Colombia Clamps Down on Top Informal

Bogotá, Colombia -- A government agency has thrown a
wrench in the National Television Commission's (CNTV) plans to gradually legitimize
this country's mass of unlicensed pay TV operators.

The Superintendent for Industry and Commerce, the
government agency in charge of trade affairs, last week ordered Servisatélite, the
largest unlicensed operator in Bogotá, to cease operations.

Servisatélite serves about 30,000 subscribers in
metropolitan Bogotá. In ordering its closure, the superintended cited the fact
Servisatélite can compete unfairly because it pays neither the CNTV's $570,000
license fee nor a 10 percent tax on revenue.

A superintendent source said the agency could move quickly
to clamp down on other unlicensed operators.

Servisatélite has filed an appeal, allowing it to continue
operations. The superintendent now has two months to issue a final ruling. Servisatélite
will still be able to participate in the licensing process.

Henry Reyes, Servisatélite's vice president, said he
was "surprised" by the superintendent's ruling. "They never heard our
point of view nor ever summoned us," he said. "We have never engaged in
arbitrary behavior and we strictly follow the law."

About 80 percent of Colombia's pay TV subscribers
receive service through unlicensed operators. The CNTV hopes to normalize the sector by
auctioning valid franchise licenses.

"CNTV's overall intention has always been to
legalize completely the market. It has [also] been our policy to give a chance to those
informal companies that are willing to participate in the process of legalization,"
said CNTV chairman Jorge Hernández.

Servisatélite had registered to participate in the first
round of the licensing process, which is scheduled to conclude in September.

The superintendent's move to shut down Servisatélite
came after TV Cable, Bogotá's only licensed cable operator, filed a complaint with
the regulator. TV Cable, with about 37,100 subscribers, has long been opposed to the CNTV
plan to legitimize the unlicensed operators.

"The law is crystal clear," said TV Cable
secretary general Juan Carlos García. "If a government agency like CNTV has been
unable to enforce the law, we have all the right to find whatever legal mechanism we

TV Cable's opposition to licensing these companies
should not be surprising. If Servisatélite were to receive a license, TV Cable would face
a fully legal overbuild competitor. Currently, Servisatélite provides service at rates
that are 73 percent lower than TV Cable's.

TV Cable also said it lost 3,000 subscribers in the first
quarter of the year as a result of competition from Servisatélite.

However, with the country mired in its worst recession
since the 1930s, many licensed and unlicensed cable operators have complained of
subscriber losses.