Venezuelas MSOs Eye Telephony Prospects

Caracas, Venezuela-Venezuelan cable operators welcomed the recent signing of a landmark telecommunications law that permits them to offer a range of broadband services, including telephony.

"The law establishes trustworthy legal protection for [telephony] investment, and is the most up-to-date legislation of its kind in Latin America," said Alberto Arapé, president of the Venezuelan Chamber of Subscription Television (Cavetesu).

The country's fixed-line telephone monopoly ends in November. As a result, telecommunications heavyweights and cable companies are both contemplating the array of broadband services they may offer customers.

Venezuela's largest MSOs have expressed interest in providing telephony. Cabletel's infrastructure was built specifically as a telephony platform, according to Peter Aquino, CEO of Veninfotel, the holding company that controls the MSO.

On the other hand, Venezuela's incumbent telephone monopoly, Compañía Anónima Nacional Teléfonos de Venezuela (CANTV), is prohibited from offering cable TV for two years from June 12, the new law's effective date. That stipulation is to avoid unfair competition and to stop CANTV from using its nationwide infrastructure to knock out its cable-TV competitors.

Arapéalso applauded some of the new law's provisions, including a transparent bidding process for telephony licenses and safeguards that would prevent Venezuela's government from modifying the measure.

Furthermore, the government cannot ask a telco to provide socially desirable but unprofitable services, such as universal coverage, as was once a concern. The law put no limit on foreign investment in the country's telecommunications industry, which is regulated by the National Telecommunications Commission (Conatel).

The only potential cloud on the horizon is a clause that would allow Venezuelan President Hugo Chávez to suspend transmissions deemed harmful to the nation, which has been blasted as a censorship threat.

Santo Landolfo, chairman of the Venezuelan-American Chamber of Commerce Tele-communications Committee, added: "There is a great deal of local and international interest in investing in Venezuela's telephony industry. It only lacked legal guarantees to make companies feel confident enough to come here."

Venezuelan lawmakers struggled for more than a year to hammer out the new legislation. A powerful group of investors led by Gustavo Cisneros, of the Cisneros Group of Cos., and Tom Hicks, president of private investment firm, Hicks, Muse, Tate & Furst Inc., met in Caracas to discuss telephony investments that could be made after CANTV's monopoly ends.

While painting a glowing picture of plans and possibilities, Hicks and Cisneros warned of lost investment and damage to the nation's telecommunications sector-and its economy-if the proposed legislation did not pass. Three weeks later, the bill became law.