Chile - NCA and NRA

Regulator and Anti-Trust Commission Clash over Potential Liberalisation of Telefonica Chile's Tariffs

FNE, the Chilean anti-trust commission, is on a collision course with Subtel, the national telecoms regulator, over the pricing of incumbent operator Telefónica Chile's fixed-line rates, reports Business News Americas. The FNE is against liberalising the rates, claiming that it could spark anti-competitive practices, predatory pricing, crossed subsidies and binding contracts. However, Subtel has suggested that the change in market conditions over the past five years, particularly the growth of fixed-to-mobile substitution, should see tariff liberalisation with certain conditions attached.

Significance: The dispute highlights the evolution of the Chilean voice market in recent years, with Telefónica's market share having dropped from 74.3% in 2004 to 64.5% in 2007, and 40% of homes now mobile-only, according to Subtel spokesman Pablo Cereceda. However, the FNE has countered that fixed-line traffic still outweighs mobile traffic and that alternative technologies, such as WiMAX and cable networks, are not yet sufficiently developed to bring about liberalisation of the incumbent's tariffs. A decision is likely to come from anti-trust tribunal TDLC, but Telefónica has indicated that even a negative outcome would have only a small effect on it, given that fixed-line telephony currently accounts for only 30% of its sales.