Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Monday, December 28, 2020

Government anticipates future increases after complaints from the sector about the 5% increase and the Universal Basic Benefit

The Secretary of Public Innovation, Micaela Sánchez Malcolm, assured last week that the 5% increase authorized to ICT companies from January "is the beginning of unfreezing prices" and announced that the issue will continue to be evaluated in dialogue tables with companies.

The official sought to put cold cloths on the tension that appeared on Friday, December 18 when regulatory developments were announced and that shot up last Monday with the publication of regulations in the Official Gazette. Sánchez Malcolm reminded Convergencia that the economic crisis and the worsening of the pandemic fell on the entire society and not only on companies.

The declaration took place in the midst of the protest of service providers who considered the authorized increase very low and who also objected to the launch of the PBU (Universal Basic Benefit), which obliges them to offer a minimum service for some 10 million inhabitants in vulnerable social conditions.

En un comunicado que se difundió el miércoles pasado, la Cámara Argentina de Internet (Cabase) condenó los DNU 1466, sobre el aumento; y el 1467, relativo a la PBU, como “una sentencia de muerte” para las pequeñas empresas y cooperativas y acusó a las autoridades de desconocer la estructura de costos y el ambiente en el que operan a lo largo y ancho del territorio. La entidad solicitó al Enacom “la inmediata suspensión de la aplicación de las medidas” con el argumento de que agravarán la concentración del mercado.

In a statement released last Wednesday, the Cabase (Argentine Internet Chamber) condemned DNU 1466, on the increase; and 1467, relative to the PBU, as “a death sentence” for small businesses and cooperatives and accused authorities of not knowing the cost structure and the environment in which they operate throughout the territory. The entity requested to Enacom "the immediate suspension of the application" with the argument that they will aggravate market concentration.

The Asiet (Inter-American Association of Telecommunications Companies) agreed to define the novelty as a “unilateral” decision that neglects technical needs of the industry and is insufficient to cover the costs affected by inflation and devaluation. Asiet also warned that the official decision will impact on investments and the deployment of networks, adding to the uncertainty about the sector’s future.

Surface and background

On Monday, December 21, Enacom executives received executives from these companies and SME chambers. The official chronicle reported that those gathered analyzed the impact of Covid on SMEs and cooperatives and the Executive's policies to accompany these companies during the emergency. Referents from Fecosur, Fecotel, Catel, Colsecor and Fedecoba attended. The Enacom president, Claudio Ambrosini, explained to attendees that the will of the government is to seek a balance between the needs of users and companies, and assured that "we are not going to harm any licensee."

On Tuesday was the meeting of Cabase and Red Intercable with authorities of the control body. Informally, it was rumored that the tension was transferred to the dialogue table and that there were episodes of "high level of aggressiveness" between the parties.

The companies raised in that tone a criticism of the PBU. They questioned the obligation to provide services at prices that they defined as "a joke" to a proportion affected by the crisis without receiving subsidies from the State as energy providers, for example, because it is a public service, category that DNU 690 gave to ICT services.

Reflecting the discomfort, some businessmen announced that they would stop providing connectivity services before “merging”. Others exacerbate the threats with "digital blackouts." In their reasoning, providers consider that consumers are going to start claiming the PBU in a massive way and point out that they do not have personnel or elements to supervise and respond to these requests.

In this context, an acronym for the self-named UAPI (Argentine Union of Internet Providers) appeared. An SME leader defined this seal: “it is a mailing list”. A couple of videos with unusual violent tones that circulated on networks deserved the repudiation of leaders of SME business chambers.

Among the government's reasons, the first was the social, economic, cultural, educational and commercial impact that the pandemic had. An unquestionable argument from the state side was the US$ 458 million investment through the Connect Plan in the Refefo (Federal Fiber Optic Network) with a projection to 2023, the trunk line to which companies in the different regions of the country will join. He also highlighted the provision of satellite services through Arsat and the launch of the State cloud.

Enacom also pointed out the importance of monthly allocations it authorizes for broadband connectivity projects throughout the country through ANR (Non-Refundable Contributions).

The big ones

The allowed increase is far from the percentage expected by companies of all sizes with the issue of costs as a consensual argument. The most important operators in the market had been anticipating to their clients that January invoices would arrive with increases of 15% on average. Even the CEO of Telecom, Roberto Nobile, revealed his optimism about the course of negotiations with the government 40 days ago during the ATVC conference.

On December 18, after the dissemination of government measures, the reaction of companies was immediate. The first of the big companies to demonstrate was Telefónica, which informed Convergencia of the "insufficiency" of the increase based on costs and the unknown regarding "the technical rationale taken by authorities to set" the indicated increase. (Convergencia wrote an extra edition at sunset that day with all the reactions.)

Another that entrusted its position to this media was Claro, which considered that the measures, due to their structural nature, should have been the result of consensus, after a deep technical analysis. But they were “unilaterally” adopted. Alejandro Quiroga López, director of Regulatory and Institutional Affairs of the company for Argentina, Uruguay and Paraguay, urged authorities to provide the industry with “a map of what they want to do, what is the plan, and if they want to go towards a constructive model with all the actors.”

On its part, Telecom accused the national administration of "strangling one of its most competitive sectors of economic activity."

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