Argentina's debt with telcos: full convergence and spectrum bidding

Thursday, March 29, 2018

Telecommunications is one of the main investment engines in Argentina, which is why it is necessary for the sector to have a legal framework that encourages it, Miguel de Godoy, president of local telecommunications regulator Enacom, told BNamericas. The watchdog aims to lead the process of technological convergence and create stable market conditions in the country.

However, Enacom faces enormous challenges to get the industry to dissociate itself from the political affinities of the governments of the day and operate under a technical framework that facilitates investment and free competition.

On January 1, convergence in telecommunications was enabled, which gave companies free access to offer quadruple play. However, the convergence was defective, since two of the main competitors cannot offer satellite television for now.

Also pending is the amount and the date of spectrum that the state will auction for mobile communications, which will be defined by means of a bill that the executive power will send to congress. If approved, it will pave the way for bidding on the spectrum returned by state telecoms company Arsat, and enable Claro and Movistar to offer satellite television and define the sharing of infrastructure.

But the challenges for this year are not just those. In an interview with BNamericas, de Godoy spoke about the proposal to eliminate roaming charges among countries in the region, the deployment of broadband in remote areas and the interest expressed by towercos in entering the market.

BNamericas: Telecoms convergence began in January, but there have been no offers of products with these characteristics. What happened?

De Godoy: We really have to finish the process, because operators have an explicit prohibition to offer satellite television, and that can only be reversed by a presidential decree, approved by congress or by a law. That could give us full convergence.

Today there could be convergence because operators can offer cable television. What happens is that on the one hand we have a large operator that has cable and, on the other, there's no time for the other operators to catch up. So satellite would be a solution.

Hopefully it will happen as soon as possible. I think that the ministry of modernization is preparing a four-article law that includes provision of spectrum, satellite television and infrastructure sharing in order to make convergence a reality.

BNamericas: Why the delay in enabling incumbent operators to offer satellite television?

De Godoy: At first it had been thought out as a presidential decree, but it didn't turn out to be politically feasible. In that context, it was delayed, and the thinking has changed to doing it soon through this short bill. 

BNamericas: When would this be?

De Godoy: We hope to send it as soon as possible. The legislative branch will take its time, but we hope it will come out as soon as possible to provide full convergence.

BNamericas: Regarding the Cablevisión-Telecom Argentina merger, are you not worried about the creation of a dominant operator that distorts the market?

De Godoy: The merger still lacks the defense of competition stage. After that we'll be able to say there's a new operator. And that's why we're trying to accelerate the processes of satellite television to have more convergence. What we couldn't do was stop the growth of a company that had submitted everything to do [a merger].

BNamericas: A new spectrum tender for mobile communications is coming. What needs to be finalized?

De Godoy: The tender starts with the spectrum that Arsat had [30MHz] and another company that returned it to the state [60MHz that Arlink acquired in the last tender]. Even now the part of the spectrum that Telecom Argentina has to return [80MHz from its mobile division, Personal] is missing.

BNamericas: Do you have an estimate of how much you are going to raise with those 170MHz?

De Godoy: You have to bear in mind that the first tender will be 60-90MHz, and then there will be a second one. It will not be all together. We have to appraise the market, even when we make it available. It can be between US$700mn and US$900mn.

BNamericas: What bands will be offered?

De Godoy: We have 700MHz, 900MHz and AWS [paired frequency of 1700MHz with 2100MHz].

BNamericas: You also need to raise the spectrum caps...

De Godoy: Sure, because one company is at the limit [Personal] and the others are almost at the limit [Claro and Movistar].

BNamericas: Is there a possibility that a new stakeholder will be present?

De Godoy: One always launches the tender with a new operator in mind You have to see if there is a new interested party, which is difficult. The fundamental thing is that there are no countries where there are more than three or four operators, except for a few exceptions such as Poland. And Argentina would not be the exception.

BNamericas: Argentina became the standard bearer for the elimination of roaming in the region, following the agreement signed at the recent assembly of the Inter-American Telecommunications Commission [Citel] in Buenos Aires. What does the agreement consist of?

De Godoy: What we proposed was to put it on the agenda because it is progressing gradually between the countries. We have already signed a roaming agreement with Chile and we are close to doing it with Brazil. Taking advantage of the meeting in Buenos Aires, we proposed it as a regional issue, and we continue to work on that and our technical teams are progressing.

We should keep signing bilateral agreements, but we think that if we're going to work under the umbrella of Citel, it's better that we have a protocol to move all together. The tentative date [of the agreement] is 2020.

BNamericas: Is there willingness on the part of the operators?

De Godoy: First, there must be willingness from the countries and then we're going to ask the operators on what terms we should proceed. There will be a bit of back and forth about the terms. There are even operators that already have it [like Claro], but you have to keep watching, because there are also operators that are not regional and, obviously, do not.

BNamericas: If operators are interested, could the 2020 date be brought forward?

De Godoy: I don't believe so. We'll have to see how it is carried out and consider the operators that are not regional.

BNamericas: What is the government doing to stimulate investment in the sector?

De Godoy: Let's start from the base that just two companies, Cablevisión-Telecom Argentina and Telefónica, have announced investments for US$7bn. We had the entrance of the towercos with an investment of US$1bn and Viacom with US$358mn [it bought the Telefé television channel from Telefónica].

Let's say that the sector is becoming more dynamic. I think it's one of the most dynamic in terms of investments. Definitely the regulatory frameworks are those that lead the sector to invest. We know that it is a sector that reinvests according to profits. So you have to have the legal and regulatory framework for them to do so.

BNamericas: Which towercos are you referring to?

De Godoy: American Tower was one of those that came to the country. We were at the Mobile World Congress in Barcelona and there were at least three towercos that showed interest in coming. I try to refrain from naming them, but they have expressed their interest in coming to the country. We're even organizing a roundtable to discuss the issue of pollution and antennas, and they want to be at the table.

BNamericas: How is the MVNO landscape?

De Godoy: We have issued 10 to 12 licenses, and some of them have already signed a contract with the operators, so we hope they will start working as soon as possible. The majority are in the interior of the country.

BNamericas: Has there been progress in regulating OTTs like Netflix?

De Godoy: I don't want to reveal anything here, but that should be considered in the law on convergence because it merits regulation on the subject. But nobody in the world has found the definitive solution to this. The most advanced are European countries. I don't want to speak for the legislators, because I'm the one who enforces the norms, but these [OTTs] cannot go without some type of regulation.

BNamericas: What's happening with Uber and how is Enacom involved?

De Godoy: What happened particularly with Uber was that the courts of Buenos Aires city asked Enacom to block the app, but we don't have the power to block content. We cannot turn it off, because it's not within our power. But we have helped the courts and we have given the names of each of the service operators.

BNamericas: What is being done with the project to take the internet to remote areas?

De Godoy: We have a trust fund with 1% of what the telephone companies produce and what we have done is a joint project with Arsat to activate 80 nodes. We've invested around 2.2bn pesos [US$109mn] there. This Círculo de Fibra [fiber circle] covers a 20km-perimeter around the towns and reaches the highways.

Now we're applying small grants, or non-reimbursable credits, so that cooperatives or municipalities can connect some 500,000 people in places where it's often not profitable for companies to be there. And well, the state must take charge.

I always said when I was young that equality was marked by health and education; now it's connectivity. The places we don't reach with connection are marginalized. But the state has an obligation to reach out, even where operators are present. For example, in Buenos Aires, one mega costs from US$15 to US$25, while in La Quiaca [in northernmost Jujuy province] it costs US$200, which is not fair. The state has the obligation to lower prices.

About the company

Ente Nacional de Comunicaciones (Enacom) is an Argentinean autonomous and decentralized entity created in 2015 to lead the technological convergence process in Argentina and to create stable market conditions, assuring access to internet, mobile and fixed telephony, and radio and television for all Argentineans. Enacom, with headquarters in Buenos Aires and offices in each Province, operates under the national Ministry for the Modernization of the Nation, and it is associated to the South American Council for Infrastructure and Planning (COSIPLAN, in Spanish), the Internet Governance Forum (IGF), the Internet Corporation for Assigned Names and Numbers (ICANN), and the Latin America & Caribbean Network Information Centre (LACNIC).