One hot topic in communications regulation these days is the recently enacted regulation on Multiband Homologation and Certification of Mobile Devices. According to this new regulation, contained in Subtel’s Exempt Resolution No. 1,463 of 2016, mobile devices destined for the public mobile telephony and data transmission services, to be distributed or commercialised in the Chilean market, must:
- support at least the total frequency bands that operate over one of the several technologies deployed in Chile;
- be homologated, certified and validated by an authorised entity;
- bear a distinctive sticker that should identify the capabilities of a device to operate over any of the technologies (ie, 2G, 3G, 4G, etc) and its support of a Chilean emergency alert system; and
- be registered at a central database to assure compliance with these regulations.
The purpose of this regulation is to facilitate number portability and eliminate limitations and restrictions that currently affect users’ capability to switch operators, and thus remove the need to purchase different devices from different providers.
Another interesting recent development in the field is that Subtel announced a 77 per cent reduction, during the next five years, of the tariffs charged among concessionaires for the interconnection of their networks, which are known as access charges. This implies that all mobile telephony companies will pay less to interconnect their networks, thus eliminating the entrance barriers for incoming actors. Furthermore, the competition in the market will increase, and this will promote the revitalisation of fixed telephony, which will also pay less to communicate with mobile phones. Consequently, users will have access to better offers and services, and Chilean access charges will be on a par with those of OECD countries. Subtel’s decrees providing these reductions should be issued and published during 2019.
There is also a bill currently being discussed in the Chilean Congress, which, if approved, will create a Superintendency of Telecommunications. This entity will be public, autonomous, non-centralised and will own and manage its own patrimony. Its main roles will be the supervision of compliance with local telecoms regulations by the operators and the imposition of administrative sanctions if such regulations are violated. (These functions are currently performed by Subtel and will be transferred to the new entity.)
Moreover, there is another bill currently being discussed in the Chilean Congress which, if approved, will create a secondary market for the transfer of mobile telephony radio electric spectrum by and among the current operators, and to achieve this, Subtel has already amended the 2G, 3G and 4G mobile concessions technical rules allowing the separation of the current spectrum band blocks into sub-bands of 10MHz each. According to the bill, the concessionaires would be able to partially assign their spectrum by means of a transfer, a lease, an assignment or a grant of right of use with the prior authorisation of Subtel, which may not be denied without reasonable cause. The new authorisation related to the relevant transfer, lease, assignment or grant of right of use, will have the same duration and obligations - applicable to the corresponding spectrum portion - as the original concession title.
Regarding mobile services, there has been a lot of expectation, in both the market players and the general public, regarding the announcement of the upcoming spectrum allocations for the deployment of 5G networks. However, there is a series of past and current events that may affect or delay this process, which are summarised below.
On 27 January 2009, the Supreme Court ruled that no operator may concentrate more than 60MHz in any band assigned for public mobile telephony services as a consequence of the 3G public bid, which became an opportunity for new entrants. The public bid took place during 2009 and, after a public bid, Nextel (currently WOM) obtained two concessions of 30MHz each and VTR (a subsidiary of Liberty Media) obtained the remaining 30MHz, permitting the entrance of two new competitors into the market of - at the time - next generation mobile services.
In 2012, a public bid process took place in Chile for the granting of PTS concessions based on 4G technology for the provision of fixed or mobile data transmission public service (in the 2,505-2,565MHz and 2,625-2,685MHz frequency bands) and Claro, Entel and Movistar were all awarded one of the three 40MHz spectrum blocks granted through this public bid (blocks ‘A’, ‘B’ and ‘C’ respectively).
Later, during 2014, a new public bid process took place in Chile for the granting of PTS concessions based on 4G technology for the provision of fixed or mobile data transmission public services in the 713-748MHz and 768-803MHz frequency bands (700MHz frequency bands). Movistar, Entel and Claro were each awarded one of the three spectrum blocks granted through this public bid (blocks ‘A’ of 20MHz, ‘B’ of 30MHz and ‘C’ of 20MHz, respectively). In addition, on 7 November 2014, Subtel issued a technical rule reserving 20MHz of the 700MHz band in favour of the Chilean state to cover the communication needs of public safety and aid in case of catastrophes and emergencies.
Notwithstanding the foregoing, Telestar, Netline and Conadecus presented an opposition before the MTT, arguing that the limit of 60MHz established by the Supreme Court (on January 2009 in the 3G awarding process) was not being considered and enforced in the public bid process and that the bidding conditions were discriminatory. The MTT ruled in favour of the incumbents that participated in the public bid process, noting that this topic is currently being treated by the Antitrust Court and that, therefore, it is not of its competence and that the bidding conditions were fair and sufficient. Telestar appealed before the Court of Appeal of Santiago, which ruled in favour of the incumbents that participated in the public bid process, following the general reasoning of the MTT in its first instance decision. Finally, the Antitrust Court also ruled in favour of the incumbents.
However, a legal remedy was submitted by Conadecus against the Antitrust Court decision, before the Supreme Court in October 2016. After almost two years, in June 2018, the Supreme Court issued its ruling, stating that the incumbents incurred in anticompetitive conduct when participating in the 700MHz frequency bands public bid. It also stated that in order for the incumbents to have been able to participate in such bid, they would have had to: (i) previously dispose of the relevant spectrum blocks to assure that they did not exceed the 60MHz limit; or (ii) file the relevant consultation before the Antitrust Court to reanalyse such limit, based on the characteristics of the market at that time. Considering the above, the Supreme Court: (i) ordered the incumbents to dispose of an equal portion of the spectrum (in any band) obtained in the 700MHz frequency bands public bid (Entel 30MHz; and Movistar and Claro 20Mhz each); and (ii) recommended Subtel to submit a consultation before the Antitrust Court to redefine the 60MHz spectrum limit.
As a consequence of the Supreme Court’s ruling, in October 2018, Subtel submitted the above-mentioned consultation proposing an increase of the spectrum limits per concessionaire and making a segmentation of the frequency bands according to their nature (low, mid-low, mid-high and high). On the other hand, the incumbents still have not disposed of any of their spectrum blocks; therefore, Conadecus initiated enforcement proceedings before the Antitrust Court. Currently, such proceedings are pending.
Almost simultaneously with the Supreme Court resolution described above, in June 2018, Subtel issued the exempt resolution No. 1289-2018, which amended several technical rules of services provided in the 3,400-3,800MHz (3.5GHz) spectrum bands. The resolution established that no other telecommunications authorisations would be granted in such frequency bands. However, it also suspended or ‘froze’ all the operations of all the telecommunications services that were authorised in such bands, giving the affected entities the possibility to provide their approved services in other frequency bands described in the same resolution. Subtel’s decision provoked a turmoil in the telecommunications market, as it was well known that these frequency bands were under analysis for a possible future deployment of 5G technology. Thus, the main players holding concessions in such frequency bands filed legal remedies against the resolution seeking for its annulment by the courts. In October 2018, Subtel amended the resolution, partially eliminating the suspension for some of the telecommunications services originally included in such resolution. Consequently, the above-mentioned legal remedies were withdrawn by the affected operators.
Following the above, in February 2019, during the Mobile World Congress held in Barcelona, the Undersecretary of Telecommunications informed that the plan for the implementation of 5G would be starting during March of the same year, stating that Subtel would make available a 20MHz spectrum block in the 700MHz band for 5G, in line with what the authority was currently doing in the 3.5GHz band. Consequently, on 11 March, Subtel issued the exempt resolution No. 265-2019, and has made available for future public bids a 20MHz block in the 700MHz that was previously reserved in favour of the Chilean state to cover the communication needs of public safety and aid in case of catastrophes and emergencies.
There have also been some new developments in the physical infrastructure front. On March 2018, a new public bid process was announced regarding the deployment of land tracts of the Southern Fibre Optics Project. During 2017, another land tract and also submarine tract of the project were awarded. This project is part of an initiative to bring higher level connectivity to the most southern and extreme areas of the country. Finally, in connection with the above, there have been some announcements regarding new submarine cable projects. For example, Google has already started the deployment of the submarine cable that will connect the United States and Chile, which it is expected to be operative within 2019. Also, Huawei has announced that they are analysing the possibility of building a submarine cable between China and Chile. Finally, the Chilean government has announced an Asia-Chile fibre optics cable as an official project that is already being carried out and aims at selecting the cable builder provider during 2019.
In April 2018, the MTT published in the Official Gazette the Supreme Decree No. 167, which contains the regulation that rules the ways and conditions to guarantee the freedom of choice in the contracting and receiving of telecommunications services in private estates, buildings and co-owned real estate. Subsequently, Subtel issued the Exempt Resolution No. 766, which establishes the above-mentioned regulation’s technical rule. These new regulations seek to apply and enforce the provisions of Law No. 20,808, which protects the freedom of choice of cable, internet and telephone services, also known as ‘Duct Law’, by establishing the minimal conditions of construction and design that allow for free access to telecommunications services by owners or lessees of units in private estates or building projects. The regulatory framework provided by these rules will permit telecommunications services providers to reach users that most of the time only had the chance to contract services from the only provider that originally was able to access such private states or buildings.
Finally, there are several governmental agencies currently discussing the blockchain, smart contracts and artificial intelligence technologies and its potential implications in different areas of the economy. Although the technology is young and its regulations worldwide are still unclear or at a very early stage of development, the telecommunications sector could be one of the areas affected by these revolutionary technologies. This is why new regulations could eventually arise from these discussions.
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