Peru: ls the Renewal of Telefónica's Contract a Good Thing?

On January 21st [es] the Peruvian government, through the Minister of Transportation and Communication (MTC), Carlos Paredes, announced [es] the renewal of the expired cellular phone contracts with Telefónica of Peru (TdP) for a period of 18 years and 10 months. The contracts were for GSM frequency bands of 800 and 1,900 megahertz for Lima and Callao, and for a band of 800 megahertz for the rest of the country, which expired throughout 2011 and 2012.

The government has pointed out [es] that they have “been able to triple the benefits of the negotiation”, with new investments and agreements which Peru demanded of Telefónica with a value of 1.184 billion USD (3.02 billion Nuevo Sols), and that a big part of this investment will be for rural areas, which are not profitable. At this link [es] you can see the terms and conditions proposed by the MTC and accepted by Telefónica of Peru. As for the company, it noted in a statement [es] that “Telefónica finally accepts what is demanded by the MTC in spite of the harsh, unprecedented conditions”.

Protesta contra Telefónica en Arequipa

Protest against Telefónica in Arequipa. Photo from the blog Sin Patrones.

Nevertheless, not everyone is happy. While in the Congress you hear the minister receiving requests for discussion [es] about this “shameful and illegal decision”, associations like CONACUP (National Council of Consumer and User Organizations of Peru) declare [es] that the renegotiation process has not been as transparent as it could have been, and that there should have been an open international public bidding with which perhaps even better conditions would have been obtained.

The DN Consultores blog lists [es] various points with which they do not agree:

¿Cómo podemos sentirnos los peruanos ante tal anuncio? ¿Impresionados? ¿Sorprendidos? ¿Algún peruano bien informado podría, incluso, quizás sentirse algo ofendido en su inteligencia? En cualquier caso, poco probable que exista razones para sentirnos reconfortados, por las siguientes razones:

- Los términos del acuerdo exacerban la evidente concentración en el mercado de telecomunicaciones;
– Derivado de lo anterior, el acuerdo trae abajo la potencia del modelo de la red dorsal como vehículo para impulsar firmemente la banda ancha en el país; y,
– La cifra de 3 mil millones es difícil y onerosa de controlar por el Estado Peruano (o sea, genera un uso de recursos innecesario, que nos cuesta a todos los peruanos que pagamos impuestos)

¿How should we, as Peruvians, feel about such an announcement? Impressed? Surprised? ¿Could a well-informed Peruvian maybe even feel their intelligence being somewhat offended? No matter what, it is unlikely that there are reasons to feel comforted, for the following reasons:

- The terms of the agreement exacerbate the clear concentration in the telecommunications market;
– Coming from the reason above, the agreement lessens the power of the backbone model as a vehicle for firmly propelling broadband in the country; and,
– The figure of 3 billion is difficult and burdensome for the Peruvian State to control (that is, it generates a use of unnecessary resources that costs all of us Peruvians who pay taxes)

On the website of Gato Encerrado, which had been reporting [es] on the meetings of César Alierta, the president of Telefónica, with President Ollanta Humala, while the limit of state taxes on Telefónica of 2.3 million Nuevo Sols is still in judicial dispute, writes the following: [es]

El ministro de Transportes y Comunicaciones, Carlos Paredes, tiró al tacho el informe de Osiptel que valorizó los tres contratos en US$830 millones y en vez de pedir esa cantidad de dinero a Telefónica, se conformó con compromisos de inversión y otros que asumirá la empresa española para renovarles la concesión por 18 años y diez meses.

The Minister of Transportation and Communication, Carlos Paredes, threw out Osiptel's report which valued the three contracts at 830 million USD and instead of asking for that amount of money from Telefónica, he accepted investment and other types of agreements that the Spanish company will take on to renew their authorization for 18 years and ten months.

Pablo Secada, on the Peruvian Institute of Economy's blog in the newspaper Gestión, believes [es] that the contract renewal is a good thing, even though there are some things that are worth discussing:

Entendemos que el paradigma de algunos operadores privados para celular es la tarifa plana nacional para voz e Internet y que algunos operadores globales están ofreciendo tarifa plana mundial. Se nos debe haber pasado leer tal meta en la “lista de logros” de la nota de prensa. Un buen ambiente competitivo casi siempre ofrecerá mejores resultados para los usuarios que cualquier negociación privada del Estado. Será, además, menos vulnerable a críticas populistas e injustificadas de favoritismo.

We understand that the model of some private cell phone operators is the national flat rate for voice and Internet and that some global operators are offering a worldwide flat rate. We must have read that target on the “list of accomplishments” from the press release. A good competitive environment almost always offers better results for users than any private state negotiation. It will also be less vulnerable to populist and unjustified critiques of favoritism.

Imagen de la página de Facebok El Comerrio

Image from El Comerrio's Facebook page

The Facebook page Banda Chancha Telecom reflects [es] on the consequences that this contract renewal will have on the plans for the national fiber optic backbone:

Considerando que el artículo 8 de la Ley 29904, “Ley de promoción de la Banda Ancha y construcción de la Red Dorsal Nacional de Fibra Óptica” respecto de la construcción de la red dorsal señala que “El Estado intervendrá de manera subsidiaria en zonas donde no participa la inversión privada.” Entonces, si Telefónica ya tendría cubierto todo el pais y el proyecto de la red dorsal sólo puede ser subsidiario, ¿qué queda para el futuro proyecto y para el futuro operador neutro? ¿hueso?

Consider that article 8 of Law 29904, “Law of promotion of Broadband and construction of the National Fiber Optic Backbone” regarding the construction of the backbone points out that “The State will intervene secondarily in areas where there is no private investment.” So, if Telefónica would already have covered the whole country and the backbone project is to only be secondary, what is left for the future project and for the future neutral operator? nothing?

On the Ideele Radio blog they have gathered declarations from Congressman Jaime Delgado, who declares [es] that Telefónica should improve the service it offers, and he explains why OSIPTEL [es], the regulating entity of telecommunication companies, recommended the contract renewal in spite of the infinity of existing complaints:

Cuando Osiptel evalúa los niveles de comportamiento de la empresa, el cumplimiento de estándares, obligaciones, solo se consideran las multas y sanciones que han quedado firmes, no las que están judicializadas. Entonces, hay un montón de infracciones judicializadas que no se pudieron contabilizar”, precisó. “Osiptel les pone una multa, la judicializan y se pasan 10 años litigando, la Sunat les pone una multa y se pasan 20 años, porque tienen la capacidad y las espaldas económicas para hacerlo. A una bodeguita la Sunat le cae, y la cierra y punto. Eso nos debe hacer reflexionar. Yo me ratifico en lo que dije, que Telefónica debía pagar sus deudas antes de la renovación”, acotó.

When Osiptel evaluates the company's level of performance, their meeting of standards, obligations, only the fines and penalties that have been confirmed are considered, not the ones that are being brought to trial. So there are a ton of offenses brought to court that could not be counted”, he specified. “Osiptel gives them a fine, they bring them to court and 10 years are spent litigating; the Sunat gives them a fine and they spend 20 years, because they have the ability and the financial strength to do it. A little shop could be taken down by the Sunat, and it closes and that's it. We should reflect on this. I confirm what I said, that Telefónica should pay its debt before the renewal”, he closed.

Likewise, on the Institute of Legal Defense (IDL) blog they spoke [es] with the president of the Consumers and Users Association of Peru (Aspec) [es], who questioned Osiptel's silence, an institution that is far from having the ability to regulate a transnational of Telefónica's magnitude:

No se habló de cómo se va a supervisar toda esta maravillosa oferta anunciada ayer, ¿quién va a ir a supervisar que estos ofrecimientos se cumplan?, ¿se ha hablado acaso de fortalecer al Osiptel, que supuestamente es el regulador?, por último, ¿qué ha dicho el Osiptel porque no hemos escuchado nada?”,

How it will supervise this whole marvelous offer that was announced yesterday has not been talked about. Who is going to go and supervise that these offers are carried out? Has strengthening Osiptel been talked about, since it is supposedly the regulator? Finally, what has Osiptel said, because we have not heard anything”,

Chillinfart in his blog V de Vergüenza mentions that the government has ignored FITEL (its own investment fund for telecommunications) upon accepting the conditions that it gave to Telefónica in this renewal, which include subsidies, and he also gives an opinion [es] about OSIPTEL:

Es un hecho, OSIPTEL debe desaparecer. Esconde la cabeza cuando la gente le consulta por los abusos del duopolio, no entrega información que se le pide (esperemos que responda las cartas sobre el reciente Speedygate), es una coladera por tener infiltrados del duopolio en su administración, da fallos apañadores frente a la evidencia de infracción y hasta delitos por parte de los operadores. Es un órgano que padece de cáncer y debe ser extirpado.

It is a fact, OSIPTEL should disappear. It hides its head when people consult it about abuses of duopoly, it does not give the information that is asked of it (we hope that it responds to the letters about the recent Speedygate [Es]), it is a strainer that keeps infiltrators from duopoly in its administration, it gives fixed sentences when faced with the evidence of violations and even misdemeanors on the part of the operators. It is a body that suffers from cancer and should be eradicated.

And in another post [es] he asks for concrete actions in defense of the rights of the users:

- Saturen las consultas, exijan el informe de ese contrato y que no se quede solo la propaganda del gobierno. Bombardeen a OSIPTEL con correos, de preferencia háganlo de forma presencial para que tengan constancias. El estado no ha tenido ninguna razón para volver secreto ese acuerdo con Telefónica y lo más triste de todo es que ignoró peticiones de entidades como ASPEC para verlo.

- Make more inquires, demand the report on this contract and make sure that we are not left with only government propaganda. Bombard OSIPTEL with mail, preferably do it in person so that there is proof. The state has not had any reason to make this agreement with Telefónica secret and the saddest thing of all is that it ignored petitions [es] from entities like ASPEC to see it.

But not only are there these proposals. The Peruvian faction of Anonymous is organizing [es] various protest activities, among them demonstrations [es] in front of the Telefónica headquarters and #Paperstorms in different places in the country. Furthermore, in Arequipa there have already been protest marches [Es] against Telefónica's contract renewal and in Cusco there will be a demonstration [es] on Tuesday, January 29.

Telefónica does not have a good image in the public opinion, for which this sort of a reaction was to be expected. Also, there was an earlier increase in authorization [es] that was argued over a lot. And if we add to this the dark stories [Es] that are told about the process of privatization and about the subcontracting that Telefónica does, we have a panorama of secrecy that the majority of Peruvians are concerned about.

Post originally published in the blog Globalizado [es].
First image taken from the blog Sin Patrones [es].
Second image taken from the Facebook page El Comerrio [es].

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