|Issue:||Latin America I 1997|
|Topic:||The Future is Wireless Technology and Ubiquitous Communication|
|Organisation:||Philips Consumer Communications in Latin America|
Connect-World’s journalist Jaime Grezemkovsky interviews Andres Carvallo, Vice President of Philips Consumer Communications in Latin America, on Philip’s views of the future and trends in the telecommunications market, the opportunities and risks, and its role in the region.
Connect-World Latin America (CWLA): What is your general opinion regarding Latin America’s telecommunications market in the next three to five years? Andres Carvallo (AC): I think that the whole region is poised for exceptional growth in the coming years. I believe we have only just begun scratching the surface, and the opportunities are enormous. It is difficult to grasp the potential this represents for us. Thanks to the stability demonstrated in the region, many markets have opened up, presenting exciting money-making opportunities. CWLA: What can you tell us about the progress in this region regarding telecommunications? AC: Most of Latin America is still running mainly on an analogue system. Chile, Colombia, Venezuela and Puerto Rico have almost completed the change to a digital system. The rest of the countries are making great progress. The fact that the big communication corporations are entering and starting to dominate this market is very important. Bell-South, Bell-Atlantic, GTE, SWB, Telefonic, and many others will have a great impact. AT&T has recently restructured and is very liquid. Japan’s most important firm NTT, the German Deutsche Telecom, and other European giants, can become important players in this area in the very near future. I believe that there is still too much attention being paid to the US market, which of course is the biggest in the world. But many interesting developments in Latin America are happening all the time, and I am sure this will continue. Brazil, after China, offers the single most important opportunity in the world. CWLA: What will be some of the future trends in telecommunications, and how is Philips preparing for them? AC: To talk about the future is to talk about wireless communication. In an ideal scenario, every cellular phone should work in every country in the world. We are not there yet. I believe we trail the information technology industry by about 5 to 10 years on a global standard. Just like today, there is an almost universal computer system, based upon Microsoft’s concept of the Windows operating system. In the future there will only be one dominant wireless system, with other systems trailing far behind. In our industry this issue is of greater importance because changing from one system to the other is much more complicated. National interests and infrastructure problems can intervene. In technology Philips remains neutral. We support Global system for Mobile Communications (GSM), Time Division Multiple Access (TDMA), Code Division Multiple Access (CDMA), Narrowband Advanced Mobile Phone System (NAMPS) and Advanced Mobile Phone Service (AMPS). The fight is about moving from analogue to digital. GSM is the European standard and is very popular in Asia. TDMA is the standard in the US, with CDMA making a big push. CWLA: What are the main markets you will target in this region? AC: This is what really excites me. Considering that today only between 1 and 2% of the white-collar market has a cellular phone, it still means a great deal to us. Every lawyer, engineer, and professional who works in an office or on the road should have a cellular phone or pager. Because of the mere size of this market, it has been our first target. We also feel that blue-collar workers such as transportation and distribution personnel can also benefit a great deal from this technology. Finally, it can also benefit the general population. Living in big urban cities, the population requires constant and reliable communication services. We can offer it to them to improve their quality of life. CWLA: What are the greatest challenges you face in this region? AC: The most important issue to remember is the enormous diversity and differences that exist in Latin America. There are more than 450 million people, living in more than 44 different countries, including the Caribbean. Although the Spanish and Portuguese languages dominate, other languages and cultures are present. I believe many multinational corporations that have not considered this diversity will often fail in their endeavours. Philips has always recognized this diversity, and hence, hires local management and personnel of those countries to help deal with these challenges. It is a great mistake to treat this region as a complete whole. Apart from some language uniformity, it is Europe all over again. Different laws and regulations, different needs, and different ways of doing business. CWLA: What can you tell us about telecommunications abuse? AC: I believe that every industry, including ours, faces this problem. But as with other problems, we at Philips have turned it into an opportunity. The problem in our industry is that some phones were not developed with the “A-Key” Authentication Technology, thus allowing unauthorized calls to be made. At Philips, all our phones have this feature, enabling us to market them as truly piracy-free phones, provided that the network supports this technology. CWLA: Some people have argued that Philips got “late to the party” of cellular telephony. What does your company think? AC: We don’t feel that way at all. We thank all the other pioneers that have developed this industry, but today we feel we are in a very strong position in this market. Philips is the only player with in-house expertise in plastics, battery technology, Liquid Crystal Display (LCD) technology, software and semiconductors. In fact, our competitors have been customers of ours for years. In Latin America, our great advantage , is that we have been present in this market for over 50 years. With sales of over US$4 billion, we also operate 15 industrial plants, 9 subsidiaries, and employ over 30,000 people in the region. We have over 1,800 service centres from Mexico to Tierra del Fuego, which is a massive advantage. We also feel very strongly about our experience and ability in the retail business in which cellular telephony has become commonplace. CWLA: You sound very optimistic, what more can you tell us about the future? AC: Well, I think I have many reasons to be excited. The telecommunications industry in this region is worth today approximately US$5 billion. In the year 2000, there are estimates that it will reach US$25 billion. We are talking about an industry becoming five times bigger in a very short period of time. There are over 4 million persons in Brazil alone waiting for a telephone. Of course, we are excited. Several companies are developing technology that would take wireless infrastructure to the home and replace current landline technology. This is called the wireless loop, which of course would be very significant in this region considering the Amazon and the mountains that make up such difficult terrain. Conclusion There have also been great advances in cellular telephony. For example, considering the rapid developments in battery life, there is no reason not to believe that in the near future, we will all be carrying one single phone, which also serves as our house phone. There will be no need for different numbers, bills and payment methods: just one personal number; at home, for work, or even on the road travelling the whole world. This is the future of ubiquitous communication.