Regulatory changes aim to push mobile operators to do better

The regulatory environment for telecommunications has become increasingly stringent over recent years, as authorities increase their efforts to create a more levelled competitive landscape. As mobile telecommunications services also expand rapidly, issues relating to pricing, competition and quality have become centrally linked to economic policy and the government’s goal on greater connectivity. The issues have also become part of the political debate. In February 2014 Colombia’s attorney general asked the three entities that can shape the sector’s regulatory framework – the Ministry of Information Technology and Communications ( Ministerio de las Tecnologías de la Información y las Comunicaciones, Mintic), the Commission for the Regulation of Communications (Comisión de Regulación de Comunicaciones, CRC) and the Superintendency of Industry and Commerce (Superintendencia de Industria y Comercio, SIC) – to focus on resolving problems in mobile telecommunications service quality.

Imposing Fines

Regulatory changes have increased the intervention of regulators. The beginning of 2014 saw the implementation of a new law by the CRC which forces mobile operators to compensate clients for lost minutes due to bad service. For the first fourth months of 2014 operators returned the equivalent of COP21bn ($10.5m), which amounted to 138m minutes. However, it can be difficult to determine if the failure of mobile service was the cause for cut communications. Although the law is clear, there are some loopholes. “Say a user turns off the phone instead of finishing a call through hanging up, or that he goes into an elevator, these can be counted as a call that fell through, and it falls on the operator to compensate those minutes,” Carlo Villamil, category manager at Tigo, told OBG.

Another controversial issue has arisen over customer support services, which mobile operators are expected to provide in specific time windows. Sector laws require operators to resolve customer problems through customer service hotlines in 15 minutes. “This is sometimes not enough time to solve a specific problem, so service provision is affected because of the stringent laws,” said Villamil. At the beginning of 2014 SIC announced it had started to investigate six operators regarding potential customer service delays. In some cases, the fines do not emanate from telecommunications regulatory authorities themselves. In April 2014 SIC fined several operators for charging mobile users for content and services without having their consent. The superintendency based its decision on the market rules that stipulate operators can send only certain messages or content offers when authorised by clients through a written text message. This resulted in fines of COP1.23bn ($615m) (Claro), a COP700m ($350m) (Movistar) and COP500m ($250m) (Tigo).

Additional Obligations

Much impetus has also come from the recent renovation of operating licences. Taking advantage of the fact that the two major players in the sector, Claro, and Movistar, had reached the end of their 10-year operating licences, Mintic added more stringent service quality requirements as conditions to renew their spectrum-use permission. The two operators are now expected to present plans to improve service in the areas of the country where mobile phone calls have had the most problems.

Service quality will remain a key aspect in the growth of mobile telecommunications. Increased transparency would eliminate doubts over when fines should or should not be used. In its 2014 report covering telecommunications regulation policy in Colombia, the OECD commended fining operators as a means to encourage better service, although it has also underlined the need for the financial penalties to be sufficiently robust to serve as effective deterrents. The balance needs to be struck between a standard of service quality that is hard to measure and risks becoming excessively skewed towards consumers, and a mobile telecommunications market that lacks the correct mechanisms to enforce quality standards. As the OECD suggests in its report, the market needs a more reliable measurement system for service quality with oversight from a third party.