Azteca requests exit from backbone network project

3 Jan 2020

Azteca Communications, the firm licensed to deploy, maintain and operate Peru’s National Fibre Optic Backbone (Red Dorsal Nacional de Fibra Optica or RDNFO) has submitted a proposal to the communications ministry to terminate the concession by mutual agreement. If the proposal is approved, the Ministry of Transport and Communications (Ministerio de Transportes y Comunicaciones, MTC) said in a statement that it would begin the process of defining a new methodology for finding an operator to manage the system ‘in order to design the best alternative that allows the network to be delivered again to the private sector’. Under the proposal, Azteca would gradually hand the network over to the Peruvian government in a way that would guarantee continuity and quality of service to users, Vice Minister of Communications Virginia Nakagawa told local news outlet Gestion. With the termination of the Azteca agreement, responsibility for the system would fall to the National Telecommunications Programme (Programa Nacional de Telecomunicaciones, PRONATEL), the minister explained.

As noted by TeleGeography’s GlobalComms Database, in mid-2017 the government’s RDNFO project was found to be underperforming with utilisation rates far below their expected level. The results of a subsequent analysis found that the capacity on the RDNFO was not priced competitively, and operators had instead installed their own networks, limiting the demand and increasing competition for the remaining contracts. Remedying the situation has been a long-winded affair, however, as the rules governing the management of the RDNFO are integrated with the 2012 Broadband Law, and therefore more difficult to modify. Further complicating matters, meanwhile, Azteca has disagreed with the government over the best course of action to correct the situation. Following a lengthy review, a proposal to amend the relevant law was put forward in July 2019 and are expected to be approved within the coming weeks. The measures look to disentangle the RDNFO from the Broadband Law, thereby providing Azteca – or a future licensee – with greater flexibility in terms of pricing and services provided, and freeing up the ministry to carry out remedial measures more easily.