January 18, 2013


Colombia: Regulator takes steps to increase competition

According to Business News Americas, asymmetric regulatory measures have been implemented to curb the dominance of Colombia's largest mobile operator, Claro.

Carlos Pablo Marquez, a director for telecommunications regulator CRC, said that the regulatory initiative includes a measure to establish asymmetric interconnection rates, where other operators will pay lower fees to terminate calls on Claro's network. These benefits are expected to be transferred to mobile users either through lower tariffs or investment in new infrastructure.

A second measure prohibits Claro from charging differential on-net and off-net rates. Other operators are still allowed to charge different rates for on-net and off-net calls, but the market conditions have prevented them from doing so, Marquez added. It is hoped that the regulations will lead to decreased tariffs from all operators. The new regulations will be in effect for two years, but could be extended depending on market conditions.

According to Marquez, there are no regulations prohibiting market dominance, but the CRC is concerned about Claro's potential to abuse its market position following a number of ongoing investigations of the operator by trade regulator SIC. The new rules were expected before the end of 2012, but were delayed as Claro filed an appeal and waited for the maximum period allowable to recognize the measures.

A major demand of other operators was for measures to be taken against Claro before the release of bidding rules for the 4G spectrum auction.

Intelecon comment: Colombia's new asymmetric interconnection rates represent an effective tariff structure that can be adopted by a regulatory authority for a variety of reasons. For instance, asymmetric charges for rural areas have been explored in depth by Intelecon's Andrew Dymond in a February 2004 World Bank Working Paper, "Telecommunication Challenges in Developing Countries: Asymmetric Interconnection Charges for Rural Areas." The paper investigates an approach to rural telecom investment that bridges much of the rural access gap by revising the interconnection regime, such that operators serving high cost areas would receive higher termination fees. This rural asymmetric regime relies on geographically de-averaged termination charges to reflect cost differences between urban and rural networks.