IA TR - July 10, 1998 - Page 2 - National Law Center for Inter-American Free Trade®

Volume 5, Number 14, Page 2

Dominican Republic: New Telecommunications Law

by Russin, Vecchi & Heredia Bonetti

On May 27, 1998, the Dominican Republic enacted General Telecommunications Law No. 153-98 (“Telecommunications Law”). The new law regulates public and private telecommunications services, including:

carrier services (telephone and related services);
final services or teleservices (radio broadcasting, television sound and cable broadcasting); and
value-added services.

The new law is predicated on general principles of free competition and provision of universal telecommunications services. As a result, all services are completely opened up through the application of the derivative principles of neutrality, transparency, equality, generality and non-discrimination. The law further prohibits the application of any practice that limits, restricts, prevents, or misrepresents the right of the user to exercise free choice.

With regard to universal service, for the first time in Dominican legislation, the law establishes the obligation of the State to guarantee this public service to the greatest possible number of persons and places in the country. The law contemplates the expansion of telephone services to low-income rural and urban areas.

The Telecommunications Law completely overturns the legal framework previously in effect in this sector, embodied in General Telecommunications Law No. 118-66 (Ley General de Telecomunicaciones) and several administrative resolutions handed down by the State Department of Public Works and Communications (Secretaría de Estado de Obras Públicas y Comunicaciones - SEOPC) and the General Telecommunications Agency (Dirección General de Telecomunicaciones - DGT).

Conditions for Entry and Operation. The Telecommunications Law defines telecommunications services, dividing them into those requiring a concession and those that do not. It requires equal access to such services in its definition of the procedures for obtaining General Operating Concessions (Concesiones Generales de Explotación) and Operation Licenses (Licencias de Operación). In a general manner, the law defines requisites for entering and remaining in telecommunications, as well as for renewal, assignment, termination and removal. The details will be defined by the implementation regulation to be drafted by INDOTEL. The concessions are granted for a period of between five and twenty years and are renewable.

The Telecommunications Law imposes the following general obligations on telecommunications service providers:

To establish and comply with a minimum expansion plan (the plan must detail the projects to be implemented, setting technical and economic conditions, commitments and terms for their implementation);
To continue to provide the public services for which they are responsible;
To provide services on a non-discriminatory basis and pursuant to the quality requirements and minimum time periods established by the terms of their concessions and applicable regulations;
To allow free access to their networks and to services they provide in accordance with the pertinent regulations and under non-discriminatory conditions;
In the case of telephone service concession holders, to establish an equal access mechanism, which permits the user to freely choose the long-distance service provider of his or her preference;
To serve as collection or withholding agents for the Contribution to the Development of Telecommunications (Contribución al Desarrollo de las Telecomunicaciones - CDT) telecommunications customers must pay; and
To maintain separate accountings for each type of service provided, in order to permit monitoring to ensure fair and effective competition.

Those value-added service providers, re-sellers of telecommunications services and those using private telecommunications networks (provided that they are not interconnected with the public switched network) do not need a concession to provide telecommunication services; they need only to register with a special registry that the Regulatory Body will establish for this purpose.

Rates and Costs of Services. Public telecommunications service rates will be set freely by the companies, except in certain cases identified by the Regulatory Body where the service in question cannot be provided under effective competition conditions. Interconnection charges, accounting rates and international distribution rates may also be freely negotiated by the parties.

The Telecommunications Law provides that prices for public local telephone service for the first residential line must reflect costs incurred within the so-called transition or rate re-balancing period to be established by the Regulatory Body. For purposes of bringing prices for local services in line with their costs, a commission will be formed to examine the issues. The commission will have 60 days to submit its recommendations with regard to the re-balancing of rates which must be carried out prior to December 31, 2000.

Promotion of Universal Service. The expansion of telephone service will be carried out through development projects financed by the CDT. The Telecommunications Law establishes certain criteria for the content and assignments of the projects. These projects will be awarded through a public bidding process. The CDT will consist of a quota of two percent of the monthly income received, before taxes, from billing the final users of public telecommunication services, correspondence amounts (settlements), from all telecommunication companies, with the exception of radio broadcasters, private telecommunications networks (provided that they are not interconnected to the public switched network), re-sellers of telecommunication services and interconnection services.

Interconnection. Interconnection of the networks of different providers of public telecommunication services is based on the principle that such interconnection is in the public interest and is therefore obligatory.

Interconnection contracts may be freely negotiated among telecommunication service providers. Once entered into, such contracts must be submitted by the parties to the Regulatory Body for consideration. A summary of the contract must be published simultaneously in a newspaper of wide national circulation.

Private networks cannot be connected to one another unless such connections comply with corporate purposes and are carried out under the conditions established by the Regulatory Body. They can, however, be connected to the public switched network upon an agreement with the incumbent local operator.

Electromagnetic Spectrum. The Telecommunications Law provides that the electromagnetic spectrum is a natural, rare and inalienable asset of the public domain that belongs to the Dominican Republic. Its use, control, administration and granting of rights for use are effected through INDOTEL, pursuant to international standards and the National Plan for the Attribution of Frequencies.

The Right to Use will be paid for as an annual duty, the amount of which will be dedicated to the management and control of same. The ways of use and the methods for calculating the duty to be applied to each one of the uses and services is defined in the regulations governing use of the spectrum.

Telecommunications Regulatory Body. The Dominican Telecommunications Institute (Instituto Dominicano de las Telecomunicaciones - INDOTEL) is a decentralized, autonomous and self-sustaining state entity. INDOTEL has its own separate assets and capacity to exercise rights and assume contractual obligations. Its objectives include:

Promoting and developing telecommunications;
Implementing the principle of universal service;
Guaranteeing the existence of sustainable, fair and effective competition;
Defending the rights of clients, users and service providers;
Sanctioning those who do not meet the standards embodied in the Telecommunications Law and in implementing legislation; and
Overseeing the efficient use of the electromagnetic spectrum.

INDOTEL is operated by a Board of Directors and an Executive Board. The Board of Directors is composed of a total of five (5) members named by the President of the Republic:

1) A President with the rank of State Secretary;

2) The Technical Secretary of the Presidential Administration;

3) Members selected from a slate drawn up and proposed by the companies providing final telecommunication services;

4) A member chosen from a slate drawn up and prepared by radio and cable television broadcasting companies; and

5) A member chosen freely and directly on the basis of professional qualifications and whose responsibility is to protect the rights of the users of the companies mentioned above.

Rulings are issued by INDOTEL in the form of resolutions. The resolutions are dated and numbered consecutively. They are registered in a medium accessible to the public, unless a determination is made upon reasonable request from an interested party to a concrete dispute that certain information will be kept secret. Those resolutions that are general in nature and regarded as being in the public interest will be published in a newspaper of wide national circulation.

Before issuing a general resolution, INDOTEL must consult with the interested parties to hear their opinions and observations. This consultation will not be binding on the Regulatory Body. For cases in which it may be necessary to execute certain actions for the benefit of the public interest, a provisional resolution can be issued. The regulation will be published and open for public comment for a 60-day period, after which time a definitive resolution must be issued.

Sanctions. The Telecommunications Law imposes monetary fines for a range of administrative violations, defined as multipliers of a unit called Charge for Non-Compliance (Cargo por Incumplimiento - CI). The basic amount of the CI is RD$ 20,000.00. This amount is subject to annual review. “Light” infractions are subject to fines of as little as two CIs (RD$ 40,000 or about U.S.$ 2,750) while “very serious” infractions may result in a fine of as much as 200 CIs (RD$ 400,000 or US$ 275,000).

The firm of Russin, Vecchi & Heredia Bonetti is located in the Dominican Republic. The firm has offices in more than 11 cities worldwide, including New York, Washington, D.C., Moscow, Bangkok and Taipei.