learns to diversify after turbulent political times

Introduction - Infrastructure - Tourism - Diversification - Reforms and deregulation -
The states - Technology - The information age - Business - Outlook

The information age kicks in...

Following deregulation of the telecom sector in late 2000, companies are now rushing to provide Venezuelans with total telecom and cable TV coverage. Jesse Chacon, President of the state run telecom watchdog, Conatel, says that a new law aimed at laying out new regulations for operators and customers has revolutionized the domestic telecom industry and made the transition from state run services to deregulation less painful.

"It is the first time that a Latin American telecom law has contained the idea of public service and defines the telecom sector as a sector of communal interest," says Chacon.

Unlike other countries, one company can offer all telecom and cable services without restrictions. "One company can offer subscription TV, high-speed Internet access and domestic telephone services, it's revolutionary," he says.

Satellite communications company Globalstar, owned 51% by France Telecom and 49% by French telecom firm Alcatel through its subsidiary T.E.S.A.M, is now providing a full range of satellite communications to its Venezuelan customers.

The Globalstar system maintains 48 operational satellites, while its Low Earth Orbit (LEO) technology ensures that its satellite phones are the same size as a regular cellular phone. The system maintains full coverage even when a satellite fails because each orbit has multiple satellites as well as in-orbit spares.

The satellites download information to a Gateway, which then sends the signal to global telephone and cellular companies.

Mr. Ruy Sarmiento, General Manager of Globalstar in Venezuela

Globalstar resumed commercial operations in Venezuela in late 2000 after a $30 million investment in its national earth station.

"Basically the Globalstar service offers mobile, fixed and satellite services and it aimed at areas that have no regular coverage or have no fixed line telephone infrastructure," says Ruy Sarmiento, General Manager of Globalstar in Venezuela.

Globalstar has received strong support from President Chavez, while the Venezuelan armed forces and the U.S. Drug Enforcement Administration (DEA) use the Globalstar service because it is impossible to clone or eavesdrop on conversations, according to Sarmiento.

He adds that Globalstar is keen to move into other areas of telecoms including Internet technology and Internet protocol (IP) for voice services.
"In the case of market share we have no competition, as competitors do catch up we will still have 60-70% of the market because we are further down the line than others," Sarmiento adds.

To date, T.E.S.A.M has invested $300 million in South America including Brazil, Argentina and Peru.

"Satelite technology is a tool I would always have when travelling. GSM is good but you must have a roaming agreement. Satellite telephone services will be a key player," he adds.

Also looking to take advantage of Venezuela's telecom revolution is the country's largest cable television company, Intercable. Operating in Venezuela since 1996, the company has approximately 14,000 kilometres of fiber optic cable through 900,000 homes in 60 towns and cities.

Mr. Eduardo Stigol , Intercable's President

Subscribers receive around 70 channels including CNN and the Discovery Channel, while options to purchase extra movie channels are available.

Intercable's President Eduardo Stigol says that the company is looking to compete in the cable-based telecom market.

"We are aiming at providing not just cable TV but telecom solutions in the home including high speed internet access and voice and data transmission services," Stigol says.

Intercable is well-placed to carry out this telecom revolution as its direct competitors in the cable TV sector run their services using satellite technology.
"We believe that we have almost all of the solutions for the house, neither Direct TV nor CANTV can do that," he says.

Also aiming to provide Venezuelans with a full range of telephone and Internet solutions is local cell phone provider Telcel, 80% owned by U.S. telecom giant Bell South.

With cell phone use in Venezuela only reaching 20% of the population compared to 50% in France, the country is still a virgin market. Telcel recently won several licences to offer non-fixed line telephone services using Wireless Local Loop (WLL) technology. WLL enables to provide home-based phones which can give international and long distance services in areas not accessible by traditional copper wires.

" We have the widest coverage in Venezuela; we cover ninety-eight percent of the Venezuelan population. We go to very remote areas, the jungles bordering Brazil; we reach the plains bordering Colombia," says Enrique Garcia, Executive President of Telcel.

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© World INvestment NEws, 2002.
This is the electronic edition of the special country report on Venezuela published in Forbes Global Magazine.
April 2002 Issue.
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