RESTRICTED
WORLD TRADE S/NGBT/W/3/Add.29
20September 1995
ORGANIZATION(95-2725)
Original: Spanish Negotiating Group onBasic Telecommunications
COMMUNICATION FROM VENEZUELA
Response toQuestionnaire onBasic Telecommunications
Theattached communication iscirculated attherequest ofVenezuela totheMembers ofthe
Negotiation Group onBasic Telecommunications.S/NGBT/W/3/Add.29
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Responses oftheAdministration ofVenezuela Formulated bythe
National Telecommunications Commission (CONATEL)
Response totheQuestionnaire onTelecommunications
PartI
Definition andMarket Structure
Definition
1. Basic telecommunications services means switched local, domestic andinternational fixed
telephone services.
Basictelecommunicationsnetworkmeanstheswitchednetworkconsistingofequipment,systems
andphysical infrastructure intended toprovide basic telecommunications services.
2. Facilities means alloftheequipment, devices andcomponents connecting thebasic
telecommunications network totheinternal telephone facility.
3. No.
Market structure
4. Atthepresent time, anduntiltheperiod oflimited competition comes toanend(bythe
year2000), CANTV (National Telephone Company ofVenezuela) hasthebasic telecommunications
monopoly.
5. CANTV nowhasthenational basictelecommunications monopoly, i.e.49percentoftheshares
belong totheState, 11percenttoCANTV workers and40percenttotheVENWORLD Consortium.
6. Foreign equity participation ofmonopoly orexclusive suppliers ispermitted; however, the
maximum percentage share allowed hasnotbeendefined. Thecurrent level ofidentifiable foreign
participation ispartoftheVENWORLD Consortium, represented bytheTelefónica Internacional of
Spain, GTE andAT&T.
7. Certain activities which could beconsidered basic telecommunications arenotreserved tothe
monopoly, forexample: facsimile, telex, datatransmission, mobile, satellite services.
Atthepresent time, AT&T, SPRINT andMCIoffer services forinternational calls.
8. There arenosuchagreements.
PartII
Competition
(i) Overview. Thebasic policy oftheVenezuelan Administration hasbeentoopenup
thesector andpromote private investment. Consequently, except inbasic
telecommunications,wherethereisaperiodoflimitedcompetition,anyforeignsupplier
canparticipate inthetelecommunications business. Itshould alsobeemphasized that,
nowadays,someoftheownersofthebasictelecommunicationsenterpriseareforeigners,S/NGBT/W/3/Add.29
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which indicates that,when theperiod oflimited competition comes toanend,any
privatesupplier(foreignerordomestic)mayenterthebasictelecommunicationsbusiness.
(ii) Modesofsupply.CommercialpresenceisrequiredinVenezuelaand,whentherelevant
concession isobtained, itispossible tooperate freely throughout thecountry. There
isnoother restriction.
(iii) Market access. Apart from obtaining therelevant licence orconcession, there isno
other limitation onthesupplier except forrestrictions ontheuseoftheradio spectrum,
which places natural limits onthenumber ofsuppliers ofservices (forexample,
cellular).
(iv) National treatment: Venezuela gives national treatment toalltelecommunications
operators.
(v) Licensing.TelecommunicationslegislationinVenezuelarequiresalicenceorconcession
tooperate anytelecommunications service. Theprocedure forobtaining itisintwo
stages: (i)Registration oftheenterprise, whereby thelatter supplies theregulatory
body (inthiscase, theNational Telecommunications Commission, CONATEL) with
legal information, financial statements andabrief description oftheproject, and
(ii)Grant oftheconcession, inwhich theinterested party provides further details.
Theconcession agreement, setting outthelicence, includes thecommitments between
theAdministration andsupplier andnormally suchcommitments stemfromtheproject
thatthesupplier wishes todevelop. Inthisregard, Venezuela requires asupplier to
provide aperformance bondof1percentoftheinvestment undertaken. Thisisdone
tofoster thepresence ofoperators ofproven financial solvency. Insome cases, where
therearestructurallimitsimposedbytheradiospectrum,theVenezuelanAdministration
usesthecompetitive bidding system.
A. Subsectors: Asstated earlier, only(voice) telephone services, switched, local, long-distance,
domestic andinternational, arecovered byaperiod oflimited competition; allother services come
under paragraphs (i)to(v)above. Theonlyother restriction onnewsuppliers istheradio spectrum.
B. Venezuela hasakindofservice called private networks, which areforsmall usergroups and
arenotconnected tothebasic telephone system. Under theregulations these operators maytransmit
signals wherever theywish, domestic, international andevenlocal, theonlyrestriction being thatthey
mustnotbeconnected tothepublic network. Other operators mayusethebasic monopoly onlyfor
theirconnections withforeign countries, untiltheperiod oflimited competition comes toanend.
Resale basis
Until theperiod oflimited competition comes toanend,nooperator mayresell hiscapacity,
whether ornotunused, toanother operator oruser.
Facilities-based
5. With aconcession and/or permit, basic telecommunications suppliers, whether foreign or
domestic, mayconstruct andoperate theirownnetworks orinvest inconsortia toconstruct andoperate
suchfacilities, provided thisdoesnoteffect therights oftheCANTV limited competition regime.
Atthepresent time, therural telecommunications sector isbeing opened up.S/NGBT/W/3/Add.29
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Public/non-public supply
6. No.
7. Voice telephone services.
8. Exceptforswitchedbasictelephoneservices(local,anddomesticandinternationallong-distance),
theoperator mayormaynothaveavailable therestofservices tothepublic ingeneral.
9. Ifthesupplier wishes tobeasupplier tothepublic ingeneral, twoobligations arerequired:
(i)Ageneral obligation called "equal treatment", inthesense thathecannot discriminate between his
customers, and(ii)Aspecific obligation, inaservice contract which theoperator hastosignwithhis
customers andwhich isbinding ontheparties; thespecimen ofthecontract isapproved bytheregulatory
authority.
10. None, except theprohibition onconnecting tothebasic network, during theperiod oflimited
competition.
PartIII
Relationship Between Regulatory andOperational Functions
1. InVenezuela, owing tothesystem ofpublic hearings, alloperators inthesector areafforded
anopportunity toparticipate directly informulating andenforcing allrulesandstandards forthesector.
2. Theregulatory authority inVenezuela isresponsible forformulating standards andforenforcing
them.
3. InVenezuela theregulatory authority alone hasallthepowers toregulate thesector. Inthe
event ofdisputes, theparties concerned mayappeal bymeans ofarbitration, totheMinistry forthe
sector and,onfinalinstance, totheSupreme Court.
Frequency allotment orassignment
4. Theinterested partysetsoutinhisproject theradiofrequencies herequires andtheyareassigned
tohiminterms ofavailability. Hemayalsorequest additional frequencies, ifhesowishes.
5. National treatment isgranted toallthose requesting radio frequencies.
Numbering andidentification codes
6. Adirect sequential mechanism isused.
7. National treatment isgranted.
Standards, typeapproval andequipment attachment
8. Themandatory standards arethose intended toprevent damage tonetworks towhich equipment
andsystems willbeconnected.S/NGBT/W/3/Add.29
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9. Atthepresent time, thestandardization process isintheveryearly stages; accordingly, the
suggestionthattheprocessofdevelopingstandardspublicly,withtheparticipationofallthoseconcerned,
isacceptable.
10. Todate, approval given byadvanced Administrations hasbeenaccepted. Ingeneral, any
equipment (national orforeign) requires approval.
11. Theonlyruleisthatthere should benodamage tothenetwork towhich theequipment is
connected.
12. They maybeused. Theonlyrestriction isthattheycannot usevoice traffic (telephony), in
accordance withtheconditions forthebasic network, during theperiod oflimited competition.
13. Itisnotobligatory; itdepends ontheagreements between theoperator andhiscustomers.
What isobligatory isthattheequipment supplied bytheusermustnotdamage thenetwork towhich
itisconnected.
Interconnection
14. Interconnection iscompulsory, forthepresent operator ofthebasicnetwork, withalloperators,
except withprivate networks, which bytheirverynature areexcluded from thissystem.
15. Thisisoptional foroperators other thanthepresent operator ofthebasic network.
16. Yes,itisauthorized.
17. InVenezuela interconnection iscost-based, withtheexception ofcellular interconnection, which
contains acellular usersubsidy component forthebasicnetwork. Thesubsidy willdisappear in1997.
Whenever anewservice requiring interconnection appears, theinterested parties firsttrytoreach an
agreement, which willbevalidforalloperators oftheservice. Iftheyreach anagreement, theterms
andamounts fortheinterconnection mustbeapproved bytheregulatory authority andtheyareamatter
ofpublic knowledge. Ifnoagreement isreached, theregulatory authorities specifies aperiod oftime
tofixtheterms andamounts.
Competitive safeguards
18. TheCompetition Protection Lawissufficiently broad tocover andpenalise allanti-competitive
practices andthereisaseparate authority responsible forthiswork. Inthecaseoftelecommunications,
ithasbeenestablished thatthepresent operator ofthebasic network mayprovide competitive services
ontwoconditions: (i)through aseparate subsidiary, and(ii)interconnection ofthecompeting operators
isguaranteed.
19. Theonlydominant operator isthepresent operator ofthebasic network, whoactsunder a
concession, under specific rulesforthatoperator, andspecific regulations specifying anysafeguards.
20. TheGovernment 'spolicy isnottofoster monopolies inthetelecommunications sector, for
which reason itgranted thepresent operator ofthebasic network amonopoly thatwillendby
November 2000. Mergers andacquisitions aregoverned byanother regulatory bodyestablished under
theCompetition Protection Law.
21. They onlyexistforthepresent operator ofthebasic network, inwhich animportant operator
andmanufacturer from theUnited States participates, andthismeans thattheoperator ofthebasicS/NGBT/W/3/Add.29
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network inVenezuela mustsubmit anypurchase formore thanfivemillion dollars toacompetitive
bidding procedure.
Pricing-related measures
22. There aretwotariff scenarios: (i)oneforthepresent basic network operator governed by
the"price caps" method, devised withtheactive participation ofthetwoconsortia thatcompeted for
thenational telephone company before thecompetitive bidding procedure wasstarted, and(ii)the
oneforcompeting service operators (including those whoparticipate insome basictelecommunications
services), governed byamaximum andminimum tariffs system, which isanattempt tomake sure
thatthecharges arethesame foreachservice. Inthissystem, theoperator(s) must determine the
minimum levels soastoreflect costs.
Ifthecompeting service operator becomes dominant, histariffsystem becomes the"price caps"
system.
23. Alloperators mustpublish theirinitial tariffs intwonation-wide newspapers onemonth before
theyenter intoeffect. Except forthetariffs ofthepresent basic network operator, which require
notification andapproval bythetelecommunications regulatory body'sMinistry, theothers donotneed
tomeetthisrequirement.
Asfortheminimum tariffs ofcompeting services, theoperator must clearly carry thecost
structure ofthose minimum tariffs. Thereafter, theoperator neednotsubmit histariffs totheMinistry.
24. Theprinciple ofequal treatment, mentioned earlier, means thatoperators canoffer special
tariffs tousergroups andother users mayhaveaccess tothem iftheyfulfil thesame conditions. As
torelations withother countries, tariffs aregoverned byagreement between operators andtheymust
handle possible disparities. Theexception isthepresent basic network operator, whose international
tariffs aregoverned bythe"price caps" method andaresubject tore-balancing withlocalresidential
tariffs.
25. Yes,through discussions onmaximum andminimum tariffs.
26. Allarecost-based, taking account ofthedifficulties especially associated withthebasicnetwork.
Other services, werenon-existent andsoitwasveryeasytodetermine maximum andminimum tariffs
toreflect cost.
27. Yes. Whenever anewservice isstarted thecoststructure andtheproposed maximum and
minimum tariffs arereviewed bytheregulatory body together withtheinterested party, inorder to
reach areasonable agreement. Efforts aremade toensure thatthemaximum andminimum tariffs
arethesame foralloperators ofsuchservices.
Rights ofwayfortheconstruction ofinfrastructure
28. Theyarefullyentitled toconstruct anyinfrastructure deemed necessary; except forconstruction
thatrequires rights ofway(pipelines, pillars, among other things), which mustbediscussed withthe
municipality concerned, therearenootherlimitations ontheoperator constructing infrastructure, which
must, ofcourse, meetfire,flood, worker-safety andother regulations thatexistthroughout theworld.
29. Yes. National treatment isgranted.S/NGBT/W/3/Add.29
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Newtelecommunications services
30. Theregulatorybodydrawsuptwodocumentstobeconsideredatapublichearing:(i)astrategic
outline and(ii)draftregulations. Withthese documents, aprocess ofseveral hearings isstarted until
theregulatory body issues thefinalregulations. Atthatpoint, itsstarts todraw uptherespective
concession agreement. Admittedly, aservice maybeprovided onlywiththeconcession agreement,
buttheinterested party runstheriskthattheregulations willbedifferent andtheagreement willhave
toberenegotiated.
31. Newservices arestarted ontheinitiative oftheregulatory bodyoraninterested party. Ifthe
nature andother parameters oftheservice arenotspecified intheabove-mentioned documents, these
areworked outintheprocess ofthepublic hearings.