The current classification of services under the argument of technological progress is the basis for the deregulation of the sector, creating conditions for a scenario of greater consolidation among a few (and almost the same) stakeholders, who will now be able to provide cross-services between audiovisual and telecommunications media.
Ana Bizberge */Argentina/ March 2017
Competition and Convergence is the motto that guides the communications policy of Mauricio Macri’s government. Its instruments are decrees of necessity and urgency (DNU) and decrees that dismantle the regulatory model established by Cristina Fernández de Kirchner, encouraging changes in the classification of services under the argument of technological progress, as a basis for the deregulation of the sector and creating conditions for a scenario of greater consolidation among a few (and almost the same) stakeholders, who will now be able to provide cross-services between audiovisual and telecommunications media.
Classification of services
One dominant view from the telecommunications sector is that as the technological barriers that have historically separated industries disappear, the system of “sectoral” regulation (by service and/or technology) enters into crisis, and a road is opened towards “horizontal” regulations, which point towards the establishment of the same rules for similar services.
From this perspective, the idea of horizontal regulations, which are in line with the liberalization of services proposed by the World Trade Organization (WTO), aim to erase the specificity of the cultural sector by proposing a series of key categories – mainly licenses, interconnection, spectrum and universal services – on which progressive deregulation should be centered, so shifting the focus of discussion towards economic and competition justifications as engines of development.
Underlining this situation is the tension between ex ante regulation, which is typical of sectoral regulations, as opposed to ex post regulations or the defense of competition, characterized by leaving the sector free to market forces and analyzing situations on a case-by-case basis when it is observed that some business movement can affect the competition. In this discussion between ex ante and ex post regulation, what is at stake is the power of the State to define the rules of the sector.
According to this framework of understanding there is a need to analyze both DNU 267, with which Macri inaugurated his administration in December 2015, and Decree 1340 of December 2016. These complementary decrees allow for the progressive deregulation of the media and telecommunications in Argentina. In the case of the former, this points to the heart of the service classification, establishing that cable TV companies are no longer defined as providing an audiovisual service and are to be classified as an ICT service. This exempts them from adhering to limits on concentration (which were also relaxed by extending the number and deadlines for licenses for radio and free-to-air TV) and rules regarding content. Although there are countries in which the cable sector is considered a telecommunications service, the process of updating the Audiovisual Services Directive carried out by the European Union is an example of how technological advances and the appearance of new players such as OTT can be approached from another perspective, one that contemplates the extension of the scope of services (and not their reclassification), and maintaining their sectoral specificity as an audiovisual service.
Spectrum and Interconnection
If DNU 267 was key in the classification of services/licenses, the sanction of decree 1340 allowed the government to move forward with regard to the spectrum and interconnection. Although the decree was criticized by Telefónica – which recently led to a meeting in Spain between Macri and the CEO of that company, José María Álvarez Pallete, the fact is that it benefits both the major telecommunications companies (Movistar, Telecom-Personal and Claro) and the Clarín Group and DirecTV (AT&T).
Moreover, by giving a precise date and geographic scope for the provision of audiovisual services by telecommunications companies, the regulation established the refarming of frequencies of the spectrum “with economic compensation and shared use” in order to allow Clarín, through Cablevisión, to use frequencies in the bands of 2.5 Ghz and 900 Mhz (obtained via the purchase of Nextel and five other companies) attributed to other mobile telephone service providers.
The “Regulation Establishing the Refarming Procedure with Economic Compensation and Sharing of Frequencies” issued by the Ministry of Communications established the frequencies reassigned to mobile services (from 450 to 470 Mhz, segments of the band from 698 to 960 MHz, the band of 2300 to 2400 MHz, and the band of 2500 to 2690 MHz, part of the latter in the hands of Clarín) and extending the limit of accumulation of the spectrum per service provider in a locality of 60 Mhz to 140 Mhz, so that both the existing operators (Movistar, Personal and Claro) and the new operators (Cablevisión) will be able to count on a spectrum for the deployment of 4G. The next step will be to arrange a call for competition, as provided by Decree 1340, for the attribution of new bands for the provision of mobile services.
Contrary to the logic of opening up the spectrum, the government has been protectionist in terms of interconnection by establishing a 15-year period in which operators who build last mile broadband networks will not be forced to open them up to third parties, which acts as an incentive for incumbent telephony companies (Telefónica and Telecom, with rumors circulating about the latter of a possible and eventual merger with Cablevisión), Cablevisión (Clarín) and DirecTV (AT&T) – which will enter the market as a fixed broadband competitor – but contradicts the regulatory trends in this area, which uphold the construction of open architecture networks and the opening up of existing networks to promote competition. Such protectionism also extends to the mobile networks, but in this case, it is more clearly defined for the stakeholder involved (Cablevisión), which will enjoy asymmetric interconnection rates for 3 years (with the possibility of an extension of 1 year and a half more) and with reference prices for the same period. After this period the regulator will stop exercising its power, which will remain in the hands of the market as a matter between private entities.
Conditions of “competition” at the service of consolidation
Although the two movements that have been described may seem contradictory, they are not. Both are supportive of the consolidation of the status quo of the pre-convergence stakeholders under the new conditions of “convergence.” And the proclaimed competition is thus reduced to the establishment of a model at the service of just a few companies.
* Content editor for OBSERVACOM. Doctorate in Social Sciences (UBA- IEALC) and Master’s Degree in Cultural Industries (UNQ). Lecturer in Communication Politics and Planning (UBA).