Regulatory Unit for Communication Services URUGUAY

1. Regulatory Unit for Communication Services URUGUAY

2. CTIA 2007 The Uruguayan Experience León Lev President of URSEC

3. Summary • Introduction • Telecommunication sector • Mobile market • Convergence • Regulation • Challenges • Conclusions

4. Capital: Montevideo Population (2004): 3.241.003 inhabitants Geographic area: 176.215 km2 Urban population: 90,8 % Literacy rate: 97,8 % GDP pc (2005): 4877 dollars Inflation rate (2006): 6,38 % Unemployment rate (2006): 9,1 % Uruguay

5. Telecommunications Market Structure • Monopoly in the provision of fixed lines telephony for urban and national calls. • Competition in the: Mobile telephony market. International fixed telephony market. Internet and data transmission market. Cable TV market.

6. Liberalization Process • February 2001. Creation of the telecom regulatory agency (URSEC). • November 2001. Authorization for the entrance of international long distance operators. • October 2002. First auction for the allocation of radio electric spectrum for mobile services. • May 2004. Second auction for the allocation of radio electric spectrum for mobile services.

7. Fixed Telephony Market • Monopolistic services (local and national calls) provided by ANTEL, the state telecommunications company. • Fixed lines (Dec 2006) : 986.867 • Fixed lines per 100 inhabitants (Dec. 2006): 30,44 • Proportion of households with a fixed line telephone (Dec. 2005): 78 % • Network digitalization (Dec. 2006): 100 % • Unsatisfied demand (Dec. 2006): 0 % • Number of public payphones (Dec. 2006): 15.372

8. Mobile Telephony Market • 3 mobile operators. • Number of mobile subscribers (Dec. 2006): 2.152.4561 • Number of pre-paid subscribers: 85% aprox. • Number of post-paid subscribers: 15% aprox. • Mobile subscribers per 100 inhabitants (Dec. 2006): 66,41 • Geographic coverage: 70 % • Population coverage: 95 % 1 Note: no uniform active customer criteria.

9. Brief Mobile Telephony History • 1991 - ANTEL contracts Movicom BellSouth for the provision of mobile services in the south area of the country. • 1994 - ANTEL, through its mobile unit business ANCEL, launches mobile services with national coverage. • 2002 – First auction for the allocation of radio spectrum frequency. Movicom BellSouth acquires radio spectrum frequencies. It is now an independent operator. Duopoly market up to year 2004. • 2004 - Movicom BellSouth is acquired by Telefónica.

10. Brief Mobile Telephony History • 2004 - Second auction. A new entrant, CTI MÓVIL acquires radio spectrum frequencies and launches its services at the beginning of year 2005. Competition is strengthened. • 2005 ANCEL: 3G WCDMA technology operation prove 17 radio bases in Montevideo, Huawei equipment. UMTS Band. URSEC allows use of the spectrum for trials without cost to contribute to sector development. • 2006 MOVISTAR: 3G WCDMA trial with two radio bases en Punta del Este.

11. Frequency Band Allocation for Mobile Services

12. Fixed vs. Mobile Telephony

13. Mobile Growth and Universal Access • Are mobile services contributing to the voice universal access? Explosive mobile growth means new families with voice access? Probably few new families with voice access. High impact in the quality of that access. • Are mobile services contributing to the data transmission universal access? Yes. Ex: 80 education centers in rural areas have free Internet access using GPRS mobile technology.

14. Mobile Interconnection Agreements - SMS • Free negotiation between parties for the celebration of interconnection agreements. Little Regulatory intervention. • 3 interconnection agreements subscribed for voice communications between mobile operators and between mobile operators and the fixed line incumbent. • 3 interconnection agreements subscribed for SMS between mobile operators.

15. GSM Mobile CoverageANCEL

16. Competition and Tariffs Auction 2002 Auction 2004

17. Convergence • Convergence of services • Convergence of devices • Convergence of technologies Connections/services  Clients or Users

18. Regulation • Objetives • To promote the development of new technologies and services • To encourage the competition • To fix clear rules – Stability of the sector • Control and efficient administration of the spectrum • To accompany the technological advances and development of new services • Infrastructure sharing • Protection of the Users/Consumers

19. Objetives Quality of service Coverings NIR-Health New services Assistance to the consumer • Protection of the Users/Consumers

20. Regulation • Problems • Legislation – little and very generic • Exclusive features or monopolies - Question ILD • Dynamism of the market and technological evolution • Multinationals • Fraud - Legislation, handling of black lists, regime of customs

21. Regulation • Tools and actions • Analysis and pursuit of the evolution of the market • To detect needs of the market • Public Consultations - 3.3-3.7G bands • Expressions of interest for new TV for subscribers operators • Competitive procedures - use of the spectrum • Prices / Interconnection - competition/value of market

22. Tools and actions • Permanent dialog with the protagonists • Multicarrier system – long distance services – mobile • Regime of telecommunication licenses • Efficient use of the spectrum • NIR Legislation - Health • National regulations – International regulations • Support to municipal governments • Infrastructure sharing • Assistance to the consumer • Acquisition of new equipments

23. Challenges • Total and fair competition • Security and legal stability – Wider and more specific regulations • Clear rules to promote the competition – Transparency/Equality • Growing and stability of the sector • New technologies networks and services • To promote and protect the investments • To promote new markets • Convergence – regulation of convergent services • Suitable tariffs – values of market

24. Conclusions • Process in progress • Seriousness • Transparency • Commitment

25. Muchas Gracias León Lev President of URSEC llev@ursec.gub.uy