Information Technology in Peru























Telecommunications Infrastructure

Peru's telecommunication infrastructure has undergone radical changes since the early 1990s. The majority of these changes were driven by two parallel factors: technological advances and telecommunications liberalization. Because of these factors, as well as the massive room for business growth, the telecommunications sector in Peru is expected to grow at a healthy rate for the next several years.

Communications Snapshot(1), (2), (3), (4)

Telephone - main lines 1,719,006
Monthly residential rate (1998) Automatic: $12.71
Manual: $5.79
Telephone - mobile 1,170,518
Domestic telephone system Nationwide microwave radio relay system and a domestic satellite system with 12 earth stations
International telephone system Two Intelsat (Atlantic Ocean) satellite earth stations; Pan American submarine cable
Radio broadcast stations (1999) AM: 472
FM: 198
Shortwave: 189
Radios (1997) 6,650,000
Television broadcast stations (1997) 13, plus 112 repeaters
Televisions (1997) 3,060,000
Internet Service Providers 58

Teledensity

Nationally, the number of telephone lines in service has increased by over 270% between December 1990 and June 2000, with a large portion of that growth occurring outside the metropolitan Lima region(5). However, the number of telephone lines per 100 people has not kept up with population growth. Peru had a teledensity of 2.6 in 1990, which rose to 6.8 by 1997, but it has dropped over the past few years, down to 6.3 in 2000 (estimate based on official count of fixed telephone lines and U.S. CIA estimate of population). However, if measured by household, teledensity has increased substantially, from 17% in 1993 to 49% in 1999. The most important increases in household teledensity have occurred not in the upper quartile of the socioeconomic ladder (which saw an increase from 92% to 99%), but in the two lower quartiles. The teledensity increase in the third quartile was from 10% to 62%, and in the fourth quartile, from 1% to 21%(6). These teledensity increases in the lower strata of Peru's socioeconomic composition indicate that access to telecommunication services is rapidly improving for the urban poor and rural Peruvians.

Mobile and Public Telephones

Peru has also seen explosive growth in the use of mobile and public telephones. While in December 1990, only 2,000 mobile telephones were in use, by June 2000, that number had increased to 1,170,518, an increase of over 58,000%. The June 2000 figure for mobile telephone subscribers lags behind the number of fixed telephone lines by less than 600,000. Another point to note about Peruvian mobile telephone use is that only 22% is in the metropolitan Lima area. (7) The prevailing billing regime is Calling Party Pays(8).

Similarly, public telephone availability has grown from 13,727 in December 1994 to 77,156 in June 2000, an increase of 562%. Like the mobile telephone distribution, the majority of public telephone growth occurred outside of Lima.(9) These rural areas have been divided into six regions, each of which has been given in concession to the international bidder with the lowest subsidy.

Trunk Lines

The rapid growth in Peruvian telecommunications services was, and is, dependent on a similar increase in the number of trunk lines in the country. In December 1997, Peru had 8,461 trunk lines, all of which were analog. The number of analog trunks increased slightly in 1998, and digital trunks began to appear. By 1999, the number of analog trunks actually shrunk, and the number of digital trunks reached nearly 20,000. By September 2000 there were 63,276 trunk lines in Peru, and less than 10,000 were analog.(10) Obviously telecommunications providers in Peru have realized the benefits of digital technology over analog and are exploiting those benefits as fully as possible. However, the digital trunking is focused primarily on the Lima area, with analog expansion continuing in rural areas to a greater degree.

Value-Added Services

As of November 2000, Peru has 168 registered providers of value-added telecommunications services. These services include paging, fax, email, data processing, consulting and internet access. Among the service providers are several multinational corporations, including Reuters, IBM, Telefónica, Global One, DHL, Skytel, AT&T, Nextel and Worldcom as well as the Peruvian Scientific Network.(11)

Concessions

The privatization of Peru's telecommunications system, which began in 1994, has led to a rapid increase in the number of companies providing various telecommunication services. The Ministry of Transportation, Communication, Housing and Construction provided the following figures as of December 2000:(12)

Public Telecommunications Services Concessions Granted Businesses
Long Distance Carrier (International or Domestic) 47 47
Fixed Telephone 6 6
Local Carrier 20 19
Data Transmission 1 1
Mobile Telephone 4 3
Satellite Telephone 3 3
Cable 109 86
Trunking 8 6
Public Telephone 5 5
Directory Service 32 29
Totals 235 204

Major Players

There are several major players in the Peruvian telecommunications market: Telefónica of Peru, the Peruvian Scientific Network (known by its Spanish initials, RCP) and the Peruvian government. While the amount of direct competition between these three actors varies, each is extremely important and powerful in their own way. Telefónica, the Spanish telecommunications company, purchased the state-owned telecommunications system in 1994 and renamed it Telefónica of Peru. As described in liberalization and deregulation, Telefónica received a five-year period of exclusivity in which it improved and expanded its network. As of 1998, Telefónica was the most profitable company in Peru. Most of its income is from fixed line service, but it cable television and mobile telephone services are both growing rapidly.

Tele2000 was the second largest telecommunications company in Peru as of 1998. It provides local mobile cellular telephone service, cable television and paging. In 1996, BellSouth purchased a controlling interest in Tele2000.(13)

RCP is also an important actor in the telecommunications market due to its status as the first, and still largest, internet service provider in Peru. RCP engaged in a legal dispute with Telefónica over RCP's right to provide services such as internet telephony to its subscribers. RCP accused Telefónica of introducing technical and legal obstacles to RCP because Telefónica's management did not believe that RCP had the legal right to provide a competing telephony service. In late 1999, RCP was vindicated by a ruling by OSPITEL, Peru's telecommunications regulator, which ordered Telefónica to provide unobstructed network access to RCP as they had been before the advent of internet telephony.(14) More information about RCP can be found in internet diffusion.

Of course, simply by virtue of the fairly recent privatization of telecommunications, the Peruvian government is still a major player in the market. The major government players are the Ministry of Transportation, Communication, Housing and Construction (MTC) and the Supervising Agency for Telecommunications Private Sector Investment (OSIPTEL). The MTC represents Peru in international organizations, grants concessions, approves the national telecommunications plan and regulates equipment standards, among other duties. OSIPTEL was created to assure free competition during and after the privatization of the telecommunications network.

Simón Bolivar Andean Satellite System

Andean Community Commission Decisions 395, 479 and 480 established and complemented the creation of an Andean satellite system, to be known as the Simón Bolivar Andean Satellite System. Specifically, Decision 395 established the framework for the system in 1996, Decision 479 allowed enterprises to establish, operate and develop satellite systems indirectly, and Decision 480 approved the application of Andesat, SA EMA to operate the system indrectly. This approval included creation of Bolivarsat, a consortium led by French firm Alcatel Spacecom. Andesat expects the satellite to be in orbit and operating by the third quarter of 2003.(15)

Last update: December 19, 2000 by Jeffrey S. Bernstein.