The management of the Ministry of Transport and Communications (MTC) in the first months of 2019 focused on two areas: solving the underutilization of the fiber optic backbone network and the problems about regional routing projects; and face the rearrangement of spectrum to massify 4G and pave the way to 5G.

On the first point, currently only 10% of the optical fiber network is used, complicating the MTC's goal of reaching 60% of localities with more than 100 inhabitants with fixed or mobile Internet access by 2021(by the end of 2018, 34% had been achieved).

The 13,500 kilometer display of the backbone network did not work as expected due to forecast errors and a stipulated price that was more expensive than that of other companies. That is why Azteca, network licensee, has been threatening for one year to abandon the project. In its financial results for the first quarter of 2019, it admitted that "it is in the process of updating the valuation and the prospects of its investment in Peru".

Faced with these constant warnings from the Mexican company, Deputy Communications Minister, Virginia Nakagawa, said that from the Ministry they will not hinder a possible exit of Azteca. This opened up speculation about those interested in acquiring the backbone. The eyes are on the Chilean group GTD, present in the Peruvian market for four years. In 2018 this firm invested US$40 million in its expansion plan in Peru and this year plans to spend US$25 million. Its General Manager in Peru, Eduardo Zagazeta, confirmed the interest in the backbone network, even though they estimate that its value has already devalued by 20%.

According to the original plan of the backbone network, 21 regional tenders should be added. All were awarded to different companies, but there are numerous claims of the awardees due to problems to splicing their layings. To this, changes in the award schedules and delays in the works, which even led the MTC to evaluate new tenders, were added. Regional network projects began to be awarded in 2015 and the first openings should have started in 2016: due to the above setbacks, more than 90 addenda were signed with MTC and delays in some cases exceed two years.

"A Mhz by Mhz Fight"

The last few months were very active within the MTC in all matters concerning spectrum policies. From the Directorate General for Policy and Regulation in Communications, a process of spectrum rearranging is being carried out to recover frequencies for the State, while at the same time attempting to alleviate certain "distortions" of the market. In early March, the MTC published the first proposal for reorganization, which would allow the State to recover 30 Mhz in 2.3 Ghz and 40 Mhz in 2.5 Ghz. Possible 2.3 Ghz processes would affect Entel and virtual mobile operator Dolphin and 2.5 Ghz, to Claro, Bitel, Entel and Cotel (fixed wireless service provider).

Ministry sources told Convergencialatina that the dealings with the companies affected for these rearranging processes are true "Mhz by MHz fights". As an example, in Lima, Claro has 136 Mhz in the 2.5 Ghz band and Entel with 54 Mhz, and could happen to have 80 Mhz and 40 Mhz, respectively.

This policy aims to recover frequencies that could eventually be used for 5G, and correct "deviations" observed in the market: in particular these distortions occur with Bitel, which in 2017 accessed spectrum on request in 2.5 Ghz for 183 provinces of Peru (except Lima), and Claro, which acquired smaller companies and thus obtained frequencies. Both cases were within a legal framework and in line with current regulations, without any impediment, but from the MTC they noticed this frequency hoarding and this triggered several measures between 2018 and 2019:

In March the spectrum cup regulations were published: for all bands less than 1 Ghz, the cap is 60 Mhz per economic group; above 1 Ghz and up to 6 Ghz, the cap is 250 Mhz.Also in March, ProInversión was entrusted with the tender for frequencies that were available, beyond what is recovered with the rearrangement: it contemplates the tender of 60 Mhz in 1.7-2.1 Ghz (AWS extended) and 30 Mhz in 2 , 3 Ghz for the first quarter of 2020.For all new spectrum allocations, standards for efficient use were also provided.

This week the spectrum rental regulation was approved, especially aimed at promoting the provision of services in rural areas.