Information Technology in Peru

Liberalization and Deregulation

Peru has made significant progress in privatization and liberalization over the past several years. In 1994, a new Telecommunications Law was passed which opened the telecommunications market to competition, but protected the incumbent operator for a period of five years. The government created OSIPTEL, an office which is overseeing the privatization of the previously government-operated telephone systems and monitoring the terms of any agreements. OSIPTEL initially set prices, but has since limited itself to only setting prices for low-cost telephony for the disadvantaged. As a member of regional organizations, Peru also orients its liberalization and deregulation activities toward the goals set by those organziations.

Privatization

The incumbent operator was Telefónica of Peru, which was formed when Telefónica of Spain purchased a controlling stake in the newly merged ENTEL and CPT, the two government-operated telephone monopolies. The government alleged that the five year period of protection was necessary for the new owner of the telephone monopolies to sufficiently recover their investment and fulfill their obligation to expand rural service before facing competition. While the government was challenged over the necessity of this provision, it was nonetheless introduced.

The government followed through with its commitment to open the telecommunications market to competition after this period of exclusivity. By the beginning of 2000, Peru had 30 authorized long-distance carriers and five fixed-line operators. The main competitors to Telefónica in the long-distance market are BellSouth and FirstCom (which has since been purchased by AT&T and joined with AT&T's other Latin American holdings), which will become full competitors to Telefónica once the interconnection agreements signed in 1999 are fully implemented. Interconnection agreements between Telefónica and other carriers will provide expanded, competitive rural access to telephony.⁽¹⁶⁾

The Peruvian government, specifically the Ministry of Communication and OSIPTEL have been active in approving technologies and pricing of interconnection charges to the Telefónica network. The government has removed barriers to foreign direct investment, even by Chile, whose interest in the Peruvian telephone market was strongly opposed by the Peruvian military in the early stages of privatization. The government has also to date refrained from restricting the use of different technologies to deliver telecommunication services. Thus, telephony can be delivered over cable television cables or any other technology that a provider wishes to use.

Regional Plans

As a member of CITEL, Peru worked to adhere to the regional goals set out by that organization. In its 1996 Plan of Action for the Americas, CITEL endorsed regulatory reform objectives based on those developed at the 1994 Summit of the Americas. Those objectives were:

• putting in place flexible regulatory frameworks that can easily adapt to rapid change in technology and innovation in telecommunications markets and that facilitate implementation of a Global Information Infrastructure
• encouraging fair competition among providers of services and internconnection, according to the principles of transparency and nondiscrimination
• promoting flexible regulatory frameworks that allow such competition and regulate in an impartial manner matters related to interconnection and, where applicable, numbering plans
• promoting policies that include interconnection safeguards, cost-oriented rates, equitable access charges, and account settlement rates that stimulate demand for telecommunications services and foster competition⁽¹⁷⁾

Andean Community Commitments

As a member of the Andean Community (a subregional organization made up of Peru, Ecuador, Bolivia, Venezuela and several regional institutions), Peru has taken steps with its fellow members to deregulate all telecommunication services, with the exception of sound radio and television broadcasting by January 1, 2002 as part of the effort to create a free trade area.

The Community set up an Action Program for its 2000-2001 telecommunications activities, which include:

• Approval of Community provisions on electronic commerce
• Harmonization of requirements and procedures for granting certificates of eligibility and common telecommunication service definitions
• Establishment of common provisions for the interlinkage of Member Countries
• Harmonization of the use of the radioelectric spectrum, numbering and numerical portability
• Creation of centers of excellence in the Andean Community
• Allocation of satellite radio broadcasting and satellite fixed-service plans
• Approval of a program to promote the global information society

• Preparation of the Strategic Andean telecommunication development plan
• Identification of Community projects for implementation using the satellite capacity of the Simón Bolivar System (described in telecommunications infrastructure.)
• Study of IMT-2000 implementation in the Andean region
• Revision of CAATEL regulations in order to bring them into line with the Andean Community's new organizational structure⁽¹⁸⁾

Trade Liberalization

Peru's pro-competition stance extends to its import regulations. Peru requires import licenses for foreign businesses, but these are granted in a matter of days. There are no significant customs barriers which protect domestic businesses, nor is there any discriminatory tax regime of note.⁽¹⁹⁾ Thus, Peru's IT markets are essentially wide open to both domestic and international businesses.