With RDNFO reform in its sights, MTC launches review of Broadband Law

10 Oct 2018

Peru’s Ministry of Transport and Communications (Ministerio de Transportes y Comunicaciones, MTC) has confirmed that it will ‘comprehensively review’ the economic conditions and assumptions of the Broadband Law and its regulations – with assistance from the World Bank and the Development Bank of Latin America (Corporacion Andina de Fomento – Banco de Desarrollo de America Latina, CAF) – as it looks to address the failure of the National Fibre Optic Backbone (Red Dorsal Nacional de Fibra Optica or RDNFO) project in achieving its targets. The MTC’s study will include a look into maximising the use of the RDNFO and a review the economic model of the 21 supplemental Regional Projects, to ensure that they are self-sustainable in the medium term and can contribute to the growth and improvement of telecoms services.

As previously reported by TeleGeography’s CommsUpdate, sector watchdog the Supervisory Agency for Private Investment in Telecommunications (Organismo Supervisor de Inversion Privada en Telecommuniciones, Osiptel) had warned earlier this year that use of the RDNFO was far lower than expected due to greater competition from private firms. Parallel infrastructure installed by private companies combined with the rigid pricing structure agreed between the government and Azteca – the firm selected to manage the RDNFO – had led to an 84% shortfall in capacity demand: Osiptel noted that expected capacity demand in June 2018 had been 137Gbps, but reported use for that period was just 21Gbps. To remedy the situation, the regulator explained that modifications would need to be made to the contracts for the installation and operation of the fibre, but such changes would require alterations to the current legislation.

Following recommendations from the regulator, the MTC proposed an amendment that would provide tariff flexibility with a price ceiling, allowing Azteca to compete more effectively with other providers, and maximise use of the RDNFO. Nadia Villegas, DG of the MTC’s Communications Concessions division explained that the alteration would: ‘increase the demand of the RDNFO, increase use of the network to benefit 100% of the areas covered, reduce the telecommunications infrastructure gap [and ensure] that the RDNFO is not underutilised and complies with the Digital Agenda 2.0’. The MTC formally submitted the amendment to Azteca on 17 September and requested a counterproposal, but on 3 October the company responded to the ministry but provided no counter-offer. As such, no agreement had been reached regarding a potential modification of the contract with Azteca.