CANTO WEEKLY NEWSLETTER – BNamericas 04/08/16

ICE files complaint over fixed telephony regulations – Costa Rica

El Salvador considering secondary spectrum market – El Salvador

Japan’s NTT reconsidering a PoP in Buenos Aires – Regional

The Fair Trading Commission of Barbados has established a new price cap plan (PCP) to govern how telco Cable & Wireless (CWC) Barbados adjusts its service rates over the next three years.

The plan details rates for competitive and non-competitive services, as well as a sub-cap placed on fixed line services for residential customers, according to a press release fromthe Commission.

The overall price increase for non-competitive services must be equal to or below national inflation, or 3% per year if inflation exceeds that percentage.

In the case of negative inflation, the permissable overall price increase will be zero for that year.

The PCP came into effect on April 1 and will apply to all customers of CWC until March 31, 2019, including those acquired as part of the Columbus Telecommunications acquisition.

In determining CWC’s cost for price-capped services, the Commission took into account demand forecasts, expected inflation, public opinion and expected efficiency gains for the period.

CWC recently made 1Gbps internet speeds available to all customers of its Flow brand in Barbados, as well as reporting significant Ebitda growth in 3Q15.

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5TH Mexico Infrastructure Summit

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ICE files complaint over fixed telephony regulations – Costa Rica

Costa Rica’s state-owned telco Grupo ICE has filed a complaint with the supreme court over new portability regulations for fixed telephony published by telecom regulator Sutel.

The operator claims that the regulations are unconstitutional and go against the free trade agreement between the Dominican Republic, Central America and the US, reports local news outlet El Mundo.

The regulations allow for the introduction of competitors to provide public telephony services, without the need for a corresponding concession.

“Both the constitution and the FTA state that public fixed telephony is not open to competition, but only to those who hold a special legislative grant, which, until today, had only been granted to ICE,” said the company’s telecommunications manager Jaime Palermo.

This is not the first time ICE and Sutel have clashed this year; the telco sued the watchdog for interfering with rates, as well as claiming that the regulator’s outdated practices result in discriminatory treatment.

El Salvador considering secondary spectrum market – El Salvador

El Salvador’s telecoms regulator Siget has included plans to create a secondary spectrum market in its proposal to amend the country’s general telecommunications law.

The proposal, submitted to the legislative assembly last week, states that “concessionaires will be able to transfer any title or lease the right to operate frequencies under concession with prior approval from Siget,” according to newspaper El Mundo.

The guidelines also state that lessors must demonstrate an ability to meet financial obligations related to concessions in order to ensure the continuity of services, as well as securing the approval of the local antitrust regulator.

Siget’s proposal has been met with resistance from the Inter-American Association of Telecommunications Companies (Asiet) on the assertion that it was formulated ​​without consulting local telecom operators.

Additionally, the ad hoc commission studying the proposed reforms decided that the unauthorized sale and rental of concessions would be grounds for revocation due to a prohibition in the existing law.

Latin America’s secondary spectrum markets are still in their early stages. The Mexican regulator IFT sanctioned the creation of one last week, while Chilean regulation continues to move towards one in that country.

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UPCOMING BNAMERICAS EVENT

5TH Mexico Infrastructure Summit

Click here to see the agenda and speakers

Japan’s NTT reconsidering a PoP in Buenos Aires – Regional

A few years after dropping plans to have physical infrastructure in Argentina, Japanese telecommunications giant NTT Group is reconsidering opening an internet point of presence (PoP), Michael Wheeler (pictured), executive VP for global IP network at NTT America, told BNamericas.

“We’ve looked to Argentina in the past, many years ago, when we were opening the point of presence in Brazil. We strongly considered doing one in Buenos Aries as well. However, as the situation there got worse and worse and more unpredictable, we decided it was too risky and didn’t make a move,” Wheeler said.

“We are cautiously optimistic about where things are heading in Argentina, but [opening a PoP] is definitely on our radar screen.”

Another Latin American country where NTT will “probably be putting in” a new PoP is Colombia, which Wheeler considers a market with steady, linear growth and “architectural advantages” for a PoP.

Speaking to BNamericas in São Paulo, Wheeler said the company is “long-term optimistic” about Brazil sorting out its political instability as well as the economic crisis.

It is in Brazil that NTT maintains its sole physical infrastructure in Latin America. Customers from other countries in the region either buy services from the Brazilian PoP or directly from the US. Large-scale internet transit for ISPs and telcos is the company’s core business focus.

According to Wheeler, NTT’s business has been resilient overall to the current situation in Brazil due, predominantly, to two reasons: first, around 60% of the group’s nearly 50 clients in Brazil are multinational companies, who are NTT’s customers in other markets.

And secondly, because demand for connectivity and for traffic tends to grow steadily regardless of the economic situation in the country.

Who’s who in the Panama Papers – Regional

The leak of 11.5mn secret files from Panamanian law firm Mossack Fonseca has connected 140 politicians from over 50 countries with offshore companies in tax havens.

The leak known as the Panama Papers – the result of an investigation by the International Consortium of Investigative Journalists – names 72 current or former heads of state, including Russian President Vladimir Putin.

Argentine President Mauricio Macri was found to have been a director, along with his father and brother, of Fleg Trading Ltd, which was incorporated in the Bahamas in 1998 and dissolved in 2009. He did not disclose his connection to the company when he was mayor of Buenos Aires, and never specified the source or location of his foreign assets, according to the ICIJ report.

In response, Macri’s spokesman said the president did not list Fleg Trading as an asset because he did not have capital participation in the company.

Argentine President Macri failed to disclose a role in a company in the Bahamas (CREDIT: AFP).

Macri’s predecessors, the late Néstor Kirchner and his wife Cristina Fernández de Kirchner, are also listed in the report via a close associate. Daniel Muñoz was the private secretary of Kirchner, who ruled from 2003 to 2007, and an aide to Fernández (2007-15). He is linked to Gold Black Limited, which was incorporated in the British Virgin Islands in 2010, with funds listed as “personal savings,” the report says.

In 2009 Muñoz was investigated in Argentina for illegal enrichment, although the charges were dropped. Four years later, media reports said he helped transport “bags of money” belonging to Néstor Kirchner to Santa Cruz, the home province of the ruling couple.

Muñoz could not be reached for comment by ICIJ.

Another high-profile Latin American player cited in the Panama Papers is Juan Armando Hinojosa, known as Mexican President Enrique Peña Nieto’s “favorite contractor,” having secured some US$750mn in contracts with government agencies.

He was part of the 2014 controversy over a US$7mn property acquired by Mexican first lady Angélica Rivera, which was built by one of Hinojosa’s firms and registered under its name. Following the controversy, according to ICIJ, an offshore network of trusts was created with help from Mossack Fonseca to hold US$100mn, with Hinojosa as the main beneficiary. The network included nine entities in New Zealand, the UK and the Netherlands.

Hinojosa did not respond to inquiries from ICIJ.

Controversy over a property for Mexican President Enrique Peña Nieto and first lady Angélica Rivera may have led to the creation of offshore accounts for a contractor (AFP).

The Panama Papers also mention Peruvian political players, including the two main financial backers of presidential candidate Keiko Fujimori, while her rival Pedro Pablo Kuczynski appears in a letter of recommendation he wrote for a friend who created a firm in Panama.

Mossack Fonseca has been operating for 40 years, and has 600 employees in 42 countries.

Creating offshore companies is not illegal per se, as there are legitimate uses for them. But the report found that in the majority of these cases, the law firm, banks and other entities did not verify that clients were not implicated in criminal enterprises, tax evasion or corruption.