On February 21 2001, Uruguay enacted Law No. 17,296 which, among other things, puts an end to the state monopoly over telecommunications services and creates a regulatory entity over telecommunications operations. A summary of the main aspects of the Act follows below.
The Act restricts the scope of ANTEL - the state-owned telecoms company - exclusivity to "basic telephony", defined as local traffic effected through fixed telephones.
Up to now, ANTEL benefited from an exclusivity over a wide array of telecommunication services (including local and long distance telephone calls) which up to now remained excluded from free competition.
Pursuant to the Act, long distance telephone services, value-added telecommunication services and cellular operations, would be excluded from the scope of ANTEL's exclusivity and therefore subject to free competition and ready to be exploited by private capitals. Under the Act, companies interested in providing international long distance telephone services, will require the prior authorization of the executive branch. Such authorization will be granted upon compliance of proceedings ensuring equal rights to all interested parties.
The Act authorizes ANTEL - with the prior authorization of the executive branch - to either incorporate or participate in public or private companies, based in Uruguay or abroad, with the purpose of rendering any telecommunications services other than "basic telephony" as defined above. The sale of ANTEL's shares in such companies will require the prior authorization of the executive branch and will be effected through bid, auction, or stock exchange sale.
Pursuant to the Act, telecom activities have to be rendered in accordance with certain basic principles, including broad coverage of the services, adequate levels of investment, appropriate protection for users and consumers, encouragement of free competition without prejudice to ANTEL's surviving legal exclusivities, users free choice grounded in clear and accurate information etc.
The Act creates a regulatory entity – the so-called the Communication Services Regulatory Unit (Unidad Reguladora de Servicios de Comunicaciones, or URSEC) - as an autonomous entity (organo desconcentrado) within the scope of the executive branch.
The URSEC will be governed by a three-member commission designated and removed by the President of the Republic acting jointly with the Cabinet. Commission members will serve six years in office, will be precluded from undertaking any activities - other than teaching - related to the scope of the URSEC, and will not have any professional relationship with the companies subject to the URSEC's controlling powers.
The URSEC will be responsible for:
- advising the executive branch on the determination and application of the communications policy;
- controlling compliance with applicable regulations;
- administering the national radio-electric spectrum;
- granting licences (locally designated as "authorizations") for the use of frequencies in the national radio-electric spectrum;
- in those cases in which, upon prior generic authorization of the executive branch, the use of the frequencies is assigned by auction, URSEC will be entitled to set forth the term of the assignment and the performance bonds to be placed;
- approving technical control regulations;
- enacting rules ensuring compatibility, interconnection and inter-operation of the networks - including the public network - and also ensuring the correct operations of equipment connected to such networks;
- maintaining international relationships with similar foreign entities;
- enforcing compliance with this Act and with any other applicable regulations; and
- advising the executive branch as to the requirements to be met by those companies or individuals rendering telecom services.