Home Latin America I 2003 Access through Broadband – A competitive Tool for Small and Medium Businesses

Access through Broadband – A competitive Tool for Small and Medium Businesses

by david.nunes
Carla CicoIssue:Latin America I 2003
Article no.:7
Topic:Access through Broadband – A competitive Tool for Small and Medium Businesses
Author:Carla Cico
Organisation:Brasil Telecom
PDF size:128KB

About author

Born in Verona, Italy, Carla Cico has shaped a brilliant career in the international telecommunications industry. For over 17 years, Ms. Cico has been a significant player in major telecom acquisitions and service improvement projects in various countries such as China, India and Czech Republic. She is widely regarded amongst her peers as one of the world’s leading telecommunications executive. Since March 2001, she has been the Chief Executive Officer of Brasil Telecom S.A., the main fixed-line telecommunications operator in the South, Center, West, and part of the Northern region in Brazil. Ms. Cico is the first female chief executive in the Brazilian telecommunications industry. Previously, Ms. Cico worked as Director of International Business Operations for STET International, S.p.A., in Rome. During her career with the Company she was involved in many major international acquisition transactions related to telecom and also acted as Board Member in different wireline and wireless companies. Ms. Cico also worked as Chief representative for two companies prior to STET. She managed the Beijing office during her employment at IRI S.p.A. and Italtel S.p.A. In October 2002, Ms Cico was listed among the 50 Most Powerful Women by Fortune Magazine and, in December, elected Executive of the Year by ANEFAC, a Finance, Management and Accounting Association in Brazil.

Article abstract

The Small and Medium Enterprises that generate more than half the world’s jobs can benefit greatly by using advanced telecommunications. Analysts say that SMEs are responsible for 46% of Brazil’s investment in data transmission infrastructure. Telecommunications companies in Brazil, looking towards data communications for future growth, are developing cost efficient products for SMEs. SMEs demand innovative services that add value to their commercial communications. The creation and deployment of customized services for SMEs is a requirement for telecommunications operators’ profitability.

Full Article

Within the confines of the model for today’s economy, agile communications are essential for the success of each and every company. New telecommunications technology is being developed each day to keep pace with the continuous growth of the market’s needs. Throughout the telecommunications marketplace, a trend toward deregulation and liberalization prompted expectations of increased competition, reduced consumer prices, and innovative new services. The Brazilian telecommunication sector had been subjected to serious limitations of the funds available for investment prior to its privatization. This was largely a result of the sector being subjected to those limitations that are an intrinsic concomitant of most state owned monopolies. Lack of investment revealed itself in the limited availability of data communication services and in the absence of competition. These manifested themselves in the high prices and lack of interest by the carriers in the development of new products and services to meet market needs. This had a negative impact upon SME (Small and Medium Enterprise) costumers who faced, as a consequence, a huge gap in the technology available to them locally in comparison to what telecom companies and other, more developed countries offered. SMEs in Brazil suffered from increasing digital exclusion. After the sector’s privatization and the resulting division of the Brazilian telecommunications market into regions, significant new investment was called for. “The SME market, which generates more than half the world’s jobs, has faced significant changes to adapt itself to the new reality” This investment went to fulfill the Universal Service Obligations and Quality Goals established in the concession contracts with the Government (Plano Geral de Metas para a Universalização do Serviço Telefônico Fixo Comutado), for the digitalization – modernization – of Brazil’s networks and, as well, for a major increase in the system’s capillarity – the extensions and branching needed to reach new users. After having met the enormous pent-up demand for telephony that existed when they acquired their concessions, data communications became a top priority for most telecom companies. The telecom sector has developed a diversified and innovative portfolio of products to meet the data communications needs of various markets, in particular, the Small and Medium Enterprises (SMEs) that represents an important niche in the new competitive scenario. The SME market, which generates more than half the world’s jobs, has faced significant changes to adapt itself to the new reality, the new possibilities, brought about by the increased availability of modern telecommunications technology and services. The improvement of the communication infrastructure was, and is, a major change for them. Entrepreneurs in the telecommunications sector are focusing their efforts upon quality assurance, the building of communications networks that exchange information with greater agility, upon enhancing their productivity, increasing network availability and increasing the competitiveness of their businesses. The main reason why the demand for this market is mounting is the need for many companies to spread their business units around the globe. Many companies also benefit from a growing mobile workforce. For that reason, their executives travel around the world, their salespeople operate in the field and they have employees working at their homes. Due to this, there is an intense ‘build-out’ of a global, mobile and distributed network. There is a great need for a solution that connect the companies’ offices and sites of every type in the field in a multi-services network that supports data, voice and video. Faster communications is already becoming a reality due to these efforts. This transformation of the communications infrastructure is also intended to deliver high levels of network availability to distributed regional offices, mobile employees, remote workers, partners and customers at reduced cost and accordingly enhance their business competitiveness. Reducing cost, however, is only part of the competitive equation. Today’s companies demand innovative services that add value to their commercial communications. The ability to create and deploy customized services that satisfy companies is required to compete profitably. Reconciling the investments made in the telephony infrastructure and the demands of SMEs, we have found in our concession area – which consists of 10 states that represent approximately 25% of the Brazilian GDP, that by developing broadband solutions based on xDSL technology we can obtain an adequate return on investment, while keeping prices in line with the budgets of SMEs. This can only be done by moving away from the traditional solutions, these usually bear higher costs, that keep SMEs from using IP connectivity. Recent studies conducted by IBGE (Instituto Brasileiro de Geografia e Estatística – Brazil’s census bureau), based on the government’s annual survey of social information (RAIS – Relação Anual de Informações Sociais) and other studies carried out by Lehman Brothers we find, as shown in graph 1, that the number of broadband connected small and medium businesses in our concession region can be expected to increase from 6.000 in 2001 to 55.000 by 2005. This means that by the end of the year 2005 the number of companies that use ADSL Internet access will correspond to 59% of the total number of Internet connected businesses. Studies by analysts’ show that the volume of investment by small and medium businesses in infrastructure for data transmission corresponds to 46% of the overall total amount spent in Brazil for data communications infrastructure. Additionally, according to IBGE and SEBRAE (Serviço Brasileiro de Apoio às Micro e Pequenas Empresas – Brazil’s SMB support service), when compared to large companies, the amount of resources allocated to technology by small and medium businesses is greater, as shown in graph 2. A quick look at the general profile of small and medium businesses shows that: ÿ These companies are dynamic and innovative; ÿ There is a need for complete solutions (voice, data and video); ÿ Credibility and relationship are the keywords to these companies; ÿ The decision makers of these companies need assistance to decide which technology to adopt. Telecom companies are quite aware of these characteristics. Since 2001, these companies have been developing new products especially designed to meet the primary needs and principal expectations of the SOHO and SMB markets. The new products now being offered by the telecom companies consist of fast and secure value-added Internet access services and resources. The products were designed to improve communications – at affordable prices – for the customers and partners of these businesses. Furthermore, these companies have been working harder than ever to research, develop and launch new products based on broadband technology. These products seek to employ special hosting solutions for the SMB segment that allow the use of state-of-the-art technology and services within the framework of an on-demand cost model. In this way, the telecom companies are overcoming the SMBs traditional capital barrier, making it possible for them to implement a full IP–based strategy. By using such powerful tools as these, SMBs can implement strategies that greatly increase their competitiveness within both the national and international arenas. Tailor-made projects developed by telecom companies can help SMB companies launch themselves quite rapidly in the e-market. By using such tools and the opportunities opened by e-business solutions, SMBs can increase the awareness of their current and potential customers, providers and partners in relation to the services and products they provide and the commercial opportunities they represent. In this way, SMBs can have economically obtainable access to the same sort of solutions large corporations have – be it a simple web page or a full-fledged turnkey solution. Lastly we can say, (as explained above) that telecom companies are finally developing products and services, as well as focusing their marketing strategies, to better serve the small and medium businesses whose needs were largely ignored before privatization. Since the sector’s privatization, new IP connectivity solutions have been developed to meet the needs of these smaller businesses. Nevertheless, the demand for these solutions is still just beginning. SMBs, generally speaking, have yet to become accustomed to the availability of many of the more advanced services. As a consequence, they still have limited – although growing – plans to use the newly available communications infrastructure to support broadband applications, such as videoconference and VoDSL (voice over DSL) to support their daily operations. Brasil Telecom has been constantly reinforcing its commitment to foster the strength of its SMB clients. We know that these advanced telecom solutions can make a difference – they can be the key to success.

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