From 1994, the year in which cellular phone concessions were awarded, the number of users of this type of service increased from 69,795 to 1,921,065 in 1999, which means an increase of 87.2% per annum on the number of subscribed users. This figures vastly exceeds the initial projections of all involved, both companies and the government (initial calculations were of around 250,000 subscribed users in the first five years). As a result of this situation, and in order to increase the competition within the Colombian wireless telecommunications market, on February 2 2000, the Colombian Congress enacted Law 555, which sets forth the general framework for the provision of Personal Communication Services (PCS) in Colombia.
During the third quarter of last year, the government contracted a special advisory team in order to, among other things, regulate the terms provided in Law 555 and establish the specific terms and conditions under which the concessions would be granted, including a proposed start-up date. The Colombian government has now publicly announced that it is expecting to launch the PCS process in July 2001.
Pursuant the terms of Law 555, the government will grant one concession for each of the three regions of Colombia (the Atlantic coast region (north region), west region and east region). These areas are identical to those existing for mobile phone concessionaires. Any participant may bid for a concession in one or more regions.
The concessions will be opened to public bidding and they will be awarded by means of public auctions. Licences will be granted for a term of 10 years, which may be extended for a same or lesser term upon request prior to the eighth year of the initial concession. Such an extension will be granted by the Colombian government. The exclusivity for granting the initial PCS concessions will be for three years, after which the government may open for bidding new concessions and any interested investor may participate without any restriction.
Law 555 of 2000 has imposed strict limitations to the participation by mobile phone concessionaires and national trunking operators (including their affiliated companies, parent companies and any other beneficial owner) in the PCS process in order to guarantee a competitive market.
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