Country: Venezuela

Client: Comisión Nacional de Telecomunicaciones (Conatel)

Project Title: Spectrum Management; ICT Sector Restructuring and Liberalization; Interconnection Policies and Procedures

Project Description: Global Resources has served the Comisión Nacional de Telecomunicaciones (Conatel) three times, assisting the telecommunications regulator by creating project scopes, task deliverables, contractor qualifications, budgets and related project parameters for specific activities to help modernize Venezuela’ ICT institutional and information infrastructure.

In 1997, Conatel sought assistance for developing an automated system for radio spectrum administration and management. At the time, specifications were already developed for a tender on this topic, and we reviewed this material to ensure it was thorough relative to global best practices.

By 1999, the Venezuelan Government established a new mission for Conatel: to ensure a non-partial, expedient opening of the telecommunications sector. The Venezuelan regulator now needed help developing a National Development Plan with special attention to the restructuring and liberalization of the ICT sector.

Global Resources began its work in the midst of this transition. Both the newly appointed Minister of Transportation and Communications and the Director of Conatel had begun work to integrate the Ministry of Transportation and Communications and the Ministry of Urban Development into one new Ministry. At the same time, they were restructuring Conatel, reintroducing telecommunications legislation, negotiating with the basic telephone company to advance the expiration date of their monopoly, and reopening a PCS bid. Resources were limited, and both operational and planning issues were complex. Thus, our initial task was to consider the most critical regulatory issues for the next five or ten years.

Global Resources worked with Conatel and the US Foreign Commercial Service to identify eight areas for action:

1. Developing regulatory models suited to a liberalizing market
2. Opening the sector to competition
3. Considering Interconnection Models and Their Impact on Operators
4. Implementing Universal Services
5. Creating of a Model for Number Portability
6. Developing Telecommunications Applications for Times of Mass Emergency and Disaster
7. Reviewing Telecommunications and Corporate Strategies
8. Research on Global Tendencies with Regard to Rural and Urban Trends for the Next Few Years with Special Emphasis on Venezuela

As part of our work, we structured an assistance package that in addition to covering these legal, financial, sector, and business development issues, would also assist members of the organization as they defined and implemented new regulatory procedures. The goal was that the overall assistance would impact Venezuela by accelerating the commercial development of the ICT sector and thereby, the nation’s economic and social development. We ensured that a project leader was established at Conatel, so that there would be continuity and focus as the technical assistance team worked with Conatel staff to develop the National Development Plan. Additionally, we ensured that the assistance project had clear milestones and deliverables so that it would be more action- than research-oriented. Our work on this second project for Conatel concluded with the drafting of the project budget, contractor qualifications and tender for the project, which upon acceptance of our recommendations by Conatel, was funded by the US government and implemented in 2000.

By 2001, the National Development Plan was in place. Now, one of the elements of that plan needed more focus. The ICT sector was opening, numerous players were offering services, and interconnection – the financial, legal and technical model that allows multiple network suppliers to link their technical pathways into one seamless network – posed the most immediate priority and challenge for Conatel. With their positive track record moving forward in related areas of sector modernization and liberalization, US funding agencies were interested in potentially supporting this request.

Once again, Global Resources was called upon to assess Conatel’s needs and to create an action plan. We evaluated the new National Development Plan and considered the pros and cons of each recommendation, with a particular focus on the unique qualities of doing business in Venezuela. We reviewed global best practices in the area of interconnection, ensuring we compared the maturity of other economies and networks to the current conditions of Venezuela’s ICT sector. As new and varied network technologies proliferated, the need for cost-effective, technically-sound interconnection policies and procedures between carriers had become paramount – we wanted to ensure that the best of “recent lessons learned” could be applied to Conatel’s request and needs.

We also reviewed the ICT sector’s recent history; Venezuela had indeed taken major steps in the Latin American region by passing needed legislation, restructuring the primary carrier, and conducting auctions and awarding licenses to those companies interested in competing for telecommunications business. Title VII of the New Telecommunications Law promulgated in June 2000 ensured that “Among other duties, telecommunications network operators are obligated to interconnect with other public networks with the objective of establishing interoperable and continuous communications among its users. Interconnection shall be accomplished in accordance with the principles of neutrality, good faith, non-discrimination and equal access among operators.” It was clear that the timing and foundation were in place for this intensive interconnection project.

Following this legal and economic/financial due diligence, we assessed the preliminary interconnection project outline that Conatel had shared, including its draft terms of reference and staffing plan. We ensured that the project would focus on critical areas such as designing a “bottom-up” long-range incremental cost model, applying routing factors to determine percentage of use of network components, reviewing the network architecture of each network operator in the Venezuelan market and related analytic areas such as collecting data on prices for interconnection equipment, including related operating costs and any other relevant inherent interconnection costs. We added project elements such as a needed project timeline and budget, set of deliverables, and contractor qualifications. Finally, we also ensured that Conatel would have the needed staff professionals available to support and integrate the interconnection advisor’s work, e.g. the engineers, lawyers and economists that would comprise the Conatel Interconnection Team.

As Conatel was the sole organization responsible for regulating competition in the industry including price setting and rate rebalancing, and coordinating the expansion, modernization and improvement of the telecommunications infrastructure, the Commission was the appropriate organization to receive technical assistance and to plan and manage interconnection cost modeling and implementation. It was with this analysis – and our recommendations and due diligence work – that Conatel received funding for its interconnection technical assistance program.

Le agradecemos a Conatel, a la Agencia de Comercio y Desarrollo de los Estados Unidos (USTDA por sus siglas en inglés) y al Servicio de Comercio del Extranjero del mismo país por la oportunidad de auxiliar a Conatel y a la República de Venezuela con actividades basadas en Tecnologías de Información y Comunicación (ICT por sus siglas en inglés) críticas para el desarrollo económico y social del país.