Dialing Selection Modality

On February 6, 2003, Resolution No 75/2003 of the Ministry of Economy was published in the Official Gazette. It modified Resolution No 613/2001 of the former Ministry of Infrastructure and Housing which had implemented the Dialing Selection Modality for Long Distance Service Providers (“DSM”) by issuing pertinent regulation (as amended by Resolution No 75/2003, “RGDSM”).

DSM is the modality that enables a client to select a local or international long distance service provider on a call per call basis. This selection is performed by dialing a prefix code, “17” for local long distance calls and “18” for international ones, plus a three digit number that identifies the chosen service provider.

DSM is based on Section 42 of the Argentine Constitution which sets out the authorities’ duty to provide for the defense of competition against any form of market distortion, control of natural and legal monopolies and the quality and efficiency of public utility services.

It is also based on the obligations assumed by the Argentine Republic in the Fourth Protocol annexed to the General Agreement on Trade in Services under the World Trade Organization, ratified by Law No 25,000, by which Argentina committed to open telecommunication services to competition, without restrictions except for satellite services, after November 8, 2000.

Based on these principles, the Government provided for DSM in numerous decrees and resolutions which set out the telecommunication framework, and the provisions of Section 34 in Annex II of Decree No 764/2000 refer to this topic specifically.

By means of a consultative proceeding the Secretariat of Communications allowed the administered to submit their observations, comments and objections in connection with the implementation of DSM. This proceeding ended with the issuance of Resolution No 613/2001 mentioned above.

Notwithstanding the above, before RGDSM came into effect, numerous licensees, chambers that embrace sector companies and consumer associations submitted formal objections against it. To review such observations and refutations required more than the stipulated time, so the Ministry of Economy issued Resolution No 33 dated March 26, 2002 which suspended the application of the RGDSM.

Finally, Resolution No 75/2003 partially included certain observations, and amended the RGDSM by setting forth the relevant rules in this subject matter.

The following are the most important provisions of the RGDSM :

(a) Scope. It sets forth the rules that govern the DSM. Its scope aims to enable any client to access DSM in the future, notwithstanding its geographic location, as DSM shall become mandatory for any telecommunication provider that originates calls through the rendering of local or mobile telecommunication services (the “Origin Service Providers”) and long distance service providers (those registered to provide national and international long distance calls).

(b) Availability. The Origin Service Providers shall have their networks (by means of the relevant interconnection agreement with long distance service providers) and equipment available to provide the DSM within a maximum term of 120 days counted from February 6, 2003. We understand that those providers that are technically and legally able to provide the DSM as of today may do so without having to wait for such term to expire.

(c) Exclusions. The DSM, may not be accessed from, among others: (i) temporary lines, fixed or mobile prepaid lines; (ii) controlled consumption lines; (iii) public telephony; and (iv) mobile lines under roaming condition.

(d) ID Call. The Origin Service Providers shall send the identification data pertaining to the telephone line originating the call (ANI – Automatic Number Identification) to the long distance service provider. This mechanism is aimed at controlling and diminishing fraud and the non collection of invoices. Should this ANI be tempered with or omitted then the long distance service provider may block the call.

(e) DSM blockage by providers. The long distance service provider may request the Origin Service Provider the blockage of the DSM of those client in default of their payment obligations by blocking the prefix “17” and “18”. A client shall be considered in default should their invoice remain unpaid within ten (10) days of its payment date.

DSM blockage by client. Each client shall request the DSM blockage from the Origin Service Providers. The Origin Service Providers shall inhibit the access to the “17” and “18” prefix for which it may apply a charge that compensates such service.

(f) Duties. The long distance service providers shall comply with certain guidelines in order to: (i) provide clients with all DSM information in a clear and adequate manner and avoid technical terms; (ii) clarify that VAT must be added to the price of any and all offers; (iii) provide the availability of a free telephone consumer attention service center to all DSM users, and of one or more free access telephone lines, to receive queries and claims on the same; and (iv) inform all clients in a clear manner all additional charges that they must pay by virtue of amounts billed by other providers, as a consequence of the completion of the call.

In addition, Origin Service Providers shall inform those interested in retaining a new telephone line which long distance service providers are available through the DSM and expressly indicate their access codes.

(g) Inclusion in telephone directories. The Origin Service Providers shall include the information pertaining to those providers registered to offer the DSM as well as their access codes in the telephone directories distributed to their clients or at least in one invoice per year. The cost of such publication shall be borne by the long distance service providers on an equal basis, who may also provide an insert with the relevant information to be included in the telephone directory.

(h) Sanctions. Sanctions are imposed in accordance with the nature of the scope of work, that is to say, depending whether the infringer is an Origin Service Providers, a long distance provider or the ABDS (as this term is defined below). The sanctions may result in a warning, the imposition of fines, or the revocation of the license, authorization or permit. The Argentine Communication Commission (Comisión Nacional de Comunicaciones) shall provide for the publication of the sanction in the event of the relapsing of the infringement or when the public repercussion of it deems public notice of the same advisable.

(i) Prior publicity. Apart from any other publicity means that long distance service providers are free to adopt, in at least one nationally distributed newspaper they must publish information, among other matters, on: (i) the date when DSM will be implemented; (ii) the scope and use of DSM; (iii) the differences between the presubscription (presuscripción) modality (current modality that enables the selection of a long distance service provider for all calls) and DSM; and (iv) the places where DSM will be implemented. Such publication must be made at least three days prior to the provision of the DSM. All long distance service providers may make such publication together.

(j) Authorization. The Origin Service Providers shall request the authorization to the long distance service provider or to the company that manages the data base and registers the DSM authorizations (the “ABDS”), which may be retained by the long distance service providers ad referendum of the Communication Secretariat of the National Presidency (Secretaría de Comunicaciones de la Presidencia de la Nación). The cost of the authorization shall be borne by the long distance service providers.

(k) The authorization proceeding set forth by the long distance service providers and the ABDS, shall include the following information: client name and surname, ID number, telephone line number, invoice address and Origin Service Providers’ client number. The ABDS is responsible for receiving the requests for authorization, register them and maintaining the confidentiality of the data so obtained. This authorization shall expire upon the change in ownership or cancellation of the telephone line. The long distance service provider shall submit to the Argentine Communication Commission, either directly or through the ABDS, a fifteen-day report on the requests for authorization received, both valid and invalid, and in the latter with indication of the relevant cause.

The implementation of the DSM enables the user to select from different providers in order to place its local or international long distance calls as it deems more efficient. However, the effective implementation of this modality will ultimately depend on the rapid and constant flow of technological advances and economic and commercial aspects of the industry. The wisdom of this regulation will be seen in the future.