I believe Q has a piece of the Bell Canada deal>
Bad connection in Brazil's telecoms market
Business Times
SOON after Telefonica of Spain took control of
Sao Paulo's fixed line phone network last
September, many private lines went dead. Others
became mysteriously connected to public
phones.
The new owners had neglected to warn Telesp's 6.4 million subscribers that
its expansion programme would disrupt services.
The result was an avalanche of complaints.
Calls to the company went unanswered, prompting some angry customers to
storm its offices in Sao Paulo and, in some cases, exchanged blows with
staff.
The State Assembly set up a committee to investigate the chaos. In March,
the Justice Ministry fined Telefonica R$2.9 million or US$1.5 million (US$1
= RM3.80) for providing an unsatisfactory service.
In April the industry regulator imposed another fine of between R$4.5 million
and R$5 million.
Sensing a public relations disaster in Brazil's wealthiest telecommunications
market, the Spanish company wheeled out the president of its Brazilian
subsidiary to face the public. Mr Fernando Xavier Ferreira admitted poor
communications, but rejected accusations of incompetence.
He said expansion of the network would cause inevitable but temporary
degradation.
"Eventually (we will) establish perfectly good services. There will be definite
benefits for the population," he said.
The debacle may cost Telefonica dear as the Brazilian market is opened to
competition.
Telefonica is already "spending a lot more on publicity than expected" to
counter its terrible image, said Mr Alexandre Constantini, a
telecommunications analyst with Bear, Stearns, the New York investment
bank.
When the Government opens the long-distance market to companies once
restricted to providing local services this month, the risk for Telefonica is that
it will have alienated so many Paulistas that it may face a shrinking customer
base, or be confronted with the need to reduce charges.
Its expensively acquired monopoly - it paid US$4.96 billion for Telesp, 64
per cent above the minimum price - will end later this year when a
consortium led by [ Bell Canada International ] begins setting up a parallel
network to compete in the local market.
However, if Telefonica has learnt its lesson, not all is lost. It still has a
powerful franchise, and analysts expect service to improve as it extends
digital and added value services.
What is surprising is that Telefonica should have committed such elementary
mistakes in Brazil. Elsewhere in the region, the company has won grudging
admiration for modernising former state-owned telephone services on the
brink of collapse.
In Argentina, for example, where Telefonica part-controls one of the
country's two fixed-line telephony companies, waiting lists for telephone lines
were cut dramatically after privatization.
"The service is simply not as good as that provided by Telefonica in Spain,"
said one Buenos Aires businesswoman. "But boy, is it better than before."
(Copyright 1999)
_____via IntellX_____
Publication Date: July 03, 1999 |
