 | Issue: | Latin America IV 2000 |
| Article no.: | 6 | |
| Topic: | Supporting the IP Revolution in Latin America | |
| Author: | James J. Welch | |
| Title: | President & General Manager | |
| Organisation: | Lockheed Martin Global Telecommunications | |
| PDF size: | 20KB |
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Article abstract
Latin American business via the Internet is poised to make a major impact on the global marketplace. Beyond today’s explosive usage, the growth forecasts are equally impressive. Where the world’s expected growth in Internet access and use over the next three years is estimated at about 30 per cent, Latin American analysts anticipate more than 43 per cent jump for usage throughout Latin America. Leading the charge in this explosive regional growth are Brazil, Mexico and Argentina.
Full Article
Over the coming four years, industry analysts see retail revenues for Internet services accounting for more than 75 per cent of the total Internet services revenues and, by the end of 2004, well over US$6 billion. Concurrently, there will be substantial growth in Internet-related communications services that regionally based service providers companies will be expected to provide. These include expanding some of today’s traditional web support services such as tailoring individual business web designs, web hosting and farming. But there also will be a substantial new demand for additional support services including e-commerce solution services, network security, Voice over IP and IP-based Virtual Private Networks. Latin American service providers must be prepared to offer these services to their customers throughout the Americas with viable and secure connectivity to the global web. Using Brazil as an example of this rapidly growing market, the country currently ranks as the world’s 9th largest telecommunications market and seventh in the world in number of Internet users with almost seven million users. Brazil leads the region, accounting for 88 per cent of retail e-commerce sales and over 40 per cent of Latin America’s B2B (Business-to-Business) commerce. Service providers offer a rich mix of value-added Internet services to business customers in the country including extended networks (extranets), migration to integrated data and voice private networks and value-added backbone solutions including frame relay and IP to replace private circuits. Demand for Internet Services – Top 6 Latin America Countries – Total Internet Services Revenues (US$ Milions). Latin American User Trends. Service Providers must meet new demands What is driving this increased demand for service providers to focus on networking solutions? The primary force is the impact globalisation is having on Latin American businesses. Intense competition in domestic markets is fuelling the fire for enterprises into new markets, at home and abroad. This competition also drives the need for businesses to continually raise both the quality and focus of their offerings and the need to get their product or service to market more rapidly than their competitors. It is clear that the growth of the Internet in Latin America has only just begun. Service providers are tapping into pent-up demand for IP-based services as the Latin American markets deregulate and the price of bandwidth declines. As bandwidth becomes ubiquitous, service providers can influence what types of support businesses adopt by developing high-speed solutions that will support new applications. The goal of all of these efforts is to streamline, simplify and secure business networks, allowing them to concentrate on doing global business. Building the Latin American Internet Foundation As they plunge into the Internet, Latin American companies have to walk before they can run. The business community is developing and deploying enterprise applications gateways and calculating the most effective uses of the Internet in meeting business needs. Customer needs are expected to mirror service growth in the North American and European markets: Local-National-International connectivity; Application connectivity (Internet, IP – data, voice, video, mail, cross-legacy application and commercial transactions); management; data warehousing and data mining; ASP. The most important customer concerns are security, reliability, capacity and speed. As businesses match IP solutions with business needs, the Internet will expand and increase in sophistication. For example, in retail markets, the basic IP solution includes IP over frame relay for offices and factories; an Extranet to connect customers and; e-commerce solutions and centralized communication to branch offices. Customers Pressured To Respond To Competitive Challenges. From there this retail network can expand to directly serve customers; gather web-based customer research and; expand regionally and globally. The beauty of IP applications is that it is just as efficient and effective for a Brazilian company to serve a customer in Sao Paulo as it is to serve a customer in New York or Paris. The Market Role in Driving the Future of the Internet in Latin America The bottom line in the future of the Latin America Internet, as it is in almost all aspects of business, is money. When an Internet application proves its worth in supporting and creating customer value, it will thrive. The IP solutions sought by business must be flexible and adapt-able to customer needs. The applications must always be developing and improving. Customers will seek constant improvements in response time and the addition of new services (i.e. improved security, streaming video, and customer relationship management). The Internet is a great equaliser. To a customer, a small company may be seen as providing the same quality of service as a much larger company. The main business goal is to respond as quickly and easily to customers as the Internet allows. The main e-business competition is in a company’s supply chain. Providers that can supply and manage e-business networks will have an advantage. Providers that offer the widest range of services will have an additional advantage. Some Latin American companies will seek a complete managed solution for their Internet and e-business needs. Others will decide it is in their best interests to handle some aspects of the IP network themselves and contract for only selected services. The providers that are ‘light on their feet’ and can provide a tailored offering will be those that dominate the Latin American market. “Big companies want to be able to respond with the flexibility of a smaller dot.com company, and dot.com companies want to assure customers they have as much to offer as their larger rivals.” The driving force, both throughout Latin America and globally, is toward network integration. Companies, big and small, must respond quickly and easily to customers. Big companies want to be able to respond with the flexibility of a smaller dot.com company, and dot.com companies want to assure customers they have as much to offer as their larger, more established rivals. To successfully capitalize on B2B needs, service providers will offer a ‘rich mix’ of secure, managed enterprise applic-ations and services. These include such capabilities as extranet networks and virtual private networks (VPNs) with unlimited capacity and unquestioned security. Service providers will offer these capabilities by forming strategic partnership and alliances with ASPs, ISPs, and transport providers, regardless whether they use fibre optics, wireless or satellite connectivity. By sharing the communications infrastructure, providers bring the commerce power of the Internet, with its global economic reach and real-time speed to all regions and to businesses of all shapes and sizes. Competitive Challenges Globalisation continues to have a major impact on business throughout Latin America. Traditional communications solutions offered by telcom companies no longer meet B2B networking needs. But the challenges globalisation raise also provide opportunities for service providers who are willing to add to their portfolio of IP-oriented services. Intensified competition in domestic markets is driving local businesses into new markets. To meet this challenge, successful service providers will build and expand Pan-Latin networks and infrastructure to connect enterprises as they expand into new markets. Globalisation also leads businesses to form new combinations of goods and services. This can lead service providers to develop fully redundant and meshed interconnectivity between businesses and potential partners. Expanding regionally and globally raises serious new security and intrusion concerns. The opportunities to be seized here are the development and deployment of a full array of security solutions for VPNs (Virtual Private Networks) and extranets. Conclusion Global competition creates the need to ‘get to market first, before your competitors’. Today’s service providers must offer flexible, scalable and tailored services that meet specific customer needs. The bottom line answer for providers to achieve the IP vision for Latin America is to provide a full array of total network management services, tailored to meet large and small customer needs. The projected strong growth in the Latin American market will continue to attract the major Internet networking companies as customers demand the Internet services required to connect with the global marketplace.
