Latin America's Business Information Leader
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Telecommunications Perspectives - a weekly summary
January 9 - January 15 2010
Click to read the online version:
http://www.bnamericas.com/perspectives_home.jsp?idioma=I§or=2&id_email=170274453
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In this issue:
* Weekly Wrap
* Q & A:Cloud-based communications solutions
Tim Marsden
Chief technologist, CMS division
HP
Regional
* Coming Up
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** WEEKLY WRAP **
The horrific earthquake in Haiti this week that caused devastation and loss of many lives reminds one of how important communications networks are at times like this. Unfortunately no matter how robust networks are, few can go unscathed when the level of destruction is such as it was on Tuesday.
The largest operator Digicel said its network suffered some damage but was operational. The bigger problem was congestion of the network as everyone tried to phone at once.
It's been nice to see the international solidarity shown to what is the poorest nation in the western hemisphere, and with telcos doing their corporate social responsibility bit by offering donations of money and equipment.
Digicel announced a donation of US$5mn for the relief effort and the launch of donation lines.
Haiti's neighbor on the island of Hispaniola, the Dominican Republic, appears relatively unaffected by the earthquake, although that country's telecoms regulator Indotel requested its telecom operators to increase the power of the signal coming from towers on the border between the two countries.
Orange Dominicana created a special committee to coordinate efforts which consist of humanitarian and technical aid to restore communications.
In other news this week, Mexican mobile phone giant América Móvil launched a US$21bn offer to take control of its sister companies Telmex and Telmex Internacional (Telint), both controlled by billionaire Carlos Slim.
América Móvil said it would offer to exchange 2.0474 of its shares for one share in Carso Global Telecom, which controls 59.4% of Telmex and 60.7% of Telint.
Following the stake swaps, América Móvil plans to delist Telint and Carso from all stock exchanges where they currently trade.
The move is designed to allow América Móvil to offer converged telecoms services of voice data and video across the 18 markets in which is operates.
Analysts commented that in combining the wireless and triple-play businesses, América Móvil would have a similar structure to that of its biggest rival in Latin America, Spain's Telefónica, which recently unified its mobile and fixed operations under one brand, Movistar.
Mexican brokerage IXE sees a merger of operations creating an even stronger company than it already is.
However, Elías Vicente, analyst with Signals Telecom Consulting, pointed out that to carry out a full merger of operations would require the company to get past regulatory hurdles in certain markets like Colombia and Ecuador.
Also this week in Telecommunications:
Chile
- Mobile virtual network operators (MVNOs) in Latin America are expected to generate revenues of US$570mn in 2014, according to a study by consultancy Signals.
Revenues from this segment are expected to grow at a CAGR of almost 57% during the 2009-14 period.
According to the report, the countries with the highest development of MVNOs are Chile, Ecuador and Mexico.
Argentina
- Telco, the consortium which controls Telecom Italia (TI) and led by Spain's Telefónica, has appealed against the Argentine anti-trust body CNDC's order for TI to sell its 50% stake in Sofora, a holding that controls Telecom Argentina.
The CNDC ordered TI last August to sell on the grounds that Telefónica's indirect stake in TI violates Argentina's antitrust laws, given that Telefónica controls Telecom Argentina's biggest rival Telefónica de Argentina.
The government recently gave TI until February 25 to sell the stake; otherwise it would step in and take action.
Brazil
- ISP and telco GVT is expected to continue growing at an annual rate of 20-30% over the next two or three years, said Jean Bernard Levy, executive president of GVT's new owner, French conglomerate Vivendi.
Levy said that GVT's investment plan for 2010 could be increased to accelerate the company's expansion. The company's board just approved an 850mn-real (US$492mn) investment plan for this year.
Vivendi also announced it will hold a public offer for the 13.22% of shares it does not already own in GVT.
Vivendi acquired control of GVT in November, after outbidding Spain's Telefónica. The French group now owns 85.7% of GVT's shares.
Mexico
- A total of 93 companies acquired bidding rules for an auction for spectrum in Mexico's 1.7GHz-1.9GHz bands, telecoms regulator Cofetel said.
A combination of incumbent operators and potential new entrants bought the rules that went on sale for a mere three days, from January 6-8.
Forty four companies acquired the documents for the 1,850-1,910/1,930-1,990 MHz band tender, and 49 companies bought rules for 1,710-1,770/2,110-2,170 MHz band.
In related news, Vivendi and Mexican media group Televisa have reportedly allied to launch a joint bid for a mobile license in Mexico.
Guyana
- Telecoms incumbent GT&T landed on Sunday (Jan 10) a 1,240km submarine cable system (SG-SCS) being built between Suriname and Guyana.
President Bharrat Jagdeo said GT&T plans to invest in adding a connection to Brazil. Definitive plans for this venture are expected to be finalized during the second or third quarter of this year.
RESULTS & FIGURES
Paraguay's state-owned telecoms operator Copaco expects to invest US$25mn this year to deploy its mobile telephony network.
The operator plans mobile services to be available by the end of 2010. Initial coverage will include the country's main cities as well as all department capitals.
Paraguay's mobile telephony operators posted revenues of US$542mn during the first 11 months of 2009, up 12.5% in nominal terms compared to the same period in 2008
Mobile broadband connections in South America represent 0.2% of total internet connections in the region, according to a study by consultancy Quancast.
Globally, the number of mobile broadband connections grew 148% in 2009 compared to the previous year. Mobile broadband connections worldwide represent 1% of global internet connections compared to 0.4% at end-2008, according to the study.
Revenues from mobile IMS (IP Multimedia Subsystem) in Latin America should see a CAGR of 16% from 2009-14, totaling US$2bn in 2014, according to ABI Research.
Revenues from IMS in the region totaled some US$1bn in 2009. Worldwide, in 2009 approximately US$8.4bn was spent on IMS. That figure will rise to US$17.3bn in 2014.
By Patrick Nixon
Related Companies
* Teléfonos de México, S.A. de C.V. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=11543§or=0
* GVT Holding S.A. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=11979§or=0
* Compañía Paraguaya de Comunicaciones S.A. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=11992§or=0
* Guyana Telephone & Telegraph Company - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=12088§or=0
* Orange Dominicana S.A. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=12137§or=0
* Telefónica S.A. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=12239§or=0
* América Móvil, S.A. de C.V. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=12343§or=0
* Comisión Federal de Telecomunicaciones - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=12347§or=0
* Grupo Televisa, S.A.B. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=12544§or=0
* Telecom Italia S.p.A. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=12580§or=0
* Telefónica Argentina S.A. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=12584§or=0
* Telecom Argentina S.A. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=12585§or=0
* Digicel Group - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=15023§or=0
* Signals Telecom Consulting, Inc. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=16644§or=0
* Telmex Internacional, S.A.B. de C.V. - http://www.bnamericas.com/factfile_detail.jsp?idioma=I&documento=569039§or=0
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** Q & A **
* Cloud-based communications solutions
Tim Marsden
Chief technologist, CMS division
HP
Regional
Last month the Communications and Media Solutions (CMS) division of Hewlett Packard's software and services arm launched a standardized platform that allows service providers to offer virtualized communications solutions - such as unified communications and contact center services - to SMEs, under a business model HP calls Communications as a Service (CaaS).
BNamericas had the opportunity to ask the CMS unit's chief technologist Tim Marsden for more details about this offering and also how CMS fits into HP's overall operations.
BNamericas: An executive has said HP itself could host the CaaS offering. Doesn't that mean you'd be competing with the telcos to which you sell the CaaS platform?
Marsden: No, it's all about enabling the telco to generate new revenue streams and drive growth in the SME or enterprise market.
BNamericas: Does it also mean HP will be setting up datacenters around the world, or at least improving those it already operates?
Marsden: At the moment, within HP, we offer SaaS services directly to enterprises, but those are mainly services for them to use themselves and mainly our own software assets. We have a business unit called business technology optimization [BTO] and they've been looking at the portfolio to determine which area can be turned into a SaaS delivery model, and they now have seven or eight that they deliver.
I can't comment on datacenter construction to back cloud services. As far as I'm aware there've been no publicly announced plans.
BNamericas: It's been said that the CMS unit is HP's first attempt to "spin off" an industry-specific unit. Which other sectors could follow?
Marsden: Well, to put this into context, HP has been focusing on different industries for a long time, with industry-verticalized business units focusing on communications, media, entertainment, public sector, healthcare, manufacturing, etc. Those have mainly been vertical overlay businesses, mainly sales and presales people, who reach across the whole HP portfolio and pull in components to build services specifically for each sector. But they haven't been business units in themselves.
What they were saying was that [CMS] is the first full, end-to-end business unit with its own profit and loss, its own development teams, operations teams, sales teams, support teams that HP has invested in. That is basically pulling in all the relevant assets into one place and giving them ownership of them. That means the sales team correctly understands customer requirements, that you have the power to invest in your own R&D without taking components from other areas of HP. It's a complete unit, rather than just a sales branch.
BNamericas: Recent press releases describe HP as number one in SMS platforms globally, but that seems to be a claim that many suppliers have made. How do firms like Colibria and Acision fit into the picture?
Marsden: True, Acision is a big player in SMS. In terms of who ranks higher than who, it does depend on which component you're talking about. And each supplier has different components. Our publicly available stats will indicate which area we lead in.
In terms of SMS enabling platforms, our stats are based on things like the number of SMSs sent, the number of end users, etc.
BNamericas: How well aware are telcos that when they seek HP solutions they should be turning to the CMS unit, since that "brand" is fairly recent? Is your visibility partly dependent on partnerships with other companies like Oracle?
Marsden: In certain areas [that may be so]. The CMS portfolio is extremely wide and I can't think of any competitor with exactly the same portfolio.
There are certain domains - for example the actual core network, or rather the access network domain, meaning the radio networks and the broadband DSLAM networks - that have traditionally been the domain of the network equipment providers. We tend to sit above that layer, with network intelligence, network management and protocol management, so we do work very closely with network equipment providers and sometimes they position themselves within network operators to sell higher up the stack. A lot of the time it's actually HP components that they're selling.
So if you're going in at the access network level then HP doesn't have many assets in that space and we would most likely go to market through a partner, but if you're going in at the higher levels - service delivery, network management - then we're much more well known.
But, because for the first time we've pulled all of our capabilities into one place and we've just articulated the full extent of those capabilities, we've actually been going through an exercise of engaging our key customers, having innovation workshops with them and making them aware of those capabilities, and sometimes it does actually surprise customers that we have such extensive capabilities.
BNamericas: Do you have some service providers already signed up for the CaaS platform?
Marsden: What I can say is we're speaking to them, we've been training our sales force over the last few months so they're fully trained. There's been a lot of interest from customers and we'll be announcing agreements as soon as they occur.
With our innovation process, in order to get things passed by our VC board, customer engagement, customer feedback and customer interest are the key things they look for.
BNamericas: Telefónica has an agreement with HP to push its devices, such as iPAQs, in Spain and Latin America. Do you have similar agreements in the pipeline with other operators?
Marsden: Yes, there are others; it's publicly known that Verizon is bundling in our laptops and the volume is significant. It's actually called the subscription computing market and it's something that our PSG team [Personal Services Group] has been working on for a couple of years, to go to market with telcos. This goes across PSG and our business unit, to find all the capabilities they can to go to market with telcos for SMEs - that's bundling of handsets, notebooks, CaaS services.
BNamericas: We have heard of independent MVNEs that compile comparisons between telcos and sell the benchmark info to regulators. Would you have a role negotiating with these MVNEs?
Marsden: They probably work closely with the telcos for that, and only do limited reporting, like speed tests. A lot of telcos actually bundle in service monitoring tools, particularly with VPN services, so if you buy an MPLS VPN from a telco, typically they'll have those tools to monitor latency, jitter, packet loss etc. That's a service differentiator.
BNamericas: One of your colleagues hinted that CMS's deals are getting larger all the time. To what extent do you attract contracts to provide solutions across the board - all four areas: Service delivery, BSS, OSS, and Digital Media - with your telco customers?
Marsden: What's happening more and more is that people don't come asking for a standard solution, they tend to have a user case that they're trying to achieve, say a new service roll-out or an issue with customer performance, or the time it takes to service a fault. So we put together a solution along those lines.
We're seeing more and more that the solution comprises components across the whole stack. For example, a SaaS application would have components from the NGOSS layer [activation of services], from the RT BSS layer [mediation and relay of information to the billing system] and from Service Delivery/Infrastructure. The domains are there for portfolio management purposes, but there is no restriction as to how those components are assembled.
For that reason, it's hard to project the revenue breakdown between those four streams going forward, since they can all contribute to a single project.
Similarly, our aggressive innovation exercise, redirecting investment [even to customers' R&D programs], will really ensure that there is growth in all domains this year.
BNamericas: You mentioned several channels for achieving that innovation, including scouting for development partners. Does that mean there will be no further need for acquisitions, since you can always create partnerships for new product lines or sector-specific orientation?
Marsden: As you say, we use our CTO team, our proxy solutions teams and our "Garage" tool [partner forum for incubating ideas] to funnel innovation, control it and make sure we do justice to every [opportunity]. Obviously I can't comment whether that rules out any acquisitions in the future, but I wouldn't necessarily tie innovation efforts with M&A decisions.
BNamericas: Latin America is now embarking on the transformation to digital terrestrial TV (DTT). From your experience in Europe would you say this change has much impact on CMS's digital media operation?
Marsden: It does bode well for the digital media side in that there will be more players wanting to distribute more content, and they'll need mechanisms to store and manage that. But we don't have much to do with building digital TV broadcast infrastructure.
What we do specialize in is multichannel: Service providers no longer operate just broadcast, just online or just mobile delivery platforms. For example, almost all broadcasters now have an online strategy or a mobile strategy - so how do they acquire and store the content in one place so that it can be accessed and played out by multiple channels? And how do they monetize each of those channels - for example, for broadcast it is through ad-insertion, but for online there is also the interactive opportunity.
So the move to DTT is not a huge driver for us, it's more the multichannel and digital distribution issue.
About Tim Marsden
As chief technologist, Marsden leads the CMS innovation program, interface into HP Labs and the HP technical community, and is technology lead for the CMS unit's Cloud Strategic planning activity and alignment with the rest of HP.
Marsden has over 18 years in IT and communications, holding senior product management & development positions with leading pan-European multimedia and communications service providers. He began his career with Arthur Andersen, leading IT and business consulting engagements.
About the company
HP's CMS unit covers four main business areas: service delivery infrastructure and applications (SDIA), which includes end-user ID solutions like HLR and migration of services to IMS; next generation OSS (operations support systems); real time BSS (business support solutions), such as revenue intelligence solutions, charging solutions and fraud control; and digital media solutions.
CMS is part of HP's software and solutions division, which accounts for about 3% of HP's total global revenues. HP's other main business areas are PCs, services, printing, and enterprise storage.
By Phil Anderson
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** COMING UP **
January 15, 2010:Book-building will end on this date for mobile telephony operator Oi's 2.25bn-real (US$1.30bn) issue of non-convertible bonds in two separate, five and 10-year tranches. Banco Santander will handle the operation, in conjunction with BTG Pactual.
Brazil
January 15, 2010:Bids will be received and opened on this date for telecoms regulator Subtel's auction for concession licenses in the 900MHz band.
Chile
January 17, 2010:Second round of presidential election.
Chile
January 18, 2010:Martin Luther King, Jr. Day, US markets closed.
Regional
January 18, 2010:Telecoms watchdog Sutel will present a report on this date on the state of the telecommunications sector and conditions for an upcoming tender for mobile spectrum.
Costa Rica
January 19, 2010:Reception of any questions from interested parties regarding the communications and transport ministry's (SCT) auction for the use and development of the 1.9GHz and 1.7GHz bands.
Mexico
January 20, 2010:Forum: Number portability LatAm 2010, to be held in Mexico City.
Regional
http://www.frecuenciaonline.com/carlos/mail_portability/portability_esp.html
January 20-21, 2010:The V edition of the Mobile Mexico and Central America Summit (MMCS) will be held on these dates in Mexico City.
Regional
January 27, 2010:New president Porfirio Lobo to be sworn in.
Honduras
February 02, 2010:Question and answer period with respect to doubts on the rules, qualification documents or the concession model in the communications and transport ministry's (SCT) auction for the use and development of the 1.9GHz and 1.7GHz bands.
Mexico
February 07, 2010:Presidential and congressional elections.
Costa Rica
February 10, 2010:Telco Oi plans to offer up to 3bn reais (US$1.7bn) in non-convertible bonds beginning on this date, after book-building is completed.
Brazil
February 15, 2010:Washington's Birthday/Presidents' Day, US markets closed.
Regional
February 16-17, 2010:Reception of documentation that certifies bidder capacity, as outlined in bidding rules for the communications and transport ministry's (SCT) auction for the use and development of the 1.9GHz and 1.7GHz bands.
Mexico
February 23, 2010:Qualified parties interested in bankrupt Canadian technology vendor Nortel Networks' carrier VoIP and applications solutions (CVAS) business must submit offers for the CVAS business by this date.
Regional
February 25, 2010:Government-imposed deadline for Telecom Italia to sell its stake in Sofora, a holding that controls Telecom Argentina. Otherwise, government says it will step in and take action against the telco, with threats ranging from fines to the cancellation of the concession contract.
Argentina
February 25, 2010:Auction scheduled for this date for bankrupt Canadian technology vendor Nortel Networks' carrier VoIP and applications solutions (CVAS) business.
Regional
April 02, 2010:Good Friday, most markets closed.
Regional
April 05, 2010:State-owned telco ETB plans to select a strategic partner on or around this date, which will bring a welcome injection of fresh capital.
Colombia
April 10, 2010:Telecoms watchdog Cofetel's deadline for operators to register all customers in a mobile user database that is designed to help combat crime.
Mexico
April 15, 2010:Confirmation of qualification of interested parties in the the communications and transport ministry's (SCT) auction for the use and development of the 1.9GHz and 1.7GHz bands.
Mexico
May 06-07, 2010:Bidders to present "project for the meeting of non-economic criteria" in the communications and transport ministry's (SCT) auction for the use and development of the 1.9GHz and 1.7GHz bands.
Mexico
May 25, 2010:Bidders to present economic proposals in the communications and transport ministry's (SCT) auction for the use and development of the 1.9GHz and 1.7GHz bands.
Mexico
May 31, 2010:Memorial Day, US markets closed.
Regional
June 24, 2010:The communications and transport ministry (SCT) expects to award the concessions by this date for the use and development of the 1.9GHz and 1.7GHz bands.
Mexico
July 05, 2010:US holiday marking Independence Day.
Regional
September06, 2010:Labor Day, US markets closed.
Regional
September30, 2010:Internet service provider Universo Online (UOL) plans to buy back 10% of the outstanding preferred shares circulating on the São Paulo stock exchange, Bovespa. The buyback - due to run until this date - would be for some 3.12mn preferred shares
Brazil
October 03, 2010:Presidential elections.
Brazil
November 01, 2010:All Saints Day, most Latin American markets closed.
Regional
November 25, 2010:Thanksgiving Day, US markets closed.
Regional
December 24, 2010:Christmas holiday (observed), US markets closed.
Regional
September02, 2019:Analog and digital TV will coexist until this date, after which analog will be brought offline and the country's terrestrial digital standard SATVD-T will be fully implemented.
Argentina
Click here to view the most important conferences and events in your sector of interest. http://www.bnamericas.com/conferences_home.jsp?idioma=I§or=2
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