The Performance Assessment Framework for Economic Regulators (PAFER) was developed by the OECD to help regulators assess their own performance. The PAFER structures the drivers of performance along an input-process-output-outcome framework. This chapter applies the framework to the governance of Peru’s telecommunications regulator (Organismo Supervisor de Inversión Privada en Telecomunicaciones, OSIPTEL) and reviews the existing features, opportunities and challenges faced by OSIPTEL in developing an effective performance assessment framework.
Driving Performance at Peru's Telecommunications Regulator
The Governance of Regulators
Chapter 2. Governance of Peru’s telecommunications regulator
Abstract
Role and objectives
The Supervisory Agency for Private Investment in Telecommunications (Organismo Supervisor de Inversión Privada en Telecomunicaciones, OSIPTEL) was created on 11 July 1991 by the Legislative Decree No. 702 with the goal of protecting the telecommunication public services market from practices against free and fair competition. Its creation was part of a wave of structural reforms in the early 1990s as Peru moved towards a liberalised economic model. This liberalisation was accompanied by the creation of government bodies to manage the new economy, including independent regulators for four key sectors – telecommunications, energy, water and sanitation, and transportation.
OSIPTEL officially began its operations in 1994, with the installation of its first set of Board of Directors. Since then, the mandate of the agency has been to regulate and supervise the telecommunications market in Peru. OSIPTEL has the authority to fix the tariff structure, manage and issue regulatory instruments, mediate and settle complaints at the second instance and settle controversies between operators at the first and second instance, and establish and impose sanctions and corrective measures. The regulator is also the competition authority for the telecommunications sector, a function exercised by Indecopi, Peru’s competition and consumer protection authority, for most other sectors of the country’s economy. Reportedly, this distinction is due to a need for higher specialised knowledge of the sector in the case of telecommunications. A summary of the regulatory framework governing OSIPTEL’s roles and objectives can be found in Box 2.1.
Box 2.1. OSIPTEL’s regulatory framework
OSIPTEL is governed by general rules that apply to all for Peruvian regulators, as well as specific rules that govern only OSIPTEL.
Common regulations governing Peruvian regulators
Law No. 27332, Framework Law on Regulatory Agencies for Private Investment in Public Utilities (Ley Marco de los Organismos Reguladores de la Inversión Privada en los Servicios Públicos, LMOR).
Supreme Decree No. 042-2005-PCM (LMOR regulations).
The LMOR and its regulations establish characteristics, functions and main organisational rules for Peruvian regulators. For example, the LMOR defines regulators as entities with administrative, functional, technical, economic and financial autonomy. In addition, the LMOR grants them with their functions, as noted in Table 2.1. It also establishes the rules that govern the Board of Directors rules and the Users Councils (Consejo de Usuarios).
Rules specific to OSIPTEL
Legislative Decree No. 702: Creates OSIPTEL as Peru’s telecommunications regulator. OSIPTEL oversees the efficiency and quality of the telecommunications services and protects the users and markets from unfair competition practices.
Supreme Decree No. 013-93-TCC, Telecommunications Law: Regulates OSIPTEL’s general and specific functions, such as approving standards for interconnection agreements.
Law No. 27336 (Ley de Desarrollo de las Funciones y Facultades de OSIPTEL): Law that establishes precisions to OSIPTEL’s functions, including regulations to strengthen enforcement and inspections.
Supreme Decree No. 008-2001-PCM (Reglamento General de OSIPTEL): Law that develops in more depth LMOR and Law No. 27336 regulations, regarding functions and the regulator’s internal organisation.
Resolution of the Board of Directors No. 032-2002 (Reglamento de Organización y Funciones): Internal organisation and functions regulations.
Source: OECD analysis based on information provided by OSIPTEL, 2018.
OSIPTEL’s main legal powers are indicated in the Law No. 27332, Framework Law on Regulatory Agencies for Private Investment in Public Utilities (Ley Marco de los Organismos Reguladores de la Inversión Privada en los Servicios Públicos, LMOR), enacted in 2000. This law allows regulators, such as OSIPTEL, to supervise, regulate, establish norms, and inspect the sector activity of regulated entities and serve as the competition authority in the sector (see Table 2.1). In contrast, the Ministry of Transport and Communications (Ministerio de Transportes y Comunicaciones, MTC) set sector policy and perform some regulatory and supervision functions (see Table 2.2).
Table 2.1. Powers and functions of OSIPTEL
Source: (OSIPTEL, 2018[1]), Plan Estratégico Institucional 2018-22, OSIPTEL, https://www.osiptel.gob.pe/repositorioaps/data/1/1/1/PAR/res025-2018-pd/Res025-2018-PD_PEI2018-2022.pdf (accessed on 22 June 2018).
Table 2.2. Powers and functions of the MTC
Source: Information provided by OSIPTEL, 2018.
OSIPTEL as an institution has progressively evolved according to changes in the market – from public companies to limited competition in basic services, to competition in all services and, from 2006 to present, the consolidation of markets (see Figure 2.1). This was influenced by a period of rapid technological advances and the development of new sectors in the telecommunications sector.
Figure 2.1. Evolution of OSIPTEL’s role in the telecommunications market in Peru
Source: Information provided by OSIPTEL, 2018.
Institutional co-ordination
The functions of OSIPTEL, the MTC, Congress and other regulatory and public administration bodies (Table 2.3) are contained in their respective organic laws published in the Official Gazette, El Peruano, and publicly available on the respective websites of each entity and the national portal of the Peruvian state. These entities can initiate activities that impact the regulator’s duties and functions, ranging from national security policy by the Ministry of Interior or the national data policy by the Ministry of Justice, to legislations passed by Congress that will require the regulator to pass corresponding secondary legislation.
The relationship between these entities is governed by the principle of effective collaboration through agreements of inter-institutional collaboration that facilitate activities of co-ordination and mutual co-operation.1 There are no structured co-ordination mechanisms with other public administration bodies, including the other economic regulators. Co-ordination is often facilitated rather through ad hoc channels based on personal relationships established between senior officials at OSIPTEL and the public administration bodies.
Table 2.3. Public administration bodies involved in the telecommunications sector in Peru
Source: Prepared by the OECD Based on information collected during the review, 2018.
OSIPTEL can receive requests for information or opinions from any of these bodies and lack of co-ordination make it challenging to respond in an appropriate amount of time, especially when more than one request is made in the same time period.
To foster effective collaboration, OSIPTEL has been active in developing national, regional and international co-operation agreements with various government bodies and telecommunications regulatory agencies (see Table 2.4).
Table 2.4. Agreements signed by OSIPTEL with other telecommunications regulatory agencies
Source: Information provided by OSIPTEL, 2018.
Functions
OSIPTEL performs functions related to promoting competition, advising other government agencies, and protecting consumers in the telecommunications sector. The functions of OSIPTEL have increased over time, linked in part to changes in the sector. The MTC, Congress and other executive agencies can also add functions to OSIPTEL through legislative text without granting additional resources to implement these new functions. OSIPTEL estimates that 14 such functions have been granted to them since 2013 (see Table 2.5). OSIPTEL expended PEN 5.5 million of their budget in 2017 on these new functions. Two functions – the Rural Mobile Infrastructure Operators (OIMR) and procedures for the removal of telecommunications infrastructure – were most recently assumed and OSIPTEL does not yet have an estimation for how much it will cost to implement.
Table 2.5. New functions added to OSIPTEL since 2013
Source: Information provided by OSIPTEL, 2018.
Competition functions
Competition functions are carried out by the Regulatory Policy and Competition Department (Gerencia de Políticas Regulatorias y Competencia, GPRC), who focus on ex ante competition promotion and also maintain data and conduct analyses of market competition and development. This includes developing general regulations for the telecommunications market, including setting prices, tariffs, and interconnection charges. OSIPTEL also considers deregulation if they consider that the particular problem had already been solved.
Ex post competition functions are also carried out by OSIPTEL through the application of the competition laws in the telecommunications market, namely the Law on the Repression of Anti-competitive Behaviours (Ley de Represión de Conductas Anticompetitivas) and the Law of Repression of Unfair Competition (Ley de Represión de la Competencia Desleal). These laws are applied through sanctions and corrective measures. The Technical Secretariat also carries out ex officio investigations to detect anticompetitive or unfair behavior between operators, which are heard by the Collegiate Bodies in the first instance and Controversies Settlement Court in the second instance (see more in the Appeals section).
Prices are regulated in the fixed line and wholesale markets to create accurate conditions for the development of public utilities in the telecommunications sector and ensure quality and economic efficiency. OSIPTEL is reviewing the need to continue regulating fixed lines. The General Tariff Regulation (Reglamento General de Tarifas, RGT) and the Procedure for Setting and Reviewing Price Caps (Procedimiento de Fijación y Revision de Tarifas Tope) establish the methodologies for price-setting.
When regulated, prices are set every four years but can be reviewed every two years upon the request of a regulated entity or due to significant changes in the market. These are set through cost models based on cost-oriented price caps, international benchmarking, simulations of hypothetically efficient firms, cost-models from regulated entities, or a specific model of particular need.
Regulatory interventions can be initiates in response to: 1) laws enacted by Congress; 2) requests by the MTC, executive entities, or stakeholders; or 3) a detected market failure. For the first and second sources, OSIPTEL can be requested to accept new responsibilities without additional budget or staffing.
While OSIPTEL is the competition agency for telecommunications, some of these functions are assigned to the MTC. This includes licensing new operators in the market and determining when and how spectrum is auctioned. MTC usually consults with OSIPTEL with regards to spectrum auctions to receive a non-binding opinion on anti-competitiveness concerns. No merger law exists currently in Peru; the only merger control is with those involving a transfer of spectrum, which are decided upon by the MTC with non-binding opinion from OSIPTEL.
Advisory functions
The MTC can solicit technical support from the OSIPTEL, which the regulator does regularly and informally. Channels include commenting on open consultations, or receiving an ad hoc request from the Ministry for the regulator’s high level of technical expertise and capacity on a certain issue. The MTC can also comment on OSIPTEL’s open consultations. However, OSIPTEL’s technical opinions on Ministry consultations are non-binding in nature and in several instances the Ministry has acted contrary to the regulator’s recommendations (see Table 1.6). Non-binding opinions can also be requested by Congress and other ministries on measures to restore or promote competition.
Table 2.6. Decisions by MTC on mergers and spectrum allocation (2004-2018)
Source: Information provided by OSIPTEL, 2018.
Customer protection functions
User protection policy2 is led by Protection and User Services department (Gerencia de Protección y Servicio al Usuario, GPSU). The GPSU employs 80 per cent its staff to deal with face-to-face interactions with consumers, and is primarily oriented towards complaint resolution. This is supported by three offices in Lima and the de-centralised offices and centres where the Decentralised Offices Department (Gerencia de Oficinas Desconcentradas, GOD) applies GPSU policies.
The GPSU focuses on both protecting consumers and providing services to users. Protection is through designing rules and supporting investigation of issues raised by consumers through legal and economic approaches. GPSU’s approach focused on competition-related resolutions first, and resort to rule making when necessary. All regulations have a stated sanctioning regime for non-compliance (see more in the Supervision, enforcement and inspections section), with the final sanctioning being decided by the General Manager in the first instance and appealed to the Board of Directors in the second instance.
In addition to these mechanisms, the GPSU focuses on the provision of information to educate consumers. They view this as especially important in a dynamic market like telecommunications. While there is interest, behavioural analyses of consumer decision-making have yet to be completed. The mobile operators are prohibited from including clauses in their contracts that do not comply with current regulations.
The GOD is in charge of managing 23 regional offices and 8 centres across Peru. Decentralised offices are responsible for responding to any issues of concern in the locality, informing users of their rights, providing training for local enterprises, and measuring service quality in all regions. These offices also maintain close communication and contact with the local government to improve telecommunications access and service. Offices in Lima are set up close to the headquarters for each telecommunications provider to facilitate easy complaint filing by consumers.
The GOD has five people based in Lima and 113 individuals distributed across the different regional offices or centres. On average, each regional office employs five people responsible for advocacy and supervision and is managed by a chief lodged in a property rented by OSIPTEL. On the other hand, centres have been set up based on office-sharing agreements with local governments or institutions. These centres normally employ less staff members and are responsible for advocacy in the city they are located, in co-ordination with the head of the GOD.
Decentralised offices interact with the public on a daily basis. In more remote communities, regional language requirements make it difficult to interact. The GOD is testing innovative and proactive ways to reach out to these communities, including using rural and more visual presentations when providing information on user rights.
Strategic objectives and planning
OSIPTEL’s vision is to achieve quality telecommunications services with empowered users within a framework of effective competition. This includes being recognised as an autonomous and innovative institution with committed and qualified staff. OSIPTEL defines three pillars upon which this vision is built: quality of services, customer care, and competition (see Figure 2.2). Their mission is to promote these pillars in a continuous, efficient and timely manner.
Figure 2.2. Vision and mission of OSIPTEL
Source: Information provided by OSIPTEL, 2018.
OSIPTEL develops a five-year Strategic Institutional Plan (Plan Estratégico Institucional, PEI) that provides medium-term direction for accomplishing their vision and mission. The current PEI is set for the 2018-2022 period with seven strategic institutional objectives (Objetivos Estratégicos Institucionales, OEI) separated into core and support functions (see Table 2.7). Core objectives relate to the mission of the institution, whereas support objectives relate to the internal management and processes of OSIPTEL. The last support objective (“Implement processes for disaster risk management”) is mandatory for all public bodies, as set by CEPLAN. This is an evolution from their previous PEI (2014-17), which had three objectives – one for each area of increasing competition in the market, improving satisfaction of users, and improving internal management and processes.
Table 2.7. OSIPTEL Strategic Institutional Objectives 2018-2022
Source: (OSIPTEL, 2018[1]), Plan Estratégico Institucional 2018-22, OSIPTEL, https://www.osiptel.gob.pe/repositorioaps/data/1/1/1/par/res025-2018-pd/res025-2018-pd_pei2018-2022.pdf (accessed 22 June 2018).
To achieve the OEIs, OSIPTEL develops Strategic Institutional Actions (Acciones Estratégicas Institucionales, AEI) as intermediate objectives and are reflected in the yearly operational plans (Plan Operativo Institucional, POI), which implements the PEI. The POI is governed by a directive and participatory plenaries are used to decide which strategic priorities to focus on in the years to come.
To achieve each AEI, it is necessary to implement a series of activities for each objective, which must also be scheduled annually in the POI. Monitoring of the POI is accomplished through the Operational Management Document, with the goal of ensuring the execution of all the activities within the framework of the AEI, since their achievement guarantees also the achievement of the strategic objectives and measured by indicators.
The process and methodology for developing the PEI are established by National Centre for Strategic Planning (Centro Nacional de Planeamiento estratégico, CEPLAN), who is responsible for overseeing Peru’s National Development Plan. CEPLAN co-ordinates with OSIPTEL and ensures that the correct methodology is followed. In 2017, CEPLAN issued a new directive for developing institutional plans that requires bodies to provide more information relating to impacts on the population as well as geographic effects, i.e. urban versus rural affects. For example, CEPLAN requires OSIPTEL to justify how the National Fibre Optic Backbone project is affecting specific communities and individuals.
The Planning and Budget department (Gerencia de Planeamiento y Presupuesto, GPP) of OSIPTEL is responsible for co-ordinating and drafting the strategic objectives, which are developed in line with the main objectives, mission, and vision of the organisation and are presented to the President and the Board of Directors for approval. The GPP co-ordinates via participatory plenaries with technical staff from each department, senior management, and stakeholders that are often consulted at a later stage. Each department has a planning officer in charge of constructing indicators linked to a specific objective while technical staffs provide a diagnosis of the market situation and institutional management. Stakeholders include the PCM, related ministries, and selected regulated entities and consumers. An external consultant, selected by public competition and with knowledge of CEPLAN’s methodology, ensures that the processes are respected and conducts the interviews with selected stakeholders. Members of the Board of Directors are invited to attend plenary sessions, and review the final version of the PEI or POI after approval from the President of the Board.
A technical team is also created to support the PEI and POI process. Managers from each department designate two staff members to sit on this team and accompany the entire planning process. To involve the largest number of personnel, questionnaires are sent electronically to gather opinions and contributions. During each stage of the process, workshops are held with the technical team, plenary sessions, managers of each department, the President of the Board and the General Manager. Decisions are made through a consensus format, with final approval by the President.
An annual review of the POI was introduced in 2013, but has not been formally institutionalised. Changes can be made each year to goals or specific indicators, but not to high-level objectives. Modifications are considered to be rare, as it would need to be clearly justified. The PEI and POI are displayed on the OSIPTEL website.
Communications
OSIPTEL enhances their transparency through a well-developed communications strategy that is implemented through a yearly strategic plan. Communications is directed towards the Congress, executive bodies, industry, industry associations, user associations, users and the media. However, the regulator is not required to present or discuss their annual report (discussed more in the Output and outcome section) with Congress for increased scrutiny. The communications department makes use of:
Newsletters to industry and Congress;
Blog oriented towards academic circles to gain support for a common interpretation of issues;
Social media accounts, such as Twitter (84 000 followers) and Facebook (170 000 likes) designed for disseminating quick information, as well as LinkedIn (7 000 followers) to connect with professional actors, such as civil servants; and,
Position papers periodically released on specific themes of concern.
In 2016, the regulator also invested in increased visibility in media, resulting in a doubling of OSIPTEL media appearances from 2015 to 2016 (from 2 831 to 3 626).
Consumers are making use of the social media channels to direct feedback and comments about their services to OSIPTEL, which are often responded to by officials in OSIPTEL. This is occurring in an ad hoc manner and not in association with a formal stakeholder engagement effort leveraging social media to expand outreach.
The Communications Department is also working with the Protection and Users Services Department to improve the way information is provided to consumers to enable better decision making. They are also developing a mobile-based tool to allow people to report problems with service.
The Communications department is creating a monitoring system for results and impact of its different communications mechanisms.
Independence
Article 2 of the LMOR establishes OSIPTEL as a regulatory body with administrative, functional, technical, economic, and financial autonomy. Article 10 of the General Regulations of OSIPTEL3 further establish the autonomy principle whereby OSIPTEL is not subject to the mandate of other bodies or entities of the state, but actions are strictly subject to the applicable legal regulations and must be supported by technical studies.
The General Regulations highlight other principles that aim to support the independence of OSIPTEL. Article 7 establishes the transparency principle, which requires OSIPTEL to present their criteria for decisions and publish drafts for public consultation. Article 9 establishes an impartiality principle, which requires OSIPTEL to weigh fairness and impartiality with adherence to the relevant norms and interests of both operators and users. Finally, article 5 highlights the principle of non-discrimination that guarantees equal treatment of all operators by OSIPTEL.
In June 2018, the Commission for the Defense of Consumers and Public Services Regulatory Bodies (Comisión de Defensa del Consumidor y Organismos Reguladores de los Servicios Publicos, CODECO) of Congress discussed and passed a draft law to enhance aspects of institutional independence for economic regulators in Peru. The draft, which was based in part on OECD research, included measures to strengthen the regulators’ administrative, functional, technical, economic and financial autonomy as well as their accountability mechanisms. As of November 2018 the draft law has not been proposed for discussion in Plenary.
Input
The LMOR grants all independent regulators with an independent source of funding based on regulatory contributions levied on the incomes of companies and entities that are under the scope of its jurisdiction.4 Additional revenue can be collected from (OECD, 2016[2]):
Payments from administrative procedures enlisted in their Single Text of Administrative Processes (Texto Único de Procedimientos Administrativos, TUPA);
Donations, contributions, or transfers;
International persons;
Interests or late fees derived from the regulatory contribution;
Financial interests generated through own resources; or
Sources from fines.
The income of the regulator has decreased over the last years with reported industry income. While privately collected, these are considered public funds and thus enable the Congress and executive power to enact directives over how these are used, including requirements to pay into national development funds. Furthermore, a recently-introduced budget law has required non-executed budgets to be forwarded to the Treasury each year.
OSIPTEL is well-known for their highly technical staff. Like many regulators, they identify issues with competitive salaries vis-a-vis the private sector. A dual labour regime and pay freeze since 2006 may create adverse incentives for current and future staff. Training programmes and benefit packages have been developed to help attract and retain staff, which has been successful.
Financial resources
The contribution rate collected from regulated entities is approved by the Council of Ministers through a Supreme Decree subscribed by the President of the Council of Ministers and MEF. This cannot exceed one per cent of the total annual income of regulated firms after taxes of each firm, minus GST and MPT. Supreme Decree No. 012-2002-PCM set the contribution rate at 0.5% in 2002 and has remained at that level since. The steady-state of the contribution rate at 0.5% indicates that financial resources are determined ex ante rather than determined in accordance with a cost recovery principle that is re-evaluated on a regular basis.
Table 2.8. provides an overview of OSIPTEL’s annual budget over the last five years. Over the last three years, OSIPTEL has seen an overall decline in funds by 19% in real terms due to a decrease in industry income, in part linked to higher competition, lower prices, as well as a merger of two major companies Telefónica and Movistar in 2014. A large amount of informality, specifically in the cable TV subscription sector, also limits OSIPTEL’s ability to raise funds. Finally, OSIPTEL has received new functions in line with sector evolution or new legislative texts (e.g. regulation of the National Fibre Optic Backbone) but without being granted additional resources. OSIPTEL estimates that 13 such functions have been added since 2013. Taken together, this situation has left the regulator feeling that its resources are stretched thin.
To compensate, OSIPTEL has been required to request supplemental funds to be added to their budget. These funds originate from the reserves of the regulator saved as carry over from previous years. MEF must approve access to these reserves, as well as the Modified Institutional Budget (PIM) proposed by OSIPTEL. Thanks to this mechanism, two times in four years the regulator has executed a budget higher than the initial budget received from regulatory contributions.
Any changes to contribution the rate must be made through MEF. This was attempted in 2016 by the regulator without success. The regulator has presented this request again in 2018 but the review process has been delayed due to changes in government, and the regulator has been requested tore-submit the request.
Table 2.8. OSIPTEL annual budget and execution, 2014-18
Notes: Initial budget is sourced from funds collected from the regulatory contributions levied to regulated entities. Supplemental funds are approved by MEF and added from the reserves of the regulator, arriving at the Modified Institutional Budget (PIM).
Source: Information provided by OSIPTEL, 2018.
Recent changes to the budget law have imposed limits on the use of this mechanism by the regulator. Since the regulator is funded solely through contributions collected directly from regulated entities, their funds are classified as “directly-collected resources” (recursos directamente recaudados, RDR) in contrast to “ordinary resources” (recursos ordinarios, RO) that are central government funds. While it is possible for OSIPTEL to receive OR funds, to date they have only ever been funded by regulatory contributions.
The national budget law previously allowed agencies with RDR funds to keep surplus funds and carry them forward to future spending, while agencies with RO funds were required to return surpluses to the Treasury each year. In 2017, the Treasury included the Law of Financial Equilibrium (Ley de Equilibrio Financiero) in the national budget law, which also required surplus RDR funds to be forwarded to the Treasury. This law must be renewed yearly with the national budget law. Forwarding surpluses was renewed for the 2018 Fiscal Year.5
Funds collected from fines and sanctions are transferred to the Telecommunications Investment Fund (FITEL), while fines associated with the taxes levied on regulated entities are kept by OSIPTEL.
Managing financial resources
In 2015, the Government of Peru, through MEF, implemented a performance budgeting system for some government entities.6 OSIPTEL participates in this new system, which requires budgets to be aligned with the goals and objectives established by the institution in their strategic institutional plans (PEI) and operational plans (POI). This ensures that agencies consider the problems they are trying to solve and have measurable indicators of success towards solving these problems. MEF works with the various government agencies to help design better indicators by encouraging them to follow the methodology and develop indicators that show how institutional actions are leading to positive improvements in the sector and for society.
OSIPTEL utilised two budgetary processes until 2016: a three-year budget forecast and an annual budget. Both were created according to the Programming Directive, while only the annual budget required approval. For 2017 and 2018, in accordance with the shift to the performance budgeting system, the budgetary programmes changed to a single multi-annual budget that covers three years and requires the first year to be approved via the Annual Budget Law. The following two years are referential in nature and are updated yearly. MEF makes modifications in accordance with administrative simplification efforts, as well as aligning the multi-year budget with the Multiannual Macroeconomic Framework.
The multi-annual budget aligns technical analysis and decision-making on the priorities indicated in the PEI and POI. The budget includes information on goals and inputs needed to achieve these goals, broken down according to the various departments in the regulator. This requires activities, tasks and sub-tasks to be developed, followed by human and material resources being estimated. Yearly updates are submitted to MEF and Congress with details on how it will achieve its intended goals. This is then implemented through the annual budget. The goal of this process is to ensure the entity has sufficient resources for the fulfilment of its goals and objectives.
The Administration and Finance Department (GAF) co-ordinates the budget process. OSIPTEL uses expected revenue to determine how much will be available to carry out operational goals set in the POI. The GAF co-ordinates with the different internal departments, who establish the amount of budget they require to meet the goals assigned to them within a set period of time. The GAF collects and filters these demands according to the resources available and priorities identified for the upcoming year, and then presents to the President of the Board for approval.
The budget process is co-ordinated with the national government through a digital system linked with MEF that is used by all relevant government agencies. The GAF uploads the information to the Integrated System of Financial Administration (SIAF)7 and to the Integrated Administration System (SAI).8 Managers of each department carry out reviews of their budgetary balances through the SAI System. The GAF is responsible for updating manually the information that is not automatically interfaced with the SIAF system.
Budgetary allocations are overseen by the PCM, which have decision over some administrative allocations, including travel policies and public information campaigns.
Human resources
OSIPTEL employs 400 staff as of August 2018, of which 80% of professional staff hired are economists, engineers, or lawyers. A full breakdown of staff by occupation can be found in Table 2.9. , while a breakdown of senior and technical staff by department can be found in Table 2.10.
Table 2.9. Staff by category, 2018
Source: Information provided by OSIPTEL, 2018.
Table 2.10. OSIPTEL staff by department, 2018
Note: All categories of staff other than support staff are considered professional staff.
Source: Information provided by OSIPTEL, 2018.
Recruitment
The President of the Board is appointed for a five-year term by the Presidency of the Council of Ministers. The General Manager reports directly to the President of the Board. Some senior management positions are appointed by the President of the Board without term limits as “puestos de confianza” or “trusted positions”. These positions include the General Manager, Administration and Finance Manager, Corporate Communications, Legal Advisor, Advisor to the President and Secretariat of the Board. These trusted positions can be dismissed by the President at any time. The new SERVIR labour regime (see more below) being implemented limits puestos de confianzas to 5% of total staff. While SERVIR is not fully implemented, Supreme Decree 084-2016-PCM establishes that the 5% rule is in full effect until the implementation of SERVIR. OSIPTEL currently only has 1.5% of staff as puestos de confianzas.
The remaining senior management positions have indeterminate term limits after undergoing a regular recruitment process and appointed by the President of the Board. An organisational realignment currently underway will convert the position of Head of Human Resources, which is currently a position under the Administration and Finance Manager, into a senior management position to further increase and improve HR management policies and practices.
The regular recruitment process is based on a skills model that considers both institutional and personal skills required for the position. OSIPTEL aims to recruit new employees that fit both the technical needs of the agency and are able to adapt to its institutional culture. The model identifies these skills and classifies them according to professional and functional categories (see Figure 2.3). The skills model is also used as a management tool for training and performance review.
Figure 2.3. OSIPTEL recruitment skills model
Competency matrix
* Staff that works directly with users (on-site and by phone).
Source: Information provided by OSIPTEL, 2018.
The results of each stage are published in OSIPTEL’s website. The hiring manager sends a report based on the results, which recommends hiring the candidate that obtained the highest score, to the general manager, who then takes the final decision.
OSIPTEL has an Organisation and Functions Manual, which outlines the main functions and responsibilities of the different positions within the organisation and describes the professional profile required for each position. The executive cannot nominate preferred candidates or overturn OSIPTEL’s decisions.
Recruited staff members are considered as civil servants and therefore follow the rules outlined by National Civil Service Authority (SERVIR). Two employment regimes are used by regulatory authorities. The first is the Law 728 regime, which is a private regime not commonly offered in public entities (which normally follow Law 276 regime). Law 728 offers an open-ended contract term with full benefits. The number of positions is fixed, meaning that recruitments under the 728 regime can only be made when a 728 position has been vacated. Moreover, OSIPTEL must inform the Minister of Economy and Finance when hiring a new position under 728, which can cause a delay in the hiring process.
The remaining staff members are under the Law 1057 regime for “Administrative Service Contracting” (Contratos Administrativos de Servicios, CAS), which is a public sector regime that offers non-permanent employment on a fixed-term six-month contract that can be renewed without limit. Contracts in the last six-months of the year must end in December and renewed in January. CAS also offers less employment benefits, such as insurance or pensions, in contrast to the 728 regime. This may reduce the competitiveness of contracts offered in OSIPTEL compared to the private sector.
As of August 2018, 280 staff members are employed under Law 728, 200 under CAS.
A new labour regime introduced by SERVIR in 2013 merges both categories into one. Migration to the new regime is optional for staff under Law 728, but mandatory for staff under Law 1057. In either case, it will be necessary for the staff member to re-compete for their job in order to join the new regime.
The transition to the new SERVIR labour regime also modifies the regulations governing senior management. For example, senior managers will need to go through the formal recruitment process and all dismissals shall require proper justification, such as failing to accomplish individual goals. Term limits will also be introduced for all senior managers, which will be for three years and can be renewed for another two terms. After three terms, the official must leave the organisation. The 2016 OECD Public Governance Review of Peru, conducting as part of the OECD Country Programme for Peru, assessed, amongst other topics, the management of Peru’s professional civil service and public administration reform agenda through the SERVIR law (see Box 2.2).
Box 2.2. OECD Public Governance Review of Peru: Integrated Governance for Inclusive Growth
Chapter 5. Building a stable and professional civil service in Peru
Peru’s civil servants are currently under multiple labour regimes and complex employment regulations. This translates into a public labour system highly difficult to manage. For example, over 2 000 government agencies established over 500 public employment regulations and over 400 different wage criteria.
In 2013, the Peruvian government issued the new Civil Service Law (30057) for implementing an ambitious civil service reform. The law has an implementation horizon of six years and SERVIR is charged with overseeing this implementation.
The purpose of the Civil Service Law is to establish a single and exclusive scheme for civil servants at national, regional and local levels. A new pay system will be implemented for those in the new regime, with the intent to improve transparency and equity across public entities. In addition, it articulates a strategic policy rationale for the civil service reform, emphasising merit and professionalism.
The new Civil Service Law was designed based on best practice across OECD countries, and, once implemented, is expected to create a lasting impact by significantly improving the organisation, capacity, professionalism and stability of the civil service.
Nonetheless, the transition to the new regime will likely take much longer as the transition is not automatic. Civil servants can choose between transitioning to the new regime and remaining in their previous regime. Furthermore, existing civil servants will need to apply to posts in the new regime and go through a competitive process to be appointed. If they are not successful, they remain in their old post, under the old regime.
Source: (OECD, 2016[3]), OECD Public Governance Reviews: Peru: Integrated Governance for Inclusive Growth, OECD Public Governance Reviews, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264265172-en.
OSIPTEL has also recently developed a succession plan that identifies critical positions and potential successors, which have been used to provide more targeted training to potential successors. Succession plans developed for 12 key positions (all management) and 17 critical positions. The Administration and Finance Department identifies and evaluates successors, and then finally builds a succession map.
Remuneration
Staff members of OSIPTEL are remunerated according to limits ascribed by Supreme Decree No. 172-2013-EF and endorsed by the Chairman of the Council of Ministers and the Minister of Economy and Finances.9 The salaries are not indexed to inflation (see Table 2.11), and OSIPTEL has no flexibility setting salaries outside of these bands.
Staff remuneration is set in accordance with their governing Laws. Both the labour and remuneration guidelines are different and independent from that of public servants in ministries and other public entities. Law 728 allows OSIPTEL to have more flexibility regarding promotions and career prospections. It also establishes salary bands higher than those considered under Law 276 for public officials.
Changes to salary bands under Law 728 must be approved by Supreme Decree, while changes to salaries under Law 1057 can happen only when an employee re-applies for a new contract. Salary bands are not indexed to inflation. The last modification to Law 728 was made in 2013.10 All senior managers are currently remunerated at their respective maximum pay bands, which means that there have been no recent adjustments made with their salaries to meet current market conditions and compete with industry for new talent.
In partial response, the government promulgated Supreme Decree No. 024-2018-EF in 2018, raising the President of the Board of Directors salary to PEN 28 000 (USD 8 400, approximately) to be more competitive with industry.
Table 2.11. Remuneration scales at regulatory agencies in Peru (in PEN)
Note: By Supreme Decree No. 172-2013-EF of 15 July 2013 and Supreme Decree No. 024-2018-EF of 9 February 2018 (for the President of the Board).
Source: Information provided by OSIPTEL, 2018.
Talent retention and training
OSIPTEL has developed a talent retention system that offers a suite of key benefit plans to attract and retain staff. A key component is an insurance plan that extends insurance to the official’s dependents and parents, but is only available for staff employed under Law 728. Given these efforts, OSIPTEL has been ranked in the 2015 Great Place to Work list (El Comercio, 2015[4]) and experienced a staff turnover rate of 9.13% in 2017 compared to 18% across the Peruvian economy (see Figure 2.4.).
The regulator has recently created a gender equality commission to determine how it can attract more women into its workforce. OSIPTEL has already enacted some flexibility measures for women, including an extra week of maternity leave (in addition to the 98 days mandated by Peruvian law), as well as other more generally family-friendly policies half-days off for birthdays of children, and time off to tend to sick children.
Figure 2.4. Staff turnover rate at OSIPTEL, 2012-17
Source: Information provided by OSIPTEL, 2018.
OSIPTEL also offers a training programme designed to fulfil the specific needs of each department, including both upgrading technical skills and covering soft-skill gaps. This program is designed in collaboration with each head of department making sure that every need is taken into consideration. The programme is tied to the performance assessment system, as it seeks to offer training related to gaps identified in the performance evaluation. The Human Resources Office inside the GAF executes at least 90% of the training activities.
The success of the training programme is measured in two ways. First, the programme requires the individual to have an average grade of 14 out of 20 in a given course for it to be considered beneficial and for the staff to achieve this grade in 80% of their training activities. Second, OSIPTEL evaluates staff performance after receiving training and the staff is expected to improve his or her performance within a year by at least 5%.
Public service training programmes as under the scope of SERVIR, as they are the national civil service authority. The new SERVIR labour regime will also contain regulations for training programmes; however, these regulations will only come into effect when the SERVIR labour regime is implemented. In the meantime, SERVIR’s regulation have influenced OSIPTEL’s training programme. First, OSIPTEL cannot provide further training courses until they are formally part of the new labour regime. Second, the new labour regime specifies some restrictions and commitments that the beneficiaries have to assume to be able to participate, including:
Type of training: Until 2014, OSIPTEL could provide their employees with financial aid for master’s degrees or PhDs. This is no longer possible due to SERVIR regulation, which dictates that the beneficiary cannot receive a degree or title from the training provided. When OSIPTEL officially implements the new SERVIR labour regime, the regulations contained in the regime will come into force and govern types of training programmes that can be offered.
Beneficiary Commitments: When an employee participates in the training programme, according to SERVIR regulation, they have to assume two commitments. First, they agree to reimburse OSIPTEL the money invested in their education in case they fail the class provided. This amount is calculated according to direct costs, indirect costs and, in case the class was imparted during working hours, the equivalent to the hours they did not work according to their salary. Direct costs refer to the cost of the class itself and indirect costs refer to coffee breaks, renting of the space needed to impart the class or any other expense related to it. Second, they have to agree to keep working in the institution for a determined period of time after receiving training. The amount of time is defined by (see Table 2.12).
Table 2.12. SERVIR post-training employment requirements (in USD)
Source: Information provided by OSIPTEL, 2018.
Performance assessment
OSIPTEL has developed a performance assessment framework that is tied to a talent development model and talent retention system. It aims to offer staff tailored advice on career development and also provide incentives and training to fulfil technical gaps.
The performance assessment framework is linked to a competency model that defines specific skills needed to achieve OSIPTEL’s strategic goals. This competency model is used to hire new staff and also evaluate current staff performance. In 2018, OSIPTEL began linking the performance assessment system with the POI to ensure tasks assigned to departments or persons correlates to objectives needing to be achieved within a given time frame.
Individual evaluations are conducted together with the staff’s managers and are based on identifying and measuring both the skills and goals of the employee. Skills evaluation identifies competency gaps according to each position while goals evaluation allows staffs to set, discuss, and measure intended goals. These evaluations are then used to help managers formulate training plans and identify the skills that need to be improved or help staffs identify other suitable positions within the agency.
Since 2011, performance evaluations have been conducted via an online platform. In 2015, the system was updated in two ways. First, the process was upgraded from a 180-degree evaluation to a 270-degree evaluation, which means that employees are not the only ones evaluated in the process, but employees are also encouraged to evaluate their managers, sub-managers and chiefs. Second, a new performance evaluation model was created to allow for a more objective evaluation of skills and goals.
Given existing remuneration restrictions, well-performing employees are not rewarded for their accomplishments with any financial incentives. As an alternative, OSIPTEL holds an internal acknowledgement programme and well-performing employees are given half-day off as compensation.
To measure institutional performance, OSIPTEL conducts an Internal Customer Satisfaction Survey (ESCI) to gather opinions on the satisfaction of services provided in the different areas, and gather proposals to improve internal management and strengthen inter-agency communication. The survey gathers information on outcome (level of compliance with the services received), opportunity for attention (promptness of response and punctuality), and personal attitude (treatment, willingness, and friendliness).
Process
OSIPTEL is headed by a Board of Directors and President of the Board, who make a wide variety of executive decisions. Its General Management conducts the technical functions in regards to regulation, user protection, and supervision, and is supported by horizontal functions carried out by various departments.
OSIPTEL uses regulatory quality tools to varying degrees, such as RIA, stakeholder engagement and ex post evaluation to improve their decision-making process.
Decision making and governance structure
The Board of Directors is the highest authority in the regulatory agency and carries out mostly executive decision-making functions. The Board is composed of five members – four who are part-time and one who is full time and serves as the President of the Board. The current composition of the Board is two lawyers, two engineers, and one economist. Members hold office for five years on staggered terms (one appointment per year)11 and can be re-appointed to serve one additional term (see Box 2.3). However, in 2018, three board positions are expiring and will be replaced concurrently, which may pose a risk to continuity in decision making (see Table 2.13). Supreme Decree No. 082-2018-PCM was issued by the PCM, extending their mandates once by 90 days. At time of writing new members had yet to be appointed and the Board was operating with only two active members, including the President.
Table 2.13. Ten-year history of OSIPTEL board members
Notes: 1., 2., & 3. Received 90 day extension according to Supreme Decree No. 072-2018-PCM; 4., 5., 6. & 7. stayed 60 calendar days after the end of their terms, in accordance with provisions in article 7 of the Regulations of the Framework Law, approved by Supreme Decree No. 042-2005-PCM.
Source: Information provided by OSIPTEL, 2018.
In the event that a board member leaves before the end of their term, the new member is only appointed for the remaining amount of time. Vacancies must be filled within 30 days of the expiration of a member’s term, though can be exceptionally extended by 60 days through Supreme Decree. This is currently in force for the three board members leaving in 2018 due to delays in the nomination procedure of new members.
The Board is responsible for setting the strategic direction, developing policy, and setting a clear process for executing the mandate of the organisation. They exert functions related to promoting competition and consumer protection, as well as issue non-binding technical opinions when requested by the executive or congress. The Board also designates and removes members of the appellate bodies and acts as a sanction function in the second instance.
Box 2.3. Board of directors selection process
Criteria for selection as a Board member are:
Be a professional with no less than ten (10) years of practice;
Have recognised professional solvency and suitability, by way of no less than three years of experience in a position of executive management, with understanding of the decision making in public or private companies; or five years of experience in matters related to the competence of the regulatory body; and;
Complete studies at the master's level in subjects related to the competence of the regulatory body.
All members of the Board are selected by:
A selection committee composed of one member proposed by the PCM, one member proposed by Indecopi, one member proposed by MEF and one member proposed by the sectorial ministry related to regulator activities;
The President of the Council of Ministers, who submits to the President of the Republic the final list of selected candidates; and
The President of the Republic, who appoints the member of the Board by Supreme Resolution, which will be endorsed by the President of the Council of Ministers, the Minister of Economy and Finance and the sectorial ministry related to the regulator activities.
Board Members can be dismissed due to legal impediments following the appointment, unjustified absences from two consecutive sessions unless authorised, or in the case of serious misconduct. A one-year restriction on post-employment for employees of the regulator is applied to board members, as it is for staffs.
Source: Law No. 27332; Supreme Decree 103-2012-PCM; Supreme Decree No. 014-2008-PCM; (OECD, 2016[2]), Regulatory Policy in Peru: Assembling the Framework for Regulatory Quality, OECD Reviews of Regulatory Reform, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264260054-en.
To maintain the independence of the Board, the only interaction between the Board and staff of the regulator is intended to be through Board sessions and with respect to the issues being addressed in those sessions. The decision making process is as follows:
Departments of the General Management are responsible for proposing and sustaining specific sectoral issues entered into the agenda of the Board session, which must have the approval of the General Manager.
The topics proposed in the agenda, together with its supporting documents, are made available to the members of the Board at least two days prior to the session.
During the session, if necessary, those responsible for the proposed topic briefly explain the content of the proposal and answer the questions of the members of the Board.
The Board adopts its decisions in the session.
The President of the Board is the only member with a full time position with the regulator. The remaining four members are remunerated PEN 3 000 (approximately USD 900) per month, with the requirement to attend two meetings each month and can be requested to meet additionally under extraordinary circumstances by the President of the Board or a majority of its members. They are not provided additional remuneration on these occasions. This structure can limit Board members’ ability to fully examine issues, especially when the Board has to consider new, non-routine, or complex topics. There are no advisor positions available to members of the Board other than the President. Changes to remuneration rules require an amendment to the Law.
Quorum for meetings is set at half of the members being present and requires the attendance of the President or Vice-President of the Board. Votes are determined by a simple majority of the members attending. The agenda and minutes of Board meetings are posted on the OSIPTEL website.
President of the Board of Directors
The Board of Directors is represented on a full-time basis by the President of the Board, who performs the executive functions of the regulator. The President is responsible for setting the strategic direction and functions of the Board, exerts executive and administrative functions, and reports on behalf of the regulator to the PCM and MEF.
The President is selected through a public contest. A selection committee composed of two members from the PCM, one member proposed by MEF and one by the MTC proposes a list of applicants to the President of the Council of Ministers, who submits to the President of the Republic the proposed selected candidate. The President of the Board of Directors is then appointed via a Supreme Decree signed by the President of the Republic and endorsed by the President of the Council of Ministers.
The President presides over the Board, implements the decisions of the Board, and represents OSIPTEL before public authorities and national or foreign institutions. The President also designates or removes the General Manager and approves, at the proposal of the General Manager, the hiring, promotion, suspension, or removal of line managers and management-level officials. Some managers are directly appointed by the President as special positions or “puestos de confianza”. Finally, the President approves the institutional budget, balance sheets and financial statements as well as the Institutional Management Plan and administrative policies.
The President transmits the Board’s strategic directions via weekly meetings with the General Manager and senior management. The President is supported by two advisors that work directly for the office.
General Manager
The General Manager is responsible for the legal, administrative, and judicial responsibilities of OSIPTEL. Appointed by the President at-will and without open recruitment, the General Manager is responsible for legal, administrative, and judicial responsibilities of OSIPTEL and plans, organises, manages, executes and supervises the administrative, operational, economic and financial activities of OSIPTEL. The General Manager also prepares draft annual reports, budgets and makes senior management recruitment decisions, which are approved for decision by the President.
The General Manager also attends sessions of the Board, but does not have a voting function. For discussions pertaining to appeals of decisions made by the General Management, the General Manager must withdraw from the session.
The General Manager is supported by one advisor, but has the authority to request support from staff in various departments. Consultants can also be hired under the direction of the General Manager and by the responsible department, following national procurement rules. The General Manager can also convene the managers of the various departments to work on special projects.
Together, the President of the Board and the General Manager chair a weekly meeting with OSIPTEL senior management.
Internal organisation
OSIPTEL is organised into five sections (see Figure 2.5 for full organigram):
Strategic bodies: Board of Directors, President of the Board and the General Manager, described above.
Line bodies: Responsible for developing regulations, conducting supervisions and protecting users according to their specific duties.
Advisory bodies: Responsible for developing and proposing advice and initiatives to the General Manager on issues related to Legal Advisory Department, Planning and Budget Department, and Corporate Communications.
Support bodies: Provide the General Management with Administration and Finance Department, and IT services.
Dispute resolution bodies: Responsible for handling user complaints and disputes between companies, and is supported by a technical secretariat. It is preferred to disband the Arbitration Centre due to enterprises preferring to bring their cases via other avenues. However, this requires a change in law.
Most departments report to the General Manager, with the exception of the Technical Secretariat, Internal Control, and the Public Prosecutor who report directly to the President of the Board.
The Institutional Control Body (OCI) is part of the National Control System and is responsible for ensuring compliance with the annual plans and programmes, and external governmental control on behalf of the Comptroller General of the Republic of Peru. The Public Prosecutor’s Office is in charge of the legal defence of OSIPTEL’s interests. It has autonomy to exercise its functions and must comply with the principles of the State Legal Defense System.
The Planning and Budget Department (GPP) plays a co-ordinating role within OSIPTEL, as it is responsible for gathering information obtained from internal surveys and reviews, which are reported to the Managers Committee and the President of the Board. The final report is used to improve performance in each department, notably in terms of outcomes, attention and personnel attitude. Managers of each department are requested to submit comments, decisions or recommendations to corresponding personnel/area, following a performance review, to improve co-ordination and collaboration with other departments.
Figure 2.5. OSIPTEL organisational structure
Source: Information provided by OSIPTEL, 2018.
A high priority has been placed on obtaining international certifications for management and processes, including the SGSI Certification for ISO 27001 (information security management systems) and the SGS certification for ISO 9001 (quality management systems) in 2015, which requires yearly re-certification. OSIPTEL has also been awarded the 2016 National Quality Award in the public sector category in recognition of its management model, and the 2017 Association of Good Employers (ABE) Award for Labour Social Responsibility in the category of Best Work Flexibility Program.
A formal practice has also existed since 2003 to send preliminary analyses on draft regulations to the various departments for feedback. This is normally done through a memo attached to the draft regulation. In 2017, the General Manager improved the process by encouraging departments seeking feedback to provide concrete action points, including a timeline.
Regulatory quality
In 2016, the PCM issued Law Decree No. 1310 on Regulatory Quality Assessment (RQA), with draft rulings and guidelines in July 2017. The full rulings and guidelines are expected in 2018. The RQA is a procedure to assess regulations that establish administrative procedures to identify, reduce and/or eliminate unnecessary, unjustified, disproportionate, or redundant procedures (Ministerial Resolution No. 196-PCM-2017). The rulings and guidelines apply to all public entities of the executive branch.
The Decree and support documents will require all government entities to perform RQAs on all regulations that establish administrative procedures. The Decree establishes three actions: requiring an ex ante assessment of impactfor new procedures, a review of the regulatory stock, and a revision to the regulatory stock every three years to reduce burdens. The decree limits this to procedural changes related to administrative processes and not for all regulatory measures.
A Multi-Sectoral Commission on Regulatory Quality (MCRQ) was also establish as a permanent body that reports to the Presidency of the Council of Ministers. The MCRQ serves to assess and validate the RQAs conducted by public entities of the executive branch according to four principles: legality, necessity, effectiveness, and proportionality. The MCRQ issues its observations and proposals for improving the measure, which is sent to the public entity for correction or acceptance and then back to the MCRQ for validation. The MCRQ can also propose the dismissal of an administrative procedure if it does not meet the principles of legality or necessity.
Prior to PCM’s decision to implement the RQA, OSIPTEL has been using regulatory quality initiatives to improve decision- and policy-making. OSIPTEL is considered as the first public entity that required studies for each regulatory provision introduced and published upcoming initiatives as a way to welcome feedback and suggestions from private and public stakeholders (OSIPTEL, 2014[5]).
Independently and in parallel to the development of the PCM RQA, three regulators – Osinergmin, OSIPTEL and OSITRAN – developed manuals and guidelines for assessing the impacts of regulatory decisions. These manuals extend the scope of analysis and application of assessments to include a wider scope of regulatory decisions, and not just those affecting administrative procedures. In January 2017, OSIPTEL published a “Regulatory Quality Commitment,” which sets the framework for good regulatory governance and continuous improvement of OSIPTEL’s regulatory policy tools via:
Adherence to ISO 9001 (see above)
Mandatory use of RIA
Publish all proceedings on the website of the regulator
Use Regulatory Technique Guidelines and Regulatory Quality Guidelines to standardise language/structure
In March 2018, OSIPTEL issued a set of “Guidelines for Regulatory Quality” (Lineamientos de Calidad Regulatoria), concurrent with the release of PCM’s RQA requirements. These guidelines establish a mandatory framework to strengthen the good practices of the regulatory policies undertaken by OSIPTEL in the fulfilment of its functions.12
OSIPTEL uses international standards to inform their performance and develop solutions. Since 2013, OSIPTEL has subscribed to Cullen International, an international benchmarking database operated out of Belgium that compares regulations of different countries in the telecommunications sector and presents details comparatively. This is used to develop new regulations according to international practices.
Regulatory impact assessments
OSIPTEL is considered as an early adopter of RIA in Peru. Prior to the release of its Guidelines for Regulatory Quality, OSIPTEL has been conducting regulatory impact assessments (RIAs) on draft regulations, but not on a mandatory or systemic basis and not released for public use. RIAs are conducted by the technical staff in all departments that propose norms or regulations and they are supported by the Legal Advisory Department (GAL) that also reviews the legal quality of the draft regulations. All RIAs drafted are overseen by the counsellor of the President of the Board, who is independent of the regulatory process. This counsellor performs this function in addition to other duties. They also have the power to block and send back inadequate RIAs before presenting to the Board.
According to the new guidelines, regulations can be assessed using a cost-benefit analysis, cost-effectiveness analysis, or multi-criteria analysis. To date, assessments conducted by OSIPTEL have used both multi-criteria analysis and cost-benefit analysis. Cost-benefit analysis should also be consistent with the proportionality principle and based on market prices.
RIAs are included in the package of documents sent to the Board for approval. A simplified version compared to the one presented to the Board is published online for the public consultation process with stakeholders. RIAs are also included in the final regulation alongside the comments matrix.
Stakeholder engagement
Public consultations are not mandatory in Peru. The only form of consultation required by law is to publish new laws and regulations in the Official Gazette, web page or other instrument at least 30 days before its entry into force, in order for public bodies to receive comments and make necessary modifications.
All economic regulators prepare a matrix of comments that assembles stakeholders’ comments on a regulatory proposal. This is published together with an evaluation from the regulator on how the comments will be considered in the draft regulation (OECD, 2016[2]).
According to the LMOR, economic regulators are also required to have one or more Councils of Users that serves as a mechanism for stakeholder participation for each sector. Council members are elected for two years and can operate at the local, regional, or national level, depending on the characteristics of the market. When forming a Council, regulators publish information on a call for potential candidates, a provisional list of candidates, and a final list of elected members. Member councils can come from consumer associations, universities, professional colleges, non-profit organisations and business organisations not related with the regulated entities.
Despite this requirement, there is no active Council of Users consulted by OSIPTEL on proposed initiatives, in part due to inadequate incentive mechanisms for them to engage in meaningful exchange. Positions on the Councils are not remunerated, and the regulator does not finance the functioning in the Councils.
In 2016, OSIPTEL incorporated the requirement to conduct stakeholder engagement into their General Rules for all normative projects via the OSIPTEL website, which includes the requirement to collect opinions from the public and conduct a public hearing when necessary. Each department in charge of a norm or regulation co-ordinates the stakeholder engagement process throughout the comment period.
An informal and non-mandatory early stage consultation is sometimes conducted with external stakeholders when OSIPTEL begins the analysis of a potential draft regulation. During these consultations, OSIPTEL may ask stakeholders for information or feedback on the issue, statistics, or impact. Feedback is collected from users, enterprises, or relevant stakeholders. No formal advisory body exists, but a select group of private companies is occasionally contacted on an ad hoc basis for opinions early in the regulatory process.
During the various stages of the regulatory process, operators may request a meeting with the Board of Directors or specific working groups. A summary of the meeting, including its attendees, is posted on the OSIPTEL website. This practice appears to have been scaled back in 2018, as access has been restricted for regulated entities to discuss issues that are in the regulatory development phase. They must then wait until the public consultation period to provide their inputs into draft laws.
Changes in tariffs and interconnection charges also require public hearings. In the case of tariff regulations, public hearings must take place in three cities – one in each of the north, south and centre – and selected according to the number of people using the regulated service. Public hearings must be conducted for at least 20 days. Specific operators who may be impacted directly by the draft regulation may also be permitted extra time to provide a presentation of their opinions on the public hearings
OSIPTEL has been experimenting with innovative methods such as Facebook Live to also increase participation from user groups, as well as occasionally conducting seminars with academic audiences. The effectiveness of these methods has not yet been evaluated.
Public administration entities may participate as stakeholders in the engagement process, but their comments have no mandatory effect and are evaluated along with the comments presented by the stakeholders.
According to the Guidelines on Regulatory Quality, supporting documents must be included when a draft is published for comment to provide stakeholders with more information prior to the consultation process, such as the cost model, where applicable, in excel format. In some cases, a press release is also prepared.
The final regulation plus a matrix of consultation comments are published as one document on the OSIPTEL website. The resolution is also published in the Gazette, with a statement that all supporting information can be found on the OSIPTEL website. The matrix provides a summary of all comments received and a response from OSIPTEL explaining and justifying its decision.
When a new regulation is approved, the Communications Department releases a press release and organises interviews on main radio stations or television channels to explain and raise awareness on the new regulation. OSIPTEL also participates in different forums or seminars to provide more in-depth information on new regulations. However, due to budget constraints, large scale campaigns are used on a limited basis.
Ex post reviews
In accordance with the PCM RQA, economic regulators in Peru are only required to undertake stock reviews and ex post evaluations for regulations that add administrative procedures. In OSIPTEL, ex post evaluations of regulations not covered by the RQA are ad hoc and completed only for specific regulations, usually involving controversial decisions. In some cases, evaluations are indicated in some regulations through a sunset clause or are set by OSIPTEL’s existing norms.
For price regulations and interconnections charges, OSIPTEL is required to evaluate the conditions of the market every four years to determine if a change is necessary.13 OSIPTEL uses market data collected to monitor operators classified as having Significant Market Power (SMP) and make necessary modifications when failures are detected. This classification is subject to a sunset clause, which requires OSIPTEL to re-evaluate every three years to see if the operator continues to have the SMP classification. This analysis can be done every two years if the regulator has strong evidence of a significant change in market conditions or if requested by a regulated entity.
OSIPTEL also carries out periodic analyses of the telecommunications market to identify the impacts of existing or newly introduced regulations or modifications. These analyses look at main statistics, such as number/evolution of lines, penetration, traffic, market share, incomes (by market, by economic group). In addition, OSIPTEL actively monitors telecommunications enterprises offers (main plans, prices, specific characteristics) and consumers demand.
Each department within OSIPTEL is responsible for evaluating their own regulations, and are not conducted via established quantitative or qualitative criteria. Consultation with external stakeholders or the public is not used. However, OSIPTEL often receives advice from firms on an ad hoc basis requesting to remove regulations that may not be necessarily related to the regulation under review.
In accordance with the PCM RQA, OSIPTEL is reviewing its stock of regulations to determine which need to be removed or revised. This review will extend past administrative processes, as required by the RQA, and include all norms enacted by OSITPEL. The GAL is leading this process, which has compiled a list of all regulations and norms established since 1994. The Legal Department is currently requesting departments to identify regulations that need to be reviewed and set a timeline for the review. An external consultant has been hired and an ad hoc group has been created to conduct the process.14 This group will deliver its conclusions in 2019. From 2019 to 2021, OSIPTEL will repeal, modify, or leave unchanged the regulations in accordance with the recommendations.
OSIPTEL has committed to reviewing four regulations in 2018, with one completed in the second quarter. The entire process is scheduled for completion by 2021. Some regulations will be reviewed in tandem and combined into a single consolidated text.
OSIPTEL has recently established a committee to carry on the ex post evaluation of norms, focusing on typifying conducts that will be subject to supervision and, eventually, sanctions. The committee is chaired by the Regulatory Policy and Competition department, and includes officials of the Supervision, Legal, and Users Protection departments as well as Technical Secretariat. The goal of the committee is to issue a norm with all sanctionable conduct, which will make OSIPTEL more predictable and facilitate more efficient supervision function.
Supervision, enforcement and inspections
Inspections are performed by the Enforcement and Supervision department (Gerencia de Supervisión y Fiscalización, GSF), who have an assigned staff of professionals in Lima as well as one in each of the 23 decentralised offices. The inspectors are specialised in different areas – including engineering, law, and economics – to develop a multidisciplinary approach to both inspection and the administrative procedures associated with enforcement.
Inspection plans are made yearly and programmed to visit areas that are new, have not been visited recently, or have faced infractions in the previous year. Information collected from inspection activities are transmitted from the regional offices to the Lima office for analysis.
Supervisions are conducted with the goal of compliance and prevention, which is also reinforced by the General Administration Procedure Rules that establishes the normative goal for inspections. OSIPTEL works with regulated entities using education or trainings to improve performance and contracts and to encourage resolutions before any sanction is imposed. Supervisions are carried out in three areas:
Quality of service: mainly focused on the technical delivery of fixed and mobile internet and mobile voice services, which needs to meet OSIPTEL standards. A variety of indicators are measured using field tests with specialised equipment. Quality of service indicators specified in the framework of the PPP projects associated with the National Fiber Optic Backbone and coverage of spectrum auctions are also enforced by GSF under this area.
User rights: focused on protecting consumers in the market, related to subscriptions and termination of service, over charges, and portability. Also, OSIPTEL supervises the Register of Stolen or Lost Cellular Phones, which was created to avoid these phones be used in the mobile networks.
Management: focused on ensuring that all processes in the GSF are managed consistently, given that different inspectors will view supervisions differently.
Annual inspection plans vary according to the different areas. For Quality of Service, inspection plans are made yearly and programmed to visit areas that are new, have not been visited recently, or have faced infractions in the previous year. Information collected is transmitted from the regional offices to the Lima office for analysis. For User Rights, inspection plans are organised in accordance with the regulations that govern this area. Supervisors are usually deployed at the national level and issues are divided between recurring issues (to promote consistent behaviour change of the operating companies) and circumstantial issues (i.e. those generated from implementation or regulatory changes).
Sanctioning involves a lengthy administrative process that can take over two years to complete and involve opening three separate files. The files involve iterations of inspections and contracts for improvement with the regulated entity before sanctions are levied. When a sanction is levied, the governing regulation gives the procedure and ranges for sanctions according to three levels: light, moderate or heavy. The governing regulation gives the procedure for arriving at the amount of the sanction, which is normally in accordance with economic principles, i.e. the rate of return or revenue divided by the probability of detection.
The first instance for sanctions are handled by the line department responsible for the supervision, who forwards a proposal to the General Manager. The General Manager approves or revises the sanction to increase or decrease the amount within the bounds of the governing legislation. Second instance appeals are handled by the Board of Directors, which occurs in most cases.
Funds from sanctions are sent in their entirety to FITEL, and decisions are posted on the OSIPTEL website as part of the mandatory procedure for transparency. OSIPTEL wishes to extend this provision and public all decisions to include the case of no sanction.
Enforcement and inspections are an increasingly resource intensive activity for OSIPTEL (see Table 2.14). One inspector may be insufficient for some areas, especially those with challenging terrain that impedes access and accuracy of tests. Under Peruvian law, OSIPTEL is not allowed to hire third party companies to ease the burden on their inspectors and lawyers.
Table 2.14. Enforcements, by year
Note: Data on inspections can be found at https://www.osiptel.gob.pe/documentos/registro-de-sanciones.
Source: Information provided by OSIPTEL, 2018.
In 2017, the Government modified the Administrative Procedures Rules to shift focus from compliance-based supervision to performance-based supervision. The modifications are aimed at improving performance across ministries and government agencies and diagnosing and preventing unwarranted behaviours. For example, if an enterprise has violated the rules but complies later in advance of sanctioning procedures being commenced, then the enterprise has no negative consequences and the sanctioning procedure is cancelled. If the compliance occurs after the sanctioning procedure has commenced, then a discount of the total fine is applied. In this sense, the supervision itself has not changed but the evaluation and imposition of sanctions has changed.
Appeals
OSIPTEL has four dispute resolution bodies for the telecommunications sector, supported by a technical secretariat that administers these functions, except in the case of sanctions imposed on regulated entities that involves the Board of Directors in the second instance. An overview of the role of these different bodies in dispute resolution can be found in Table 2.15. The four dispute resolution bodies are:
Arbitration centre
Collegiate bodies
Controversies settlement court
Administrative court for the resolution of user complaints (Tribunal Administrativo de Solución de Reclamos de Usuarios, TRASU)
Table 2.15. Map of dispute resolution pathways for regulated entities and users
Notes: For administrative issues between regulated entities, the entities can voluntarily elect to use the Arbitration Centre when there is an infringement related to their contracts and there is not any violation to compulsory regulations. For consumer complaints, TRASU in the second instance can levy a sanction. When doing so, the sanction becomes a first instance decision, in which case the Board of Directors serves as the second instance arbiter.
Source: Information provided by OSIPTEL, 2018.
Two pathways exist for resolving administrative issues between regulated entities. First, the Arbitration Centre is dedicated to the resolution of disputes in the telecommunications sector through institutionally-supported arbitration and reconciliation. Companies volunteer to use the Arbitration Centre in lieu of the other administrative review bodies (i.e. Collegiate Bodies and Controversies Settlement Court), whereby one or more arbiters are selected to hear the case and make a binding decision. This also avoids an examination of infringements or violations of the law or illegal conduct by the other administrative review bodies. However, to date, only one case has been heard by the Arbitration Centre.
Second, the majority of cases between companies are resolved through the Collegiate Bodies and Controversies Settlement Court. The Collegiate Bodies hear the case in the first instance and Controversies Settlement Court in the second instance. Both bodies handle administrative issues related to free and unfair competition or subjects of interconnection, access, infrastructure sharing and tariffs.
In terms of composition, the Collegiate Bodies are composed of between three and five members appointed by the OSIPTEL Board of Directors from a preliminary list approved by the Body. In cases of free competition and unfair competition, two Permanent Collegiate Bodies can be formed for a period of three years. As of 2018, only one Permanent Collegiate Body has been formed. In the case of controversies, the Board of Directors appoints an Ad hoc Collegiate Body for each case. Members of the Controversies Settlement Court are nominated by the PCM and MEF, with one member nominated by the MTC and another by Indecopi.
User complaints are handled through a different dispute resolution pathway. In the first instance, users must launch their complaint directly with the regulated entity. If the complaint is not resolved, then the user can appeal their case in the second instance to the Administrative court for the resolution of user complaints (TRASU).15 The process was established in 199416 and updated in 2015.17 TRASU decides on the merit of the case, and can also choose to levy sanctions in accordance with infractions to established procedures or breaking of resolutions issued by TRASU. Sanctions levied by TRASU become a first instance decision, which can be appealed in the second instance to the OSIPTEL Board of Directors who serves as the final arbiter on these sanctions. Funds from sanctions are sent in their entirety to FITEL and decisions are posted on the OSIPTEL website for transparency.
The Board of Directors of OSIPTEL nominate members of TRASU. At the time of writing, the Board implemented extraordinary rules for the organisation of TRASU in 2018 (Resolution No. 051-2018-CD/OSIPTEL) to deal with an excess workload (see Table 2.16). These extraordinary measures are to last 18 months and permit hiring extra staff to process the complaints that can be handled quickly.
Table 2.16. Organisation of TRASU before and after extraordinary measures, 2018
Note: The original six uniperson chambers located in Lima focus on 1) Complaints about issues during the procedure, 2) Appeals for issues that can be solved in 15 working days, or 3) Appeals on issues with claim amounts less than PEN 100.
Source: Information provided by OSIPTEL, 2018.
The excess workload was caused by an exponential rise in consumer complaints from 2015 to 2017 (see Table 2.17). This was caused, amongst other reasons, by a provision in Peruvian law that allows users to receive a holiday from paying their bills if the appeal of their complaint is still being decided. This was exacerbated by third-party services who filed complaints on behalf of users, a situation that is that is expected to change with new regulatory rules in 2018. So far, the extraordinary measures have reduced the second instance claims from approximately 43 000 in February 2018 (before the emergency rules) to 14 000 in July 2018.
Table 2.17. First and second instance complaints by users, 2015-17
Notes: OSIPTEL reports that on average, 3.5% of first instance complaints move to second instance appeals with TRASU. 2018 statistics are as of June 2018.
Source: Information provided by OSIPTEL, 2018.
Any additional appeals to the first and second instances of each body described above must be done through judicial review, which can take up to five to eight years to complete. For second instance decisions by the collegiate bodies or TRASU, a judicial review can be filed as a “contentious administrative process” under Law No. 27584. Justices have the ability to decide the case based on both the merit of the issue as well as process. Tariff decisions can also be appealed via judicial review. Judicial reviews launched by users are rare, due to the lengthy period of time it takes decide cases. Details on the decisions of OSPITEL appealed in courts can be found in Table 2.18.
Table 2.18. OSIPTEL decisions appealed in courts and outcomes
Source: Information provided by OSIPTEL, 2018.
When an operator deems a law imposed by the Board of Directors as unconstitutional or against the existing legal frameworks, they can launch a “Popular Act” appeal in accordance with article 200 of the Political Constitution of Peru. Regulated entities can also challenge decisions that impose administrative burdens under Legislative Decree No. 1256, which approves the Law on the Prevention and Elimination of Administrative Burden.
Transparency, integrity and accountability
OSIPTEL is directly accountable to the PCM as well as Congress, but can be called upon by the MTC or other relevant government departments to provide information or opinions. Although OSIPTEL publishes an annual report on their website, there is no requirement to officially share and present this with any state entities. The PCM and MEF do require the regulator to report on certain indicators and meet reporting requirements; however, these are often fragmented.
The actions of OSIPTEL are governed by the Transparency Principle,18 which requires regulations issued to be published in the Official Gazette, El Peruano, and on its website. All resolutions that create or influence mandatory administrative processes as well as those that impose sanctions relating to serious or very serious infractions must also be published in the Official Gazette.19
OSIPTEL makes use of their website to publish regulatory decisions, results from stakeholder engagements, sanctions, data, reports, and other necessary information. Media, including social media, is used extensively communicate these outputs with the public.
Ethics
OSIPTEL has an Institutional Code of Ethics, within the framework of the General Law on the Civil Service Code of Ethics (Law No. 27815) maintained by SERVIR. The Code contains five general dispositions and does not lay out supervisory and enforcement mechanisms. However, staff in violation of the code are subject to sanctions. Violations are reported to a designated person, who is currently the advisor to the President of the Board of Directors. This person accepts this responsibility on top of regular work duties. All violations are handled by an ethics committee, while severe violations are escalated to the Human Resources Manager. In severe cases such as corruption, the violation is escalated to the SERVIR tribunal, who will provide the appropriate sanction. Violations are not reported anonymously and, to date, there have been no violations ever reported.
An ethics working group, which includes a representative from each department, ensures that OSIPTEL staffs are aware of the code and promote ethical behaviour within the workplace. This is promoted through emails or during induction programs and institutional events. The ethics code is published on OSIPTEL’s website for transparency, as well as posted in several areas around the OSIPTEL buildings.
Transparency
OSIPTEL operated an ‘open-door’ policy with regulated entities, allowing them to come to the regulator to discuss issues. Recent changes, however, restricted this access during the regulatory development phase, whereby regulated entities must wait until the public consultation to provide their inputs into draft laws.
According to OSIPTEL’s rules on transparency, meetings with the operators’ representatives must be documented on the OSIPTEL Transparency Portal and the Peruvian Government Transparency Portal, which displays the name of the entity and representatives visiting, a headline about the topic discussed, and the names of OSIPTEL staff met. A detailed description of what was discussed is not included.
Conflicts of Interest
Conflict of interest guidelines, issued in 2018, sets the specific procedure and format to declare possible conflicts of interest.20 These require all staff to declare any possible conflicts, including with family members or friends. This declaration needs to be updated yearly, or when major changes occur. This process is enforced by the GAL.
Post-employment restrictions are governed by Law 27588, which establishes prohibitions and behaviours that are incompatible for all staff qualified as civil servants. These rules apply to all people that provide civil services under any contractual arrangement. According to the Law, any board members, senior officials, advisors and members of administrative tribunals, as well as officers or public servants that have had access to privileged information or whose opinion has been determinant in decision making, are subject to a one-year post-employment restriction. This includes providing services under contractual arrangement, accepting remuneration, being part of the Board of Directors, directly or indirectly acquiring shares of a company associated with the sector, signing contracts with companies, or participating in employment with companies.
Likewise, OSIPTEL’s General Regulation stipulates that board members, senior officials and servants despite their contractual arrangement are forbidden to defend or counsel any entity against OSIPTEL and to work for any institution within the jurisdiction of OSIPTEL for a year after ending their professional relationship with OSIPTEL.
Staff members subject to post-employment restrictions, which have ended their professional relationship with OSIPTEL, must sign a legal document committing not to violate the terms and conditions of the policy. OSIPTEL has stated that these provisions do cause some difficulty recruiting new personnel.
To avoid conflict of interest, any person who owns more than one per cent of shares of a company related to the competency of the regulator cannot be appointed as a member of the board or hired as a director, legal representative, agent, employee or consultant of a regulatory agency.
Conflict of Interest guidelines require Board members to declare any possible conflicts, including with family members or friends. This declaration needs to be updated yearly, or when major changes occur. This process is enforced by the Legal Advisory Department (Gerencia Asesoría Legal, GAL).
Output and outcome
Data collection
OSIPTEL collects a large amount of data from the regulated entities, which it uses to monitor market performance, detect market failures and develop regulations. This includes sector performance data, as well as financial data for the five biggest operators. Data is turned into indicators, which are presented to the Board. Non-confidential information is posted in its raw form on the OSIPTEL website.
Most data requests are part of the Periodic Information Requirements Rule (Norma de Requerimientos de Información Periódica, NRIP), which is sent through the Periodic Information System (Sistema de gestión de las estadísticas periódicas, SIGEP), which is a predictable and digital data collection tool that includes 185 forms. Companies may be requested to provide exceptional information in response to specific rules or in response to letters sent by the regulator, which are often based on information requests from other entities of the Peruvian executive branch or that are necessary by the OSIPTEL in a non-periodic way.
Regulated entities are often requested to provide detailed amount of data on the market. Conversely, the regulator sometimes finds that information that is submitted is incomplete, is not submitted on time, or is inconsistent (in the latter case, for example for the use of codes that do not match, atypical evolution of series, etc.). For most relevant indicators, a procedure has been implemented in order to detect inconsistent or incomplete information (evaluating the evolution of the time series, verifying blank cells, etc.). The process is currently done manually with database tools.
Smaller or newer entrants to the sector may identify issues in obtaining all data on a regular basis. However, larger firms may also submit inconsistent or incomplete data. Telefónica and Claro (América Móvil) are required to send additional periodic information on inter alia lines, subscriptions and data once a year to supplement the SIGEP data. This is due to the large impact of these firms in the sector.
OSIPTEL ensures that its data requests are reasonable and in line with actual data requirements to minimise burden on industry. This is done through regular reviews of data requests via the SIGEP that is administrated by the Regulatory Policy and Competition department (GPRC), or via other specific rules that are approved by each department. Each department is responsible for drafting indicators and collecting information for the PEI and POI reporting and monitoring. If data required is not collected through the NRIP, then each department requests the information via their own rule or by letter. In August 2018, OSIPTEL began a process to revise the SIGEP data requirements to reduce the number of formats in an effort to reduce burden on operators.
Box 2.4 describes the data collection channels of OSIPTEL. The regulator also has the ability to request specific information from companies if it is not already collected through any of the existing data collection efforts, as indicated in article 100 of the General Regulations of OSIPTEL.
Box 2.4. OSIPTEL data collection systems
Internally, the GRPC manages three main data collection systems that gather data on sector performance.
1. Periodic Information System (SIGEP)
The Periodic Information Requirements Rule (Norma de Requerimientos de Información Periódica, NRIP) includes a total of 185 forms that require information of lines, traffic, infrastructure, financial, and claim indicators. The NRIP was created on in 2004 and was digitised in 2015 through the Periodic Information System (Sistema de gestión de las estadísticas periódicas, SIGEP). The SIGEP is a predictable and digital data collection tool, used by the regulated entities for reporting that information; this System is also, a database of statistical information on the performance of the telecommunications sector.
The quality of data submitted via the SIGEP is ensured inter alia by blocking submissions if data cells are left blank.
Due to changing market dynamics, OSIPTEL recognises that the NRIP must improve its data collection forms and/or review collected information that is no longer utilised or relevant, to ensure that all data collected is used periodically by the regulator. Since this change requires a special regulation, it can be lengthy to modify NRIP requirements. In the interim, special information requirements are sent to regulated entities (such as market and infrastructure of the carrier service), which will be included in a new project of the NRIP. OSIPTEL is also working on a project to optimise the use of all data collected through the SIGEP system. The GPRC is designing indicators (graphs/tables) that are used frequently in different documents and will be made automatically through the system, therefore saving time.
2. Price Information System (SIRT)
The Price Information System (Sistema de consultas de tarifas, SIRT) requires operators to register the price of every commercial offer, which is then made publicly available on the OSIPTEL website. Promotions must be registered 24 hours before they are released to clients while price increases must be registered 15 days before it is applied to users.
This information is used to populate Comparitel, a website that allows consumers to compare offers of different operators, as well as find details about price increases and track the evolution of commercial offers. Comparitel can only compare current listed prices and not special offers.
3. Annual Consumer Demand Survey (ERESTEL)
The Annual Consumer Demand Survey (Encuesta residencial de servicios de telecomunicaciones, ERESTEL) asks a sample of 10 000 households about their use of services, preferences, attitudes towards switching, among others. All information about the survey, including surveying material is published on this OSIPTEL website, along with an analytical presentation of the year’s results. 2016 results can be found here.
4. Other data collected
Other sources of information include internal reports on specific subjects, tariff benchmarks conducted biannually for some markets or services, statistics prepared by other regulators or international public bodies (i.e. Regulatel, CITEL, OECD, UIT), and information from other areas in OSIPTEL (claims, information from users drawn from the social networks) and / or stakeholders, which are mostly enterprises.
Operators are required to present quarterly information on the villages that have received coverage on or before the 15 of January, April, July and October. Regulated entities are also required to provide performance information related to call accessibility and retention of mobile voice service.
Radio network operators are required to produce information regarding their network measurements (counters). These counters are the base of Key Performance Indicators (KPI), which are used for measuring network performance.
Source: information provided by OSIPTEL, 2018; Resolution No. 121-2003-CD/OSIPTEL; Resolution 050-2012-CD/OSIPTEL; Resolution 096-2015-CD/OSIPTEL, Regulation on Tariffs (art. 11); Resolution No. 135-2013-CD/OSIPTEL; Resolution No. 123-2014-CD/OSIPTEL; Resolution No. 110-2015-CD/OSIPTEL.
Performance monitoring
OSIPTEL 2018-2022 PEI is structured along seven high-level strategic institutional objectives (OEIs), separated into four core (market outcome) and three support (process and output) objectives. Core objectives are related to the mission of the institution, whereas support objectives are related to the internal management and processes of OSIPTEL. The OEIs are measured via 21 mostly outcome-level indicators.
The PEI is translated into institutional strategic actions, according to each OEI. The four core OEIs are implemented via 16 priority actions, measured via 36 indicators; the three support OEIs via 14 priority actions and 32 indicators. Appropriately, the indicators at this level focus on input, process and output (see Table 2.19). The full table of institutional strategic actions in available in Annex 2.A (in Spanish). Targets for these indicators are not fixed in the PEI. MEF also requires OSIPTEL to share data to inform a set of indicators for monitoring budget execution and performance. These MEF indicators are not included in the strategic framework for the regulator.
The indicators used to monitor the implementation of the plan are aligned with the OEIs and include sophisticated indices constructed by the Regulatory Policy and Competition department (GPRC). Moreover, these indices are combined for higher level indicators such as the Competitive Intensity Index (índice de intensidad competitiva), which has been calculated since the first quarter of 2012.
The index is composed of indicators of the main unregulated services: pay TV market, fixed Internet market and mobile telephony market (see Figure 2.6). It is used to evaluate whether or not competition has increased with respect to the same quarter of the previous year. The construction of the sub-index for each market is composed of four weighted ratios: i) market concentration, ii) quality of service, iii) services prices and iv) lines in service.
Figure 2.6. Competitive intensity index
Source: Information provided by OSIPTEL, 2018.
The index has specific limitations. For example, only the indicators for voice services are considered in the mobile telephone market and not the indicators related to the mobile internet service. This is due to issues related to acquiring accurate information on mobile internet service, mainly regarding data traffic and income from the service. As a result, OSIPTEL is working with technical staff in the operators to improve the accuracy of this information and include it in the index. The operators have been progressively reporting improvements in their internal data systems and providing corrected data. In addition, OSIPTEL is focused on addressing monitoring challenges related to information on quality of services and is considering proxies to help measure the quality of services provided, such as speed as a proxy for internet service quality.
OSIPTEL will be implementing a second index that will measure quality in consumer service in all types of telecommunications services. In addition, a set of questionnaires are being prepared to gauge user satisfaction on services provided by the operator, in terms of its efficiency and effectiveness. The questionnaires will be administered through telephone, online and in person. They expect to have first results at the end of 2018.
OSIPTEL uses information collected to better diagnose problems in the market, assess its performance, and identify necessary modifications to current regulations or other measures to address any issues. Ad hoc market surveys help identify the impacts of some regulations. Other important statistics of the telecom market are also considered in market analyses, such as lines, market share, traffic, access, income of operators and industry as a whole, etc.
The 2018-2022 PEI includes a new project to integrate all databases and to make them accessible to all officials, with the exception of confidential data. This project brings together three internal committees (competition, quality and users), and expects to have results at the end of 2018.
Table 2.19. OSIPTEL strategic objectives and indicators, 2018-2022
Source: OSIPTEL Strategic Plan 2018-2022.
Reporting
Autonomous regulatory authorities in Peru are only legally mandated to report to the Ministry of Economy and Finance, as part of Peru’s administration-wide performance based budgeting system. OSIPTEL submits information on indicators that have been defined by MEF via the online integrated administrative financial system (Sistemas integrados de administación financiera, SIAF) every year. OSIPTEL also sends a hard copy of this report to its stakeholders in the executive (Comptroller) and legislative branches of government (Permanent Budget Committee of the Congress). The indicators reported in the SIAF to MEF are listed in Table 2.20.
Table 2.20. SAIF Indicators sent to MEF
Source: Information provided by OSIPTEL, 2018.
These indicators are not the similar to those defined by OSIPTEL for its strategic framework and priority actions, although there is some overlap. Combined with the strategic framework (21 indicators for the strategic objectives, 68 indicators for priority actions), OSIPTEL performance is reported on via 104 indicators.
PCM and Congress also regularly request presentations of result indicators and targets, which are those designed within the framework of the Budget Program and incorporated in the POI for follow-up. The level of compliance with these goals is reported by semester, according to the programmatic functional structure approved for each fiscal year.
The OCI also produces an audit of the POI to be submitted to the Supreme Audit Institution. Each department at OSIPTEL is responsible for constructing their relevant indicators and building an index from the data, without requesting additional information and indicators are approved by MEF. The PPR is reviewed each year, which also requires an evaluation of the indicators being used. Reports to MEF and the OCI are processed online.
Once a year, as required by law, OSIPTEL prepares an annual report on its main activities and results. The reports are comprehensive, insightful, easy-to-read and well-produced, and are made available online.21 There is no particular requirement to share these reports with Congress or any other stakeholder, nor does OSIPTEL organise any physical presentation event of the report. However, OSIPTEL may be invited to congressional meetings to address specific matters, concerning tariff provisions, budget, or other relevant issues. These requests are normally made by the Defense of Consumers and Regulatory Bodies Commission (CODECO) and attended by the President of the Board or General Manager, who present the requested information or respond to questions raised.
A large amount of raw data is also made available in OSIPTEL’s website, for example:
Based on this data, OSIPTEL prepares and communicates analysis via varied and extensive outputs that may be one-off or part of a series. These include:
Two- to three-page statistical reports on the evolution of the telecommunications sector, principally on the mobile telephony market and coverage on its website every one to three months. These reports provide snapshots into the performance of different areas under OSIPTEL’s responsibility24 and include the following:
Quarterly statistics: general and specific information on mobile, fixed, internet, or paid TV services, penetration, traffic, market share, income, and financial statements for largest service providers, etc.
Characteristics of the plans offered by telecommunication firms
Main changes in the telecommunications market
Newsletters on a quarterly basis that include a preface from the Chairman of the board and present major evolutions in the telecommunications market as well as customer preferences.25
Working papers on thematic topics that inform the development of indicators, for example on bundled fixed services and mobile telephony in 2017), (such as statistical reports published every 2-3 months).
Internally, OSIPTEL prepares quarterly reports on the implementation of the POI that are presented to the Board of directors. These reports are not made public.
References
[4] El Comercio (2015), VisaNet, Liderman y Cofide ganan el Great Place to Work | Economía | Perú | El Comercio Perú, https://elcomercio.pe/economia/peru/visanet-liderman-cofide-ganan-great-place-to-work-205562?foto=2 (accessed on 22 June 2018).
[3] OECD (2016), OECD Public Governance Reviews: Peru: Integrated Governance for Inclusive Growth, OECD Public Governance Reviews, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264265172-en.
[2] OECD (2016), Regulatory Policy in Peru: Assembling the Framework for Regulatory Quality, OECD Reviews of Regulatory Reform, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264260054-en.
[1] OSIPTEL (2018), Plan Estratégico Institucional 2018-22, OSIPTEL, https://www.osiptel.gob.pe/repositorioaps/data/1/1/1/PAR/res025-2018-pd/Res025-2018-PD_PEI2018-2022.pdf (accessed on 22 June 2018).
[5] OSIPTEL (2014), The Telecommunications Boom, OSIPTEL, https://www.osiptel.gob.pe/Archivos/Publicaciones/boom_telecomunicaciones/boom_telecomunicaciones_osiptel.html#6.
Annex 2.A. OSIPTEL Institutional Strategic Plan (PEI), 2018-2022
Source: Information provided by OSIPTEL, 2018.
Annex 2.B. Application of RIA on cap tariffs and interconnection charges
Note: Rules approved by the Board of Directors.
Source: Information provided by OSIPTEL, 2018.
Notes
← 1. Articles 85 and 86 of the Single Consolidated Text (TUO) of Law No. 27444, General Administrative Procedure Act, approved by Supreme Decree No. 006-2017-JUS.
← 2. Governed by Law No. 29571 or the Consumer Protection and Defense Code, passed in 2010.
← 3. Approved by Supreme Decree No. 008-2001-PCM.
← 4. Article 1 of Supreme Decree No. 098-2016-PCM.
← 5. See: Ley de Equilibrio Financiero de Presupuesto del Sector Publico Para el Año 2018, https://www.mef.gob.pe/es/por-instrumento/ley/16769-ley-n-30694/file.
← 6. In 2007, the Government of Peru, through MEF, implemented a budget for results system, initially called “Strategic Programming and measurement of results”; the strategic programmes prioritised were those that provided care for children, such as: i) Maternal and Neonatal Health, ii) Nutritional Articulation, iii) Achievements of Learning at the end of the third cycle, iv) Population Access to Identity, and v) Access to Basic Social Services and Market Opportunities. Government Entities that would attend the selected programs were: i) Ministry of Education, ii) Ministry of Health, iii) Ministry of Women and Social Development and IV) Ministry of Transports and Communications. OSIPTEL is integrated into the Budget for Results in 2015 with its programme named No. 0124 Improvement of the Provision of Telecommunications Services.
← 7. The SIAF allows OSIPTEL to manage, improve and supervise the revenue and expenditure operations of all State Entities, as well as allowing the integration of the budgetary, accounting and treasury processes of each entity. This system is of mandatory use for Public Sector Entities according to the Framework Law of the Financial Administration of the Public Sector.
← 8. The SAI is designed for internal use by OSIPTEL in order to have an updated system that supports the processes and information needs, and to simplify processes for information analysis to facilitate management. The SAI is interfaced with the SIAF for the exchange of information.
← 9. Law No. 28212, in accordance with Supreme Decree No. 046-2006-PCM, approved new remuneration caps for the public sector. Emergency Decree 038-2006, which modified Law 28121, reduced the remuneration for the President and Managers of regulatory bodies.
← 10. Supreme Decree No. 172-2013-EF.
← 11. Law No. 27332, art. 10.
← 12. The Guidelines were approved under Resolution 069-2018-CD/OSIPTEL.
← 13. Lineamientos para Desarrollar y Consolidar la Competencia y la Expansion de los servicios de Telecomunicaciones en el Peru – DS 003-2007-MTC.
← 14. Memorando 047-GAL/2018 contains a schedule of activities for this evaluation.
← 15. Laws No. 27332 Regulatory Agencies Framework Law and No. 27336 Functions and Faculties of Supervisory Agency for Private Investment in Telecommunications Law.
← 16. The first law was the “Directive that defines the framework to establish the procedures associated with the complaints of users of public telecommunications services”, approved by Resolution of OSIPTEL’s Board of Directors No. 007-94-CD/OSIPTEL. After that, there were two more Resolutions approved by the OSIPTEL’s Board of Directors that regulated the complaint procedure: No. 032-97-CD/OSIPTEL and 015-99-CD/OSIPTEL. Then, the OSIPTEL’s Presidency approved the Resolution No. 036-97-PD/OSIPTEL as well.
← 17. Regulation for the Attention of Complaints of Users of Public Telecommunications Services” (hereinafter, referred as the Regulation of Complaints), approved by the Resolution of OSIPTEL’s Board of Directors No. 047-2015-CD/OSIPTEL. The Regulation of Complaints has been modified by the Resolution of OSIPTEL’s Board of Directors No. 127-2016-CD/OSIPTEL, in 2016; by the Resolution of OSIPTEL’s Board of Directors No. 048-2017-CD/OSIPTEL, in 2017; and by the Resolution of OSIPTEL’s Board of Directors No. 051-2018-CD/OSIPTEL, in 2018.
← 18. Article 7 of the General Regulations of OSIPTEL.
← 19. Under Article 33 of Law No. 27336 or the Law of Development of Functions and Powers.
← 21. Annual reports can be found at www.osiptel.gob.pe/documentos/memorias-anuales.
← 24. For full list, see: www.osiptel.gob.pe/documentos/reporte-estadistico.