US embassy cable - 05BOGOTA2001

UNCLAS SECTION 01 OF 03 BOGOTA 002001 
 
SIPDIS 
 
DEPT FOR WHA/EPSC, EB/CIP 
STATE PLEASE PASS TO USTR: KENNETH SHAGRIN, ARROW AUGEROT 
FCC INTERNATIONAL BUREAU FOR ETALAGA 
 
E.O. 12958: N/A 
TAGS: ETRD, ECON, ECPS, CO 
SUBJECT: COLOMBIA: SECTION 1377 TELECOM TRADE AGREEMENTS 
REVIEW 
 
REF: 05 STATE 26652 
 
1.  Per reftel, Econoff met with appropriate Colombian 
government authorities, including the GOC's 
Telecommunications Regulatory Commission (CRT), and provides 
the following responses to complaints about excessive mobile 
to mobile termination rates, excessive fixed to mobile 
termination rates, and excessive pricing and provisioning 
delays for access to leased lines: 
 
2.  Q: Are the rates for mobile termination services 
regulated? 
 
Answer: The rates for mobile termination services are 
regulated in Colombia by Resolution 463 of December 2001. 
This resolution established maximum rates that mobile 
companies can charge for termination services during 
2001-2005.  In 2005, CRT plans to issue a new mobile 
termination services resolution with new maximum rates for a 
subsequent five-year period. 
 
3.  Q: If so, how are the rates determined?  What cost 
methodology is used to determine rates? 
 
Answer: Resolution 463 determines the rates on a network 
capacity basis or a charge-per-minute basis.  The 
capacity-based rate for cellular operators, including 
Personal Communication Systems (PCS), applies only to calls 
from international long-distance carriers or cellular 
operators.  A TELRIC (Total Element Long Run Incremental 
Cost) methodology determines the maximum rates.  This 
methodology calculates rates by adding long-term incremental 
costs to a fraction of the common costs.  The 
charge-per-minute methodology is applied to domestic fixed 
line operators.  According to CRT, the new mobile termination 
services resolution will provide domestic fixed line 
operators the opportunity to use similar cost methodologies 
currently offered to cellular and international long distance 
operators. 
 
4.  Q: Is the process to determine rates transparent?  Are 
the results made public? 
 
Answer: Yes, the process to determine rates is transparent 
and the results are made public.  The CRT organized three 
public fora and published technical studies two years prior 
to issuing Resolution 463, in order to allow public debate 
and discussion of the regulations. 
 
5.  Q: Are the rates tending upward?  If so, what explains 
this trend? 
 
Answer: Yes, rates are tending upward.  Under Resolution 463, 
incremental maximum rates were established yearly, between 
2001-2005, because CRT claimed that Colombian 
mobile-to-mobile termination rates were too low for 
international standards.  In 2005, the CRT plans to issue a 
new mobile termination services resolution with new maximum 
rates for a subsequent five-year period (2006-2010).  The 
same TELRIC cost methodology as well as the charge-per-minute 
rate will be used. 
 
6.  Q: Does the mobile termination rate differ based on 
origin of call? (i.e. domestic vs international)? 
 
Answer: Yes.  A CRT study claims that for international calls 
terminating on a mobile phone, the rates are competitive 
(approximately US 4 cents per minute) and lower than other 
Latin American countries (US 7 to 27 cents per minute) and 
European countries (US 12 to 23 cents per minute).  However, 
the CRT determined that such rates should increase over a 
5-year period to meet average international rates.  For 
domestic mobile-to-mobile calls, the CRT asserts that the 
rates are one of the lowest in Latin America (US 2 cents per 
minute), and competition between mobile operators is intense. 
 CRT asserts that there is room for rates to decrease even 
more in the domestic mobile-to-mobile market.  However, for 
domestic fixed-to-mobile calls, the CRT claims that the 
termination rates are too high (approximately US 38 cents per 
minute).  According to the CRT, mobile operators charge fixed 
operators a high termination fee to discourage the use of 
fixed lines.  Resolution 463 does not limit the termination 
fees a mobile operator can charge a domestic fixed operator. 
 
7.  Q: Is the regulator/ministry considering taking any 
action, including on an interim basis, with respect to mobile 
termination rates? 
 
Answer: Although CRT plans to issue a new resolution on 
mobile termination rates in 2005, CRT has not published a 
draft of the new resolution.  CRT mentioned that the new 
resolution should establish maximum termination rates for 
fixed-to-mobile calls or require mobile operators to charge 
outside users rates similar to the rates they charge their 
own network subscribers. 
 
8.  Q: Is there any ratio between rates charged for 
termination on fixed networks and rates charged for 
termination on mobile networks that reflects the disparate 
costs of the different networks?  What would be a reasonable 
ratio? 
 
Answer: CRT does not have a standard ratio between rates 
charged for termination on fixed networks and rates charged 
for termination on mobile networks that reflects the 
disparate costs of the different networks.  Termination rates 
on fixed networks are a lot less than on mobile networks. 
Currently, termination rates on mobile networks vary 
depending on what originating source requests termination and 
if the originating source has an affiliation with the mobile 
network or is a direct competitor with the mobile network. 
Although there is a maximum termination rate for mobile 
networks, CRT does not have a current standard ratio to 
measure the disparate costs between fixed and mobile networks. 
 
9.  Q: Are the wholesale (carrier) rates being charged for 
leased lines used by carriers (e.g. two megabit link between 
a carrier's network and its customers) regulated? 
 
Answer: Yes, regulations oblige carriers to provide their 
customers with two options: a charge-per-minute rate and a 
capacity-based rate.  Colombia introduced the capacity-based 
interconnection charge in an effort to promote greater 
competition among telecommunications providers. 
 
10.  Q: If so, how are the rates set?  Does the regulator 
benchmark them against other comparable markets? 
 
Answer: CRT set interconnection rates for each year between 
2001-2005, decreasing the rate by approximately 10 percent 
each year.  Under the option of capacity-based 
interconnection charges, the operator that interconnects with 
a carrier pays a flat monthly charge.  The price is 
calculated based on the premise that the operator providing 
interconnection for the service shall recover its cost of 
operation, maintenance of the network plus a reasonable 
profit, independent of the volume of traffic.  The operator 
that opts for the capacity-based methodology assumes the risk 
associated with traffic fluctuations.  CRT also permits a 
charge-per-minute rate.  In 2003, CRT performed a 
benchmarking of Colombian telecommunication rates against 
rates charged in other comparable markets, mainly in Latin 
America and a few European countries.  According to the CRT 
official, the findings of this benchmark showed that carrier 
rates charged for leased lines are competitive. 
 
11.  Q: Is the process for determining rates transparent? 
Can interested parties challenge cost-data submitted by the 
incumbent operator? 
 
Answer: CRT asserts that the process for determining rates is 
transparent and those results are usually published. 
Interested parties can challenge cost-data submitted by the 
incumbent operator and provide that information to the CRT 
for mediation purposes. 
 
12.  Q: Is the regulator aware of complaints about the time 
it takes to receive a line? 
 
Answer: CRT is not aware of complaints about excessive time 
for receiving a line. 
 
13.  Q: What are the factors that affect delivery? 
 
Answer: Delivery depends entirely on the operator's capacity. 
 
14.  Q: We have heard allegations that the incumbent is 
providing leased lines faster to their end-user customers 
than they are providing them to requesting competitors.  Are 
there reporting requirements to monitor this?  If not, how is 
this monitored?  If so, are the reports public? 
 
Answer: Although CRT is aware of some allegations that the 
incumbent is providing leased lines faster to their end-user 
customers than they are providing them to requesting 
competitors, CRT states that they have no reporting 
requirements to monitor this. 
However, CRT has the ability to mediate and resolve conflicts 
between telecommunications providers, incumbents and 
competitors.  CRT estimates that the time to resolve a 
conflict ranges from four months to one year, depending on 
the complexity of the conflict.  The CRT has mediated 
approximately 54 cases between 2002 and 2004. 
WOOD