INTERNET LAW - ARGENTINIAN PROGRESS IN TELECOMMUNICATIONS AND E-COMMERCE

Staff Attorneys, IBLS Editorial Board
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The partial deregulation and privatization of telecommunications began in Argentina in the early 1990s. While Argentina has privatized some portions of its telecommunications sector, it has yet to make this sector fully competitive. Currently, Argentina provides Internet access over cable lines, and increased its business-grade Internet connections by 9.4 per cent in 2006.

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Argentina’s Internet market is the third largest in Latin America, and Internet penetration is among the highest in the region. In 2006, the Argentinean consultancy, Prince & Cooke, reported that Argentina had an estimated 13 million Internet users and 1.45 million broadband subscribers.

The number of broadband users increased by 76.8 per cent between 2005 and 2006. In addition, the Argentine communications market is expected to experience continued Internet Protocol (IP) expansion as more and more businesses gain control of IP networks.

Q:  How have the privatization of the Argentinean telecom sector and the deregulation of telecom services in Argentina paved the way for growth in e-commerce?

In 1990, Argentina began the process of privatizing the state-owned telecom operator, ENTEL, due in large part to ENTEL’s poor performance record. This resulted in an increase in both service quality and coverage. Since ENTEL had a monopoly over basic voice telephony, this effectively prevented the expansion of Internet telephony and its related applications. This situation changed in March 1996, when ImpSat introduced its satellite link and began charging a fixed rate for Internet access.

However, until June 2000, when Argentina’s President de la Rua passed legislation to deregulate the telecom industry, that industry was dominated by Telecom Argentina (jointly owned by Italy and France) and Telefónica de Argentina (owned by Telefónica of Spain).

Deregulation affected licensing, interconnection, and universal services, and was expected to create opportunities in an open, competitive environment. Deregulation impacted the entire telecom industry, including local service, national and international long distance, cable, wireless, satellite, IP telephony, and the Internet. Nevertheless, in 2002, Telefónica and Telecom Italia, which still accounted for 90% of telecom sales, experienced losses of Ps 8 billion (US$ 2.6 billion). Although new operating licenses have been approved, deregulation has not succeeded in lowering fixed household charges for telecom service, since Telefónica and Telecom Italia continue to dominate the market.

Q:  How did the telecommunications framework develop in Argentina over the past decade?

Since 2000, when Argentina passed deregulation legislation, the domestic telecommunications market was dominated by Telecom Argentina (jointly owned by Italy and France) and Telefónica de Argentina (owned by Telefónica of Spain) who covered the north and south of the country, as well as 43 % and 57%, respectively, of metropolitan Buenos Aires. While this market coverage was due to expire in 1997, these companies were granted an extension of coverage until 1999. In that year, a new entity, called Telintar SA (under joint ownership of Telecom de Argentina and Telefónica), was granted rights to international telecommunications services.

Deregulation was instituted in several steps, and initially allowed other companies to provide international telephone services. This was followed by mobile service coverage, and finally by domestic service coverage. In 2005, several new companies offered high-speed broadband access, Voice over IP (VoIP) and other services to businesses and high-level residential users. Many Internet service providers currently have agreements with various telephone companies, in which they do not charge a fixed monthly fee, but do charge a higher overall rate to users whose communication service packages include Internet.

Q:  What regulatory obstacles stand in the way of the development of Internet services in Argentina?

The high cost of local calls, coupled with the low rate of Internet hardware ownership, has slowed the development of Internet services in Argentina. This situation was somewhat alleviated in 1997 when the government passed regulatory legislation that reduced the cost of international leased lines by 45 per cent and the cost of Internet calls by 58%. However, this legislation mainly affected users in the large metropolitan areas

Since broadcasting regulations are sometimes separate from telecommunications regulations, it is difficult to ensure that legislation is uniformly enforced with regard to telephone and cable-based communications.

Staff Attorneys, IBLS Editorial Board

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