The Colombian government, recognizing the importance of an efficient telecommunications infrastructure, has taken steps in the last few years to liberalize Colombia's regulatory framework. These changes have created significant investment opportunities in a number of areas, including local telephone services.
Until recently, local telephone services were provided by a network of government-owned service providers, each with a monopoly in its local area. Now, anyone can set up and operate a company to provide this service. No licence is required other than a local permit to provide a public service. Foreign investment must be registered, but is not restricted or controlled in any way.
Some private companies have entered into joint ventures with existing public local telephone companies, finding this an effective way of accessing existing infrastructure and client bases. Others have entered into direct competition with local public companies.
The government set up a regulatory agency known as the Telecommunications Regulatory Commission (TRC) with a mandate to break up inefficient local monopolies and gradually reduce controls on tariffs for telephone services as competition becomes established.
At present, local telephone service providers are free to set their own charges, so long as they cover the cost of providing the service (to prevent predatory pricing), and the charges are below the ceiling set by the TRC for each service provider based on its costs, including investment in infrastructure.
The TRC also lays downs other rules to ensure free competition. For example, service providers must permit access to their telephone network on the basis of 'equal access, equal fees': they cannot offer preferential rates to companies with which they are affiliated.
With these changes, the Colombian government has signalled that it views private enterprise, competition, and foreign investment as the key to meeting Colombia's considerable excess demand for local telephone services.