Gerencia #310: Keeping Afloat in the Monopoly Country: Telecommunications, the Reform that Could Make History

COVER STORY
by Carmen Urízar

Keeping Afloat in the Monopoly Country: Telecommunications, the Reform that Could Make History

There is a general consensus that telecommunication services are an essential factor in a country's development. In Guatemala, unfortunately, telecommunications do not satisfy Guatemalan's growth and development needs.

Telecommunications in Guatemala are greatly deficient, in quantity as well as in quality, in the following aspects:

High unsatisfied demand
Low service quality
Political, not economical, tariffs
High inefficiency
User dissatisfaction

Due to the actual state of telecommunications in Guatemala, the new government has recognized the challenge, and both the general manager of Guatel and the Minister of Communications, Transportation and Public Works, have announced that officials from this institution, as well as the Executive Branch are working on a reform that will increase this service's coverage and quality. The reform contemplates three main areas:

Demonopolize the telecommunications sector, to introduce competition at all levels and in all of the
industry's services.
Reorganize Guatel
Modify the actual legislation, concerning the radioelectric spectrum, so that its utilization is developed efficiently.

In order to demonopolize, the legal barriers that are present in the telecommunications sector must be dismembered or decreased, in order to open the market and submit the provision of services according to the needs of the consumer.

With regard to the stated reform, there have only been discussions concerning the legal transformation of Guatel, which will enable it to compete in an open market like the one expected. Nothing has been said on its privatization.

The success of these reforms could turn Guatemala into a model country, for its citizens would be able to enjoy the development and growth opportunities that would rapidly boost their quality of life.

A big part of the state intervention is based precisely on the need to control the use of this important resource. This scheme, however, has not and will not be efficient. This focus has missed the fact that the spectrum can be utilized for various purposes, frequencies, and sectors. Thus, decisions concerning its use and management must be market oriented. The assignment of the spectrum should be auctioned in order to permit the transfer of utilization bonds to be geared by market mechanisms.

This procedure would allow the frequencies to be utilized for the most valuable causes, everyone would have the chance to participate in the market acquiring utilization rights, and state intervention, as well as arbitrary assignment, would be avoided.

Write to us at agg@guate.net
September, 1996