Telecommunications Regulation. DOMINICAN REPUBLIC Pellerano & Herrera

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1 Telecommunications Regulation DOMINICAN REPUBLIC Pellerano & Herrera CONTACT INFORMATION Luis Rafael Pellerano Pellerano & Herrera 10 John F. Kennedy Avenue What is the name and nature of the regulatory body(ies) in your jurisdiction? To which bodies (if any) are decisions appealed? The telecommunications regulatory body in the Dominican Republic is the Dominican Telecommunications Institute ( Instituto Dominicano de las Telecomunicaciones - INDOTEL), which, pursuant to Article 76.1 of Law as of 1998 on Telecommunications, was created as a decentralized state entity, with functional, jurisdictional, and financial autonomy, with its own patrimony and legal identity, and have national jurisdiction in matters of regulation and control of telecommunications. It has legal capacity to acquire rights and to contract obligations and it is not subject to embargo. The regulatory entity will be subject to inspection and control by the General Comptroller of the Republic. *Appeals: As per Article 96 of the Telecom Law, the decisions of the Executive Director and of the Board of Directors may be objected through an appeal for reconsideration, which must be submitted within the term of ten (10) calendar days, counting from the notification or publication of the appealable act. Both the Executive Director and the Board of Directors must issue a pronouncement in a maximum term of ten (10) calendar days from the date of the appeal. The decisions of the Executive Director may be objected as well through a hierarchical appeal before the INDOTEL s Board of Directors; the latter must be

2 brought simultaneously with the appeal for reconsideration. The Board of Directors must issue a pronouncement in a maximum term of ten (10) calendar days from the date of said motion for appeal. Finally, the decisions of the INDOTEL s Board of Directors shall be objected through a hierarchical appeal before the jurisdiction of contentious administrative proceedings before the Contentious Tax and Administrative Court, in the form and terms provided by law as of February 6, Has your jurisdiction adopted the WTO Basic Telecommunications Agreement? If yes, with what exceptions, if any? Yes, the Dominican Republic has been a member of WTO Basic Telecommunications Agreement since 1998 ratified by the Telecom Law. No commitments were made on (i) Electronic Mail, (ii) Voice Mail, (iii) On-line Information and Data Base Retrieval, (iv) Electronic Data Interchange (EDI), (v) Enhanced/Value-Added Facsimile Services, (vi) Code and Protocol Conversion, and (vii) On-line Information and/or data processing. 3. Are operators in your jurisdiction privately or publicly/state owned? Local carriers are privately owned. 4. What are the primary differences between the regulation of wire line, wireless, satellite, cable and VoIP providers? There are no substantial differences in the regulation of these services. Under Telecom Law and its Rules on Concessions, Licenses and Special Registration, as amended, for rendering such services a concession must be obtained. In the specific case of Cable diffusion services, the concessionaires must comply with Rule No as of October 13, On the other part, regarding the use of the radio electrical spectrum by means of communications satellites is governed eminently by international law, notwithstanding any applicable internal law concerning the segment of land referred to. In the Dominican Republic, the Rule No , as of July 30, 2004 provides the general use of the radio electrical spectrum. 5. Are broadcasters regulated separately from telecoms? No, INDOTEL controls this field as well. The main regulations are: a) Rule No on TV Broadcasting Services, as of July 8, 2004; b) Rule No on Audible Broadcasting Services of frequency modulation (FM), as of June 20, 2002, as amended; and, c) Rule No on Audible Broadcasting Services of amplitude modulation (AM), as of June 20, 2002, as amended. 6. How are satellite earth stations and submarine cable landings regulated?

3 As per the provisions of Article 68 of the Telecom Law, Satellite earth Stations will require obtaining a concession before INDOTEL along with a license for using the radioelectrical spectrum. For submarine cable landings, only a concession must be obtained. 7. How is the radio spectrum generally regulated? For providing services by using the radioelectrical spectrum, a concession along with a license must be obtained, and must comply with Rule No , as of July 30, 2004 which provides the general use of the radioelectrical spectrum in the Dominican Republic. 8. Are any operators granted exclusivity? If this refers to exclusivity for providing a particular service, then no, it has not been granted. One of the Telecom law principles is Universal Service, which includes the satisfaction of the demand for public telecommunications services in conditions of free competition, ensuring the continuity, generality, equality, and neutrality of said services. Also, one of the Telecom Law purposes is to promote participation in the market of public telecommunications services by providers with capacity to develop fair, effective, and sustainable competition, which will be translated into a better supply of telecommunications in terms of prices, quality of service, and technological innovation. 9. Are anti-competitive practices subject to regulation or general competition (e.g., antitrust) laws? Telecom Law expressly forbids antitrust and restrictive competition practices, and any breach to such provisions is considered an extreme misconduct, which will imply sanctions from fines to the revoke of the license. In operators commercial relationship, article 8 of Telecom Law expressly forbids to apply unequal conditions for equivalent services provided, which will create disadvantageous situations for third parties. Also, the operators may not perform practices which limit, impede, or distort the right of the user to free choice. The Telecom Law also details, without limitation, the restrictive competition practices, as follows: a) Abuse of dominant market positions, especially over essential installations; b) Predatory actions or practices which tend to falsify or which effectively or potentially limit or distort sustainable, fair, and effective competition; and, c) The refusal to negotiate in good faith or unjustified delays in the negotiations which place a present or potential competitor at a disadvantage position. Also, for purposes of guaranteeing the existence of effective and sustainable competition, they may not charge the end user for a service less than the cost of the same for the provider.

4 10. What services have been liberalized or designated as competitive services? If by liberalization, it refers to not being regulated, then the answer is none. All telecommunication services in the Dominican Republic are fully regulated. 11. Are there regulated tariffs or price lists? If so, for what types of services? None. Article 39 of Telecom Law provides freedom of rates, which implies that the prices or rates of public telecommunications services shall be set freely by the local carriers, unless INDOTEL, by means of motivated resolution, deems that in a concrete case there are not sufficient conditions in the market to ensure effective and sustainable competition due to the existence of practices which restrict competition. Only under those circumstances shall the regulatory entity proceed to set them, according to the Rule No on Tariffs and Services costs as of June 1st, Are there restrictions on foreign investment in any types of communications companies? If so, what are the restrictions? In principle, there are not any restrictions on foreign investment of Communications Company. Nevertheless, in order to obtain a concession for providing such services, all must be incorporated under Dominican laws and, in order to retain the corporate management control, it will be required to bear the Dominican citizenship or naturalized foreigner. 13. What are the approval processes for mergers and acquisitions? Do these vary by type of operator? As per the provisions of Article 28 of the Telecom Law, the transfer, assignment, lease or granting of the right of use of any title and the incorporation of a lien over the concessions or licenses must be carried out, under penalty of forfeiture, after obtaining authorization from the regulatory body, which may not be denied without justified cause. The acquiring party, who must fulfill the requirements demanded by INDOTEL, shall be submitted to the same obligations as the concessionaire or licensee. In virtue of the above, the sale or assignment of shares or corporation participation (equity) which implies the loss by the seller or assigner, of corporate control or the possibility of forming the corporate will, shall require the authorization of the regulatory body. Additionally, we must refer to the provisions of Literal b of Article 62.1 of the Telecom Rules, when it establishes that any physical or juridical person must obtain an authorization from the INDOTEL for (i) the transfer of the right of use of a concession, inscription or license; (ii) the lease or granting of the right of use of a Concession, License or Inscription; (iii) the incorporation of a lien over a concession,

5 license or Inscription; and (iv) any transaction implying the share transfer of a company holding a concession, inscription or license, or other transaction that implies, directly or indirectly, loss or possibility of loss from the seller of the corporate control. 14. Is interconnection between carriers mandatory? Yes, the interconnection of networks of different carriers rendering public telecommunications services is of public and social interest, and therefore is mandatory, under the terms of the Telecom Law and its regulations. 15. Are interconnection fees/rates regulated? No. As per the provisions of Article 41 of the Telecom Law, interconnection charges shall be freely agreed between the local carriers. INDOTEL will insure that the charges are not discriminatory and that they ensure effective and sustainable competition. In the event of a disagreement between the parties, it may intervene in the setting of same by means of a motivated resolution, taking as parameters the costs, including a reasonable remuneration of the investment, calculated according to what is established in the Rule on Tariffs and Services prior indicated. 16. Must carriers make available network components to competitors? If so, what are fees/prices based on cost, or market rates? Yes. As stated before, prices are freely negotiated by the carriers. 17. Is there an obligation to serve all customers? If yes, is there a fund to subsidize eligible carriers? Which carriers contribute to the fund? Which carriers are eligible to receive these funds? Are broadband services subsidized or otherwise promoted through tax or other incentives? Yes. Under the Universal Service principle, Telecom Law must ensure the free access to public telecommunications networks and services in conditions of transparency and non-discrimination by the carriers and end users of telecommunications services, the generators and receivers of information, and the providers and users of information services. Furthermore, there is no fund to subsidize eligible carriers or any kind of incentives whatsoever. Broadband services are neither subsidized nor promoted through tax nor other incentives. 18. Are there mandatory requirements to customer agreements (subscriptions, etc.)?

6 No, there are no mandatory requirements. Nevertheless, the agreement must be filed at INDOTEL as part of the process for obtaining the concession, and will be approved by the regulator. 19. Are there any general or telecommunication specific requirements as to data retention? Yes, indeed. Article 5 of Telecom Law provides the secret and inviolability of telecommunications. Telecommunications and the information and data emitted by means of telecommunications services are secret and inviolable, with the exception of judicial intervention pursuant to common law and provisions of special laws. Local carriers must comply with said inviolability, and shall not be liable for the violations committed by users or third parties without their participation, guilt, or fault. Rule No on Telephone Service establishes that carriers can save personal data of users for promoting operations, unless otherwise expressly stated by the user. When engaging a new service, carriers must present to the user an option to restrict the personal data and contact information for other purposes than the direct rendering of the contracted services. 20. Is number portability mandatory? If so, for which types of carriers (e.g., wireline, wireless, voice over internet protocol)? Yes. In the Dominican Republic, number portability in both mobile and local telephony is planned to start in September 30th, Is equal access dialing selection mandatory? If yes, for which types of carriers? Yes. 22. Is access or other contributions ( ADCs ) required of new entrants? No. 23. Is VoIP regulated? If yes, to what extent? At the moment, VoIP is not fully regulated in the Dominican Republic. However, INDOTEL has included the term as a regular telecommunication service and therefore, it is required to obtain a concession, unless being provided as (i) value added services to those rendered by any local carrier or as (ii) a reseller; in which case, a procedure for obtaining a certificate on special registrations must be performed. 24. Are any major changes to telecommunications laws expected in the near future?

7 Besides the coming into force of the number portability, no. 25. Is resale of telecom services permitted? If yes, is this activity regulated? What is the process to become a reseller? Are foreign companies permitted to be resellers? Yes, resale of telecom services is permitted and is fully regulated. For such purposes, and as per the provisions of article 36 of Telecom Law, it is mandatory to obtain a Special Certificate Registration granted by INDOTEL, which is a less complex procedure than the filing of a concession; the agreement intervened with the local carrier must also be part of the application documents to be filed before INDOTEL. Also, as per the provisions of Article 4.1 of the Rule No on Public Services Telecommunications Resale as of February 20, 2007 ( Resale Rules ), the reseller must obtain an individual certificate for each separate agreement intervened with local carriers. Therefore, resellers will be only authorized for the services set forth in the filing of such Special Certificate Registration. Furthermore, a foreign-based entity can provide resale services, in which case, a procedure for the establishment of domicile in the Dominican Republic must be followed; which consists of an authorization granted by means of a Decree issued by the President of the Dominican Republic submitting a request along with certain corporate documents. Said procedure takes approximately 3 to 4 months. As established by Article 30 of the Telecom Rules, among requirements to be met when applying for a Special Certificate Registration before INDOTEL, you may find in summary, a) general information of the applicant, as well as, b) legal and technical information, and c) the agreement with the local carrier. Please note that, as per the provisions of Article 36.1 of the Telecom Rules, the Special Certificate Registration is granted for a term not exceeding from five (5) years.

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