Information Technology in Panama

Overview

Panamá has experienced many changes regarding telecommunications in the past five years. The telecommunications market was privatized in 1997, and in 2003 it was de-regulated. Although many of the changes that were brought about as a result of these two processes have not been entirely positive, many of changes have been beneficial to both individuals and businesses. The telecommunications infrastructure has greatly improved, as a result of investments made by Cable and Wireless. Also, as a result of de-regulation there are new choices in telecommunications service providers for national and international calls. The domestic market has still only one service offering. More detailed information regarding telecommunications infrastructure and de-regulation is presented below.

(Source: Regulating Entity of Panama--Ente Regulador de Panama)

Infrastructure
According to the CIA World Fact Book, Panamá has well developed telecommunication facilities, including domestic and international facilities. (6)
According to the ARI (Inter-oceanic Area Authority-Autoridad de la Región Interoceánica), Panamá has access to one of the best submarine optical fiber connection infrastructures in Latin America. The ARI is an organization that administrates and maintains the areas that were reverted to the Panamanian government in the year 2000, and its goal is to promote the productive integration of these areas in order to benefit the country. (7)

Infrastructure at the National Level
On the national level, Panamá has four optical cable systems which are extended throughout the country.

Submarine Optical Fiber Connections (8)
Internationally, it has the following submarine optical fiber connections:
PAC system: connects Japan, California, Mexico, Panama, St. Croix, United States and Europe.
SAC system: connects Panama, Peru, Chile, Argentina, Brazil, Venezuela and Colombia.
Pan American system: connects Panama, Colombia, Peru, Ecuador and Chile.
MAYA 1: connects Florida, Mexico, Guatemala, Costa Rica, Panama, Colombia, Puerto Rico, Grand Cayman and Jamaica.
ARCOS: connects Central America and the Caribbean.

Brief History of Privatization and De-Regulation
1996: The Panamanian government began the process of privatization of the National Institute of Telecommunications (INTEL-Instituto Nacional de Telecomunicaciones).
1997: The INTEL provided telecommunication services until 1997. The companies that were pre-qualified to buy the rights to 49% of the INTEL were Cable and Wireless, GTE, and South Western Bell. South Western Bell retired before negotiations got underway, leaving Cable and Wireless and GTE as contenders.
1997: Cable and Wireless bought 49%. The government owns the remaining 51%.
2003: The telecommunications market was opened and other companies were allowed to enter the market. As a result, Cable and Wireless ceased to have the monopoly in the market, for national and international services. Telecarrier Inc. and Clarocom are currently providing competitive rates for national and international calls. Companies seeking to enter the market in the near future include Advanced Communications, Galaxy Communications Corp., System One World, Tricom, and Voip Comunicaciones de Panamá. (9)

The Panamanian Telecommunications Market
The Panamanian telecommunications market includes 677,000 households. Currently, there are about 376,499 landlines, 569,705 cell phone subscribers, and about 11,439 public phones. The telecommunications market has dramatically changed in the past seven years. (10)
For many years Panamá's main telephone provider was the National Institute of Telecommunications (INTEL). The INTEL was privatized in 1997, and the new provider was Cable and Wireless. However, the Panamanian government continued to own 51% of the entity. Also, at this point new cell phone providers entered the market. Cell phone providers included Cable and Wireless, and Bell South. In 2003, the telecommunications market was de-regulated, and Cable and Wireless ceased to have the monopoly on national and international service. The new companies that were to enter the market needed to perform interconnection testing, and also be able to demonstrate that they were ready to be telecommunication service providers. Many of the new companies had difficulties whether it was with the testing, or because there were certain problems with Cable and Wireless regarding interconnection. (11)
Currently, the main phone provider in Panamá is still Cable and Wireless. Cell phone providers include Bell South, Cable and Wireless, and Tricom. Companies that are already providing some services are Telecarrier Inc., and Clarocom. Other companies entering the market include Advanced Communications, Galaxy Communications Corp., System One World, Tricom, and Voip Comunicaciones de Panamá. (12)
The privatization and de-regulation processes have been closely monitored and regulated by the Panamanian government. Many people complain that prices are too high for basic services, and also that the wait time for a new line in certain areas of the country is still too long.

Public Phone Service
Another problem is that Cable and Wireless had a contract to provide public phone services and maintenance, which will expire this year. Cable and Wireless will now be permitted to get rid of public phones that are not making a profit, leaving many individuals in rural areas that relied on public phones without public phone service. The new companies entering the market will only provide national and long distance service, and are most likely not interested in getting involved with public phone service offerings.
According to Cable and Wireless, public phone installation costs about $50,000 for each public phone, and many of them generate only $10 a month. As a result, as many as 9,000 public phones, from the 11,439 public phones, are subsidized by Cable and Wireless. The Economy and Finance Ministry, along with the Regulating Entity for Public Services, is planning to draft a proposal that will make available "universal service", and establish a means to fund phone service in non-profitable sectors of the market such as rural and suburban areas. (13) Presently, one of the ways that these institutions are seeking to fund such phone service is by possibly charging a fee to the new companies entering the market.(14)

De-Regulation: More Choices?
In conclusion, the privatization of the INTEL brought fundamental changes in the telecommunications service offerings in Panama. However, the de-regulation of the market only provides benefits for those who utilize national and international services. The new companies have introduced competitive rates, and different choices to customers. However, it is too early to assess the impact of de-regulation because not all the companies scheduled to enter the market have done so at this point in time. Also, many individuals would like to have a choice when it comes to local phone service providers.

(Source: Regulating Entity of Panama--Ente Regulador de Panama)

(Source: Regulating Entity of Panama--Ente Regulador de Panama)