provide their
customers with two options: a charge-per-minute rate and a
capacity-based rate. Colombia introduced the capacity-based
interconnection charge in an effort to promote greater
competition among telecommunications providers.

10. Q: If so, how are the rates set? Does the regulator
benchmark them against other comparable markets?

Answer: CRT set interconnection rates for each year between
2001-2005, decreasing the rate by approximately 10 percent
each year. Under the option of capacity-based
interconnection charges, the operator that interconnects with
a carrier pays a flat monthly charge. The price is
calculated based on the premise that the operator providing
interconnection for the service shall recover its cost of
operation, maintenance of the network plus a reasonable
profit, independent of the volume of traffic. The operator
that opts for the capacity-based methodology assumes the risk
associated with traffic fluctuations. CRT also permits a
charge-per-minute rate. In 2003, CRT performed a
benchmarking of Colombian telecommunication rates against
rates charged in other comparable markets, mainly in Latin
America and a few European countries. According to the CRT
official, the findings of this benchmark showed that carrier
rates charged for leased lines are competitive.

11. Q: Is the process for determining rates transparent?
Can interested parties challenge cost-data submitted by the
incumbent operator?

Answer: CRT asserts that the process for determining rates is
transparent and those results are usually published.
Interested parties can challenge cost-data submitted by the
incumbent operator and provide that information to the CRT
for mediation purposes.

12. Q: Is the regulator aware of complaints about the time
it takes to receive a line?

Answer: CRT is not aware of complaints about excessive time
for receiving a line.

13. Q: What are the factors that affect delivery?

Answer: Delivery depends entirely on the operator's capacity.

14. Q: We have heard allegations that the incumbent is
providing leased lines faster to their end-user customers
than they are providing them to requesting competitors. Are
there reporting requirements to monitor this? If not, how is
this monitored? If so, are the reports public?

Answer: Although CRT is aware of some allegations that the
incumbent is providing leased lines faster to their end-user
customers than they are providing them to requesting
competitors, CRT states that they have no reporting
requirements to monitor this.
However, CRT has the ability to mediate and resolve conflicts
between telecommunications providers, incumbents and
competitors. CRT estimates that the time to resolve a
conflict ranges from four months to one year, depending on
the complexity of the conflict. The CRT has mediated
approximately 54 cases between 2002 and 2004.
WOOD

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