Chile eyes PPPs to cover telecoms infrastructure deficit

By
Tuesday, November 6, 2018

Chile's government is eyeing a public-private partnership (PPP) business model to finance an ambitious plan to cover the country with fiber optic connectivity.

On Tuesday, telecoms regulator Subtel announced details of a digital map that is being developed that will identify the connectivity coverage gaps in the country.

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The mapping project is being drawn up by NicLabs of the Universidad de Chile and financed by state development agency Corfo.

"With the results of this study, we will be able to better plan future projects, taking into account all the networks we have in the country," transport and telecommunications (MTT) minister Gloria Hutt told press.

Currently some 1,495 localities still lack internet access.

The government is seeking to work with electric power distributors to take advantage of electric power infrastructure to hang fiber and use rural schools as connectivity hubs.

Fiber infrastructure would be complemented with free public Wi-Fi hotspots and mobile broadband infrastructure like 5G. Spectrum for 5G technology is due to be tendered next year.

INVESTMENT

On taking office this year, President Sebastián Piñera vowed to increase investment in telecommunications infrastructure by 30% per year to US$2bn by 2022.

The government has not yet decided where that investment will come from, but Subtel head Pamela Gidi said Piñera would announce an investment subsidy program next week.

Responding to a question from BNamericas regarding the investment model, Gidi said that the authorities were evaluating a number of alternatives and the approval of funds from congress to subsidize building out a fiber backbone in the country.

José Miguel Piquer, director of NicLabs, said that the most likely model would be a concession, as has been done with other infrastructure like highways, where the private company comes up with part or all of the investment in the infrastructure, which ultimately belongs to the state, and then it recovers investment by charging a toll or fee.

Chile has already tendered one mega project, the Fibra Óptica Austra (FOA) submarine fiber cable, which was awarded to a consortium of Huawei Marine and local telco CTR in October 2017.

Another project is at the study stage to build a submarine cable linking Chile to Asia.

Gidi said that connecting the country with fiber would require both large-scale projects from incumbents and smaller, local projects, carried out by ISPs.

In September, telco Grupo Gtd proposed to build a 3,500km submarine cable linking the cities of Arica in the extreme north of the country and Puerto Montt in the south with eight landing points, doubling current installed capacity and costing an estimated US$200mn.

While Gidi said that this was purely a private investment, the government welcomed the initiative and was doing all it could to fast-track permits and other paperwork.

Gidi said that the project fits into the government's plan of spreading out and separating different backbone cables to avoid blackouts, such as that which happened in 2015 when the two existing fiber cables connecting the north (operated by Entel and Telefónica), which are placed side by side, were severed by flash floods, leaving large parts of the country without connectivity.

"This will provide resilience in the event that the main backbone running along the Pan-American highway is cut," Gidi said.

"This mega investment speaks volumes of the good investment climate in Chile," the official added.

Companies from South Korea and China, namely China Telecom have expressed interest in investing in Chile telecoms infrastructure.