November 10, 2016 Print

Healthy competition leads to lower prices and maximized consumer surplus, so industries with several producers competing for market share tend to deliver the best value for consumers. Políticas Públicas para la Libertad, also known as Populi, is working to end state control of the telecommunications industry in Bolivia through mobile number portability (MNP), the ability to switch mobile phone service providers while keeping one’s existing phone number.

Preventing MNP places a considerable barrier on those who would rather change their providers, allowing consolidated firms to maintain market share disproportionately by maintaining high barriers to entry. MNP functionality, on the other hand, allows individuals and businesses to change telecom service without significantly hampering their business activity. Until recently, Bolivia’s regulatory body for telecommunications, Autoridad de Regulación y Fiscalización de Telecomunicaciones y Transportes (ATT), did not allow for MNP. Populi has been campaigning in favor of its implementation for years, and its most recent report on the matter discussed what liberalization of the telecommunications industry would mean.

“There are different types of consumer benefits associated with MNP,” Populi wrote (all quotes translated from Spanish). “The two most important are reduction in the price of telephone services, by way of increases in the degree of competition in the market, and, second, a corollary from before is that companies previously could not enter the market due to the inability to compete with established incumbents. With MNP they can attract customers from other telephone companies, further increasing competition in the sector.”

Countries that have adopted MNP have increased consumer choice and well-being as telecommunications providers compete to provide better service at lower costs. Populi first proposed the implementation of MNP in Bolivia in 2011, and after four years of campaigning, the government passed Supreme Decree No. 2498 on Aug. 26, 2015. The new law mandated that MNP be executed in the country within one year after technical considerations had been determined, which occurred three months later.

Populi’s report noted the discrepancy between low rates of mobile phone ownership in rural areas and high rates in urban communities. The implementation of MNP in Bolivia stands to benefit the country’s poorest and most rural populations disproportionately. The report also explained why MNP functionality should also apply to landline telephone ownership.

“Finally, in previous publications that we had already recommended MNP functionality as a means to encourage competition and reduce prices in telecommunication services; however, it should be mentioned that for this is to truly translate into benefit to the user, MNP should be in all forms, i.e. mobile, fixed (landline) and geographical,” Populi continued. “Thus there would no longer be a need for telecommunications providers to differentiate between fixed and mobile telephone numbers, as all compete in the same market, only differentiating for the service in which they specialize in order to increase quality of their product. This also helps to eliminate the existing differentiation between the fixed telephone rates of ‘long national’ and ‘local’ distance; differentiation no longer exists in mobile calls.”