Colombia hands out long distance licences

From 1998 until 2007, Colombia’s long-distance services was an oligopoly with only three operators: TelefÃ³nica, EPM-UNE, and ETB. As a result, long distance call prices remained high, which among other things contributed to an active black market of VoIP services. In June 2007, EPM-UNE complained that unlicensed VoIP operators and illegal routing of long distance traffic was costing legitimate carriers up to US$100 million annually. The company claimed that since 2000, an average of 44.8% of all long distance traffic had been lost by the country’s three licensed long-distance operators.

At the time, reported Domestic Long Distance (DLD) traffic figures showed an average drop of around 19% annually, from 3.2 billion minutes in 2003 to 1.7 minutes in 2006. This was not only the result of excessively high prices and VoIP activity, but also of fixed-mobile substitution. In 2007, however, this downward trend was reversed; DLD traffic went up by 16%, probably due to the special offers launched by the three incumbents in preparation for the opening of the long distance market.

In July 2007, Colombia’s regulator, CRT, issued a resolution that opened up the long-distance market and established a multicarrier numbering system for new operators. Companies fulfilling concession requirements were allocated a three-digit code or prefix, while the three existing operators, TelefÃ³nica Telecom, EPM-UNE, and ETB, continued to use their existing one-digit codes. The CRT also issued a resolution enforcing a preselection system by October 2008, to coexist with the multicarrier system. At the same time, the Colombian government issued a Convergence Decree that set the stage for a single concession licence for both long distance telephony and Internet access services.

Between July 2007 and June 2008, CRT reported that 21 companies received licences to provide long distance telephony. Mexico’s Telmex and Infracel, a unit of AmÃ©rica MÃ³vil’s Comcel, were among the first to receive a licence, in November 2007. Millicom’s Colombia MÃ³vil-Tigo was granted a licence in May 2008 and launched long distance services the following month.

Predictably, despite the efforts of CRT to promote competition, a number of licensees have complained that incumbent operators are creating impossible conditions for them, such as:

Excessively high interconnection tariffs, which would make any competing business unprofitable;
Conditions aimed at complicating and delaying interconnection agreements.

Moreover, the technology platform required for interconnection is Signalling System 7 (SS7), the traditional signalling protocol of public switched telephone networks, while new operators would prefer to use Session Initiation Protocol (SIP), a signalling protocol commonly used for VoIP telephony and requiring cheaper infrastructure.