Lasso’s agenda seen as opportunity to bolster Ecuador’s ICT sector

If implemented, the plans of Ecuador’s new president for the telecom sector have the potential to reduce barriers to the development of the industry and attract foreign investment, said Katherin Miño Sánchez, general manager of one of Ecuador’s largest ISP, Puntonet.

Two items of Guillermo Lasso’s government program are particularly hailed by Miño Sánchez, who was speaking Tuesday in a panel about ISPs during the Fiber Connect LatAm 2021 event. Lasso took office in May.

The two proposals are to review the country's telecoms regulatory framework and to overhaul the tax system.

A legal reform abolished the development fund administered by telecoms ministry Mintel, and obliged operators to contribute 1% of revenues directly to fiscal coffers.

Another law mandates that these funds must go to telecoms infrastructure, equipment and networks. However, the amounts collected were not used at all, according to an IDB report.

“We still have a fiscalist vision in the country favoring tax collection over the expansion of services,” said Miño Sánchez, adding that Ecuador is the Latin American country with the highest tax burden for the sector, at around 70%.

"Since May, we have a new government with a neoliberal agenda and which considers the telecom sector as strategic."

Lasso’s program, however, does not mention the elimination of the special consumption tax levied on telecommunications, which industry groups like the Inter-American Telecoms Association (Asiet) and GSMA have long demanded.

In a report, Asiet identified a lack of public connectivity investments as a key problem, exacerbated by deficient policies that discourage private investment in low-income areas.

As a result, a digital gap and inequality of access between urban and rural areas persist, according to Asiet.

With a population of about 16mn, Ecuador has average internet penetration of 60%, and 20% in rural areas, according to Miño Sánchez. The country also has only 1.2mn of fiber optic connections, she said.

According to the latest data from regulator Arcotel, Ecuador had a mobile penetration rate of 87.3% as of last November.