Govt. Recognizes Regulatory Short Comings

Chile must revise regulations governing the telecoms industry due to the convergence of different technologies, rather than a shift in government policy, telecoms undersecretary Christian Nicolai said, quoted by local financial daily Estrategia. "We are facing a process of convergence (and) greater competition, that has led us to review rate policy, use of the spectrum, the resolution of conflicts and all of the other issues that led to the 'white paper' initiative," Nicolai said. Earlier this year telecoms regulatory authority Subtel, industry representatives and consumer groups started working on a white paper to set government policy for the sector in light of technological changes in recent years. However, the initiative may be disrupted over attempts by incumbent fixed line operator Telefonica CTC Chile (NYSE: CTC) to ease rules governing the rates and access fees it charges consumers and competitors. Subtel issued a five-year decree, effective May 1999, which slashed CTC's rates and access fees. Last week telecoms minister Carlos Cruz admitted that the Economy Ministry and the telecoms department asked the Comptroller General to rule on whether they have the faculty to modify the tariff decree. CTC petitioned Subtel to consider changing the decree due to alleged errors in the calculations of local rates and access fees. This unleashed a war of words between competitors - namely VTR GlobalCom, Entel and AT&T Latin America - CTC and the government. Competitors claim any changes in the rules of the game at this stage would jeopardize investment.