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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.

231512Z Dec 05

UNCLAS SECTION 01 OF 02 BOGOTA 011901

SIPDIS

DEPT PLEASE PASS TO USTR: ARROW AUGEROT

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

REF: SECSTATE 218756

Sensitive but unclassified. Please protect accordingly.

1. (SBU) Summary. Avantel, a U.S. affiliated
telecommunications company in Colombia, continues to assert
that Colombia has not been in compliance with its
telecommunications trade agreements. According to Avantel,
Colombia has not offered complete and fair access to and use
of public telecommunications transport networks and services
set forth in the WTO Basic Telecommunications Agreement.
Avantel maintains that noncompliance arises from the refusal
of other mobile operators to offer interconnection with
Avantel's trunking network and the government regulator's
inability to enforce existing decrees requiring
interconnection.

2. (SBU) Avantel is the only U.S. affiliated
telecommunications company remaining in Colombia. Avantel
provides a digital trunked radio wireless telecommunications
network (using technology similar to that of Nextel in the
United States). Avantel President Carlos Marino told econoff
that the company has 107,000 subscribers in Colombia and that
300 accounts represent 50 percent of their business here.
Avantel customers include the President,s office, the
Colombian military and national police, the U.S. embassy, and
other corporate clients. Customers seek the more secure
mobile communications offered by Avantel,s trunking service.


3. (SBU) Avantel asserts its business and competitive
position has been harmed by the anti-competitive practices of
Colombian mobile phone operators and GOC reluctance to
enforce regulations on interconnectivity and numeration.
From 2000-2004, the Ministry of Communications and the
Telecommunications Regulatory Commission (CRT) did not
require other Colombian mobile operators to provide
interconnection services to Avantel although this was
required by Colombia,s Law 555 of 2000 according to Avantel
officials. Law 555 specifically states, &every
telecommunications operator will allow the interconnection of
its network and access to their essential installations to
any other telecommunications operator who may so request it.

4. (SBU) Decree 4239 issued in December 2004 appeared to
resolve the interconnection and numbering issue but Avantel
has had great difficulty in obtaining effective
implementation from the government and cooperation from its
competitors. While Avantel has received a unique prefix for
the telephone numbers it assigns customers, Avantel efforts
to negotiate license fees since the new degree have been
rejected by the other mobile operators who refuse to
recognize their obligation to provide interconnection.
Avantel officials reported they would file an official
complaint with CRT the week of December 19, 2005 to request
that interconnection regulations be enforced. However, CRT
officials have already informed Avantel that a ruling will
take 2-8 months, further delaying interconnection access.

5. (SBU) Avantel argues that mobile operators are delaying
cooperation in the hope that Avantel market share will
continue to decrease. Since Avantel cannot connect directly
with the mobile operators, Avantel pays for a fixed line
service that then provides the connection to the mobile
operators. Avantel pays about 43 cents per minute for the
service while the average fee for other operators is 8 cents
per minute. Avantel's market share has decreased from 5
percent in 2000 to about one percent now. Moreover, Avantel
maintains regulatory delays have caused it to miss out on a
rapidly expanding customer base and has left it with a
network that is 60 percent under-utilized according to
Avantel President Marino.

6. (U) In general, other significant barriers to entry
include high license fees (USD 150 million for a long
distance license fee), cross subsidies, the requirement for a
commercial presence in Colombia and economic means tests.
CRT may require an economic needs test for the approval of
licenses in voice, fax, e-mail, and other value-added
services. The parameters that determine an economic means
test are not established clearly in Colombia. CRT also
maintains a system of crossed subsidies where long-distance
telephony subsidizes local telephony. Low (subsidized prices
of local telephony and high restrictive costs in the
provision of long-distance telephony limit the entry of new
competitors. Colombia also prohibits &callback8 services
and excludes fixed and mobile satellite systems.

7. (SBU) As reported in 2004, CRT continues to have
difficulty establishing independence from influence by the
Ministry of Communications. Interconnection and trunk access
policies and guidelines are not formulated and applied
transparently by the regulatory authority because the
Ministry interferes in the policy process. MOC influence
over CRT creates a perception of non-transparency in the
telecommunications sector, which further limits competition
for the provision of local, long distance, and mobile
services. CRT officials told econoff that they have
sufficient independence from the MOC and that the Ministry
relies on them for technical review of proposed regulations
and dispute resolution. However, Avantel officials question
CRT independence and stated that delays in CRT
decision-making are attributable to MOC influence.
WOOD

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