Home Latin America 2004 The convergence factor: how voice over IP will accelerate business development in Latin America

The convergence factor: how voice over IP will accelerate business development in Latin America

by david.nunes
Steve Odom Issue: Latin America 2004
Article no.: 10
Topic: The convergence factor: how voice over IP will accelerate business development in Latin America
Author: Steve Odom
Title: Chairman and Chief Executive Officer
Organisation: Verso Technologies, Inc
PDF size: 192KB

About author

Steven A. Odom is Chief Executive Officer and Chairman of the Board for Verso Technologies. Mr Odom previously served as Chairman and CEO of Cereus Technology Partners until its merger with Eltrax Systems. Before joining Cereus, Steve assumed the reins of Restor Industries as Chairman of the Board and CEO. Enacting a new strategy and revised business plan, Restor (World Access’ predecessor company), in 1997, was named by Telecom Business Magazine as one of the ‘Top 250 Firms in Telecommunications’ and as one of the ‘Best of the Best 100 Companies in Georgia’ by the Atlanta Journal and Constitution.

Article abstract

Voice over IP’s inexpensive voice and data services, can help transform Latin America both economically and socially, bringing new business opportunities, boosting employment and ultimately, helping to stabilise economically stressed countries. VoIP makes it economically viable to shift highly skilled work from high-cost countries to anywhere in the world, including Latin America. The talent can be obtained for the right price. Distance learning via VoIP can teach the skill sets needed for these higher-level jobs and help drive local economies.

Full Article

Voice over IP in Latin America is a wakening giant. Voice over IP (Internet Protocol) has the potential to drive new infrastructure investment and transform the Latin American business environment by sparking new business opportunities, boosting employment and ultimately, helping to stabilise economically stressed countries. Business development in any region depends on ubiquitous communications, and Latin America’s highly dispersed, largely rural population, in particular, demands the ability to communicate across remote geographies where telecom infrastructures are poor or even nonexistent. Because landline penetration is low and the costs to extend those infrastructures are high, Latin America is a region ripe for IP-based telephony. Compared to either landline or cellular networks, the building out of a wireless IP communications network costs less to implement and manage. IP-based networks, in addition, support both voice and data traffic and enable unprecedented service flexibility. According to a report by Paul Budde Communications, Pty, Ltd. (Latin America—Telecoms & Broadband Overview and Analysis 2004), only 17 percent of the region’s population has a fixed telephone line – and this picture is unlikely to change as alternatives such as wireless continue to grain ground. This year, for example, cellular subscribers have overtaken their fixed line counterparts in Bolivia, Brazil, Chile, Dominican Republic, Ecuador, El Salvador, Guatemala, Mexico, Nicaragua, Panama, Paraguay, Peru, Suriname, Uruguay and Venezuela, according to the Budde report. In Paraguay, most notably, the trend has escalated to the point where there are five-times as many mobile phones as fixed line subscribers. At the same time that mobile phones are taking off, so too is Internet usage. Although PC penetration is very low in Latin America – an estimated six PCs per 100 people – Internet access is becoming increasingly available in schools, community centres and Internet cafes, all of which rely on broadband connections. There are an estimated 1,000 Internet cafes in Venezuela, while in Argentina, 46 per cent of the country’s four million users surf the net from such cafes. Several Latin American governments that are setting up community ‘telecentres’ (where people can get Internet access) are also spurring the use of the Internet. According to the Budde report, these include: – Venezuela – the government has established about 250 telecentres that offer free Internet access in libraries, museums, city halls and the offices of non-governmental organizations; – Mexico – a government initiative called e-mexico has been created to wire the entire country to the Internet, and to offer free e-mail accounts to every Mexican; – Chile – 294 telecentres were operating in early 2004, charging discounted rates in isolated rural communities or poor urban neighborhoods, and another 368 centres had been set up in public libraries; – Brazil – the local government in Sao Paulo has opened 100 telecentres where the public can surf the Internet free of charge. These two trends – the increasing usage of cellular telephones and the growing availability of broadband-based Internet access – are creating a market niche that is ideal for VoIP (Voice over IP) applications for two primary reasons. First, a sizable business opportunity exists for the new generation of service providers who offer VoIP-based calling cards that feature lower cost telephone service than either private landlines or cellular telephones. Second, even greater revenue generation opportunities can accrue to service providers who distribute and implement SIP-based telephones that enable local and long distance calling from any PC with broadband and IP network access. Offered as a fee-based service, SIP (Session Initiation Protocol) – phones can create new revenue streams for Internet café owners while also driving end-users to other Internet or related fee-generating services. Latin American governments, when they provide converged voice and data traffic on their networks at public telecentres, can leverage their SIP telephony investments by extending this technology to their internal operations as well. This is of great interest in terms of driving long-range, and more diverse, business development. Consider that these converged networks can then be cost-effectively extended via satellite links and high compression multi-protocol routers, to remote regions. This enables the government, in many cases for the first time, to bring outreach programmes to the remote regions where they are most needed. Available technology can be used to fully support and manage these programmes remotely from central facilities. How will businesses benefit from such governmental commitments to VoIP? For starters, service providers will undoubtedly be needed to implement, support, and maintain the switching systems required. In many, if not most, cases governments may also turn to service providers not just for network implementation support, but to deliver an entire suite of managed voice and data services. With communications networks established that link remote regions to more urban centres, the groundwork will be also be laid for other infrastructure development as well. From a rural job site, utility construction firms headquartered in urban centres, for example, will be able to easily order materials, establish and confirm delivery schedules, obtain and update engineering data, monitor progress, service customers, manage and pay employees. This development in turn, may drive other business opportunities. With power and other basic necessities built out, for instance, banks or natural resource exploration firms can now open branch offices, that, in turn, will spur local development of wide range ancillary and support services. Furthermore, with communications links and SIP-based telephones, large companies in urban centres throughout Latin America – and the world – can have ready access to competitively priced regional labour. Contact centres, or call centers, for example, can be geographically independent; with VoIP, a contact centre agent can operate wherever there’s a broadband connection. Today, with IP and satellite links, these connections can truly be established anywhere. Although many Asian countries seem to be leading the industry in terms of this ‘off-shoring’ of contact centre agents, with the large and growing population of Spanish speaking residents in the U.S., it stands to reason that Latin America can become a prime source of contact centre agents for American-based companies. In addition to contact centres, there are a wide range of other industries, and a wide range of tasks, that can be performed anywhere – where the staff can be located wherever it is convenient and economically advantageous. In work situations such as these, the key business tool is the broadband-equipped PC. Examples include software engineering, Web design, and technical support. An ability to streamline distance-learning programmes is yet another way that VoIP can drive business development in Latin America. With both voice and data easily transmitted over a broadband connection, universities in urban centres can create educational and training programmes that are made accessible to telecentres and Internet cafes in rural areas. These programmes can be focused on delivering the skill sets individuals need to get local jobs. Then, when employment increases, so too does development of a wide range of support businesses. In a world that has become completely dependent on information access and transfer, cost-effective telecommunications are essential for fostering an environment where business development can flourish. In the rugged terrain of Latin America’s interior, implementing a more extensive fixed line infrastructure is prohibitively expensive. Although cellular service growth is taking off right now, the costs of the requisite infrastructure far exceed that for a multi-use IP network. With a voice and data on a single IP infrastructure, many of Latin America’s communications challenges can be resolved, laying the groundwork for commercial development that has the potential to minimise many of the social and economic issues that have limited the overall development of the region until now.

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