Viettel, a Vietnamese telecommunications company, has recently made headway in the Latin American and Caribbean region. What makes this company unique in the region, besides being based in far-flung Honoi, is that its executives report to the Vietnamese Department of Defense. It is a military-run telco, which inevitably leads to comparison with another presumably military telco that has stormed Latin America over the last several years: China´s Huawei. (Though the latter actively denies widespread reporting of its connections to the People’s Liberation Army, PLA). Though a relative newcomer, Huawei is now a top equipment supplier to the region´s major telco service providers.
Like Huawei in the beginning, Viettel focuses on the low cost segment and aggressively competes on price. It has taken a model that served it well at home where it now boasts over 50 percent market share and exported it abroad. The Vietnamese group is a service provider in Cambodia, Laos, Mozambique, Haiti, and Peru. Its international subscribers now outnumber its Vietnamese subscribers. Despite the global economic downturn, Viettel reported a 28 percent increase in revenues in 2011, reaching $5.6 billion.
In Haiti, the company launched services in September 2011. It successfully entered the island nation by offering substantial charity to earthquake victims; free-of-charge Internet services to schools; and preferential mobile prices for students, police and the poor. Something similar happened in Peru where the group beat out the competition—Russia´s Wynner Systems, Chile´s Americatel under Entel, and Brazil´s Hits Telecom Holding Company—with free service to over 4,000 schools over the next 10 years. During this same time period, it will invest around US$400m in setting up the network and business organizations in Peru.
Governments have shown little concern regarding the company’s military status. Unlike Huawei, that did face resistance in countries like India and still does today in the United States, developing world governments appear to overlook that issue and focus instead on the benefits of low-cost, high quality competition.
Yesterday President Sebastián Piñera signed a bill to create the Superintendencia de Telecomunicaciones, an agency expected to supervise Chile’s $30 million-telecommunications industry. Accompanied by the Minister of Transporation and Telecommunications Pedro Errázuriz, Piñera said the goal of the bill—which will now be sent to Congress—is to “ensure a deeper control that allows the protection of consumers’ rights and the rapid resolution of conflicts between users and service providers.”
The size of the industry and the lack of a proper regulatory infrastructure to support it motivated the bill. According to official data from the Instituto Nacional de Estadísticas, Chile has more cellphones than people. In September 2010 the country showed 100 percent penetration with 17.6 million cellphones for a population of 17.1 million people. In addition, there are 3.5 million fixed lines and 2 million cable TV subscribers, accounting for 98 percent of households being provided the telecommunications service. “With this level of demand we must worry about the quality of the service,” said Minister Errázuriz.
The government expects the bill to be approved by the end of 2012 and the agency to be operational by 2013. Among the tasks that the new agency would have under its control are ensuring that service providers comply with the law, enforcing the regulation (with fines up to 1,000 per cent), issuing and terminating licenses, collecting and administering information about the sector, and regulating prices. Currently, the system is administered by the Subsecretaría de Telecomunicaciones (Subtel). In practice, once the Superintendencia starts working it will take charge of Subtel’s control and punitive attributions, while the Subsecretaría will keep promoting the industry’s development and growth.
The bill to create the regulatory agency is part of a comprehensive plan to reform the sector. During the last 20 months, other improvements have taken place such as unblocking cellphones, a neutral network, mobile number portability, and most recently the completion of the first phase of a plan to remove charges for domestic long-distance calls. So far, over six million customers have benefitted from this elimination.
Cuban state-owned telecom company ETECSA has again cut the activation fee for cell phones. Yesterday’s reduction means that the overall fee has now dropped 80 percent since cell phones were first allowed on the island in April 2008. The initial activation fee for pre-paid phone service has fallen to $43 from $120. The price reductions come less than two weeks after ETECSA announced reduced rates for existing service to start June 1, 2011, including reductions to the price per minute for off-peak calls.
With nearly 1 million cell phones currently in use in Cuba, ETECSA expects that the cut in price of activating a cell phone will increase their accessibility to Cubans and usage. ETECSA expects to exceed 1 million users by the end of this year and hopes to have 2.4 million users by 2015. However, ETECSA communications director Luis Manuel Naranjo told Juventud Rebelde that the slashing of fees “is not enough” noting the expense of servicing a cell phone bill continues to be “a costly challenge in terms of investment and resources” for many Cubans.
Earlier this month three Android phones—LG's GW620, Samsung's i5700 Galaxy Spica and Motorola's Milestone Smartphone Android 2.0—were introduced by the rapidly growing Tigo telephone company in Guatemala. Android, an open operating system that allows access to Google's features such as email, text messages, calendar, maps and its browser, allows devices to be built faster and at a lower cost. It also increases the technology’s accessibility.
The fact that Android is free and open source and now available in places like Guatemala is important because many people in developing countries use mobile as their primary or only source for Web access. According to the World Bank, more than two-thirds of the world's population lives within range of a wireless network. Half the global population has access to the Internet through a mobile device. This represents about 2.5 billion mobile users worldwide, which means many more people have access to a cell phone than to a personal computer.
In Guatemala, long after the asphalt and pavement ends, cell phone networks extend deep into the mountains, and coverage is almost universally accessible. Much to the surprise of its Central American neighbors, Guatemala's telecom sector is in the top four in Latin America, according to Mario Marroquín Rivera, a consultant for Fundación2020. The cell phone infrastructure (99 percent saturation) is extremely well developed in contrast to Internet access where only 7.7 percent of people have high-speed access.
China will construct a $300 million communications satellite in Bolivia, President Evo Morales announced Thursday.
Morales discussed future plans for cooperation with his Chinese counterpart, Hu Jintao, in New York during the annual United Nations General Assembly session. The two leaders’ discussion comes a week after the International Telecommunication Union (ITU), a UN agency, pledged to assist Bolivia with orbital positions and frequency bands.
The project could be financed with Bolivia’s own resources, Morales told AFP Thursday, adding that securing access to preferential credit from a country like China would help his country. He anticipates the satellite’s launch into orbit within three years. Morales also explained that a satellite would greatly benefit the country by connecting poor Bolivians with the modern world through improved Internet access. This remains a challenge in Bolivia where ITU reports that only 10 out of every 100 people are Internet users—far below Chile, 32 per 100, and Venezuela, 25 per 100.
In 2008, Chinese scientists built and launched the Venezuelan satellite, Simon Bolivar (ABC). For President Hugo Chávez, a goal of that satellite is to secure technological independence from the West.
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.