Progress Review of Peru's Telecommunications Regulator

Executive summary

The Supervisory Agency for Private Investment in Telecommunications (Organismo Supervisor de Inversión Privada en Telecomunicaciones, OSIPTEL) is Peru’s independent economic regulator for the telecommunications sector. It was established in 1994, following structural reforms in Peru to liberalise the telecommunications sector, and oversees sector activities and the development of new services and technologies.

Following an in-depth review of its governance and performance by the OECD in 2018, OSIPTEL invited the OECD to review progress made in implementing recommendations that were put forward.

This review finds that OSIPTEL has made significant progress in a number of areas. These include i) improving the fee-setting process by successfully advocating to the executive for an increase in the regulatory fee and introducing three-yearly revision, ii) resolving the large backlog of consumer complaints, iii) implementing a regulatory impact assessment (RIA) framework, and iv) reinstating a users’ council that acts as an important outreach mechanism.

At the same time, the implementation of other recommendations requires additional efforts from the regulator, while some have proven more difficult to implement due to the challenging political and institutional context. Political instability and high turnover at senior levels of the executive branch hindered more structural co-ordination with public actors. The review identifies some areas of focus that can help OSIPTEL ensure continuous progress and build on its achievements. This includes clarifying its role and mandate, promoting diversity in its decision making, and increasing the use of early-stage stakeholder consultation and risk-based inspection and enforcement approaches.

Role and objectives of OSIPTEL

Previous recommendations focused on the need for OSIPTEL to build on its mandate and strong reputation as a technically competent body, by establishing a clear narrative on its role in the telecommunications sector and assessing its powers and functions.

Assessment of progress on key recommendations and suggestions for way forward

• OSIPTEL has made some progress by appointing a parliamentary co-ordinator to liaise with Congress but has not yet developed a robust external relations strategy for all key stakeholders that establishes a stable narrative on its role as a neutral arbiter and the results of its regulatory activities.

• OSIPTEL continues to be given new functions and responsibilities by the executive or by congress without an assessment of its existing functions, which may cause additional confusion about the role of the regulator and potential overlap with other public entities.

• OSIPTEL has eliminated the backlog of 250 000 consumer complaints, setting up an effective system that has helped reduce the volume of new complaints from 40 000 per month at its peak to 6 000 per month in 2021.

• OSIPTEL has started publishing a yearly regulatory agenda on its website, which can now be used as a tool for stakeholder engagement to improve predictability and stability for all stakeholders.

Input

Previous recommendations focused on the regulator’s fee-setting process, budgetary stability and its human resources framework.

Assessment of progress on key recommendations and suggestions for way forward

• OSIPTEL has secured a more adequate budget through an increase in the regulatory fee that can be revised every three years, although a lack of criteria or procedures for this review defined in law could reintroduce budgetary uncertainty. Furthermore, there is still no structured mechanism to carry forward unspent funds between financial cycles.

• OSIPTEL improved its human resources management, but restrictions and a slow transition to the new uniform employment regime at the administration-wide level in Peru creates difficulties for its capacity to attract technical talent.

Process

Previous recommendations focused on assessing the Board’s role and resources, adding moments for scrutiny within decision-making processes, and increasing the use of early stage and proactive stakeholder engagement.

Assessment of progress on key recommendations and suggestions for way forward

• OSIPTEL submitted two unsuccessful requests to the executive to increase the Board’s resources; in the absence of these, the Board has requested more informal meetings with OSIPTEL’s technical specialists. The regulator should prioritise the involvement of its Board towards setting the organisation’s strategic direction and in the adoption of strategically significant regulatory decisions.

• OSIPTEL carried out an internal reorganisation to improve operational efficiency and made improvements to its quality control mechanisms, for example by involving legal advisors in the early stages of developing regulatory proposals. At the same time, decision making has become more centralised. The regulator could benefit from additional challenge functions within its regulatory decision-making processes.

• Stakeholder engagement has been improved with the reinstatement of a users’ council that serves an important outreach function. This council could be further integrated into regulatory decision making and complemented by other mechanisms for earlier consultation with stakeholders, such as an advisory committee.

• OSIPTEL has modified its inspections regulations and introduced digital tools to collect data on compliance. The regulator should now focus on more risk-based and behaviourally informed approaches to ensure that its enforcement strategy leads to the desired behaviour change by operators and contributes to a constructive relationship.

Output and outcome

Previous recommendations focused on using the well-constructed five-year strategic framework to communicate on OSIPTEL’s achievements and exploring opportunities to streamline data reporting requirements.

Assessment of progress on key recommendations and suggestions for way forward

• OSIPTEL has improved its strategic plan by introducing multi-annual targets linked to its different strategic objectives. It has invested in streamlining its performance indicators, though reporting on indicators remains complex. Further efforts can be made to use its strategic plan as a tool to communicate the role of the regulator and report on its impact on outcomes.

• OSIPTEL has invested in reducing the burden of its regular data requests to operators, though an apparent rise in ad hoc requests may be re-introducing burdens and reducing predictability in the regulatory process.