RESTRICTED
WORLD TRADE S/NGBT/W/3/Add.29/Rev.1
10October 1995
ORGANIZATION(95-3032)
Original: Spanish Negotiating Group onBasic Telecommunications
COMMUNICATION FROM VENEZUELA
Response toQuestionnaire OnBasic Telecommunications
Revision
Theattached communication iscirculated attherequest ofVenezuela totheMembers ofthe
Negotiating Group onBasic Telecommunications.S/NGBT/W/3/Add.29/Rev.1
Page2
Responses oftheAdministration ofVenezuela Formulated bythe
National Telecommunications Commission (CONATEL)
Response totheQuestionnaire onTelecommunications
PartI
Definition andMarket Structure
Definition
1. Basic telecommunications services means switched local, domestic andinternational fixed
telephone services.
Basictelecommunicationsnetworkmeanstheswitchednetworkconsistingofequipment,systems
andphysical infrastructure intended toprovide basic telecommunications services.
2. Facilities means alloftheequipment, devices andcomponents connecting thebasic
telecommunications network totheinternal telephone facility.
3. No.
Market structure
4. Atthepresent time, anduntiltheperiod oflimited competition comes toanend(bythe
year2000), CANTV (National Telephone Company ofVenezuela) hastheexclusive righttoprovide
basic telecommunications services, other thanservices topopulation centres with5,000 orfewer
inhabitants; suchservices areauthorized, provided thatCANTV isnotsupplying them orhasnot
installed anautomatic switching centre.
5. CANTV currently hasexclusive national rights inrespect ofbasictelecommunications. Forty-
ninepercentofitsshares areheldbytheState, 11percentbyCANTV workers and40percentby
theVENWORLD Consortium.
6. Foreign equity participation inmonopoly orexclusive suppliers ispermitted; however, the
maximum percentage share allowed hasnotbeendefined. Thecurrent level ofidentifiable foreign
participation istheshare corresponding totheVENWORLD Telecom CAConsortium, represented
byTelefónica ofSpain, GTE andAT&T.
7. Certain activities which cannot beconsidered asbasic telephony arenottheexclusive preserve
ofCANTV, forexample: facsimile, telex, mobile datatransmission, orsatellite services.
8. There arenosuchagreements.
PartII
Competition
(i) Overview. Thebasic policy oftheVenezuelan Administration hasbeentoopenupthesector
andpromote private investment. Consequently, except inbasic telecommunications, where there is
aperiod oflimited competition, anyforeign supplier canparticipate inthetelecommunications business.
Rural telecommunications services areopen tounrestricted competition subject tothefulfilment ofS/NGBT/W/3/ Add.29/Rev.1
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certain conditions laiddown intheconcession agreement signed bythebasic network operator. It
should alsobeemphasized thatsome oftheowners ofthebasic telecommunications enterprise in
Venezuela arenowadays foreigners, sothatwhen theabove-mentioned period oflimited competition
comes toanend,anyprivate supplier (foreign ordomestic) mayenter thebasic telecommunications
business.
(ii) Modes ofsupply. Commercial presence isrequired inVenezuela anditisalsonecessary to
obtain anofficial concession before aservice canbeprovided. There isnorestriction onconsumption
abroad. Cross-border movements arenotauthorized andthepresence ofnatural persons isnotrestricted,
other thantotheextent indicated inthehorizontal section ofouroffer.
(iii) Market access. There isnosystem oflicences inVenezuela. However, theTelecommunications
Lawinforcerequires aconcession fortheoperation ofanytelecommunications service. Theprocedure
forobtaining itisintwostages: (i)registration oftheenterprise, whereby thelatter supplies the
regulatory body(inthiscase,theNational Telecommunications Commission, CONATEL) withlegal
information, financial statements andabriefdescription oftheproject; (ii)subsequently, aconcession
agreement orschedule ofconditions issigned, setting outthemutual undertakings which bindtheState
andthesupplier. These undertakings arenormally connected withtheproject tobedeveloped bythe
supplier andtheconditions under which theservice istobeprovided.
(iv) National treatment. Venezuela gives national treatment toalltelecommunications operators.
(v) Licensing.CurrenttelecommunicationslegislationinVenezuelarequiresaconcessiontooperate
anytelecommunications service. Theprocedure forobtaining itisintwostages: (i)registration of
theenterprise, whereby thelatter supplies theregulatory body (inthiscase, theNational
Telecommunications Commission, CONATEL) withlegalinformation, financial statements andabrief
description oftheproject; and(ii)grant oftheconcession andsigning oftheconcession agreement
orschedule ofconditions, which laysdown theterms andconditions under which theservice isto
beprovided.
A. Subsectors. Asstated above, onlylocalanddomestic andinternational long-distance, switched
(voice) telephone services, arecovered byaperiod oflimited competition; allother services come
under paragraphs (i)to(v)above. Theonlyother restriction onnewsuppliers istheradio spectrum.
B. Venezuela hasakindofservice called private networks, which areforsmall usergroups and
arenotconnected tothebasic telephone system. Under theregulations, these operators maycarry
signals wherever theywish, nationally, internationally orevenlocally, theonlyrestriction being that
theymustnotbeconnected tothepublic network. Other operators mayusethebasic monopoly only
fortheirconnections withforeign countries, untiltheperiod oflimited competition comes toanend.
Resale basis
Until theperiod oflimited competition comes toanend,nooperator mayresell hiscapacity,
whether ornotunused, toanother operator oruser.
Facilities-based
5. With aconcession and/or permit, basic telecommunications suppliers, whether foreign or
domestic, mayconstruct andoperate theirownnetwork orinvest inconsortia toconstruct andoperate
suchfacilities, provided thisdoesnotaffect therights oftheCANTV under thesystem oflimited
competition. Therural telecommunications sector isbeing opened upatthepresent time.S/NGBT/W/3/Add.29/Rev.1
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Public/non-public supply
6. No.
7. Voice telephone services.
8. Exceptforswitchedbasictelephoneservices(local,anddomesticandinternationallong-distance),
theoperator mayormaynotmake theremaining services available tothepublic ingeneral.
9. Uninterrupted andefficient service mustbeprovided under conditions ofequal treatment for
subscribers.
10. None, except theprohibition ofconnection tothebasic network during theperiod oflimited
competition.
11. No.
PartIII
Relationship Between Regulatory andOperational Functions
1. InVenezuela, theExecutive exercises exclusive regulatory powers, although informal
consultations areheldwiththeoperators inthesector.
2. Theregulatory authority inVenezuela isresponsible forformulating andenforcing standards.
3. Only thenational authority, through thecompetent Ministry andtheregulatory body, has
responsibilityforregulatoryfunctionsaffectingtelecommunications.Anydecisiononaparticularmatter
issubject toadministrative review andjudicial appeal; judicial appeal istheonlyadmissible remedy
against decisions having general effects.
Frequency allotment orassignment
4. Theinterested partysetsoutinhisproject theradiofrequencies herequires andtheyareassigned
tohimaccording toavailability. Hemayalsorequest additional frequencies, ifhesowishes.
5. National treatment isgranted toallthose requesting radio frequencies.
Numbering andidentification codes
6. Adirect sequential mechanism isused.
7. National treatment isgranted.
Standards, typeapproval andequipment attachment
8. Theonlyrequirement isthatequipment andsystems should notdamage thenetworks towhich
theyhavetobeconnected, forwhich reason Venezuela accepts equipment previously approved by
advanced administrations.
9. Theinterestedpartiesarealwaysconsultedabouttheformulationofstandardsthroughthesystem
ofpublic hearings.S/NGBT/W/3/ Add.29/Rev.1
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10. Todate, approval given byadvanced administrations hasbeenaccepted.
11. Theonlyruleisthatthere should benodamage tothenetwork towhich theequipment is
connected.
12. Yes,theymaydoso.Theonlyrestriction isthattheycannot usevoice traffic (telephony)
inaccordance withtheconditions forthebasic network, during theperiod oflimited competition.
13. No,butagreements maybeconcluded withthesuppliers ofbasic telecommunications.
Interconnection
14. Interconnection iscompulsory, forthepresent operator ofthebasicnetwork, withalloperators,
except withprivate networks, which bytheirverynature areexcluded fromthissystem. Thisobligation
islaiddown inArticle 32oftheRegulations ontheoperation ofthebasic telecommunications network
andintherelevant concession agreements.
15. Seeprevious answer.
16. Yes,itisauthorized.
17. InVenezuela interconnection iscost-based, withtheexception ofcellular interconnection, which
contains acellular usersubsidy component forthebasicnetwork. Thesubsidy willdisappear in1997.
Whenever anewservice requiring interconnection appears, theinterested parties firsttrytoreach an
agreement, which willbevalidforalloperators oftheservice. Iftheyreach anagreement, theterms
andamounts fortheinterconnection mustbeapproved bytheregulatory authority andtheyareamatter
ofpublic knowledge. Ifnoagreement isreached, theregulatory authority hasaperiod oftimeavailable
inwhich tofixtheterms andamounts.
Competitive safeguards
18. TheCompetition Protection Lawissufficiently broad tocover andpenalize allanti-competitive
practices andthereisaseparate authority responsible forthiswork. Inthecaseoftelecommunications,
ithasbeenestablished thatthepresent operator ofthebasic network mayprovide competitive services
ontwoconditions: (i)through aseparate subsidiary; and(ii)interconnection ofthecompeting operators
isguaranteed.
19. Theonlydominant operator isthepresent operator ofthebasic network, whose conduct is
governedbytheconcessionagreementbetweentheRepublicandtheoperatoraswellasbytheregulations
concerning thebasicnetwork, which provide forsafeguards against suchpractices invarious exclusive-
rights sectors.
20. TheGovernment 'spolicy isnottofoster monopolies inthetelecommunications sector, for
which reason itgranted thepresent operator ofthebasic network anexclusive-rights contract thatwill
endbyNovember 2000 atthelatest. Mergers andacquisitions aregoverned byanother regulatory
body established under theabove-mentioned Competition Protection Law.
21. They onlyexistforthepresent operator ofthebasic network, inwhich animportant operator
andmanufacturer from theUnited States participates, andthismeans thattheoperator ofthebasic
network inVenezuela must submit anypurchase above fivemillion dollars toacompetitive bidding
procedure.S/NGBT/W/3/Add.29/Rev.1
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Pricing-related measures
22. There aretwotariff scenarios: (i)oneforthepresent basic network operator governed by
the"price caps" method, devised withtheactive participation ofthetwoconsortia thatcompeted for
thenational telephone company; and(ii)theoneforcompeting service operators (including those who
participate insome basic telecommunications services), governed byamaximum andminimum tariffs
system, which isanattempt tomake surethatthecharges arethesameforeachservice. Inthissystem,
theoperator(s) must determine theminimum levels soastoreflect costs.
Ifacompeting service operator becomes dominant, histariffsystem becomes the"price caps"
system.
23. Thepresent exclusive operator ofthebasic network isrequired tosubmit histariffs for
Government approval andsubsequently tonotify themtousers bymeans ofnewspaper advertisements;
theotherservice operators notassigned exclusive-rights concessions arenotbound bythisrequirement.
Asregards theminimum tariffs ofcompeting services, theoperator mustclearly bearthecost
structure generated bysuchminimum tariffs. Thereafter, theoperator neednotsubmit histariffs to
theMinistry.
24. Theprinciple ofequal treatment, mentioned earlier, means thatoperators canoffer special
tariffs tousergroups andother users mayhaveaccess tothem iftheyfulfil thesame conditions. As
torelations withother countries, tariffs aregoverned byagreement between operators andtheymust
handle possible disparities. Theexception isthepresent basic network operator, whose international
tariffs aregoverned bythe"price caps" method andaresubject tore-balancing withlocalresidential
tariffs.
25. Yes,through discussions onmaximum andminimum tariffs.
26. Allarecost-based, taking account ofthedifficulties especially associated withthebasicnetwork.
Other services werenon-existent, sothatitwasveryeasytodetermine maximum andminimum tariffs
reflecting costs.
27. Yes. Whenever anewservice isstarted thecoststructure andtheproposed maximum and
minimum tariffs arereviewed bytheregulatory body together withtheinterested party, inorder to
reach areasonable agreement. Efforts aremade toensure thatthemaximum andminimum tariffs
arethesame foralloperators ofsuchservices.
Rights ofwayfortheconstruction ofinfrastructure
28. Yes,theyareallentitled tobuild anyinfrastructure deemed necessary, except forthetypes
ofconstruction requiring rights ofway, suchasducts, pillars, pylons, etc.,forwhich permits must
bearranged withthemunicipality concerned. Finally, theoperator mustcomply withworker-safety
regulations.
29. Yes. National treatment isgranted.
Newtelecommunications services
30. Theregulatory bodydraws uptwodocuments tobeconsidered atapublic hearing: (i)astrategic
outline and(ii)draftregulations. Withthesedocuments, aprocess ofseveral hearings isstarted, leading
uptotheissuance offinalregulations bytheregulatory body. While itistruethataservice maybeS/NGBT/W/3/ Add.29/Rev.1
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provided onlyonthebasis ofaconcession, theinterested party runstheriskthattheregulations may
turnouttobedifferent andtheagreement mayhavetoberenegotiated.
31. Newservices arestarted ontheinitiative oftheregulatory body oraninterested party. Ifthe
nature andother parameters oftheservice arenotspecified intheabove-mentioned documents, these
matters arecleared upintheprocess ofextensive public hearings.