Despite protests from the country’s current cellular operators, the Colombian Ministry of Communications is working on plans to auction personal communications services licenses by this spring.
Fabiola Montealegre, analyst with ATC ConsulTel Americas in Cali, Colombia, said the ministry is reviewing a working document that outlines proposals and general guidelines. The ministry wants to auction licenses now so PCS operators will be up and running by Sept. 1, 1999, the day Colombia’s six cellular carriers lose their 5-year exclusivity in the market, said Andrew Elrick, research associate with Pyramid Research in Cambridge, Mass.
“The government has been trying to do this (auction spectrum) for about two years. There is a great deal of opposition from cellular operators,” said Elrick. “They are looking to stay in control of this [market] boom.”
Colombia’s cellular operators added a total of 742,000 customers during 1997 and increased their penetration from 1.3 percent in 1996 to 3.1 percent last year. The number of subscribers in Colombia has increased considerably from about 87,000 in 1994 to 1.3 million in 1997. The projections continue to point upward.
“I think the government wants to license now based on the market reaching its peak soon. It wants to attract international investment,” said Elrick.
Elrick said Colombia’s cellular carriers are upset over the government’s decision to license more operators because they paid a great deal of money in 1994-$1.2 billion-for their licenses and want the time to receive a return on their investments. They argue their license agreements stipulate that the government cannot grant new licenses until Sept. 1, 1999. But Elrick believes the government is afraid investment interest in new licensees will diminish by 1999 as the cellular operators will have capitalized on the country’s demand for mobile service by the time new players enter the market.
The government wants to auction more than six licenses. Montealegre said the ministry may auction two nationwide PCS licenses along with nine regional licenses in the west, east and north coast region. Each region would have three regional PCS operators. Only two cellular carriers currently operate in each of the three regions.
The new PCS operators also could be allowed to choose which technology they wish to deploy, but all of the country’s cellular operators use Time Division Multiple Access, and new operators may be required to deploy TDMA to interconnect with existing networks, said Elrick.
