Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Thursday, February 27, 2020

Connectivity and ICT in the hands of the market and Knowledge Economy in those of State

Development, innovation and knowledge are three terms present in the name chosen by the new government to represent the functions of agencies of different rank, within the ministerial organization chart. Among the purposes of these government agencies is the adoption of measures to design or implement State policies that add Argentina to the new economy and production era, one of the strategic objectives of Fernández administration. The Secretariat of Public Innovation is the body with the highest hierarchy for the specific subjects related to communications, with the ICT Undersecretariat (Spanish: Subsecretaría Tic, SubTic) as a direct channel towards the sector..

In practice, since last August, when the political party Frente de Todos won by a large margin the primary elections (PASO, for its Spanish acronym), there was a shake whose shock wave continues and will begin to decline just in next March. By that time Fernández government plans to have the debt rearranged - they expect to close the negotiations on March 30 - and therefrom adjust the plans for his four years management.

The new government aims to boost the Argentine industry first for its recovery and, simultaneously, create the conditions for the productive sector to reconvert to Industry 4.0. Mauricio Macri's management, more specifically Congress, dealt with and approved last May, almost unanimously, the Knowledge Economy Law, effective as of January 1 this year. In last November Macri regulated that Law. But one of the first measures taken by Fernández, in January 19, was ruling it out because he considered that it had failures and confusing issues and, above all, that the tax benefits were the same for borh SMEs and large companies. The new bill was sent to Congress on February 16. The reforms were in charge of the Ministry of Productive Development in charge of Matías Kulfas (the law enforcement authority) -, and provide for tax benefits differentiated for SMEs and large companies. Also a series of details and definitions that make it clear what a technology company is, for example. And on the other hand, a Trust Fund is created to finance knowledge economy-oriented projects.

Since September, Convergencia Latina has been warning that Fernández would not focus on encouraging connectivity, since large and small suppliers have no other way out than to invest in FTTH, update the technology of their infrastructure under penalty of losing market at the hands of competitors and deteriorating their market value. That hypothesis is confirmed. Private companies will invest by inertia, the networks will allow high speeds and the State will bring connectivity to the remote sites of the country through the state carrier Arsat or through local SMEs by providing subsidized loans from the Universal Service Fund, as very well done by Macri's government, particularly in the last two years.

ICTs. The data that support that idea are now in sight. In the structure of the communications sector, the highest rank is for the Ministry of Public Innovation, headed by Micaela Sánchez Malcolm. It depends upon the Undersecretariat of Information and Communication Technologies in charge of Martín Olmos. Sánchez will have the “supervisory control” of the regulator, the Ente Nacional de Comunicaciones (Enacom), whose board is chaired by Claudio Ambrosini, and through the Sub-Tic she will be the one that recommends policies to the state-owned company Arsat, where Pablo Tognetti was appointed as chairman of the board. He is an aerospace physicist who had already held the position between 2008 and 2013, five years in which the company built two satellites and extended 32,000 km of fiber optics, in addition to building a large Data Center. On the other hand, three other under-secretariats depend upon Sanchez: Administrative Innovation, Public Management and Innovation and the Undersecretariat of Open Government and Digital Country.

There is a complex plot that has to do with the Knowledge Economy policies and it could be said it is transversal to three ministries. These specific actions would be coordinated by Gustavo Béliz, who heads the Secretariat of Strategic Affairs, but with the rank of Minister, and depends upon the Presidency of the Nation. Béliz has the Undersecretariat of Knowledge for Development (at the closing of this note the appointment had not been made) and the Undersecretariat of Relations for International Financing for Development, headed by Christian Asinelli. But for now, Beliz faces other urgent issues.The organizational chart that illustrates this note represents the transversality herein explained. It can be seen that the development of connectivity infrastructure and ICTs remain in the hands of the market. And as can be found in the interrelation of the ministries, the State is involved in building a path that leads to development, innovation and knowledge.

Government actions will have two basic working lines. On the one hand, to design a political and legal staging oriented to the macroeconomic issued to be the reliable framework to generate investments of the industrial and service sectors' players. Government sources believe that in the evolution towards Industry 4.0, it will be important to be attentive "to the smallest details." Without too much precision they refer to being aware of every little indication or novelty and then adopting "micro decisions" that expedite the process towards knowledge economy.

If the objectives mentioned are specified throughout the four years of the presidential term, the demand for connectivity that already increases year by year will have an additional increase in the first instance due to the needs of the productive areas and also by the end users, who in addition to the devices used by each family member, they will need to interconnect other household appliances in a future smart home.

Therefore, fixed and mobile broadband providers will not be able to delay investments to renew their networks, rush to reach the home with fiber optics and be attentive to the continuous modernization of the infrastructure.

Interrelation. Beliz will have round-trip relationships, especially with the Ministry of Productive Development, who has a Secretariat of Industry, Knowledge Economy and External Commercial Management led by Ariel Schale; the Undersecretariat of Knowledge in charge of María de los Ángeles Apólito depend thereupon.

Béliz will also have links with the Ministry of Education, in charge of Nicolás Trotta, whose secretary of Education is Adriana Puigrós and will have, among others, the Undersecretary of Planning, Prospective and Innovation, which will be directed by Liliana Pascual. The measures adopted in this area for the training of tskilled human resources for the digital world and the reform of curricula of all levels of education will be key in order to adapt them to the requirements of what can be defined as a new era.

Another ministry taking part will be that of Science, Technology and Innovation, headed by Roberto Salvarezza, who has the Secretariat of Planning and Policy in Science, Technology and Innovation and the Under-secretariats of Federalization of Science, Technology and Innovation, (its head is Elisa Colombo) and the National Agency for Scientific and Technological Promotion (headed by Fernando Peirano).

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