Peru, Puerto Rico, Brazil, and Colombia drive forward with big projects

By Clayton Browne

Latin America has long been considered a laggard in terms of global infrastructure development, but that perception should be changing. Countries such as Brazil, Mexico, Chile, Peru, and Puerto Rico have all begun major long-term infrastructure projects ranging from roads to dams to telecommunications towers to airports. Infrastructure development in the areas of energy, transportation and telecommunications have seen the greatest recent growth, with estimates ranging as high as $450 billion, to be spent on infrastructure in the area between 2011 and 2015.

Up until 2009, Latin American infrastructure spending was on a rapid growth track and there were dozens of major projects planned in almost every country in the hemisphere. The global recession has put a little damper on the pace of the growth, and a number of projects have been delayed or revised, but overall the impact of the recession on infrastructure expenditures does not seem to have been as bad as feared. Several countries such as Brazil and Chile have just announced new projects and updated schedules for planned and ongoing projects in 2012 and beyond.

Public Sector vs Public-Private Initiatives

Large-scale private-public partnerships for infrastructure development have been rare in Latin America until relatively recently due to a combination of cultural and business factors. There is a deep suspicion of private involvement in large public infrastructure projects in many places in Central and South America due to the fact that graft and misappropriation of public funds has been endemic in many such projects in the past. And in some countries such as Venezuela, there is outright hostility toward private enterprises being involved at almost any level in government projects.

The other side of the coin is that historically many public sector infrastructure projects in Latin American countries have also been inefficient graft-plagued projects where a few politicians or their friends and family greatly enriched themselves at the public expense.

But all of this is changing as the 21st century gets under way, and many countries like Brazil, Chile, Puerto Rico, and Peru have crafted innovative new regulations to encourage public-private partnerships (PPPs) for infrastructural development. A few have even created quasi-governmental agencies to encourage PPPs, such as the Puerto Rico Public-Private Partnerships Authority.

That said, there are still a good number of ongoing and planned Latin American infrastructure projects such as airports that are deemed to be of sovereign interest, and are being developed solely with public funds.

Energy Infrastructure Supplanting Telecom

The development of telecommunications infrastructure has been a high priority throughout Latin America since the late 1990s, and there were more projects and more money spent on telecommunications infrastructure in Lain American countries than any other category for almost a decade. The trend continued until 2009, when investment in telecommunications declined by 37% compared to 2008, and no major new projects were undertaken.

The energy sector has seen rapid growth in the last few years in many Latin American nations, with energy infrastructure investment jumping by 127% with 43 new projects from 2008 to 2009. Brazil has been especially active in the energy sector since 2008 with two new hydroelectric plants and half a dozen major electrical transmission-related projects.

Major Projects in Selected Countries

Brazil

Brazil was one of the leading per capita infrastructure dollars to GDP spenders in the world in the 1970s and early 80s, but infrastructure expenditures dropped off significantly for the next decade or so after that. But Brazil has recently kicked off a massive campaign of new infrastructure projects of all types, dubbed the Growth Acceleration Plan. Many of these projects are being developed through the Brazilian National Development bank (BNDES), and BNDES estimates that Brazil will spend a minimum of $145 billion in the three-year period from 2010-2012. While the fact that Brazil is becoming the largest economic engine in Latin America is clearly behind most of the current surge in infrastructural development, a good bit of it is certainly related to the fact that Brazil is hosting the 2014 World Cup and the 2016 Summer Olympics.

Ongoing/Near-Future Infrastructure Projects

• Recently completed a three-year, $30 billion roads and highways improvement project.

• Almost 50 stadium, road, airport and train-related infrastructure projects slated to be finished on time for the 2014 World Cup.

• A high-speed train linking Rio de Janeiro and São Paolo due to be completed by the 2016 Olympics.

Colombia

Colombia has taken great strides in both sociopolitical and infrastructural development in the last decade or so, but it was very much needed and a great deal that remains to be done. Colombia’s current National Development Plan estimates spending $17 billion between 2010-2014 to develop the highway and railroad system, with up to half of the money coming from private funds.

Ongoing/Near-Future Infrastructure Projects

• Nearing completion of the multi-year, three-phase Ruta del Sol, a major highway project designed to connect the interior of Colombia with the Pacific Coast.

• The Central Railroad System, a project linking the two regional hub cities of Honda and Chiriguana, is under construction.

• Development of a new program to encourage the investment of private capital in infrastructure investment projects that helps link up the various parties involved, including the headquarters of the Superintendent Notary and Registrar.

Peru

Peru began a major infrastructural development push in the late 90s and continues to make steady improvements in infrastructure in the first decade of the 21st century. In Fact, the 2010 Infrascope, an index created the Economic Intelligence Unit (EIU) ranking countries by political, legal and economic policies encouraging infrastructural development, ranks Peru as the third best country in all of Latin America (behind Chile and Brazil).

Ongoing/Near-Future Infrastructure Projects

• Peru currently has over $8 billion in public infrastructure projects planned or in construction

• Several regional projects to develop areas selected in coordination with the petrochemical industry

• Long-term plan to develop the island of San Lorenzo, located 4 km off of the coast of Lima, into a “satellite city on the sea, with special areas for production or recreation with the latest technologies.”

Puerto Rico

The last couple of decades of the 20th century saw Puerto Rico make great strides to catching up to most of the rest of the U.S. in terms of public infrastructure in terms of electricity productions, roads, hospitals and so forth. However, the school system and low-income housing lagged behind and were the most pressing infrastructural needs of the island nation. Fortunately, the American Reinvestment and Recovery Act of 2009 provided a $7.2 billion stimulus funding to Puerto Rico.

According to José Basora, the Executive Director of the Puerto Rico Infrastructure Financing Authority, “The government decided to put most of the stimulus money to work in a variety of new infrastructure-related projects, and to date we have spent over 88% of the funds allotted.”

Ongoing/Near-Future Infrastructure Projects

• The Schools for the 21st Century Program has built or remodeled 103 schools throughout Puerto Rico for a total cost of $756 million. This program has improved the education facilities of over 45,000 students and 3500 teachers.

• Ongoing public and public-private weatherization and energy conservation programs that have resulted in major home or building energy-efficiency upgrades for over 15,000 homes of senior citizens and low-income families as well as 600 government and private buildings.

• PPP projects developed through the Puerto Rico Public-Private Partnerships Authority include a recent $120 million education and training initiative to which Intel contributed $12 million as seed money.

Source: TMCnet.com

France Telecom’s subsidiary Orange is gearing up to upgrade its telecom network across the Latin America as part of its plans to expand its supplementary services such as high-speed broadband, MPLS, international Ethernet link and telepresence.

The upgrading is likely to increase its network capacity by ten times meeting the needs of its multinational enterprise customers in the region.

The decision to upgrade the network comes after the carrier unveiled its plans to generate $1.4 billion in emerging markets in 2015.

The drive to increase network capacity will begin in October 2011 and may cover many countries including Brazil, Chile, Argentina, Peru and Panama, the operator stated in a press release.

The network upgrading program aims to connect Latin America to the East Coast of the United States via Brazil and to the West Coast of the United States via Chile. The upgrade will enhance quality of service for customers with improved latency to the West Coast, while also supporting the growing capacity requirements from Asia-Pacific.

Orange (News – Alert) Business Services has 122 points of presence across 31 countries in Latin America. With more than 650 employees and a major service center Orange serves more than 400 customers in the region.

“We continue to see increased global expansion not only by our multinational customers looking to grow in Latin America,” said Mauro Cruzeiro, vice president of Latin America for Orange Business Services (News – Alert). ”We also see more and more Latin American enterprises expanding within the region and beyond.”

Source: America Economia

SANTIAGO — 2010 was the year Chile moved into telecommunications. The GTD Group acquired 96.4% of Telefónica del Sur, $115 million; in August the channel Chilevisión (until then controlled by President Sebastián Piñera) was sold to international group Turner Broadcasting System (TBS) for $150 million. Shortly before the Roman Catholic Church had sold part of its property in Canal 13 (67%) for $55 million to the Luksic family. And Group Saieh (Corpbanca and Copesa) bought 20% of VTR for $300 million.

The two main players in mobile telephony, Entel and Movistar, renewed their brands, while the operator of paid TV and Internet VTR and Nextel France prepare to enter to compete in the area. The adoption of the law on number portability in 2010 and its imminent entry into operation at the end of this year is making the Chilean ITC scene more competitive than in previous years.

Companies are preparing for a scenario in which they seek to capture clients with the quadruple play: Mobile, fixed telephony, TV, and the Internet as a single service and under a single account. “The trend in Chile is more advanced than in other countries of the region,” said Sergio Rodriguez, analyst of telecommunications at Fitch Ratings in Mexico City. “But it is the same: convergence of services by means of packaging.”

“And for operators of fixed telephony, this is a way to strengthen the loyalty of customers to the company and control disconnection rates,” said Rodriguez.

To this end Movistar intends to invest $700 million — part of a larger plan of US$ 2.5 billion — basically in fiber optic networks this year. And according to government estimates, in the coming years there will be investments of about US$7 billion in the sector. “Investments for the coming years will focus on fiber optic to the home and investments in the mobile network to improve the performance of data (mobile broadband) services,” said Patricio Soto, analyst with consulting firm IDC in Latin America.

Mobile telephony has also had a boost with the entrance of increasingly powerful smartphones, which have lowered their costs and have enabled more people to have access to such devices.

“During 2010 and for the next two years the area that most contributed to the growth was mobile data, which includes mobile broadband, mobile Internet (navigation on the phone) and M2M subscriptions,” said Soto. “One of the main factors affecting this growth of the industry is the increase in subscriptions to mobile broadband.”

Chile was a leader in Latin America in terms of penetration of broadband and mobile phones, but in recent months has been moving at a pace slower than other countries. According to the Cisco Broadband Barometer, the country lost the leadership in the region in penetration of fixed broadband, with 10.8%, behind Uruguay (12.3%) and Argentina (11.7%). For Soto, the decline in the figures is misleading, since investments have focused on a second stage: “Leading the way for broadband access to lower socio-economic sectors and increase the speed,” she says.

Meanwhile, another battle is being fought in the field of paid TV, where operators like Movistar and Telmex seek to compete with the leader VTR, which has a powerful infrastructure of cabling and fiber optics. A competitive alternative might be to offer satellite connections.

Either way, the Chilean telecommunications industry appears to be in good health and competition is strong. The actors are consolidated and it is difficult for regulations to substantially change the scene, ICT experts say.

Source: Business Wire

NEW YORK — Capgemini, one of the world’s foremost providers of consulting, technology and outsourcing services, today announced the results of its third annual Executive Outsourcing Survey, which explores the perceptions and use of social media within customer care operations defined as all aspects of customer interaction management within the enterprise.

The survey revealed that social media has become a critical tool for customer care across industries, as over half of senior executives (52 percent) indicated that social media is currently a part of their company’s customer care operations, and 57 percent indicated they are aware that their company is currently monitoring online conversations. Thirty-six percent of executives say their company currently measures the value of its social media program for customer care, which is surprising given how relatively new social media is as a method to enhance customer care operations.

The survey, commissioned by Capgemini and conducted online in February by Harris Interactive among 302 senior executives at Fortune 1000 companies, reinforces that social media as a tool for customer care is here to stay. Over half of executives (57 percent) view social media as a means for inviting customer input on product and services, lead generation, responding to complaints, internal reporting, and measuring customer satisfaction. Interestingly, more than one in ten executives (13 percent) still view social media monitoring as a fad that will not significantly affect their company’s success. Nevertheless, the overwhelming majority view social media as a critical part of a comprehensive customer care strategy.

Despite social media’s growing role in customer care, there is still uncertainty amongst executives in how best to leverage the increasing influence of social media to benefit their company. For example, the survey points to confusion within the organization around whose role it is to manage social media for customer care, and when and how they should be interacting with customers.

Most executives (73 percent) are unfamiliar with how many employees at their company are currently dedicated to “listening” to customer conversations on the internet, and most executives whose company is using social media activities with respect to customer care (64 percent) rely solely on their marketing department for social media monitoring. Furthermore, less than half of executives (41 percent) in companies monitoring online conversations about its brand, product and/or services only respond to an online conversation when a customer poses a direct question, representing a significant missed opportunity for companies to proactively solicit feedback and enhance the customer experience.

Given the lack of recognized best practices amongst companies today, many organizations look to partner with a skilled third party who can respond in real-time to social media interactions and can tie customer sentiment and trends to an effective business strategy. However, the survey indicated that many companies are not yet taking advantage of third party experts—almost half, or 48 percent of companies using social media as a component of their company’s customer care operations or strategy do not currently outsource their customer care operations to third-party providers.

“The use of social media as part of a strategic customer operations strategy is still emerging, but it presents companies with a clear opportunity to engage with current customers, find new ones and build brand awareness in an increasingly competitive landscape,” said David Poole, Vice President and Head of Americas Business Process Outsourcing, Capgemini. “We’re dedicated to helping companies understand these opportunities through research and the delivery of service offerings that help our customers effectively operate in this new medium.”

About the Survey

Harris Interactive conducted the survey online within the United States between February 8 and 21, 2011 among a total of 302 Fortune 1000 Executives. Company revenue and number of employees were weighted where necessary to bring them into line with their actual proportions in the larger universe of Fortune 1000 companies.

All sample surveys and polls, whether or not they use probability sampling, are subject to multiple sources of error which are most often not possible to quantify or estimate, including sampling error, coverage error, error associated with nonresponse, error associated with question wording and response options, and post-survey weighting and adjustments. Therefore, Harris Interactive avoids the words “margin of error” as they are misleading. All that can be calculated are different possible sampling errors with different probabilities for pure, unweighted, random samples with 100% response rates. These are only theoretical because no published polls come close to this ideal.

Respondents for this survey were selected from among those who have agreed to participate in surveys. Because the sample is based on those who agreed to be invited to participate, no estimates of theoretical sampling error can be calculated.

Source: Developing Telecoms

Latin America’s fastest broadband network is being launched by the Chilean market leader Entel. Based on HSPA Evolution technology from Ericsson, the network will allow peak data rates of 42Mbps.

Increasing use of smartphones and advanced mobile applications has caused a surge in data traffic across Entel’s network. The dual carrier HSPA tech increases network capacity, supporting new revenue streams for operators by enabling internet browsing via mobile.

The operator will provide commercial plans with a maximum speed of 22 Mbps, with download speeds averaging at 6 Mbps. Entel’s CEO Antonio Büchi described the DC-HSPA+ network as “the most advanced mobile broadband network in the country”.

Nicolas Brancoli, Vice President of Unit Pacific for Ericsson in Latin America, said: “[We have] delivered tremendous high-speed broadband services to the Chilean market. With the successful introduction of mobile broadband and smartphones on the market, network modernisation has become key for operators to continue offering the best experience to their customers while reducing total cost of ownership.”

Source: Ottawa Business Journal

One of Peru’s major wireless carriers is looking for partners in Ottawa’s telecom sector to support the rollout of the South American nation’s largest 3G networks. Representatives from Nextel Peru, the third-largest mobile operator in that country, were in Ottawa this month to meet with local firms and explore potential business relationships.

During the two-day visit, Nextel officials also toured facilities at DragonWave Inc., EION, TenXc, and the University of Ottawa. “We view these initiatives as good introductions to markets and new customers,” said Greg Friesen, vice-president of product development at DragonWave Inc. “(Nextel Peru) is a strong target of ours.”

Nextel Peru spent US$125 million upgrading to a 3G network, becoming the first subsidiary of U.S.-based NII Holdings to do so. Since its beginnings in the Peruvian market in 1998, Nextel’s two-way digital radio technology has made its product popular in corporate and government circles, giving the company a dominant position within this niche market.

“(Nextel Peru) has a very large subscriber base. They are well-known for their push-to-talk technology, and they’re rolling out huge expansions in their 3G wireless network within Peru. They look like a company on the rise in many ways,” said Nabil Seddigh, president of Ottawa-based Solana Networks.

DragonWave Inc. and Solana Networks were two of 16 businesses that had a 20-minute meeting with representatives from Nextel Peru.

Although they did not announce any specific plans for the future, Nextel Peru’s representatives indicated the Ottawa visit could lead to the exploration of areas including 4G technology, wireless and RF front-end solutions, as well as e-learning for Nextel staff.

Nextel is also in the midst of capitalizing on the corporate mobile applications space, having subcontracted its hardware and network solutions to Huawei earlier this year.

The growing economy in Peru makes it a popular emerging market for Canadian companies to invest in. It is estimated that Canadian investment in Peru is valued at US$2.8 billion. During a time when many countries’ economies were contracting, Peru’s economy expanded by 1.1 per cent in 2009, and it’s estimated to increase by 6.9 per cent in 2011, according to Canada’s trade commission service in Peru.

Thanks to an estimated growth of 13 per cent between 2010 and 2014 in Peru’s ICT market, there are opportunities aplenty for Ottawa companies. Both the private and government sectors have played an equal role in the growth of the market.

According to Canada’s trade commission service in Peru, many niche markets have developed within the private sector, including education, geomatics, and health care. The government sector is spurring growth with public-private partnerships.

Opportunities exist as the Peruvian government expands and improves infrastructure and technology for prisons, airports, hospitals, as well as the country’s air force. The government has also initiated FITEL, a series of rural broadband projects intended to bring broadband connectivity to 4,000 communities in Peru.

Mr. Seddigh said that network expansion makes Peru a sustainable market.

“The market in Peru is a good one … with a very strong penetration in wireless. All of these wireless networks will be expanding from 2G to 3G and 4G, providing more and more data services. So the opportunity is a good one, and I think it is going to be sustained for quite a few years,” Mr. Seddigh said.

Technological compatibility is also what is drawing some to South America; a company can roll out a product line in one country, and then reintroduce it in several different South American markets.

“We recognize that we don’t have to do any technological advancements … to go into a lot of these countries. So the cost of entry from an internal perspective is a lot less than if we went into the Asian market or European market,” said Paul Stevens, vice-president of business development for Kavveri Technologies Inc.

With the first introductions complete, the government of Ontario’s ministry for economic development and trade is planning an ICT mission to Lima in September, which will allow Ottawa companies to further explore investment and business opportunities in Peru. – By Greg Markey

Source: Global Print Monitor

Fixed broadband connections grew slowly in Chile during 2010, according to the just-released Cisco Broadband Barometer. As a result Chile has lost its leadership in the penetration of broadband technology in Latin America, which the country had held for eight years, ever since the Broadband Barometer started.

According to the report, fixed broadband connections grew 8.1 percent during 2010, adding 138,700 new connections, for a total of 1.82 million subscriptions. Mobile broadband grew 96.5 percent, for a total of 1.02 million connections, as of last December.

Highlights

* According to the report, issued by the research firm IDC, fixed broadband in Chile is growing slowly because it is at the second stage of expansion: into rural areas and populations with lower incomes. In addition, some segments of the population still lack knowledge about the benefits of broadband Internet connectivity.

* In the second half of last year, Chile added only 73,600 fixed broadband connections, representing a growth of 4.2 percent.

* With this low growth, Chile lost its leadership in broadband penetration — now at 10.8 percent — and falls below Uruguay (12.3) and Argentina (11.7 percent).

* During last year, fixed broadband connections in the Santiago metropolitan region experienced a slightly higher growth than the rest of the country, with an increase of 4.4 percent versus 4.0 percent, respectively.

* Connections with speeds higher than 2 megabits per second experienced strong growth in the last six months, reaching 81 percent.

* Mobile broadband connections grew 40.5 percent during the second half of 2010, experiencing similar growth in and outside the Santiago metropolitan region.

* According to a World Bank report, broadband has a clear impact on productivity: In countries with low or medium income, an increase of 10 percent in the penetration of broadband is correlated with an increase of 1.4 percentage points in the per capita gross domestic product.

Nicolás Chiappara, general manager, Cisco Chile: “With such a low growth of broadband, the poorest segments of the population will always be behind in benefiting from Internet connectivity.

“The cost of this technology still inhibits its growth and access for all segments of the population. Mobile broadband is growing very fast, but it does not necessarily represent an alternative for the widest Internet access for all Chileans.”

Source: PRNewswire

SAO PAULO — Alcatel-Lucent has announced the opening of a world-class technology showcase center in Sao Paulo, Brazil. The center will highlight a range of advanced technologies and applications – including 4G LTE, video applications, cloud and location-based services – to help Brazilian fixed and mobile service providers respond to the challenges created by the mobile data explosion occurring across their networks. The investment is a further example of Alcatel-Lucent’s commitment to Brazil, already a strategic partner of the major service providers in the country and across the region.

The center occupies nearly 15,400 square feet of space in the company’s premises in Sao Paulo, and will receive visitors from Brazil and other countries in Latin America. It features executive meeting rooms with full videoconference capability to host customers and help them to experience the world of technologies available in the center.

“Brazil is one of the fastest growing economies today, and telecommunications is a fundamental driver for the socioeconomic development of this region,” said Robert Vrij, President, Americas, Alcatel-Lucent. “The creation of a world-class technology showcase in Brazil will help highlight the rapid innovation occurring in the industry, and ensure that the region’s operators remain competitive in today’s ever-changing global economy. By keeping their workforce on pace with the rapid-advancements in technology and social media, it will also improve the welfare of their citizens and help bridge the digital divide.”

Investment in telecommunications infrastructure in Brazil is critical as service providers prepare their networks to handle the exponential traffic generated by smart phones and as the country prepares for two major events – the 2014 World Cup and 2016 Summer Olympics. A robust telecoms infrastructure will enable Brazil to offer the new types of applications and services that customers desire, and generate accompanying revenue streams that will significantly stimulate the local economy and create a more inclusive society.

According to a model developed by Bell Labs and the World Economic Forum, the right combination of actions and investment can accelerate the economic impact of broad access to mobile communications services by as much as 36 percent, measured in GDP.

Including the new location in Brazil, Alcatel-Lucent has now 11 technology showcase centers around the world: Plano (USA), Murray Hill (USA), Whippany (USA), Ottawa (Canada), Sydney, Australia), Shanghai (China), Antwerp(Belgium), Paris (France), Moscow(Russia) and Cairo (Egypt).

About Alcatel-Lucent (Euronext Paris and NYSE : ALU)

The long-trusted partner of service providers, enterprises, strategic industries and governments around the world, Alcatel-Lucent is a leader in mobile, fixed, IP and optics technologies, and a pioneer in applications and services. Alcatel-Lucent includes Bell Labs, one of the world’s foremost centres of research and innovation in communications technology.

With operations in more than 130 countries and one of the most experienced global services organizations in the industry, Alcatel-Lucent is a local partner with global reach.

The Company achieved revenues of Euro 16 billion in 2010 and is incorporated in France and headquartered in Paris.

For more information, visit Alcatel-Lucent on: www.alcatel-lucent.com, read the latest posts on the Alcatel-Lucent blog at www.alcatel-lucent.com/blog and follow the Company on Twitter: twitter.com/Alcatel_Lucent.

Source: Dow Jones

BUENOS AIRES — South American governments plan to spend billions of dollars in the next few years to bring high-speed internet access to under-served communities in order to narrow the so-called digital divide between rich and poor.

Argentina has slated $2 billion to develop a government-run broadband network, while Brazil has resuscitated state telecom company Telebras (TBH, TELB4.BR) to bring connectivity to remote regions. Meanwhile, tiny Uruguay is offering a free, if somewhat slow, broadband connection to anyone with a phone line.

“We don’t want to market this as: how easy, how fast, how fun. We want to transmit values,” Carolina Cosse, the president of Uruguay’s state phone company, Antel, said Monday at a conference in Buenos Aires.

In Uruguay, Antel provides all fixed-line phone services and is a major player in mobile telephony, where it competes with private companies.

But the challenges are far greater in the case of Brazil’s Amazon region and Argentina’s Patagonia, where connecting isolated communities spread across vast territories pose a challenge to policy makers.

In Brazil, the number of internet users is growing rapidly, jumping 20% over the last year to reach 40.5 million in a country of about 194 million inhabitants, according to technology consultants Comscore.

The Brazilian government supports carriers who see a business case in providing Internet access to under-served communities, while relying on Telebras to bring connectivity to areas that are shunned by private investors, Telebras research and development director Paulo Kapp said.

Telebras plans to use the infrastructure of state-run companies, Eletrobras (EBR, ELET6.BR) and Petrobras (PBR, PETR4.BR), as well as private companies to have a 30,000-kilometer broadband network up and running by 2014, Kapp said.

The network expansion is part of a government plan to offer broadband services to low-income consumers at a rate of about 30 Brazilian reals ($18) per month.

The company expects to receive BRL1 billion this year from the government as part of that program.

Meanwhile, Argentina plans to spend $2 billion during the next three years to connect the country with a fiber-optic network to provide broadband and digital television to more homes.

The government plans to triple the country’s existing Internet infrastructure by laying 26,000 kilometers of new cable, connecting residents from the southern tip of Tierra del Fuego to the far north of the country.

The program could reach 50,000 kilometers of new cable if the provinces match the kilometers built by the federal government, said Pablo Tognetti, the president of Argentina’s state-run satellite operator Arsat.

Arsat has been charged with developing the network, which will involve both public and private investment. Later, Arsat will lease its network to telecommunications providers.

The government network will complement existing networks, with a focus on communities that today lack internet connectivity, Tognetti said.

What does Venezuela have to offer? The slowest and most expensive broadband in the region.

By Paul Budde

Venezuela was the only country in South and Central America to experience negative GDP growth in 2010. The six-quarter-long recession has been blamed on falling oil prices, reduced oil production, severe drought followed by floods, sky-high inflation, capital flight, currency depreciation, nationalisations, foreign currency regulations, and an unfavourable environment for private business and investment.

Sour Outlook

Unless radical changes are implemented, the outlook for the Venezuelan economy is not promising. Even with oil revenues rising, lack of investment will prevent the country achieving stable, long-term development goals.

State-owned CANTV dominates Venezuela’s fixed-line, mobile, and broadband markets. Although a number of private operators compete in all three sectors, their business has been dwindling. While Venezuela’s economy contracted by 1.4% in 2010, its telecommunications industry registered a 9.3% growth, performing better than any other sector. But the expansion involved primarily CANTV, as most private companies in all but pay TV saw flat or declining results. Private investment has been dampened in the telecom sector as it has in other Venezuelan industries.

Nevertheless, according to Venezuela’s investment promotion council Conapri, some private investment opportunities still exist in the telecom market, particularly in outsourcing, web-based business, wireless networks, and VoIP.

Venezuela’s fixed-line infrastructure continues to expand, though it has slowed down considerably due to the recession. In rural areas, substantial improvements since 2006 have made service availability relatively high for Latin America. CANTV controls about 87% of Venezuela’s fixed lines in service. Competing companies in local and long-distance telephony are seeing their operations and market share steadily shrink.

Below average of broadband

Fixed broadband penetration in Venezuela is below average for Latin America, lagging behind most of the region’s major markets. State-owned incumbent CANTV has a monopoly in the provision of ADSL, with which it dominates the fixed broadband sector. The only competition comes from cable modems, wireless broadband, and satellite.

There exists no wholesale market for broadband in Venezuela. There are no ISPs in the country even acting as resellers of CANTV’s ADSL service. If the government were to introduce local loop unbundling, and allow private operators to lease bandwidth from CANTV for broadband services, competition would bring down prices and improve quality (and speed), and we could expect to see a boom in the country’s broadband and ICT sector. CANTV would be able to focus on infrastructure, recovering its investment costs from lease income, rather than trying to operate as a cumbersome, vertically integrated company.

Pay TV penetration is relatively high for Latin America. The market leader is satellite TV operator DirecTV, closely followed by cable TV provider Inter. The two largest cable TV companies, Inter and NetUno, provide triple-play services combining telephony, cable modem broadband, and television. Inter’s network is bi-directional and 100% digitised.

Venezuela’s mobile penetration is about 104% and slightly above the Latin American average. The mobile industry has reached a high level of maturity but, after years of double-digit growth, it was badly hit by the recession, and the number of mobile subscribers shrank for the first time.

Mobile broadband has become an attractive alternative for internet users, as well as an important source of revenue for mobile companies faced with a near-saturated market. In early 2011, over one third of all broadband subscriptions in Venezuela were mobile.

Highlights:

• large proportion of Venezuela’s fixed-line infrastructure is based on fixed-wireless technology. Mobile operators Movistar and Digitel offer local and long-distance services over fixed-wireless, while CANTV has been using fixed-wireless to expand the reach of its telephone network.
• A submarine fibre-optic cable dubbed ALBA-1 between Venezuela and Cuba is due to become operational before the end of 2011.
• Broadband in Venezuela is slower and more expensive than in other Latin American countries. In fact, Venezuela’s mean download speed is the 11^th slowest in the world, and the second slowest in Latin America after Bolivia.

The above was provided exclusively to Nearshore Americas by Paul Budde, an international provider of telecommunications industry reports and consulting. The firm’s Latin America insights are found here.