Telecoms liberalization down the line
HAVING SUCCESSFULLY STREAMLINED ITS TELECOMS LEGISLATION, ECUADOR IS NOW LOOKING TO OPEN THE SECTOR TO PRIVATE OPERATORS

The Ecuadorian government is currently finalizing opening of the telecoms market. The predominantly state-run system is looking to attract private companies willing to invest in the development of a modern telecoms network in order to encourage greater efficiency and progress.
Presently organized by Conatel, the National Telecommunications Council, and Senatel, the National Telecommunications Secretariat, Ecuador boasts three public phone companies. Two of these are state-owned–
Andinatel, which covers the mountainous Andean zone, and Pacifictel, which covers the Pacific coast–while the third, Etapa, is municipal and operates in the country’s third largest city, Cuenca. Together they manage 1.3 million fixed lines.

Ecuador aims to grant three 15-year concessions for local wireless networks to help develop a telecommunication infrastructure in a country where less than 10% of the population has a phone line. Existing mobile operators are Otecel, a subsidiary of the U.S. company Bellsouth, and Conecel, operating in conjunction with Mexico’s Telmex. The Andean nation, which tried to sell its state-owned telephone companies twice in the 1990s, hopes this time to open the sector by inviting private companies to compete with state industries, pushing the public companies toward greater efficiency and competitiveness.

In an exclusive interview, the Director of Senatel, Carlos del Pozo Cazar, outlines his vision of Ecuador’s telecommunications future.

The telecoms sector is opening up to new operators. What opportunities does this bring for investors?
First of all, companies opening up here will be looking for a valid legal framework to guarantee that their business will function properly and is profitable. For now, our penetration rate is one of the lowest of all Latin America. There are practically no public phones. We want to raise the present fixed line penetration rate from 10% fixed lines to 15% or 20%. As for mobile telephony, the two private firms who at are operating at present manage 797,000 cellular lines. Wireless technology and internet clearly offer many opportunities.

Ecuador’s two main operators, Andinatel and Pacifictel, are now looking for strategic alliances. Past attempts to privatize them failed and Ecuador remains largely unknown to the rest of the world. How are you spreading the word on the opportunities the sector offers?
By creating publicity campaigns, attending international congresses and contacting American and European companies. We are also using e-mail promotions to embassies and foreign political representatives. International institutions such as the IMF and the IDB (Inter-American Development Bank) are also helping us.

What is the relationship between Senatel and Conatel?
It’s one and the same family. Conatel is the Directive Council and Senatel has an executive function. Employees working for both institutions have one clear objective: to open up the telecommunications market. We have speeded up the bureaucratic process. Taking out a license used to take 18 months, and now we can do it in 30 or 40 days.

With more investors, market competition will be tougher. Is this healthy?
I’m completely in favor of the open market. The more investors the better. To attract them, we must make tariffs attractive. International calls are being lowered so businessmen can communicate worldwide at a reasonable cost. After 2003 we’ll look again at the basic rate.

What about cooperation with the U.S. market?
We provide the system and would like them to be of U.S. standard. U.S. investors are accordingly welcome to bring their own technology.