December 22, 2014

Wireless World

David Poppe | 6/1/1995
In Latin America, a combination of technological advance and deregulation could usher in a revolution in telecommunications in the next three years. Newly privatized national telephone companies are building networks linked by fiber optic cable with much greater capacity than traditional copper wiring.

But wireless technology may be the wave of the future in Latin American telecommunications. Some multinational companies already are using satellite technology to improve long-distance service to the U.S. Meanwhile, a wireless phone technology known as PCS, or Personal Communications Services, is emerging. Similar to cellular but less expensive, PCS technology may enable Latin American companies to build national wireless telephone networks more efficiently than fiber optic cable networks.

For U.S. companies, Latin America looks promising. According to Ulysses S. Knotts III, a management consultant with KPMG Peat Marwick in Fort Lauderdale, the domestic telecommunications industry in the U.S. is entering a phase of rapid price decreases and technological advances, similar to the computer industry. "It's going to be a classic product maturity case. All the products will become commodities," he says, adding that cellular companies may cut prices when PCS systems are built, making it harder for PCS operators to take customers from the cellular industry in the U.S.

In Latin America, however, PCS won't be just a low-priced alternative for people who want to carry phones in their cars; in some places, it may be the only efficient phone system available.

For business, the implications are profound. In addition to improving its international phone connections through satellite technology, a company in a Latin nation might employ PCS or cellular technology to improve its communications within the nation, thus creating a totally wireless phone system for itself. "A whole series of technologies are going to come into play," Knotts says.

Florida companies are poised to capitalize on the market. One is Miami-based TeleLink International Corp., which offers a wireless financial transaction system for bank ATM machines, credit card authorization machines and even lottery systems, through a subsidiary called WinComm.

Most banks lease land-based telephone lines for their ATM machines; transactions are phoned into a central processing system. The WinComm wireless system claims to be faster, as secure and cheaper than land lines. Evert Anderson, a TeleLink executive vice-president who spent 12 years in Latin America and other foreign markets as an AT&T executive, says a bank typically pays $300 to $400 per month for phone lines for each ATM, while WinComm can offer a wireless alternative for $99 per month.

WinComm has licenses for 204 U.S. markets out of the 240 overseen by the Federal Communications Commission. Now, WinComm is eying Latin America, where land-based phone lines generally are too unreliable to handle the data processing required by an ATM. Anderson says WinComm can lease space on an existing radio tower, encrypt all data traveling over its frequency and have a secure system in place for Latin banks to open ATMs. Though WinComm has focused on the U.S. market so far, it hopes that foreign customers will account for half its revenues within two years.

"In Latin America this is not just a better technology; it is a new technology," Anderson says. "We would provide a variety of financial services where previously there were none available."

Another company poised to grow in Latin America is Americatel Corp., a Miami-based company that is 80% owned by Entel Chile, the largest long-distance carrier in Chile. Americatel last year opened its $12 million Miami facilities. The company sells long-distance service between the U.S. and nine Latin countries using satellite technology, bypassing often-unreliable Latin phone lines. For a U.S. company with multiple locations in, say, Brazil, Americatel can connect the central location to the U.S., via satellite, and to outlying offices via 2.4 meter antennas.

Patricio Northland, co-founder and director of Americatel, says technological advances will speed economic progress in Latin America and that a continuing commitment to deregulation will put more phones, both wired and wireless, into people's hands.

"I think that technology plays a certain role," he says, "but the thing that's [driving] events in the region is deregulation and privatization." In Chile, for example, competition between eight long-distance carriers means it costs just 50 cents a minute for long-distance service to the U.S., compared to as much as $3 per minute in Brazil.

Luis J. Lauredo, director of Miami law firm Greenberg Traurig's international consulting group, says that years ago, prior to privatization, securing a telephone line in Argentina was so difficult that divorcing couples squabbled over who kept the phone. On a trip in April, he noticed advertisements by two phone companies promising a telephone line within three weeks of the order date.

Northland says most Latin countries will have fully deregulated telephone industries by 1998, after which he predicts "a major revolution" in telecommunications and economic progress. "I think definitely there will be dramatic changes, radical changes in a couple of years," he says.

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