Following the partial privatization of CANTV in 1991, Movilnet was created in March of 1992 as Subsidiary of CANTV. Today, you claim to have forty five percent of the cell phone market. For our readers can you briefly come back on the steps that marked the development of Movilnet?
First of all I would like to correct the numbers, we do not have forty five percent of the cellular market customers wise. One must keep in mind that we have several segments. We have the traditional post-paid segment, which made up the entire cellular business some years ago. But since three to four years ago a new category has appeared, which is the pre-paid market. The pre-paid market is a new business. We have been learning and getting to know this new market. We measure it differently, and we do this because in the pre-paid market the sheer mechanism is not clearly defined for all the companies. We assume that some companies account for the customers in a particular way, while others do it in different ways.
The numbers of customers are measured through a statement given by the company. We try to measure the pre-paid market by the minutes of use the phone consumes which is a more reliable source. We have clear figures concerning the pre-paid market because it has a more standard fashion of measurement. We know that we have forty eight percent of market share in the post-paid area. In the pre-paid market our share is much smaller. The numbers of customers are provided through statistics given by other companies. This usually depends on how each company accounts their numbers. If we add both markets, our market share will be of about thirty five percent. When we talk about total minutes of use our market share is about forty to forty one percent. I think those three figures are important to verify our situation in the competitive market here in Venezuela. One must keep in mind that all customers vary, and that a client that speaks a total of ten minutes a month is much different than one that speaks over a hundred minutes a month.
I joined the company in January of 1996. Movilnet was created as a separate unit of CANTV in March 1992. It started to offer its services and growth from that moment on. Movilnet existed before as a department of what was the old public Telephone Company. This was a small department that installed a very small and limited cellular network for Caracas with a capacity of roughly seven thousand companies. CANTV did not develop or market it. In 1992 the Movilnet took the assets of this department of CANTV and began working as an independent unit. The growth has gone very well, the market has been evolving and maturing over the years. There was a strong growth during the first year, while we captured a portion of the market place for the post-paid market, which was the only existing market at that time.
We grew as we expanded our coverage from Caracas to the rest of the country. Nowadays we cover most of the country, all the important cities and towns of Venezuela. We do not cover the entire territory, this is a very big country and most of the population is concentrated along the coast. We have followed the main population agglomeration, main highways, areas of tourism, oil sites, which we consider strategic. Right now we have one point six million customers of whom two hundred and seventy thousand are probably post paid.
The WAP Protocol is more and more seen as one of the most important segments in the telecommunications. Telcel has invested 5 million dollars in this system. How do you foresee the development of WAP within the next few years on the Venezuelan market, and to which extent do you intend to invest in that protocol?
Within the market place we have distinguished ourselves from our competitors. We have been the most innovative and advanced in a technological point of view. Not due to the sake of technology itself but the new innovative services that we have brought to the market place. WAP is technical term that only people involved in technology can understand. I have tried to put WAP within a wider context in which I would put all the data, transmission and reception capabilities of mobile services to work. We were the first in the market to offer voice message that served as first step into the data. We have been advancing it, adding newer and more valuable capabilities and services trying to make it easier for the customer. We added the possibility for our customers to receive news. We have added relevant information’s such as news, horoscopes, jokes to e-mail notification.
This happened some years ago. With the mobile data evolution, we invested in a package data network using the city bidding technology. This data package network allows us to offer our customers the possibility to receive and send data, even to surf the web.
For instance I have a palm file, with a city bidding modem. It allows me to surf the entire web; I have full access to Internet from my pocket. I can go into my bank account and check my balance, make a transfer and payment. I can go into "Amazon.com" and buy a book from my palm. With the development of new devises, this kind of phones will appear more often. The WAP service does not explain the totality of the service. The good part about this phone is that it uses package switch data, as a transfer mechanism. We are working on launching a service using phones that have the characteristics that allow us not to charge the customer per usage.
I want you to get the overall picture, because I think that sometimes the operations and manufactures confuse the audience and customers by the use of technical terms. WAP is a protocol, a tool that will allow a mechanism to receive and send information from your mobile phone; there is another mechanism in which there is full Internet access. We also have cameras all around the city and from here we can know how the traffic is in certain areas of the country. This is not WAP but Mobile data capability. With this phone we are testing for launching more services. We want our customers to be able to use these services every day. We need to identify and discover valuable services that we can provide using this system. The advantage that we have over our competitors is that the network in which they invested five millions dollars is switch. It means that while you are surfing you will be charged by the minute. In our case it is package data so we can offer a flat fee.
All those services that you are now able to provide the customers with, how many more clients do you expect to bring to the Internet since in Venezuela there is only four million people with access to the Internet?
In the Internet there are less than four million users. I would say in the order of six hundred to eight hundred thousand people have access to the Internet in Venezuela. We will try to bring our old customer back. I think with all these mechanism we now have ways to introduce them to the Internet world. We want to stay up to date with our technology; we want our network to have the capabilities to be able to deliver this kind of services. We think that the secret for success is to find the services that the customer most values. I do not know how many people will use our service constantly unless it is something concerning directly to their work. It is a complex service. We have to do all of this at the right price. Our system platform should be able to support all these services that we are providing, so we should be able to build by packages or by services, we have been preparing for all of this. We understand that our services are transitioning from a voice box service into something of a much more complex nature. This is thanks to the technology evolution, which allows us to incorporate more services into a devise of this magnitude.
We want to be the most successful operator and we believe that in order to be able to do so we have to really understand the capabilities of the technology and be able to package this valuable services together, this way the customers will be pleased and value more everyday our service.
You were talking of widening and enlarging your system platform. Conatel is planning to set a date for the auction of Wireless Local Loop (WLL) and Local Multipoint System (LMDS) technologies. Do you intend to take part in this auction?
We are part of CANTV and we will be supporting CANTV in other services. We are the mobile company of CANTV, but certainly as a cellular company we have skills for other wireless technologies. CANTV will be certainly bidding for a Wireless Local Loop license. In some services we will act as front and in others we will just provide support or engineering. We do not want to lose focus from the mobility part. We believe that the personal service is quite different from the fix service, you need services, prices, and skills to provide a good package. We will work together with them but our focus will remain in the mobility.
Venezuela accounts for eleven percent of the cellular service of the regional market. Your partners are mainly in the local market but in a medium term, do you expect to expand your activity to other countries in the region?
We are part of the Bryson family. Bryson manages CANTV and since Movilnet is part of CANTV we are also a part of Bryson. If they decide to be in other markets we will be aligning with their strategies for the international market. I know they are working hard in adding more resources into the national market as well as Latin America, and some other countries they consider important. We will be working together.
There are rumors about Telefonica de España and EDC selling their share in CANTV in order to enter the telecommunication sector. What is the reality of the matter?
I do not hold much more information than you do on that matter. What I know and I could be wrong, Bryson has a long-term interest in Venezuela and other first stirs properties in South America. But those are just rumors. Telefonica de España has a very clear and aggressive strategy in Latin America. Venezuela is a very important market within Latin America. I would not be surprised if Telefonica cut a deal with Bryson, but this is nothing I can verify.
Both are first stir companies. Each ones has its pros and cons for being part of the family. Telefonica might have a better understanding of the Latin people, and there is no language barrier. But I know that Bryson has a global appetite, and telecommunication is a global business. I feel comfortable with the idea of these companies working together. I think it is interesting to be part of this business, which is constantly going through change. It is very dynamic and challenging.
The new telecommunication law will come into force by the end of November of 2000, meaning the end of CANTV’s monopoly. Being owned by CANTV, will this law change anything regarding Movilnet’s development strategy?
It will boost the market a lot, I believe it will bring things that have been anticipated for and others that were not. Movilnet is well prepared to compete; we have been doing so since our first day in the market. Our challenge will be supporting CANTV. It has been a monopoly and now it will undergo a transition to a competitive market place, I think we have a very important role to play there. We have very talented, committed people in the company. I fell comfortable with the competition coming in, of course it will put pressure but I expect it will allow the creation of new services, and help the market grow. It will make us more efficient.
Now there are about three competitors, but with new coming in the market will be tougher. We will need to move faster and become more creative. We are preparing for this.
I see some similarities between Mexico and Venezuela, this being because both countries have been very dependent of the oil industry. Mexico is going through a process of democracy and Venezuela is also experiencing a new political change. Do you see those similarities and how do you see the process of Venezuela evolving within the next years?
There are of course similarities between Mexico and Venezuela, but there are many differences as well. I think Mexico has evolved very well, there is the treaty with the United States and Canada. Mexico is a much bigger country than Venezuela so their economy is much bigger a well. Though Mexico is going through a transition of democracy in one particular political party. Here we are also undergoing new times. We are in the eve of new changes. We are all hoping this will bring us a new experience where our citizens will live better. We have many social, political, and economical problems. In the political area we are going through a change. What I hope and pray for is that our new political leaders will be able to vision a new situation for the future. They must show the courage and commitment to work in bringing in everybody who wants to contribute to the growth of the country. We need more security, education, health care, and infrastructure.
Are you involved together with the government in the improvement of the community?
We are doing our part; we have been investing heavily in the country in the area of our business. Our shareholders and board have had the commitment and the trust in the country’s future to invest close to one billion dollars in the cellular company and close to five billion in the Wire Company. In less than ten years, the telecommunication landscape of Venezuela is totally different than the one we used to have. We would like to see that happening in other areas as well. We are glad to have now the legal framework that will simplify things for foreign investors to put their money in Venezuela. I would like to see the same kind of thing happening for other areas that are in desperate need of it. We need to improve the quality of life for the entire country. This transition we are going through has made clear all our social problems. We need a development path. Maybe the telecommunication has contributed some way or other. These devices allow you to stay in touch with your family, police, etc constantly. It is a challenge we have ahead.
You have graduated as an electrical engineer. How did you find yourself as president of Movilnet, a position that you have been holding for the last four years? Can you tell us a bit about your professional background?
I have started up about six companies. One was acquired by CANTV. There are four that exist and operate today. One is a metalmechanic factory, three are specialized in telecommunications, or systems engineering related, working with computer network or private telephone network. I was very happy being independent, but I was referred to Gustavo Roosen and now I am here. I like the work that is being done here. I am looking forward to the challenges ahead.
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VENEZUELA
