Practice Note

Licensing of VoIP in Latin America

VoIP –Advancing on uneven ground

As in many other parts of the world, there is much enthusiasm around opportunities for cheap international and national phone calls brought about by developments in voice over Internet Protocol services. However, adoption of new technologies varies greatly across the different regions of Latin America. And, both governments and operators are worried about the potential massive loss of profits.

 

Broadband roll-out, while uneven across countries, is growing overall at a rate of 87% per year in the region. Argentina, Brazil, and Mexico account for the lion’s share of broadband subscribers (around 80%), while Chile, with a smaller population, has the highest penetration of digital subscriber lines (DSL). Broadband connections are the key drivers of VoIP roll-out, and it is not surprising that the countries with highest broadband penetration are also those that have advanced most in VoIP services.

 

Lopsided development of VoIP services across Latin America is largely the result of different market climates. Some operators view VoIP as a threat to their business model and lobby to keep it at bay for as long as possible. Legislation and regulatory environments also vary in this regard: some countries considered it as value-added, whereas for others it is deemed a telecom service requiring a license (and licensing conditions also vary!).

 

Colombia and Mexico offer examples of restrictive environments. Both countries allow VoIP services and treat them as another voice telephony service, but one that can only be offered by already licensed voice services operators. In 2004, the Mexican regulator in fact closed down 13 VoIP service providers for not having proper licenses. The extremely high costs of licenses in Colombia mean that there is no rush of new entrants in the sector, and further there is little opportunity to use VoIP to extend access to the network in pro-poor strategies. Bolivia and Ecuador are other examples of only licensed voice operators being allowed to provide VoIP services.

 

At the other end of the spectrum is Peru, where VoIP services have been allowed and offered since 1996. By 2000, 28 licensed operators were competing for the market. Peru's approach to VoIP appears to provide both a level of regulatory certainty to encourage new entrants in the market while also recognizing that it may be too early to develop further policies concerning VoIP.”[1] VoIP services are currently being introduced in Brazil, where there are no specific regulations or legislation, and are on offer in Argentina and Chile, all countries with strong broadband markets.



[1] Voice Over Internet Protocol: Status and Industry Recommendations. Presented as Guidance to the U.S. Department of State, by the Advisory Committee on International Communications and Information Policy. http://www.isoc.org/pubpolpillar/voip-paper.shtml

See Also

4.4 VoIP

Convergence

Increasing use of IP and other packet switching infrastructures

2.5 (Re) Licensing

Last updated 15 May 2013

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