President Correa queries telecoms tax, regulatory legislation

22 Jan 2015

Ecuadorian president Rafael Correa has partially vetoed the country’s new Telecommunications Act which was approved by the national assembly on 17 December, by lodging a total of 24 objections, notably querying the dominant market share threshold for the imposition of a new tax on telecoms/broadcasting companies, Telecompaper reports. Under the legislature-approved version of the law, private sector companies which exceed 30% market share in their operating sector must pay an additional percentage of their profits to the government, but Correa argued that the threshold should be 35% as per earlier proposals. TeleGeography’s GlobalComms Database notes that America Movil-owned Conecel (Claro) controlled over 68% of the Ecuadorian mobile market at end-September 2014, but Telefonica-backed Movistar Ecuador was also close to the lawmakers’ latest proposed 30% tax threshold with a share of nearly 28%; meanwhile, in the pay-TV market DirecTV (which is in the process of being taken over by US giant AT&T) would be subject to the new tax whether or not President Correa’s objections are upheld, with a segment market share approaching 40%.

According to the wide-ranging telecoms bill, the central government shall be responsible for the administration, regulation, management and control of telecommunications and radio spectrum; the Ministry of Telecommunications & Information Society will act as lead agency, and the newly created Telecommunications Control & Regulation Agency (Agencia de Regulacion y Control) will perform control and management functions (currently handled by the Superintendencia de Telecomunicaciones [Supertel]), replacing an existing regulatory system administered by dual regulators Conatel and Senatel. Other objections to the bill lodged by the President relate to the issuing and length of licences, the regime for issuing fines and the powers of the Agencia de Regulacion y Control. The national assembly will discuss the President’s objections and rule thereon within 30 days.

Ecuador, Ministry of Telecoms & Information Society (Mintel)