TBY talks to Fabián Jaramillo, Superintendent of Telecommunications (SUPERTEL), on the need to concentrate on broadband connectivity, sector competition, and Ecuador’s growing number of software companies.
TBY What will be some of the main trends in the telecoms sector over 2012?
FABIÁN JARAMILLO In Ecuador, we are facing many challenges. Nowadays, the central issue is broadband, as this is where we see the biggest opportunity for growth in the next few years. We are also going to see additional services allowing providers to reach clients using the convergence of multiple services that are currently sold separately. That’s the essential issue in telecoms. If we look at the numbers, Ecuador started 2007/08 with 160,000 broadband ports. The expectation is that by the end of 2013, we will have around 900,000, to which we can add wireless connections from mobile operators. We hope mobile broadband penetration rates will increase with more strength and better quality with cutting edge technology as well.
What are the main challenges to providing better broadband services?
The challenge in developing broadband connectivity is breaking the vicious cycle. Demand doesn’t grow because it is still costly and prices don’t go down. In order to break this, it will be necessary for one of the operators to launch a very attractive promotion in the market. In this way, it will be able to capture a good number of clients and generate a virtuous circle that increases demand rapidly and drives prices down. In fact, the arrival of new elements to compete in the market and access to systems based on IP present a challenge for established operators with traditional technology to rethink their business and increase client trust.
How would you evaluate the level of competition in the telecoms sector?
In mobile telecoms, there are three operators. The primary is Conecel, which holds an almost 70% market share and its brand is Claro. On the other hand, Otecel, which belongs to Telefónica and is sold as Movistar, holds just over 28%. Finally, CNT holds just under 2% and is sold as Alegro. Ecuador has a mobile penetration rate of more than 100%. Although the number of mobile devices surpasses the population, the figure is skewed as some people have more than one line. On the other hand, landline telephony is headed by CNT, the state operator, which has more than 2.1 million lines. CNT holds around 92% of the market. ETAPA, municipally owned by the city of Cuenca, holds around 5%, and the rest is distributed among seven operators. Regarding internet, around one-third of the population has access to this service and CNT is the provider of just over 20% of the market, although CNT had only 9% of the market in 2008. We can conclude that there has been significant growth, but it is still not enough. The provision of portability services for data transmission, which is done through the fiber-optic network, is managed by CNT. However, Telconet, another competitor, has experienced growth as well.
What role are you going to play in the implementation of the new “mobile wallet” service?
We are responsible for ensuring that transactions over the networks are safe, to avoid fraud, identity theft, and risk. SUPERTEL’s new project for 2012 is the development of a computer incident response center (CERT). Our intention is to avoid fraud, not only relating to money transfers but also identity theft, hacking, and incidents and vulnerabilities on networks. This is the role we will play in the development of the mobile wallet. We have to highlight that we have not experienced many problems with those issues in Ecuador as yet.
What are the advantages of Ecuador’s software companies?
More than 10 years ago Ecuador was number one in the production of banking software, with leaders such as COBIS. Unfortunately, we did not maintain this status. However, there is great experience in that area. There is no need for great physical spaces or complex machinery to develop such technology. Ecuador’s geographical location and its production costs are also another competitive advantage. Ecuador is a peaceful place overall compared to other countries, which means that firms can work without major problems. People are friendly and cordial, and these are some advantages we could make the most of to start exporting. However, one of the biggest challenges is to prepare good professionals with perfect language skills other than Spanish. Also, companies need funds to develop innovative products and the government has to create a program for IT sector development such as was done in Jalisco, Mexico. Companies do not get finance because their assets are codes and not property, plants, or equipment. Ecuadorean IT companies have been developing with a CAGR of 30% over the last three years, but the government has been one of the biggest clients. Now, these companies have to find new markets in the region because they cannot depend only on the public sector for their growth.
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