Noose loosens on Uruguay’s strangled mobile market

11 Jun 2003

Uruguay’s mobile market may face substantial change pending the outcome of President Jorge Batlle’s decision of whether or not to auction off a 20-year 800MHz licence. If the licence is auctioned it will open a direct market channel for BellSouth’s local unit Movicom, consequently releasing the stranglehold of the state-owned operator Ancel. At present, local law dictates that Movicom is forced to rent a licence from Ancel, creating an unwanted dependency on a major competitor. According to Uruguay’s regulating agency Unidad Reguladora de Servicios de Comunicaciones (URSEC), the decision of whether to auction the concession has resulted from steady pressure from the US trade department. URSEC director Juan Jose Camelo was recently quoted in local press saying it was unlikely that BellSouth would face a bidding war in the event of an auction due to the capital intensity of network building. URSEC went on to say that potential market entrants would be deterred by the obsolete 800MHz band technology and would most likely wait for the allocation of the higher 1800MHz frequency spectrum. While local law prevents direct licensing, the Uruguayan government is revising when to resume auctioning higher band frequencies.