Following the issuance of Law 555/2000, which provided a general framework for the rendering of personal communication services (PCS), the government issued Decree 575 on April 1 2002, which provides general rules for the rendering of PCS services.

With the issuance of Decree 575 the government has entered the final stage of the PCS process, which will be completed when the rules for participating in the PCS concession bidding process are issued. A first draft of these rules was circulated for comments in May and the issuance of a final document is pending.

The basic provisions established in Decree 575 for the rendering of PCS services are the following:

  • The service must be provided with national coverage. For this reason three PCS licences or concessions will be granted, one for each of the three areas into which the country has been divided for this purpose, which are identical to the areas currently being serviced by mobile cellular concessionaires (MCC). The areas are the East, West and Atlantic coast regions. Bids may be submitted by interested investors in one or more of these areas.

  • Each PCS service provider will have to construct and install its network and meet a five-year expansion plan. PCS providers within different areas shall grant roaming access to PCS providers in other areas. In certain specific cases, MCCs may also be forced to grant roaming access to PCS service providers. PCS providers will be granted interconnection to the state-owned telecommunications network, giving users interconnection with local fixed telephone services. All PCS providers within each of the areas to be granted must use compatible technologies in order to guarantee national coverage of the PCS service.

  • All long-distance telecommunications services to be provided to PCS users shall be performed through authorized international long-distance telecommunication service providers.

  • Tariffs will be fixed by the Telecommunications Regulatory Commission and will be based on the 'calling party pays' method.

  • The PCS concessions will be granted for an initial 10-year term, which may be renewable for an equal or lesser period by giving notice before the eighth year of the concession. PCS concessions will be granted on an exclusive basis for a three-year term as of the issuance of Law 555, after which new concessions may be granted (2003). The PCS concessionaires may be public legal entities and mixed or private companies duly incorporated and domiciled in Colombia. The main corporate purpose of these entities must be the rendering of telecommunication services.

  • The following are ineligible to apply for the initial PCS concessions: (i) MCCs; (ii) national trunking operators; (iii) the parent companies, subsidiaries or branches of MCCs and national trunking operators; (iv) shareholders of MCCs or national trunking operators with an individual or joint participation greater than 30% of the subscribed capital; and (v) the parent companies, subsidiaries or branches of the shareholders referred to in (iv). In order to establish compliance with these restrictions government entities will review who is ultimately the real beneficiary, regardless of equity participation compliance or similar arrangements regarding control of companies. The restrictions will be in place for the term of exclusivity granted to the initial PCS service providers (ie, three years).

  • Foreign and local investors are granted equal access and treatment for the participation and rendering of PCS services.

  • Concessionaires of PCS services must register their shares in the Colombian Exchange Market within three years of the award of the PCS concession. At least 15% of its capital shall be publicly offered to the public for democratization purposes before the fourth year of the concession. No person will be entitled to acquire more than 0.5% of the total capital of the PCS concessionaire.

  • Concessions will be granted under the public auction mechanism. The general principles that will be followed during the auction are transparency, national coverage and the maximization of the nation's income.

  • The minimum price will be set by the government and conveyed to the public. In fixing the minimum price, the government must take into consideration a series of factors, including those relating to MCC concessions, such as price paid by MCCs, exclusivity granted to MCCs, market offered to MCCs in comparison to PCS concessionaires, and local market and country conditions under which MCC concessions were granted in comparison to PCS concessions, including country risk.

The final stage for rendering PCS services in Colombia is now in effect and the doors are open for local and international private investors to participate in the process.

For further information on this topic please contact Alejandro Linares Cantillo or Julian Santos Rubino at Gomez Pinzon & Asociados by telephone (+571 310 7055 or +571 310 5066) or by fax (+571 310 6646 or +571 310 6657) or by email ([email protected] or [email protected]). The Gomez Pinzon & Asociados website can be accessed at