REGIONAL SEMINAR ON COSTS AND TARIFFS AND TAL GROUP MEETING TARIFF ASPECTS OF THE REGULATORY REGIME IN CUBA Presenter: Pedro Oliva Presenter: Pedro Oliva Directorate of Regulations and Standards Directorate of Regulations and Standards Ministry of Informatics and Communications, Cuba Ministry of Informatics and Communications, Cuba Buenos Aires, Argentina, 14 to 17 June 2005 Buenos Aires, Argentina, 14 to 17 June 2005
GENERAL PRINCIPLES OF THE REGULATORY REGIME In Cuba, telecommunication regulatory and In Cuba, telecommunication regulatory and operating functions are separated, the former operating functions are separated, the former being entrusted to the Ministry of being entrusted to the Ministry of Informatics and Communications , while Informatics and Communications , while operation and marketing of services is operation and marketing of services is handled by authorized operators handled by authorized operators
ROLES IN THE SETTING AND APPLICATION OF TARIFFS MIC MIC Regulation, approval and control Regulation, approval and control ETECSA ETECSA MOVITEL ISP MOVITEL ISP Development of proposals, Development of proposals, RADIOCUBA ECC RADIOCUBA ECC participation in their analysis, participation in their analysis, and application and application The price of services is approved by the regulatory body, on the The price of services is approved by the regulatory body, on the basis of proposals by operators based on their own cost models basis of proposals by operators based on their own cost models which take account of their total costs which take account of their total costs
MAIN OPERATOR Fixed telephony Fixed telephony Cellular mobile telephony Cellular mobile telephony Signal transport Signal transport ETECSA is a company constituted ETECSA is a company constituted Data transmission Data transmission by foreign Cuban capital, operating by foreign Cuban capital, operating Telex since 1994. In 2003, the Executive since 1994. In 2003, the Executive Virtual telephony Virtual telephony Committee of the Council of Committee of the Council of Public stations Ministers issued Decree 275 Decree 275 Public stations Ministers issued licensing it for a further 20 years to licensing it for a further 20 years to Internet access Internet access operate the services listed opposite, operate the services listed opposite, Value- -added services added services Value with 15 years of exclusivity for the with 15 years of exclusivity for the Trunked mobile service Trunked mobile service first five services. first five services. Applications Applications
NATIONAL TARIFF SCENARIOS RESIDENTIAL RESIDENTIAL Services are payable in pesos, Services are payable in pesos, at affordable prices, so as to at affordable prices, so as to % MARKET SHARE fulfil universal service fulfil universal service 7% obligations obligations BUSINESS SECTOR BUSINESS SECTOR 93% Residential and State institutions (peso) Services are payable in Services are payable in Businesses and joint ventures (convertible peso) convertible pesos and at convertible pesos and at increasingly cost- increasingly cost -oriented oriented prices plus a reasonable prices plus a reasonable return return
PRICE OF SERVICES FOR RESIDENTIAL USERS DECREE 275 DECREE 275 For each type of service, the regulatory body approves the For each type of service, the regulatory body approves the rates for connection, reconnection, line rental, local calls rates for connection, reconnection, line rental, local calls and national long- and national long -distance calls distance calls. . These rates are revised every two years and may be These rates are revised every two years and may be adjusted with variations in the average wage and real adjusted with variations in the average wage and real costs, in non- -convertible national currency convertible national currency. . costs, in non
TARIFFS APPLIED FOR THE TARIFFS APPLIED FOR THE RESIDENTIAL SECTOR RESIDENTIAL SECTOR National telephone tariffs in the Residential telephone Residential telephone residential sector service tariffs have been service tariffs have been maintained at the same maintained at the same 1.00 1 level as before level as before 0.8 0.75 privatization, approximately privatization, approximately 0.6 Peso (non- 0.50 convertible) 0.4 equivalent in USD to: equivalent in USD to: 0.33 0.20 0.2 25 cts monthly fee; 25 cts monthly fee; 0.03 0.03 0.10 0 0.1 cts per minute of local 0.1 cts per minute of local Local 6 y 24 25 y 49 y 81 y 161 a 281 a Más de km 48 km 80 km 160 km 280 km 516 km 516 km call and 4 cts per minute of call and 4 cts per minute of national long- -distance call distance call national long
REGULATION OF TARIFFS FOR REGULATION OF TARIFFS FOR THE BUSINESS SECTOR THE BUSINESS SECTOR DECREE 275 DECREE 275 The operator proposes changes in rates for connection, reconnection, ion, The operator proposes changes in rates for connection, reconnect line rental, local calls, national long- -distance calls and international distance calls and international line rental, local calls, national long long- -distance calls to the regulatory body, which has 30 working days distance calls to the regulatory body, which has 30 working days to to long respond. . respond If revenues fall below the level foreseen in the strategic plan by up to by up to If revenues fall below the level foreseen in the strategic plan 10 per cent, the operator may modify the rates for the following year in year in 10 per cent, the operator may modify the rates for the following order to offset the shortfall and ensure that the income target for the for the order to offset the shortfall and ensure that the income target current year is met. current year is met. However, the tariffs may not be modified as described above if the he However, the tariffs may not be modified as described above if t shortfall in income is attributable to bad management on the part of t of shortfall in income is attributable to bad management on the par ETECSA. ETECSA.
REFORM OF THE TARIFF SYSTEM FOR NATIONAL SERVICES Consideration is currently being given to reducing the Consideration is currently being given to reducing the number of tariff zones and the price of national long- -distance distance number of tariff zones and the price of national long calls, offsetting the potential reduction in revenues as a result t calls, offsetting the potential reduction in revenues as a resul of this measure with an increase in the price of local calls, of this measure with an increase in the price of local calls, thereby helping to rebalance tariffs for these services. thereby helping to rebalance tariffs for these services. Zona2 Zone 1 L Zone 1 Local Local Local Local Local Local Local Local Zone 1 Local Local Local Zone 2 Local Local Local Zone 2
TARIFFS FOR INTERNATIONAL SERVICE For the international long- -distance service, rates are distance service, rates are For the international long “capped” at the levels prevailing before privatization, “capped” at the levels prevailing before privatization, although the operator is at liberty to – although the operator is at liberty to – and indeed does and indeed does – – charge lower rates. The current rates are as follows: charge lower rates. The current rates are as follows: CONVERTIBLE PESO PER MINUTE NORTH AMERICA 1.00 CENTRAL AMERICA AND CARIBBEAN 2.00 SOUTH AMERICA 2.00 REST OF THE WORLD 2.50
TARIFF REBALANCING In the medium In the medium- -term, full term, full Cost reduction Cost reduction tariff rebalancing will be tariff rebalancing will be achieved by reducing the achieved by reducing the rates applied in the rates applied in the business sector (in business sector (in proportion with cost proportion with cost reductions) and increasing reductions) and increasing rates in the residential rates in the residential sector as people’s sector as people’s purchasing power purchasing power increases. increases. Increase in Increase in purchasing power purchasing power
REGULATIONS GOVERNING INTERCONNECTION CHARGES National law and telecommunication sector regulations, in National law and telecommunication sector regulations, in particular Law 77 on investments, provide for the particular Law 77 on investments, provide for the participation of other suppliers for services which are not participation of other suppliers for services which are not licensed exclusively to the main operator. licensed exclusively to the main operator. In such cases, tariffs and conditions governing In such cases, tariffs and conditions governing interconnection to the PSTN are freely negotiated between interconnection to the PSTN are freely negotiated between operators . operators . Interconnection agreements shall meet criteria of Interconnection agreements shall meet criteria of transparency non- -discrimination and cost orientation. discrimination and cost orientation. transparency non
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