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ARTICLE
By Adlane Fellah, CEO and founder
I just traveled to Argentina, spending family time in the cities of Cordoba and Buenos Aires, the capital. Argentina is a beautiful and large country with a very European heritage in the heart of Latin America. I took sometimes to visit remote towns such as Alta Gracia, where prominent people such as revolutionary Che Guevara and Spanish composer Manuel de Falla spent part of their lives. I was quite surprised to see the high availability of ADSL services in the center of these rural towns. Only in areas outside the city were citizens still limited to dial-up service. In Cordoba and Buenos Aires, broadband is available pretty much everywhere through both cable and ADSL. And I mean real broadband—not 64 kbps but from 512 kbps up to 5 Mbps. Argentina is also the home of Ertach, one of the most active WiMAX service providers in Latin America (profiled in WiMAXCounts service (www.wimaxcounts.com)). Ertach has been acquired by Telmex Argentina and the process should conclude very soon. So, between 2 site tours, I decided to meet their operation managers and discuss about the opportunities and challenges of WiMAX in Argentina.
About Telmex In 1990, President Carlos Salinas de Gortari decided to sell many state-owned companies, with a view towards improving infrastructure and services. Telmex was sold to a group of investors formed principally by Carlos Slim, France Télécom, and Southwestern Bell Corporation. SBC's tender was the largest. After privatization, Telmex began investing in new, modern infrastructure, creating a nationwide fiber optic network, and offering service in most of the country. In 1991, the Mexican government sold its remaining stock in Telmex. Although Telmex is now a private company, it remains a quasi-monopoly. Telmex International Telmex International, owned by one of the richest men in the world, Carlos Slim, is a conglomerate of international affiliates of Telefonos de Mexico, S.A. Telmex recently split its activities into two separate operations, one covering Mexico and the other Latin America. The aims for this reorganization are to increase efficiency by sizing each group appropriately with its respective markets and to improve their competitiveness, said Telmex. Telmex International has operations in Argentina, Brazil, Chile, Colombia, Ecuador, Peru, and Uruguay. In Brazil, Telmex acquired former incumbent Embratel to become the de facto incumbent. Telmex Argentina Telmex Argentina (TA) is still a relatively small player, with US$120 million revenue in 2006. The company serves large businesses. As a new operator in Argentina, TA has favored the use of wireless over wireline, which is mainly controlled by incumbent Telecom Argentina. TA has been using high frequency bands for a long time to deliver last-mile access and backhaul to large corporations using Netro equipment in the 10, 28, and 38 GHz bands. (Netro was later acquired by SR Telecom.) Backhaul customers include mobile operator CTI, part of American Movil, the mobile arm of Carlos Slim. Telmex acquired 2x12 MHz in the 3.3 GHz band to provide fixed wireless access services. The company has deployed almost 20,000 CPEs using Symmetry by SR Telecom. TA indicated that not many vendors offer equipment in the 3.3 GHz band, a non-WiMAX profile band. The acquisition of Ertach can be explained by the need to acquire spectrum in the 3.5 GHz band. With Ertach came also a new relationship with Alvarion as the equipment vendor. Now TA is in the final stages of selecting a respondent to its RFP to deploy 802.16e equipment for Argentina and Ecuador. TA indicated that they are focusing on Tier-1 vendors and that they do not intend to provide mobile services in the short term in the 3.5 GHz band. Regulation for that band also prohibits mobile services. Telmex’s ambitions for WiMAX Telmex has certainly the clout and potential to become a large WiMAX service provider courted by the most important equipment vendors. With operations in most of Latin America and a dominant position in its home base, Telmex has the financial resources to be a dominant WiMAX player in the region. In Chile, Telmex has announced the deployment in November 2007 of 801.16e equipment from Alvarion under a deal with Alcatel-Lucent. Telmex’s selection of vendor in a given country has thus far not automatically applied to all other countries, but its purchasing offices in Mexico now negotiate deals with equipment vendors for volumes affecting the whole region. Nonetheless, it is likely that at least 2–3 WiMAX vendors will be selected for the long term. Telmex is still evaluating WiMAX for its mobile play, and different scenarios will emerge. In Brazil and Mexico, where Telmex is a dominant wireline player, WiMAX will mainly be used for providing access in remote and underserved areas. In countries like Argentina, where Telmex is a relatively new player, WiMAX will initially be used to aggressively reach out to small and medium enterprises, possibly to be followed by SOHOs and residential users as experience dictates. In a country where broadband wireline is increasingly available to the masses, that task will not be easy. Portability of the service and superior customer service may be ways to differentiate in the short term to gain market share. For more information you can contact the author. afellah@maravedis-bwa.com
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