Telecoms bill criticised for favouring public sector; competition law takes effect

21 Oct 2011

Ecuador’s new draft Telecommunications & Postal Services Act, submitted to parliament this week by President Rafael Correa, has been criticised by local commentators for giving preference to public enterprises in obtaining authorisations for the use and operation of radio spectrum. Regarding frequency assignments, the draft law gives priority to the needs of public organisations ‘as regards the public interest and the requirements of the services offered by these companies.’ The bill gives extensive powers over frequency licensing to a directly government-controlled entity, the Agency for Regulation & Control of Telecommunications, while private operators must obtain a ‘certificate of good conduct’, subject to approval from the new body, reports local newspaper El Universal. Further criticism of the bill came from a spokesperson for the Ecuadorian Broadcasting Association, Otto Sonnenholzner, who raised the concern that the proposed law would have the effect of prohibiting foreign investment in the communications and media sectors.

There were other legislative developments in Ecuador earlier this month, with the passing of a new competition act, the Regulation and Control of Market Power Law, which introduced comprehensive merger control rules for the first time in the country. The law also imposes penalties for monopoly-like business practices and abuse of dominant market positions, while also specifying limits on ownership stakes that can be held in the media sector. The act has drawn criticism over ‘excessive’ powers to control and sanction private companies, and concerns that it will be used as a political tool.