Gonzalo Ruiz, President, OSIPTEL: Interview

Interview: Gonzalo Ruiz

What impact will the ban on locked mobile phones have in terms of operator mobility among users?

GONZALO RUIZ: The first important thing to underline here is the fact that the Peruvian telecoms landscape is unique when compared to neighbouring countries. The local market is more concentrated, with four operators controlling similar market shares.

According to our diagnosis, the barriers to competition in the mobile telecoms market can be classified as contractual, technical or regulatory. Contractual barriers consist mainly of expensive penalties to contract termination. We addressed this problem by establishing a ceiling to these penalties. Technological barriers were related to the SIM lock system, which restricted the consumer from using the same mobile phone with an alternative mobile operator. Regulatory barriers were related to long and expensive portability procedures. All these issues have been tackled by the new regulation enforced in 2014. As a result, portability has increased 10-fold and the outlook for market growth and competition is optimistic.

As mobile virtual network operators enter the market, what steps are needed to ensure that the necessary infrastructure is put in place?

RUIZ: Peru is a country in which geographic and demographic factors make the deployment of infrastructure difficult and expensive. In 2015, the government approved Law 29022, with the aim of reducing barriers to the deployment of infrastructure imposed by certain municipalities. One critical feature of this new regulation consists of the harmonisation of municipal requirements for the development of infrastructure. This avoids having different sets of rules for each district, which would add unnecessary complexity to the regulatory framework.

Another feature is the creation of an automatic approval regime for new projects, which includes a wide range of measures to accelerate procedures for starting infrastructure installation works. Some of these measures consist of putting more emphasis on ex post verification of some of the requisites.

Complementarily, OSIPTEL has recently approved a set of regulations that provide incentives to infrastructure investment. OSIPTEL has in addition developed rules in order to regulate and apply proper infrastucture-sharing regimes among telecoms and other utility companies. We think that the auction of the 700-MHz band, which will be implemented as a complementary measure to the National Fibre Optical Backbone Network (Red Dorsal Nacional de Fibra Optica, RDNFO), will allow far-away communities access to high-speed internet.

What opportunities and challenges have emerged in developing telecoms infrastructure?

RUIZ: The auction of the 700-MHz band is one of the main opportunities. The mobile segment, though very competitive, is also very attractive. The broadband backbone network, whose development is being led by the RDNFO, has acted as a magnet for investment. In 2014, a year of economic deceleration, investment surpassed $1bn in the telecoms sector alone. I strongly believe that we will continue to see growth rates in foreign direct investment in the coming years.

How can operators ensure healthy competition while avoiding price wars?

RUIZ: In Peru we are destroying the myth that too much competition reduces investment. In 2014 we saw an increase in investment and a jump in the number of users in the mobile market from around 30m to 31.8m. This happened at the same time that two new players entered the market. Competition is not only generating lower prices and enhancing the overall quality of the market; it is also creating high-quality jobs. The experience in Peru shows that a virtuous circle can exist between competition and investment.