Home Latin America I 1998 Telecommunications and Visions of Economic Stability in Latin America

Telecommunications and Visions of Economic Stability in Latin America

by david.nunes
Caterina AlvarezIssue:Latin America I 1998
Article no.:3
Topic:Telecommunications and Visions of Economic Stability in Latin America
Author:Caterina Alvarez
Organisation:Columbia Institute for Tele-information, USA
PDF size:20KB

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Article abstract

The implementation of communication technologies in Latin America faces many challenges. On the one hand, advancement would be much slower without foreign ownership and involvement. On the other hand, the discontinuity of technology could negatively affect the learning population at large. Irregardless, their deployment must be linked to a programme of comprehensive economic development, and a check and balance system will have to be in place to ensure the region’s social and economic health.

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Caterina Alvarez is a researcher of telecommunications at the Columbia Institute for Tele-Information, where she works under Professor Eli Noam. She has co-authored a paper on Electronics in Education with Professor Noam and written on Telecommunications in Latin America which she delivered as a speech for a Harvard conference in October 1997. Ms Alvarez lived in Andalucia, Spain, where she completed her undergraduate degree and studied Flamenco dance, song, and culture. She received her BA in Anthropology from The New School in New York City in 1996, and will be attending The University of London Masters of Studies program in Fall 1998. Latin America was discovered by Europe in 1492 and from that point forward has been in a perpetual state of reform that is inspired and designed by external systems. Due to a lack of internal infrastructure, many an investor’s ambition found a fertile space for experimentation. Tethered by a lariat that served and inspired a 500 year tug of war, it is appropriate that telecommunications in Latin America finds its origins in foreign ideas and funding. The first government telephone lines in Colombia were installed by three North American private investors. Not until 1958 were all telecommunications services Colombian owned. Cuba’s first lines were laid when it was still a Spanish colony, and its first telephone company, CUTELCo, which is recognised as the first in Latin America, was formed by the Continental Telephone Company, also a US based firm. These are typical examples of the history of telecommunications in Latin America. Rob Frieden states that the culture of international communications blends the diverse folkways of individual nations with shared characteristics of the officials involved in its provision and regulation. Consider, when looking at Latin America, that it has served as a ground for international experimentation. Can these economies support and continue to organise extensive foreign involvement? Can we rely on the international consortiums to be capable of managing remote operations of this magnitude? When asking and answering these questions it becomes logical and necessary to consider social responsibility. In alignment with its roots, the evolution towards privatisation in Latin American countries, especially the less developed nations, has led to over 60% foreign ownership. On the one hand, advancement would be much slower without such involvement, but on the other, by bypassing the natural stages of development, the discontinuity of technology could negatively affect the learning population at large. The Deployment of Technology The implementation of technology in Latin America faces many certain challenges. It is a market of few metropolises, dispersed between much land and many rural communities. There are communities with sometimes little and no electronic penetration. For these reasons the orchestration of telecommunications and other advanced technologies requires attention to policy. The long-time goal of universal service may serve as a catalyst to the manner in which technology is introduced. A variety of technologies are now available to create networks in rural communities. Technologies such as Wireless Local Loop (WLL) will enable universal service in areas where telephone service is as low as 8 lines per 100 people, as is the case in rural parts of Brazil. While it is a narrow band technology it can more easily be made broadband when feasible. Broadband technologies (1.5-45mbps) are not always as prosperous for a carrier serving rural areas because they are initially more expensive. However, they are more beneficial to underexposed communities who could pool their budding communications needs as a result. If governments and regulators focus on how technology is introduced to rural communities, competitive strategies will be adapted through its intelligent use. This will provide a sound reinforcement to the existing economy. Electronic data inter-exchange (EDI), by expediting business procedures through automated electronic transaction, will lend competitive and expansive advantages to rural businesses. This will in turn make the community a more desirable site for the international investor or private subsidiary. If radio technology has already been implemented, wireless connection is another economical choice especially for the investor who is centered in a metropolis but will be servicing rural areas as well. With one cable from the metropolis to a remote rural radio tower an entire town can be serviced with telephony. But, failure to link the deployment of communication technology to a programme of comprehensive economic development poses an economic threat to rural communities. If technology enables urban companies to effectively compete with rural players it will only widen the existing gap. For example, if an urban tyre supplier competes with a rural tyre supplier because technology makes the transaction a viable option, it will swallow the smaller company’s revenues, weakening the infrastructure of the rural community’s economy. On a large scale, economic development through communications will not only affect national economic performance, it will determine how the country will sustain the imminent global economy. Imbalances on the continent alone pose huge threats to the economies of certain more impoverished countries. Ecuador and Guatemala are scrambling to sell over 35% stakes of their national telephone companies. This expansion is necessary to avoid falling out of the regional economy. It is however with few exceptions that the communications sector is focussing its development and marketing efforts on large and lucrative centres of business, evading systems of growth that would enable comprehensive economic development. Unfortunately, regulators and policy makers do not possess the power to check and balance these aforementioned discrepancies. Policy often advocates satisfying the immediate needs of service to the individual. In turn, community sectors such as education and medicine end up the last to be connected. This is due to a lack of financial incentive for such investments because they do not offer direct returns. In an effort to refurbish government financial reserves these services will fall low in priority as they are striving for currency to maintain roads and schools. Long-term goals that strive to lay solid foundations for economic growth and expansion are delayed by more immediate needs. Regulators hands are tied by this kind of economy. Ideally, the contribution and prosperity of foreign investors should be matched by those of native-owned companies to ensure Latin America’s financial independence. In order for telecommunications to offer worthwhile contributions to the continent at large the services need to be learned and understood as a form of livelihood and a vocation, an area of study or an academic entity, a means to an improved future, and overall an enhanced system for living. While it is crucial for the more impoverished parts of Latin America to seek international buyers for their often government owned telephone companies, interconnection must be addressed. Operational flexibility has to be conferred so that licensees can provide a blend of fixed and mobile services over the same frequencies. With foreshadows of globalisation, the interconnectability of Latin America via their local carriers is feasible. North America, for example, did not have this option. Electronic networks and systems were designed and perpetrated while technology was still evolving through rudimentary stages. Often wiring or connection had to be revamped to accommodate the rapid changes and hungry consumer markets. We see this today in the world of global cellular telephony. A personal communications system owner cannot roam freely from country to country because of incompatible technologies. Latin America has the opportunity to bypass these stages of technological disparity by focusing on precedences. Latin America is a new frontier made precocious by the accessibility of better developed economies and infrastructures. These healthier economies are undergoing their own myriad of reforms and changes due to technology’s evolution at a logical/natural step by step rate. Latin America is pulled along by generations of technology, creating a turbo charged telecommunications environment, a new-fangled poverty that is rich with sudden technology but often without the knowledge to fully utilise it. Conclusion Expansion of the industry through foreign investment and divestiture feeds the economy which can in turn be utilised responsibly and socially. However, a check and balance system will have to be in place to protect the interest of the economies and their inhabitants. Although technological quality will be provided by competition we must work to ensure that quality is digested to the social and economic health of Latin America.

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