TBY talks to Fabian Jaramillo, Superintendent of SUPERTEL (Superintendence of Telecommunications), on the need to concentrate on broadband connectivity, sectoral competition, and the roll out of HDTV.

What will be some of the main trends in the telecoms sector over 2012?

In Ecuador, we are facing many challenges. Nowadays, the central issue is broadband, as it 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. Currently, the broadband service on offer is not very wide and its quality varies because of spectrum limitations.

What are the main challenges to providing better broadband services?

The challenge in developing broadband connectivity is breaking the vicious circle. Demand doesn't grow because it is still costly and prices don't go down. In order break this up, 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 makes prices go 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.

“The challenge in developing broadband connectivity is breaking the vicious circle."

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 almost a 70% market share and its brand is Claro. On the other hand, Otecel, which belongs to Telefonica, 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 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. This company provides corporate services to several important companies in Ecuador. To summarize it, the limitation in the past was international access to the internet; however, because of investments made by Telefonica International Wholesale Services and CNT, broadband has expanded and we have more access in urban zones, although this capacity will be underestimated again if Ecuadoreans require more services with wider bandwidth.

Ecuador has adopted the Japanese-Brazilian standard model for digital TV. What are the prospects for reducing the digital gap?

Television is present in 84% of Ecuadorean homes. By definition, terrestrial television is a free service and the government does not have any intention to make digital television subscription based or paid. The intention is to reach most of the population and to incorporate that remaining percentage that does not have access to TV. It implies making the most of the versatility that the system has to generate applications that allow people to reduce the digital divide. The Superintendence is working on producing digital content and we are certain that there is great potential in Ecuador in terms of content production by the private and public sector. I believe there are a lot of people with great creativity and skills who can develop software and applications online, and reduce the technology gap. However, we would like to encourage this human resource one step further. To achieve this, we will need to change programs at universities so college students can graduate prepared. There must be also new criteria to make the viewer loyal to the program he likes. Also, we have to educate the owners of broadcasting stations in order to explain the realities of the modern age, as opposed to the situation of radio 40 to 50 years ago in which still remain many of them. Nowadays, it is also necessary for the government to invest in the provision of services and networks in order to develop quality not only with technology but also with excellent content.

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.

© The Business Year - February 2012