Urban Peru Regulatory Environment







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Regulatory Environment


In an economy dominated by services (45 percent ) and industrial (42 percent) sectors, the ITU estimated that telecommunication services amount to 3.1 per cent of GDP in Peru. [1] The telecommunication industry revenues have steadily increased in Peru, ever since the early 1990s, when massive investment needs in the telecommunications sector prompted the Peruvian government to initiate a privatization program.

The first step was the establishment of a regulatory body, the Organismo Supervisor de Inversión Privada en Telecomunicaciones (OSIPTEL), which began functioning in 1993. In 1998, the government took another major step by opening up the telecommunications market to full and unrestricted competition, which led to large scale privatization and granting more than 240 practicing licenses to companies. This sparked the rapid development of new services and significant improvements in existing ones. [2] Historically, Latin American countries have privatized their telecommunications sector before setting up a regulatory body; but Peru was the first to create a regulatory body before privatizing its State-run telecommunication companies. [3]

OSIPTEL reports to the Office of the President of the Council of Ministers and enjoys administrative, functional, technical, economic and financial independence, thus ensuring better performance. In addition, two other government bodies also exercise some control over OSIPTEl: the Ministry of Transport, Communication, Housing and Construction (MTC); and the Ministry of Economy and Finance (MEF). Both these organizations appoint a representative to OSIPTEL’s governing board. [4]

OSIPTEL has proven to be an effective regulatory body in Peru and this is largely accredited to its structural and institutional independence, stringent principles under which it operates and transparency laws introduced into its internal rules (read more about OSIPTEL and its achievements here

Since privatization of the State run telecommunications companies and full and unrestricted competition was introduced in the 1990s, the revenues of the telecommunication sector in Peru have steadily increased over the years, largely due to fastest growing sectors-mobile telephony, broadband internet and pay tv. [5] Despite the recession, the telecom industry is expected to grow between 2009-11, albeit at a slower pace. [6]

The government has also introduced certain measures to battle the digital divide, including rural projects sponsored by Peru’s Fondo de Inversión en Telecomunicaciones (FITEL), a fund that finances rural operators to ensure universal access. [7] FITEL awards the implementation of telecommunications projects to the private sector through a public and competitive tendering process for all projects where the financing amount is above USD 1 million. As is the case with many Universal Access and Service Funds (UASFs), FITEL awards its projects to the bidder that requests the least amount of subsidy. [8]

Due to the fact that some of Peru’s rural regions are very mountainous, most of the mobile telephony projects implemented by FITEL have used Very Small Aperture Terminal (VSAT) technology. [9] VSATs are most commonly used to transmit data from small remote earth stations to other terminals using satellite access. VSATs are used across the world as a means of delivering broadband Internet access to locations which cannot get less expensive broadband connections such as ADSL or cable internet access; and are usually useful for remote or rural locations.

Despite several measures to ensure fair and equitable access to ICTs, Peru still hasn’t been completely successful in ensuring affordability and easy access for all. The ITU measures the affordability of ICTs in a nation through its ICT Price Basket (where lower index referes to greater affordability). Peru has a value of 6.9; which ranks it 86th among 150 countries in terms of affordability of ICTs. [10] It ranks below Argentina (ranked 62nd) and Chile (ranked 73rd) but is still ranked above other regional neighbors such as Paraguay (ranked 101st) and Bolivia (ranked 111st).

Media Freedom

Peru’s media and commuinications regulatory environment has not been completely immune to restrcitions on freeedom. In 2002 and 2003, the government of then-president Alejandro Toledo passed laws expanding access to public information. [11] In 2005, the same government approved a Radio and Television Law, ostensibly designed to introduce regulation to ensure an impartial broadcast media environment. Instead it was widely believed by civil society and the media to be the government’s covert strategy to assign excessive regulatory power to the chief regulatory authority, the Ministry of Transportation and Communication. [12] It also tightened restrictions on access to information and extended the timelines for release of classified information. [13] Desacato (disrespect) laws have also been the cause of arrest and court cases against some journalists in the last two to three years. [14]

A bill reportedly submitted to the Parliament in August 2009 would toughen the provisions regulating the publication of corrections and retractions in the media and would increase the penalites for violators. Interestingly, this bill also applies to online media, which was hitherto not as strictly regulated by the government. [15] If passed by the parliament, this bill would hold the media systematically responsible before the judiciary for the facts they report as well as any opinion expressed through them by outside contributors. [16] Presented to parliament by Mercedes Cabanillas, a former interior minister who now chairs parliament's constitutional commission, proposed law 2971/2008-CR aims to guarantee "the right to redressal for anyone affected by inaccurate or insulting statements in the print, broadcast or electronic media." [17] Reports suggest that this bill was passionately debated in the Peruvian congress. At this moment, the bill has not passed and put on hold until further notice. It is considered controversial and is unlikely to be approved by the Congress.

In the aftermath of Fujimori’s rule, television channels have been increasingly playing the role of the government watchdogs and exposing many corruption scandals within bureaucratic circles.

Even though the constitution provides for freedom of speech and of the press, it is thus evident that Peru is still shaking off the remnants ofthe era of former President Alberto Fujimori, which was characterized by strong governmental control over the media, widespread bribery and a heavy reporting bias. [18] Television channels were pressured and bribed to follow government-speak and promote Fujimori in their reports. They gave in, due to fear of reprisal and their weak financial situations which was exacerbated by the recession of the late 90s.

In the aftermath of Fujimori’s rule, television channels have been increasingly playing the role of government watchdogs, exposing corruption scandals within bureaucratic circles. [19] For example, in October 2008, Cuarto Poder, a show on America TV, exposed a petroleum corruption scandal that greatly affected the current government of President Alan Garcia. Petroleum Minister Alberto Quimper had to resign. [20] 

However, the media face new threats to freedom from other parties, including drug traffickers, provincial authorities and civil organizations such as protesting coca growers. [21] For example, the BBC has reported that Peruvian journalists often put themselves at risk if they write about corruption, drug-trafficking or the activities of Shining Path rebels. [22] In general, the media still occasionally bend to various economic and political interests.

[1] “Telecommunications Sector Reform: Peru”. International Telecommunications Union. Accessed January 2010. http://www.itu.int/itunews/issue/2002/02/effective.html

[2] Ibid.

[3] Ibid.

[4] Ibid.

[5] “Peru - Telecom Market Trends, Key Statistics & Regulatory Overview” Research and Markets. Accessed January 2010. http://www.researchandmarkets.com/research/c8da0e/peru_telecom_mar

[6] Ibid.

[7] "Fondo de Inversión en Telecomunicaciones - FITEL". Ministerio de Transportes y Comunicaciones. Accessed January 2010. http://www.fitel.gob.pe/

[8] “Peru: Experience of the FITEL payphone programme” http://www.ictregulationtoolkit.org/en/PracticeNote.aspx?id=3143

[9] Ibid.

[10] The final ICT Price Basket is the value computed as the sum of the price of each sub-basket (fixed landlines, fixed broadband internet and mobile phones in US$) as a percentage of a country’s monthly GNI per capita (World Bank, US$, Atlas Method), divided by 3 (Figure 6.1). For this exercise, the cost of each sub-basket as a percentage of the monthly GNI per capita is limited to a maximum value of 100, so that the final ICT Price Basket value may vary between a theoretical ‘zero’ (tariffs represent ‘zero per cent of average monthly GNI per capita’ and all three services are for free), and 100 (the price of all three sub-baskets is equal to or exceeds the monthly GNI per capita). Based on the ICT Price Basket value, countries are ranked from 1 to 150.

[11] “Freedom of the Press: Peru 2008” Freedom House. http://www.freedomhouse.org/template.cfm?page=251&year=2008

[12] “Profile: Peru”. U.S. Department of State. Accessed January 2010. http://www.state.gov/g/drl/rls/hrrpt/2004/41771.htm

[13] Freedom House.

[14] Ibid.

[15] “Controversial Bill would restrict media freedom” International Freedom of Expression Exchange (IFEX). Accessed January 2010. http://www.ifex.org/peru/2009/08/21/contentious_media_bill/

[16] Ibid.

[17] Ibid.

[18] “County Reports on Human Rights Practices:Peru”. US Department of State. Under Secretary for Democracy and Global Affairs: Bureau of Democracy, Human Rights, and Labor.  Accessed January 2010. http://www.state.gov/g/drl/rls/hrrpt/2004/41771.htm

[19] “Description of Peruvian media stun even the most jaded observers” Freedom Forum. Accessed January 2010.  http://www.freedomforum.org/templates/document.asp?documentID=13381

[20] “Peru annuls five Discover Petroleum oil contracts amid alleged concession kickbacks”. Peruvian Times. Accessed January 2010. http://www.peruviantimes.com/peru-annuls-four-discover-petroleum-oil-contracts-amid-alleged-concession-kickbacks/

[21] Ibid. "Peru Profile". US Department of State.

[22] “Country Profile: Peru”. BBC Country Profiles. Accessed January 2010. http://news.bbc.co.uk/2/hi/americas/country_profiles/1224656.stm#media