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Building an Alternate IP Backbone Network in Peru: Challenges and Safeguards

This study explores the necessity and feasibility of establishing an alternate IP backbone network in Peru, emphasizing current market inefficiencies due to limited infrastructure. It discusses the vital safeguards needed to foster fair competition in telecommunications and the institutional conditions required to avoid past oversights. The paper highlights the role of TdP in enhancing market competition and examines the implications of regulatory models on network and retail services, advocating for a balanced approach to ensure efficiency and accessibility of telecommunications services.

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Building an Alternate IP Backbone Network in Peru: Challenges and Safeguards

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  1. Bandwidth for all – The Peruvian case Roxana Barrantes Instituto de Estudios Peruanos ACORN/REDECOM (Ciudad de México) (5 de setiembre de 2009)

  2. Content 1. What is the need and viability of building an alternate IP backbone network? 2. What safeguards should be in place to promote fair competition under this scenario? 3. What institutional conditions are necessary to avoid falling into the same oversights that have caused uneven network development and market inefficiencies in the region?

  3. Current market

  4. Do we need an alternate IP backbone network? • In fact, what Peru needs is an IP backbone network! • Only one backbone along the coast and few kilometers into the highlands. • Mapa FibraOptica 2006.pdf

  5. TdP’s fiber optic network Colombia Ecuador Brazil Bolivia Chile

  6. Safeguards • The efficiency – competition dilemma keeps popping up! • TdP should not be prevented from participating –that will increase competition for the market but keep retail prices high. • Regulatory failure is non negligible. • Given TdP’s position in the Peruvian market, safeguards must be in place. • Fixed – June 2009: 75% (LIS) • Mobile – June 2009: 63% (LIS) • Cable TV – March 2009: 69.5% (subscribers) • Internet – March 2009: 93.8% (subscribers) • Which safeguards?

  7. Institutions matter • If promoted by the public sector, market design is key. • What kind of auction? • Should FITEL money be used? • If so, what is the correct subsidy amount? • Regulator to monitor compliance • What extra powers are needed to be effective? • Remember, the Peruvian regulator is the competition authority in telecom.

  8. Regulatory model matters • Shall we change the regulatory model? • Regulate networks / Deregulate retail services • Retailers are not to own networks (physical infrastructure). • New divestiture! • Calculate welfare losses from market concentration.

  9. Roxana Barrantesroxbarrantes@iep.org.pe Instituto de Estudios Peruanos Horacio Urteaga 694 Teléfonos: (51 1) 332 6194 Fax: (51 1) 332 617399999999 roxbarrantes@iep.org.pe www.iep.org.pe

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