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### Viewing cable 05QUITO1673, LICENSING CONDITIONS IN ECUADOR'S TELECOMS SECTOR

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
05QUITO1673 | 2005-07-15 18:44 | 2011-05-02 00:00 | UNCLASSIFIED | Embassy Quito

`

    This record is a partial extract of the original cable. The full text of the original cable is not available.

` `

    UNCLAS QUITO 001673

    SIPDIS

    DEPT FOR EB/CIP - TFINTON
    USTR FOR JONATHAN MCHALE
    USTR FOR PAUL NEUREITER

    E.O. 12958: N/A
    TAGS: ECPS ETRD EINV ECON EC XR
    SUBJECT: LICENSING CONDITIONS IN ECUADOR'S TELECOMS SECTOR

    REF: SECSTATE 114687

    ¶1.  Per reftel, Commercial Specialist and Econ Officer met
    with acting President of the National Telecommunications
    Council Antonio Arroyo on July 11 to discuss licensing
    conditions in the Ecuadorian telecommunications sector.  The
    following information also reflects discussions with other
    telecommunications officials.

    ¶2.  Arroyo explained that the GOE only imposes licensing
    fees to local fixed telephony.  Although no regulations
    currently exist for national and international telephony,
    Arroyo claims that such regulations will be issued later in
    the year.  Two levels of fees exist, both of which are
    charged quarterly and only once the concessionaire starts
    operations.  The first - 0.5% of gross sales - is charged to
    cover concession rights and administrative costs to include
    concession contract administration, registry, and regulatory
    activities.  The second - 1% of gross sales - is used to
    fund the development of rural telecommunications.  Fees are
    charged based on gross sales and do not reflect the
    geographical scope of the license, the type of service, or
    whether the licensee offers a facilities-based or non-
    facilities-based service.

    ¶3.  The GOE imposes a performance guarantee for each
    contract concession, irrespective of geographical scope.
    Each new contract, even for an existing licensee, requires a
    new guarantee.  The performance guarantee is in force during
    the duration of the concession (15 years) and an additional
    90 days thereafter.  The present amount of the performance
    guarantee is $100,000 for local facilities-based service
    providers and $1,000,000 for non-facilities-based service
    providers.  Arroyo indicated that this admittedly arbitrary
    figure might change, with proposed regulations stipulating
    an amount equivalent to 100% of the proposed investment.
    The guarantee issuer, depending on the type of guarantee,
    charges the following costs: 2% annually for a stand-by
    letter of credit, 4% annually for a bank guarantee, and 4%
    annually for an insurance policy.  Note that no
    capitalization or bonding requirements currently exist for
    national and international telephony.

    ¶4.  According to Arroyo, specific build-out requirements do
    not exist.  However, as part of the licensing review
    process, the investor is required to present a minimum five-
    year investment plan.

    HERBERT

`