LATIN AMERICAN CONFERENCE OF THE WIRELESS 2002 SHOW
alacel.com
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The Latin American dilemma of advancing toward 2.5 G
Equipment providers explained operators the need to deploy high speed data networks if they want to get higher revenues. The first are already enjoying benefits.
According to Scott Erickson, VP for mobiles in Lucent, "to be the first is essential, since in data churn doesn’t exist as in voice ". Corporate clients installing, for example, an Intranet with firewalls in their mobile networks would have to adapt their systems with an additional cost; if the wanted to change providers. Thus, within this segment, operators in Latin America cannot come second.
Facing the equipment providers, Raúl Katz, VP of Booz-Allen & Hamilton, was in charge of showing the "opposite side". According to his analysis, cell companies in Latin America will only get 1.5% of their income for 2002 from data services, and 98.5% will come from voice. But he also acknowledged that by 2006, it is expected mobile data to account for 33% of the cell income in the region.
The most successful case presented during the Latin American Conference of CTIA was that of the company Química Suiza, the biggest pharmaceutical distributor in Peru, that automated all its sale force with an IBM solution presented by Emerson Pierdoná, from IBM Latin America Wireless Solutions. Through the new system, Química Suiza reduced the order processing time, maximized its ability to handle last minute promotions, and was able to manage its inventory more efficiently.
Peru appears as the leader in the data mobile era in Latin America. According to Héctor Salgado, Director of Business Development in Qualcomm, "the corporate ARPU of Telefónica del Perú increased between US$ 70 and US$ 80, and data traffic is higher than that of voice". Telefónica designed an application for the police to control vehicles through cells quicker, in that country.
Erickson, from Lucent, furnished relevant data: nine out of ten new PCs sold in Latin America will be laptops, showing the strong trend for "mobile offices" and portable Intranets region wide. And added, 80% of the investment Lucent receives from cell operators in Latin America is for high speed data (HSD) networks, Puerto Rico, Brazil, and Venezuela projects among them.
Salgado, from Qualcomm, listed the operators that have already implemented or are planning to implement CDMA2000 1x in Latin America: Telesp (2001), Global Telecom (Brazil, 2001), Iusacell (Mexico, 2001), Centennial (Puerto Rico, 2001), CTI (Argentina, 2003), Movicom (Argentina, 2003), Telcel (Venezuela, 2003), Movilnet (Venezuela, 2002), Smartcom (Chile, 2002), Centennial (Jamaica, 2002), Centennial (Dominican Republic, 2001).
On the opposite side, Richard Downes, Director for Latin America and the Caribbean of the consortium 3G Americas (heir of UWCC) said Entel (Bolivia), CTE (El Salvador), Personal (Argentina), and Telcel (Mexico) were the first TDMA operators migrating their networks to 2.5 G GSM/GPRS.
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For the first time, Alacel´s Conference presented a regional executive from Verizon, the company operating in Mexico (Iusacell), Venezuela (Movilnet), and Argentina (CTI Móvil). Harris told Convergencialatina that the company is interested in advancing in Brazil, above all, but was not involved in the PCS tender, because it is designed for GSM, and Verizon definitely goes for CDMA in the region.
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All of them agreed in that the next year there will be a consolidation of the big regional operators, that will absorb many of the local players in different countries. According to Raúl Katz, VP of Communications and Technology Group in Booz-Allen & Hamilton, within the six main Latin American markets, the two most important players concentrate between 60% and 90% of the clients, and the scale has become essential to enhance the Ebitda.
In Venezuela the third operator only catches 6%, in Mexico, 8%, in Brazil, 15%, in Colombia, 17%, in Chile, 20%, and in Argentina, 25%. Only this country has an even competition, and the fourth operator exceeds a 10% of clients.
According to Katz, small players suffer the competition pressure, the high relative costs of operations and networks, and the less diversified customer portfolio. Katz sees two consolidation scenarios: big players acquiring small ones, or small operators merging to make a bigger one. He also forecasts two kinds of acquisitions: a "purchase to sell off" and a "purchase to focus". In the first case, a mobile operator buys another one in the same country, migrates its customer base towards its own network, and sells of the remaining infrastructure. In the second, the buyer creates two different business bases. One network maximizes the ARPU offering quality, 3G coverage, and full data services. The other, lowers costs and quality, and looks for a scale to make it more profitable.
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The Commissioner from the US Federal Communications Commission (FCC), Michael Copps was involved in the same panel Ecuadorian and Uruguayan regulators participated in. Discouraging his South American colleagues even more, Copps stated that his country made the "mistake of allocating spectrum through draws at first, and many operators participated only to sell the frequency later". He added that then "draws were replaced by auctions, but when the process only aims at collecting money, it may bring about future problems. I hope Latin America learns from this experience", he finished.
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The SMS business is growing in Latin America
In an ARPU-drop context, it appears as a model for generating extra income. The service was a boom in Venezuela, developed in Chile, and is progressing in Argentina, Brazil and the region in general.
After Digitel (TIM) launched the system, the rest of the Venezuelan operators followed it, and the service increased from thousands to millions monthly short messages. The boom could be reproduced in the rest of the countries in the next years. If during 2000 message income was around US$ 63 million in Latin America, last year, it two folded to reach US$ 116 million. Earnings are expected to account for US$ 185 million in 2002, and by 2006, the region, as a whole, may invoice US$ 660 million for the service, according to Baskerville.
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As those in Rio de Janeiro, operators in San Pablo, Telesp Celular (Portugal Telecom.), BCP (BellSouth) and Tess also entered the SMS interoperability this year, after negotiations that took months. The delay for closing the agreement was brought about by the technological differences among firms. Telesp Celular uses CDMA, while BCP and Tess have TDMA networks. According to the subsidiary of Portugal Telecom, the short message service grew in 600%, both for the number of messages, and turnover last year. This figure is relevant since only 20% of the total customer portfolio of the operators counts on phones suitable to receive and send SMS. Besides, BCP explained that the messages sent went up in 10% as from the agreement entered into with Tess, and now, after including Telesp Celular, it expects a further 15% growth.
Brazil may repeat in 2002 the outstanding performance showed in the last months in Venezuela, since Digitel and Movilnet (Cantv) agreed to interconnect message services as mandated by the regulatory body Conatel. Interoperability is key to market expansion and revenue increases.
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The other case is Viair (Seattle, Washington) that became the main Microsoft Office adapter for mobiles. The company was founded by the executives that led the development of Microsoft Internet Explorer and Outlook Express, and others coming from cell operators. Among its clients appear VoiceStream, Nextel, Telus and Bell Mobility, both in Canada, reaching some 160,000 application users, that contribute a US$ 16 monthly ARPU to the operator. In Latin America, the firm set off in Mexico, and already contacted Pegaso, Iusacell, Unefon, and Telcel, and wants to reach Brazil and Argentina. As Gary Clouner, ex VP of Strategic Accounts, lived in Spain from childhood, and speaks perfect Spanish, he is charge of regional sales. |
