Q-1: When I was preparing for the interview, I took a look at the history of the telecommunications sector and I found four dates very interesting. These dates take place in 1881, 1946, 1991 and of course, in the year 2000. Would you agree with me that these are the most important years in the history of telecommunications in Argentina, and would you explain to our readers why?
A-1: I think the first two years are very important but that's more for a Master's degree in history (First telephone line in Buenos Aires; nationalization of Telecommunication sector under Peron). The 90's were more important because that's the moment when only a few countries had open markets, including Chile, England, the United States, Australia and New Zealand. To open our market to privatization in the 90's was a very important step. In my opinion, this period was perhaps too extended. The opening of all telecommunications services without restrictions and distinctions occurred November 9th, 2000. It was an important moment.
Q-2: After the sale of Entel to Telefonica (de Espaņa) and the signing of a joint-venture between France Telecom and Telecom Italia in 1991, Argentina was practically divided between two companies, with restricted competition frame.
A-2: In that ten-year period there was a monopoly for the public services, but competition in the mobile and data services sector. There was also a monopoly in the international services market. Only a little piece of the cake was open to competition. It was important to have an initial period of competition in order to analyze the rules of competition. That's perhaps why it was possible for us to write the rules of competition and open up the market as we did after analyzing this ten year period.
Q-3: ...what are your expectations for this final step - the full sector competition?
A-3: Last year we had two percent of Internet users, 21 percent of fixed line users and around eight percent of mobile users. Our scope in the next three years is to see around 25 percent of Internet users, 30 percent of fixed phone lines and 30 percent of cell phones. It is true that there will be more cell phone users than fixed line in one to one and a half years. But that's only numbers. The most important issues for the client are quality and price. Our prices, for example, for a call from Argentina to the U.S., at the beginning of last year, were at 80 cents to a dollar before taxes, and taxes are quite high here. Inter-city calls from one point to another in Argentina were costing around 45 to 60 cents. At the same time, a call from the U.S. to Argentina costs 15 cents or maybe 17, if you were paying too much. The cost of communications in Argentina is related to our neighbors in South America, where prices are three to four times higher.
Q-4: Since 1991, some u$s20 billion have been invested in the telecom sector. Do you foresee a significant increase of that figure in the near future?
A-4: In the year 2000 we obtained more or less 4.2 billion dollars--that's more than twice the normal investment in Argentina. Our outlook is similar in the future. That's very impressive when you analyze these figures in per capita terms, which is twice the amount of investments obtained by Brazil in the last year. Infrastructure is growing and will reduce the lack of competition.
Q-5: The deregulation of the market will surely influence the price structure, as you said already. Will the public notice this advantage soon, or will it be mainly an advantage for corporate clients?
A-5: When you open up any market, big corporations needs are met in large cities where you can reach around 90 percent of the population. That's what we are experimenting with right now. For corporations, at the moment we can get rates of around 12 cents for internal communications or less. Normal prices were four times higher. But for long distance and international calls I think we will reach a reduction of 50 percent as companies are now installing their services in main cities and will launch advertising campaigns to compete for national clients. Telephone companies now have one year to create a second network out of the original zone and to cover the undeveloped zones. GTE and Bell South are covering the entire country with their own network to provide mobile phone services. That's more or less 40 percent of the total amount of phone calls in Argentina.
Q-6: Several new companies are battling already in Argentina for market shares on the telecommunications sector, as for instance AT&T, Bellsouth, GTE or Telmex. Do you foresee any problems such as ones encountered in Mexico, where Telmex was accused of monopolistic activities by its competitors?
A-6: Not Really. It's important to underline the fact that the authorities must oblige companies to provide interconnections. If there is a dispute over interconnections, a company has ten days to express its opinion. Within another ten days we will reach a preliminary resolution and we will oblige connections. We will then take a few months to analyze the numbers. If one company benefits from an interconnection, it will be obliged to pay for it. Interconnections are not the right of companies, they are the right of the user. The rights of the user are protected from the beginning and we will act immediately. That's perhaps the reason why we don't have any interconnection problems at the moment. We will have some perhaps in the future, but companies cannot use interconnection disputes as a means to work around competition.
| Q-7: Now that you refer to the regulatory framework; In order to provide basic phone services in marginal areas, a government-administered fund was set up, a system referred to as universal service. How does it work exactly?
A-7: After ten years of privatization in Argentina, there are plenty of places where communities of 100 to 300 people are without a line. We are obliging companies to use one percent of their income to provide service to those places. Around 80 to 90 million dollars will be allocated to areas with no lines. We currently have three policies. Competition, competition, competition for the normal zones. Companies can provide service to areas only half-developed in exchange for tax breaks. In places where there is no service, that one percent of profits will go to providing universal services.
Q-8: Deregulation will surely set the stage for the influx of new technology into Argentina, a market where, for instance, Data-transmission services make up only 6% of the sector's revenues, compared with 20% in the EU or US. In your opinion, is the field of network technology going to be the main battleground for competitors?
A-8: My main concern is to obtain more than two competitors in every region of Argentina. With infrastructure and competition in place it will be possible to provide local services connected to a global network. We have four big tycoons--Multicanal, Cablevision, Supercanal and Telecentro. After that, there are about 450 other companies now licensed to provide Internet and they can battle for clients. I hope that in one year everyone will have the possibility to reach global networks for internal and international communications. We will have plenty of small and medium sized companies providing telecom services in Argentina. We hope to attract little companies to establish also headquarters in villages to provide phone services and Internet. That's one of our challenges this year. We had 460, 000 Internet accounts around the first of December 1999 and now we reached 1.2 million at the end of the year 2000. That's a growth rate of over 117 percent in one year.
Q-9: Is that the type of growth you expect for the future?
A-9: I think we are going to reach around 120 to 150 percent growth this year or maybe more. The critical point was the one million account mark. No serious company can work without this kind of number without losses. One million will be the starting point for many companies. And we will reach 1.2 million accounts this year, which means 2.6 millions users.
Q-11: In your opinion, will Argentina be able to compare itself to countries such as Ireland, Israel, and India, within the field of IT in the future?
A-11: I think we have an advantage for that. As a consequence of a bad policy we had only two percent of internet users, however, we created last year over fifty percent of the global Spanish contents on the Web. That's amazing. It's like playing soccer with two players against eleven and winning the game. There is something special happening with the Internet in Argentina and that's why plenty of companies are coming and looking for people to create Web sites. We have a large number of university degree holders in Argentina and a very significant academic tradition. We must underline that our best capital is our people--the knowledge of our people in areas such as physical and medical science. We have always had a leadership role in South America in these areas and we will also be leaders on the Internet. The new economy could be one of the best opportunities Argentina has ever had. We want to reach a position par with Ireland and Israel. We want to create conditions to increase possibilities.
Q-12: How do you evaluate the possible impact of an UMTS licenses auction in the future, as it happened already in several European countries - with different results - in Argentina?
A-12: We do have a third-generation license auction in October of this year. We are defining in the next 3 months the frequency position. I think it is going to be a very competitive field, till now only the big four players in Argentina were interested, but we want competitors from abroad to broaden that group. Our expectation is to obtain around 800 million dollar from this auction. If you are asking me about our goal, well, we want to be the leaders in the field of 3G in Latin America.
Q-13: Where do you position yourself in the future and what is your perspective?
A-13: I only want to reach the last month of this government in December 2003 with a really open market, a communications revolution in Argentina with students having internet in all the public schools. We have 45,000 public schools and we are very committed to giving them Internet. The idea is to create conditions for young people to make their future here and not to feel that they need to leave Argentina for professional and personal goals. I am an university professor and I feel something in my heart every time I hear someone say "I need to leave".
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