Shortly after the Venezuela telecom regulatory agency Conatel was forced to lift the ban prohibiting the country’s two cellular operators from adding new subscribers, sources have said the agency now plans to auction a third cellular phone license in January.
But analysts say the political fallout from the widely criticized ban may make a January auction a pipe dream, at best.
J.J. Gullish, Latin American analyst at International Technology Consultants in Bethesda, Md., said the country has been talking about issuing another license for more than a year now, but no real action has ever occurred. “They’ve been slow to define what that license will be,” he said, adding that whether the license will be nationwide or regional hasn’t been determined yet. “The ministry hasn’t proven itself as an effective regulator.”
The existing cellular operators in Venezuela-Movilenet, a subsidiary of CanTV whose owners include GTE Corp., Telefonica and AT&T Corp.; and BellSouth Corp.’s affiliate Telcel-both have a history of capacity problems with their networks. According to Gullish, “the government thinks that introducing a third company with a nationwide license could solve the problems of capacity.”
The capacity problem began when an oil windfall dramatically bolstered the country’s economy and the demand for phones-long repressed due to financial hardship-suddenly exploded.
“Operators expanded their networks very, very quickly,” in response, Gullish said. They both added some 200,000 subscribers each in three months. “When you move that fast, there will invariably be problems. It takes companies time to react to how the marketplace functions.”
But instead of allowing them time to adjust and fix their network quality issues, Conatel banned further subscribers. The carriers fought this ruling and won. Since then, operators have reported improved services, with the number of dropped calls down to .53 percent, which is below the 2-percent maximum set by Conatel.
Now, Conatel is in a weak position. It has very little backing and has a less than desirable reputation among foreign carriers it wants to attract to buy a new license, which bodes poorly for the proposed January auction.
“I wouldn’t tell any of our customers to start preparing,” Gullish said. “They’ve been talking about this for so long that I don’t put a lot of credence in a January time line.”
Gullish said the most he expects to see accomplished by January is the circulation of the auction’s time line, if that.
