|Issue:||Latin America II 1997|
|Topic:||Alestra: The New Competitor on the Block|
|Author:||Jorge Daniel Escribano Sanjuan|
The challenge of creating a competitive telecommunications company in the era of liberalisation in Mexico reveals Alestra as one of the success stories in the region. Its launch represents an unprecedented effort in the installation of an integrated network to offer long distance services which was accomplished in record time. Its efforts and successes in the cities opened for competition, are positive proof that both Alestra and the benefits of liberalisation have made their mark.
As we approach the 20th century, Mexico has opted to become an international player in the world of commerce. It faces the challenge of modernising communications in a territory of 2 million square kilometres with 90 million inhabitants, a teledensity of less than 10% and a long distance market valued at US$4 billion. To this end, the authorities have created a regulatory framework that promotes the growth and development of this fledging industry through an environment of fair and healthy competition that provides benefits for the consumer. Launch of Alestra In this context, Alfa, one of the most important business groups in Mexico; VISA-Bancomer, the largest bank in the country; and AT&T joined forces in January 1996 to compete in the Mexican long distance market through Alestra. The challenge of creating a competitive telecommunications company was enormous, especially taking into account the fact that Alestra commenced trading on January 8 1996 without assets and with a professional team consisting of only one person. Today, it competes with Telmex, the largest privately owned company iLatin America and the most influential in Mexico, and with Avantel, the company backed by MCI. The Alestra launch represents an unprecedented effort: the installation of an integrated network to offer business and residential long distance services on a national and international level which has never before been accomplished in such a brief period of time. Alestra accepted the challenge and established precise objectives. First, it rounded up a small group of Spanish-speaking employees among its business partners, all of them with wide and varied experiences including international AT&T operations in Mexico, Puerto Rico, Chile, Spain, the Virgin Islands, and the United States. Investment for the Future In 1996, Alestra constructed a True Wave fibre optic network spanning 4,300 kilometres, three metropolitan hubs in Mexico, Monterrrey and Guadalajara to provide its business clients with direct access, 24 points of network connection nationwide and five 5ESSr central exchanges, In the long-term, Alestra plans to extend its network to cover 8,600 kilometres with 36 points of connection. All this represents an investment of over US$600 million to date and of US$1 billion by the end of the year 2000; an investment that shows the commitment of Alestra’s owners to Mexico. In 1996, Alestra created over 1,000 permanent jobs in Monterrey, Mexico and Guadalajara; aside from employing 2,000 sales promoters to work door-to-door nationwide. In order to fulfil its commitment to provide the public with quality services, the employees receive intensive training in the A1estra business culture. This offers direct solutions, promotes teamwork, forms common values, and highlights efficiency with a focus on the client. Today, its personnel has grown to over 5,000. During the first year of competition, Alestra has shown important results, having successfully: passed total service platform testing; concluded the first stage of network construction; and developed and tested customer service and the AT&T billing system. Alestra also inaugurated five 5ESSr digital switches, passed network connection and signalling tests with the Ericsson and Lucent Technologies switches operated by Telmex; incorporated over 50% of the GTE- Telefonica Internacional-Visa Bancomer team in its operations and all this without exceeding its initial budget! The Government Relations Team has played a key role in formulating the regulatory framework that provides consumers with the power to freely choose their long distance supplier. Thanks to close working relations with the Secretariat of Communications, Alestra has promoted the concept of equal success. This was facilitated by the didactic role assumed by Alestra, using Puerto Rico as an example. On January 1 1997, Mexico initiated the pre-subscription process by which the owners of over 6.5 million telephone lines, the source of nearly US$4 billion dollars in long distance income, have the opportunity to select their long distance carrier by casting their vote on a ballot. This process will be completed in June. Running Successful Campaigns In February 1996, Alestra had not installed a single kilometre of its network and had only 50 employees. Nonetheless, it decided to establish a solid presence on the market through an aggressive communications campaign, with the objective of introducing the AT&T brand name as a vehicle to sell its services. That is why Alestra established an integrated communications programme; installed the first Customer Service Centre in the sector which opens 24 hours a day, 7 days a week; hit the streets with hundreds of promoters who personally visited small and medium sized businesses; developed a sports promotion campaign through which it acts as an exclusive sponsor for the telecommunications sector of the Mexican Soccer Team, and hired and trained a direct sales force in three marketing regions. In order to uphold a consistent message through each and every channel of direct contact with the client, Alestra designed a communications plan based on building blocks. This included a corporate identity campaign, a sports promotion campaign, and an introduction to services and products campaign. A programme to support the Olympic team was developed and divided into three stages: a communications campaign to support the sponsorship of the Mexican Olympic Committee; the installation of a press centre for 150 Mexican reporters in the AT&T building in Atlanta used during the three weeks of the Olympic Games, and finally the promotion of an “Olympic FCIX” service that allowed Mexico to send messages to its athletes. This promotion turned out to be a success, given that 50,000 messages were delivered in Atlanta. Alestra hired Diana Bracho, a widely recognised and respected actress, as its spokesperson in order to dispel the erroneous public perceptions regarding the selection of long distance companies. Based on information obtained in group sessions, an educational campaign was created in order to reduce resistance to change in a market that had received service from a single supplier and a society that had not yet experienced the power of choice. Thus, for example, with the “Wrecking Ball” commercial, Alestra sought to eliminate the false perception that a change in carrier meant the installation of a new telephone line. For the business market, the “Signature” advertisement represents Alestra’s intention to tailor its services to big businesses. “AT&T With You” presents a special pre-subscription offer for both the residential market and small businesses. The “I hear you” and “Bill” campaigns show the features of AT&T services that have gained worldwide prestige. The communications and sales campaigns gained momentum as each of the five zones prepared for pre-subscription. Some of the most important achievements to date are: an increase in brand name recognition; hundreds of thousands of visits to small businesses by the professional team of promoters as well as calls received at the Customer Service Centre; and over 50% of the ballots returned were in favour of a new carrier in those cities that have participated so far in the pre-subscription process. Long Distance Services In September 1996, regional divisions began to promote two long distance businesses, which received positive responses with prospects. This achievement represents a potential annual income of over US$40 million dollars. In an effort to provide the most complete service available to multinational clients, Alestra became the first Latin American partner of the World Partners Association. In the meantime, Alestra has joined forces with its owners in other activities; such as: the development of joint initiatives along the US-Mexico border through the AT&T International Consumer Service Organisation; the realisation of co-operative marketing efforts that involve Alfa and Bancomer employees, and the access to the Visa-Bancomer distribution network, regional offices and convenience stores in order to promote services, collect pre-subscription ballots, and offer clients the opportunity to pay their bills in convenient locations. All of these efforts culminated in the launch of long distance services on January 1 1997. On this day, Jorges Escalona, the President of Alestra, along with Alestra employees and their families celebrated New Year’s day. At the same time they symbolically inaugurated operations in an eyent that activated long distance services in Monterrey. The service began with a call from the State Governor of Queretaro and Mr Escalona. In five months, over 50 million calls have been successfully completed for a total of over 200 million minutes. On January 24, President Ernesto Zedillo Ponce de Leon inaugurated the Megacentre where the 5ESSr digital switch, the Customer Service Centre, the Computer Centre and the Network Operations Centre are located. Conclusion The favourable results of the pre-subscription process in the cities opened for competition are positive proof that Alestra’s strategy has made its mark. Today, Alestra registers 850,000 lines subscribed to AT&T services. Alestra has the determination to become the leader of the Mexican telecoms market through the continuous development of its main strengths: the AT&T brand name, the commitment of its shareholders, and the ability and quality of its employees.