Venezuela’s CANTV: What should a 21st century “socialist” telecommunications company look like?

TNI fellow, Daniel Chavez has been part of a team of international advisers working with Venezuelan researchers and CANTV to review the the state telecommunications company's history and put forward proposals for converting it into an effective socialist public company.

Interviewer:  Nick Buxton

Venezuela’s revolution has often been tied to the slogan “Socialism in the 21st Century.” What might that might mean concretely in changes under way in the renationalised state telecommunications company, CANTV?

TNI fellow, Daniel Chavez has been part of a team of international advisers working with Venezuelan researchers and CANTV to review the the state telecommunications company’s history and put forward proposals for converting it into an effective socialist public company.

Tell us about the history of CANTV.

CANTV is the second largest company in Venezuela after the energy giant PDVSA. It not only provides telephone services, both landline and mobile; it also provides internet, satellite coverage and will soon provide digital TV (IPTV). It has gone through the usual history of many utilities in Latin America, firstly starting as a private company, then nationalised in 1953, before being privatised in 1991. In 2007, it was renationalised.

According to neoliberal ideologues at the time, CANTV was privatised for two main reasons: the first was that the services were bad and the second was that the state didn’t have enough money to make necessary investments in the context of global technological change. Of course, similar arguments were made throughout Latin America and around the world to justify the wave of privatisation of water, electricity, health, education, telecommunications and other public services.

In Venezuela, the process was led by President Carlos Andrés Peréz in what was called the Gran Viraje (Great Turning) in which other companies were also privatised, such as ports and productive industries. That was also the beginning of the virtual privatisation of PDVSA, which for several years (until President Chavez’s government regained control) theoretically remained in the hand of the state but was effectively managed as a private company.

So why was it re-nationalised?

CANTV was renationalised in 2007, as part of the broader Bolivarian project of recovering public ownership and management of strategic companies. Chavez had earlier threatened the company with nationalisation, after its refusal to attend to the demands of company employee pensioners.

Under the new Bolivarian legislation, telecommunications was declared a human right. This was a major challenge to the dominant paradigm, which views telecommunications from a profit-centered perspective.

Many analysts agree that telecommunications is essential for many dimensions of human development, but generally this hasn’t been translated into public policy. The Bolivarian government argued that CANTV was failing to meet its social commitments as a privatised company, as agreed in the original contract signed in 1991; for example most investment was being made in coastal regions and the northern part of Venezuela as these was profitable, denying access to poorer, indigenous and geographically isolated communities.

Our research also showed that while the company was profitable and paying taxes, most of the dividends were going abroad as the main shareholder of the company was a US multinational giant, Verizon. Now those resources are being invested within the country.

What is important to note is that the digitally excluded, in Venezuela and other countries of the Global South, are not an unforeseen consequence of the information and technological age, but an inevitable result of a process driven by commercialisation and profits. It is therefore not surprising that regional public opinion survey Latinobarómetro reveals that only a third of Latin Americans are satisfied with the services provided by privatised companies, and a clear majority, over 70%, believe that telephone services should be largely in the hands of the state.

What progress has been made since 2007?

Well, if you look at it at through narrow neoliberal lenses, then what is interesting is that that CANTV as a state company has been just as profitable as a private company, and has succeeded in expanding its services. Even commercial intelligence reports that evaluate international companies  recognise that CANTV is today a profitable and well managed company.

But we also looked at other dimensions that these commercial intelligence reports and the conventional academic research in this area never evaluate: issues such as community participation, solidarity, job creation, etc. One of the results of the renationalisation of the company is that it has led to the creation of the mesas tecnicas de telecommunicaciones (grassroots working groups on telecommunications), which are community organisations that want to take an active part in both the formulation of telecommunications policy and also co-managing with the telecommunication company the delivery of services at local level. These kind of organisations (specifically the mesas técnicas de agua) have already proved to be very successful in the management and delivery of water services in Venezuela.

The company has also encouraged the formation of Esquemas Asociativos Solidarios (Workers’ Cooperatives) for the many jobs that were outsourced from CANTV as a result of privatisation. Similar to many other privatisation processes, CANTV’s payroll fell after 1991 as many aspects of CANTV’s work were outsourced to outside companies with little accountability, low salaries, job insecurity and very poor working conditions. So, when the CANTV was renationalised in 2007 it suggested that workers in those contracted companies form cooperatives and provide the same services to the public enterprise. More than 3,300 workers have now organised in this way.

More broadly, CANTV has also been a key impulse in supporting the creation of jobs in Venezuela. Up to 2007, many providers and products for CANTV came from big foreign companies; now as much as possible they try to source from small and medium companies in Venezuela. As CANTV is the second largest company in Venezuela, this has had a big economic impact.

The most interesting thing, however, is how the delivery of services has changed – and this will be particularly noticeable in the medium and long-term future – once social needs rather than profit became the main motive for planning. The company’s coverage has already expanded to geographic areas and social sectors not previously covered, and with the launch of Venezuela’s own state satellite, the Simon Bolivar Satellite (SSB), CANTV has the potential to reach even the most isolated communities.

What hasn’t worked in terms of re-nationalisation?

It is difficult to change a whole corporate culture in three years. There are some problems; for instance, the internal management of CANTV, which to a large extent relies on individuals ‘inherited’ from the privatised company, doesn’t always go hand in hand with a socialist vision.

When the state bought the company in 2007 and took control of management and services, many top managers, not surprisingly, went to work for the competition, for example to Movistar (owned by the giant telecom multinational Telefonica, owned by Spanish capital) and some to Digitel.

By contrast, recent and professional independent surveys – as well as our own research – show that that the majority of CANTV’s current employees share the company’s socialist vision and are happier working for a public company.

How did you get involved?

The request came to TNI because we had published a Public Services Yearbook, which documented alternatives to privatisation in several services – electricity, water, and health. They were also aware of our work in the water sector, so the Venezuelan Embassy in the Hague invited me to a seminar in Caracas and then to lead on this research project together with local researchers and external research expertise coming from the broader TNI network.

Our only condition to participate in this initiative was that we would have full intellectual autonomy, without political interference. We set up a team made up of Venezuelan social scientists and telecommunication specialists, along with other researchers from the Netherlands, Canada, Spain, Uruguay, Argentina, US and Canada.

What are your proposals?

These will be in the final report that is not out yet. But the key points we underline are the importance of the workforce and in particular the need for training for workers in telecommunications and public management. We suggest strengthening the CANTV Telecommunications Studies Centre (CET), which used to be a national and international reference of excellence in the telecommunications sector until the company was privatised in 1991.

We also emphasise the importance of research, development and innovation, in order to keep innovative in a sector where this is particularly essential.

Finally we believe there is still much more that can be done to develop the participatory dimensions of the company. The mesas tecnicas are a great start, but they can be strengthened.

In what way will CANTV be socialist?

We believe that it will be the first effective socialist telecommunications company in the world. Cuba may have a public telephone company, but you can’t say they are very efficient, because the state of telecommunications is not comparable to many other Latin American companies.

We are using new criteria for communicating what a socialist company mean. Many of these criteria are based on elements that have been developed as proposed alternatives to the commercialisation of public services by the global research and advocacy network, Municipal Services Project (www.municipalservicesproject.org).

This is no longer about whether it is run by the state. We certainly must reject old models that didn’t work such as the Soviet model, as well as the former liberal institutionality of CANTV before it was privatised. We must also adapt to the new context for these companies, and this means building something radically new.

This doesn’t mean rejecting the important role of the state in the social economy, but it does mean rejecting Statism, which implies that all activism and protagonism in social life must be in the hands of the state. In the end, we need both state and community involvement, because in order to extend telecommunications networks, you need a lot of money which communities do not have. But in order to effectively target real needs you need the intelligence of communities, because they are the ones who know best.

Constructing a socialist telecommunications company also means looking at issues such as reorganising management, developing technologies that meet the needs of society, generating diverse and broad content, and enabling democratic participation in the company including those who are digitally excluded.

Venezuela is an exciting place to develop and test these ideas, because it is a good ‘laboratory’ of social, political and institutional change. The success so far of CANTV has implications for passing on many of its best practices to other public companies, in Venezuela. It can also be an inspiration for other countries going through similar processes, and trying to build a new society free of exploitation, where solidarity comes first and humans are in harmony with their environment.

What is your response to those who say only private sector involvement will drive the innovation that is needed?

Well… you have to differentiate privatisation and competition. In Uruguay, another country that rejected privatisation of telecommunications, the market has been liberalised but the state company is still the leader in the provision of telecommunication services. So, in some ways you can argue that competition is a positive factor if it means that the state company remains well managed and able to combine financial sustainability with good provision of services and strong social responsibility towards the excluded and marginalised social sectors.

We see the same situation in Venezuela. The telecommunications sector was opened up in 2000, when Chavez was already in power, which means that the public company, CANTV, today has to compete with Movistar, which has much more resources and operates right across Latin America, so it has a huge advantage in terms of economies of scale. This forces CANTV to be efficient.

It also draws attention to the possibility for further coordination between different state companies to be able to match the issues of scale. We already have very positive experiences of public-public partnerships in the water sector, so there is room for this, especially as similar processes of renationalisation of former state telecommunications companies are under way in Bolivia and Ecuador as well.

Public-Public Partnerships would be a great idea to translate the values and principles of ALBA and other regional integration initiatives currently evolving in Latin America into a concrete plan for the convergence of CANTV of Venezuela, ANTEL of Uruguay and other state-run telecommunication companies of the region. That way, we could see the development of a real alternative to the oligopolistic power of Telefonica of Spain and Grupo Carso Telecom of Mexico, which together control most of the telecommunications across the region.

Is the public sector able to make sufficient investments in a complex sector like telecommunications?

The short answer is yes. Before privatisation, the only two years when CANTV made a financial loss were precisely those two years before it was sold, 1989 and 1990. In other countries where the state telecommunications company was not privatised, states were able to provide income to modernise and expand networks, services and infrastructure. This was true of Uruguay, for example, which is a much smaller country and without oil revenue, and yet was still able to modernise effectively. The problem is not always money. It is often about the need for good and socially-driven ideas and effective public management.

International commentators suggest that Chavez’s popularity is falling. Was this your impression? What are the implications for the future of CANTV?

We always hear these forecasts from international commentators and it is difficult to say what will happen in the coming legislative election of 2010. However, if you spend time with grassroots communities where the revolution has empowered ordinary people, it doesn’t seem like Chavez’s support has fallen. I don’t see any likely collapse of his vote in the near future.

It is true though that projects such as the public reform and development of CANTV is tied to the long term future of the Bolivarian revolution. If the revolution fails, then CANTV would probably be the first to be reprivatised because of its potential for profit.

What about the current problems Venezuela is facing in the electricity and water sector?

Well… you have to consider that Venezuelan is facing environmental circumstances that are both difficult to manage or foresee. Venezuela has suffered the worst droughts in the history of country, so as 70% of electricity comes from hydroelectric power this has obviously caused serious problems. However, some, even in the Chavista camp, say there has been a degree of mismanagement and that the administration could have better prepared, but this is open to debate. What is certain is that CANTV’s experience and the proposals for its successful development could have valuable lessons for other public sectors too.

So what happens next?

Our report is currently being turned into a book, soon to be published in Spanish by a Venezuelan publishing house. The final report is at this moment being reviewed and presented to directors of CANTV, to its workers, to its cooperatives, as well as the communities involved in the mesas tecnicas de telecomunicaciones. We are organising a series of workshops to discuss results and plan moving forward. We also plan to publish the book in English later this year.

One of the best results though is that we have also consolidated a great research team, which has developed rigorous and innovative work in an area that has been dominated by the hegemony of neoliberal academics and consultants and which has received little attention from progressive researchers. Our team has proven its capacity to work in other countries and with other public sectors going through similar processes.

New criteria for a “socialist” public company
1.Public – not necessarily state-run, as it also refers to community-driven initiatives
2.Equitable – overcoming barriers to access, especially for poorer communities
3.Participative – active and informed participation by diverse groups, not just consultation
4.Efficiency – looking beyond financial efficiency to include factors such as good working conditions, and a positive environmental record
5.Quality – including means of measuring quality beyond the traditional market-driven indicators
6.Accountability – not only to shareholders but mainly to citizens and workers
7.Fair and horizontal labour relations – key to effective public management, with emphasis on training and active involvement of workers
8.Sustainability – Financial, social, political and environmental
9.Solidarity – Very different to Corporate Social Responsibility. Building solidarity between economic and social sectors nationally and internationally, based on common commitment to social goals.
10.Transferability – Examining whether the experience of the company, as a whole or in part, is transferable to other parts of the country, region or world, including options for public-public partnerships (PUPs).

Daniel Chavez – TNI New Politics Programme Coordinator

Daniel Chavez is a Uruguayan anthropologist specialising in Latin American politics and urban social and political movements. With an intimate knowledge of Latin American left politics and an advisor to various local governments on participatory local democracy, he is also editor of the La nueva izquierda en América Latina: sus orígenes y trayectoria futura (New Left in Latin America: its origins and future, with Patrick Barrett and Cesar García (Grupo Editorial Norma, 2005)  

Before moving to Europe he had worked for almost a decade for the United Federation of Mutual-Aid Housing Cooperatives (FUCVAM). Daniel currently co-ordinates the New TNI Politics Programme, in co-operation with Hilary Wainwright. He is also author of The Left in the City: Participatory Local Governments in Latin America with Benjamin Goldfrank (LAB, 2001).