A Broken Network: Argentina’s Public Service Decree and its Lasting Effects on Telecommunication Investments

By: Camila Chediak, 2L

Source: Shutterstock

The COVID-19 outbreak left nations around the globe scrambling to provide relief to billions of people. The pandemic created an unprecedented disruption that has been met with a wide range of government responses from every country—though not all responses have been praised. One recent unpopular response to the pandemic comes from Argentina. This particular course of action has been criticized as both a detriment to its nation and a move to push a political agenda under the guise of COVID-19 relief.

 In August 2020, Argentina’s president, Alberto Fernández, signed a decree referred to as “Argentina Digital” that proclaimed telecommunication services as essential public services. Internet, television, and telephone companies are capped at a fixed price until the end of 2020 in what the government calls an effort to guarantee access to equal quality services to all people. As part of this decree, all telecommunication companies are obligated to remain under the fixed price cap or appeal to the government for individual approval on price increases.

The biggest concern is that this decree will destabilize the telecommunication’s competitive market and could further aggravate the country’s economy during this already precarious state. This decree risks two harmful results. Companies will compensate by either lowering the quality of service to fit within the government’s new parameters or will pull out of the country’s market altogether, which could have a lasting effect on investments. Major American telecommunication companies such as HBO or DirecTV will have to take a serious look at whether it is better to end their relationships with Argentina. In the end, these likely consequences tend to go against the very reason the price freeze was made in the first place. Which leads one to ask, what is the true reason for passing this decree?

Critics have called this a step towards the “Venezualization of Argentina.” Interfering with a private business’ right to set its prices to its own standards is a common theme of socialism, which is prevalent among many Latin American countries. Andrea Giuricin, CEO of TRA Consulting and professor at Universidad Milan-Bicocca, argues that this could seriously isolate Argentina from the rest of Latin America, as well as internationally. This attack on the country’s telecommunication industry creates a barrier to the rest of the world in a time when people are most in need of open and dependable communication. Ultimately, the consequences will be swift and unforgiving. And by the time Argentina looks to return to the international stage as a free market economy, it may find it lacks the incentive and trust necessary to entice foreign telecommunication companies into once again investing in Argentina.


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