Carriers take steps beyond Europe

Because of the relatively undeveloped infrastructure in Latin America, many carriers see the area as a new field of green, but at the same time, it is riddled with weeds yet to pull.

Because infrastructure buildouts are in their infancy, most international and national carriers use both wireline and wireless technologies. Carriers are also circumventing some governmental regulations and hefty costs of deploying fiber.

According to research by Audits and Surveys Worldwide, in 1997 approximately 7.8 million Latin Americans between the ages 12 and 64 had accessed the Internet within three months of the survey. In 1998, the number climbed 48% to 11.5 million. Many carriers say this growth is the catalyst for their buildouts.

"We are aggressively moving into Latin America, Mexico and South America, but we are using a combination of fiber and satellite," said Robert Annunziata, CEO of Global Crossing.

Global Crossing, AT&T and MCI WorldCom are making terrestrial investments in Latin America, as are Qwest Communications and Level 3 Communications.

But with deployments are setbacks. While most countries have said that they are open for competition, the reality is quite different. Most of the PTTs have a tight hold on the little available capacity, driving up costs. Also, countries may require that wireline transmissions go through a native carrier, which then charges for each circuit use.

"In Brazil [and other countries], the government says you must give an advantage to a Brazilian equipment manufacturer," said Juan Fernandez, an industry analyst with Frost & Sullivan.

The same holds true for service providers. By teaming with a Latin American company, carriers may be able to better use regulatory loopholes to compete, Fernandez said.

In light of that, carriers are rushing to stake their claims. BT made an offer to purchase 20% of Impsat, a Latin American carrier. MCI WorldCom has a controlling interest in Embratel and joint ventures with Mexico's Avantel and Spain's Telefonica.

Like Global Crossing, IFX Corp., an Internet service provider covering Latin and South America, is taking a two-pronged approach, said IFX CEO Joel Eidelstein.

"There is definitely a lack of bandwidth available in Latin America," he said. Satellites let carriers circumvent the local carrier's reciprocal agreements. Most countries can receive information via satellite, but some may not be able to send out information, Eidelstein said.

To facilitate bandwidth needs, AT&T, BT, Global Crossing and MCI WorldCom are adding undersea links to Latin America. MCI WorldCom, with its Americas-1 cable, and Global Crossing and are deploying their own fiber. Global Crossing is laying the 20 Gb/s Mid-Atlantic Crossing and Pan-American Crossing.

Still, Eidelstein is optimistic about terrestrial fiber deployments. "I know of what MCI WorldCom and Global Crossing are doing, and therefore I am not going out on long-term contracts with satellite providers because I want to have the flexibility to do fiber when the capacity comes," he said. "We are waiting, but it isn't there yet."

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