ICT Sector Restructuring and Liberalization;
Interconnection Policies and Procedures
Client: Comisión Nacional de Telecomunicaciones (Conatel)
Global Resources has served the Comisión Nacional de Telecomunicaciones (Conatel) three times, assisting the telecommunications regulator by creating project scopes, task deliverables, contractor qualifications, budgets and related project parameters for specific activities to help modernize Venezuela’ ICT institutional and information infrastructure.
Regulatory Analysis / Spectrum Management
Conatel initially sought assistance for developing an automated system for radio spectrum administration and management. At the time, specifications were already developed for a tender, and we reviewed the RFP in its entirety, to ensure it was thorough relative to global best practices, and consistent and comprehensive as a major bidding document.
Two years later, the Venezuelan Government established a new mission for Conatel: to ensure a non-partial, expedient opening of the telecommunications sector. The Venezuelan regulator now needed help developing a National Development Plan with special attention to the ICT’s sector restructuring and liberalization.
We began our client engagement in the midst of this transition. Already the newly appointed Minister of Transportation and Communications and the Director of Conatel had begun work to integrate the Ministry of Transportation and Communications and the Ministry of Urban Development into one new entity (Ministry). Simultaneously, they were restructuring Conatel, reintroducing telecommunications legislation, negotiating with the basic telephone company to advance the expiration date of their monopoly, and reopening a PCS bid. Resources were limited, and institutional, operational and planning issues were complex. Thus, our initial task was to consider the most critical regulatory issues for the next five or ten years.
Global Resources worked with Conatel and the US Foreign Commercial Service / US Embassy (Caracas) to assess the sector and regulatory context (network, teledensity / access challenges, traffic patterns / growth forecasts, funding, service providers, current and anticipated competition, and trade barriers, among others) and identified eight priority areas for action:
- Developing regulatory models suited to a liberalizing market
- Opening the sector to competition
- Considering Interconnection Models and Their Impact on Operators
- Implementing Universal Services
- Creating of a Model for Number Portability
- Developing Telecommunications Applications for Times of Mass Emergency and Disaster
- Reviewing Telecommunications and Corporate Strategies
- Research on Global Tendencies with Regard to Rural and Urban Trends for the Next Few Years with Special Emphasis on Venezuela
We then structured and obtained US grant funding for an assistance package that assisted Conatel as they defined and implemented new regulatory procedures, while addressing legal, financial, sector, and business development challenges. The assistance funds and activities supported the sector’s commercial development, and the nation’s economic and social goals.
We also ensured that Conatel designated a project leader, so that technical assistance team could work “side by side” with Conatel staff to develop the National Development Plan. This was vital for ensuring knowledge transfers took place, and to ensure that Venezuelan’s unique planning considerations always remained at the forefront. We also ensured that the assistance project had clear milestones and deliverables, ensuring an “action” versus “research” focus. We concluded our work on this second Conatel project by designing the project budget, contractor qualifications and tender.
ICT Sector Restructuring and Liberalization
Within a few years, the National Development Plan was in place. Now, one of the elements of that plan needed more focus. The ICT sector was opening, numerous players were offering services, and interconnection – the financial, legal and technical model that allows multiple network suppliers to link their technical pathways into one seamless network – posed the most immediate priority and challenge for Conatel. With their positive track record moving forward in related areas of sector modernization and liberalization, US funding agencies were interested in potentially supporting this request.
Once again, Global Resources was called upon to assess Conatel’s needs and to create an action plan. We evaluated the new National Development Plan and considered the pros and cons of each recommendation, with a particular focus on the unique qualities of doing business in Venezuela. We reviewed global best practices in interconnection, ensuring we compared the maturity of other economies and networks to Venezuela’s current ICT sector’s conditions. As new and varied network technologies proliferated, the need for cost-effective, technically-sound interconnection policies and procedures between carriers had become paramount, and we wanted to ensure that the best of “recent lessons learned” could be applied to Conatel’s request and needs.
We also reviewed the ICT sector’s recent history; Venezuela had indeed taken major steps in the Latin American region by passing needed legislation, restructuring the primary carrier, and conducting auctions and awarding licenses to those companies interested in competing for telecommunications business. Title VII of the New Telecommunications Law promulgated in June 2000 ensured that “Among other duties, telecommunications network operators are obligated to interconnect with other public networks with the objective of establishing interoperable and continuous communications among its users. Interconnection shall be accomplished in accordance with the principles of neutrality, good faith, non-discrimination and equal access among operators.” It was clear that the timing and foundation were in place for this intensive interconnection project.
Interconnection Policies and Procedures
Following our legal, economic and financial due diligence, we assessed the preliminary interconnection project outline that Conatel had shared, including its draft terms of reference and staffing plan. We ensured that the project would focus on critical areas such as designing a “bottom-up” long-range incremental cost model, applying routing factors to determine percentage of use of network components, reviewing the network architecture of each network operator in the Venezuelan market and related analytic areas such as collecting data on prices for interconnection equipment, including related operating costs and any other relevant inherent interconnection costs. We added project elements such as a needed project timeline and budget, set of deliverables, and contractor qualifications. Finally, we also ensured that Conatel would have the needed staff professionals available to support and integrate the interconnection advisor’s work, e.g. the engineers, lawyers and economists that would comprise the Conatel Interconnection Team.
As Conatel was the sole organization responsible for regulating competition in the industry including price setting and rate rebalancing, and coordinating the expansion, modernization and improvement of the telecommunications infrastructure, the Commission was the appropriate organization to receive technical assistance and to plan and manage interconnection cost modeling and implementation. It was with this analysis – and our recommendations and due diligence – that Conatel received funding for its interconnection technical assistance program.
Le agradecemos a Conatel, a la Agencia de Comercio y Desarrollo de los Estados Unidos (USTDA por sus siglas en inglés) y al Servicio de Comercio del Extranjero del mismo país por la oportunidad de auxiliar a Conatel y a la República de Venezuela con actividades basadas en Tecnologías de Información y Comunicación (ICT por sus siglas en inglés) críticas para el desarrollo económico y social del país.