Home Latin America 2007 Voice of innovation – mobile wireless in Latin America

Voice of innovation – mobile wireless in Latin America

by david.nunes
Chris PearsonIssue:Latin America 2007
Article no.:7
Topic:Voice of innovation – mobile wireless in Latin America
Author:Chris Pearson
Organisation:3G Americas, LLC
PDF size:224KB

About author

Chris Pearson is the President of 3G Americas, LLC; he is responsible for strategic planning of the organization and for the integration of strategy and operations in the areas of marketing, public relations, finance as well as public and regulatory affairs. Mr Pearson came to 3G Americas from the Universal Wireless Communications Consortium, UWCC, where he served as Executive Vice President in charge of the strategic management of the technology consortium. Prior to joining the UWCC, Mr Pearson held the position of Strategic Alliance Manager for the Advanced Network Services Provider Programme, ANSPP, at AT&T Wireless Services and several senior level technical marketing positions at GTE Telephone Operations. Mr Pearson has provided lectures, technical marketing training, and speeches for technology audiences throughout the world. Mr Pearson holds a Masterís in Business Administration from Seattle University and a Bachelor of Arts in Marketing and Finance from the school of Business at the University of Washington.

Article abstract

The growth and economic development of Latin America is lagging behind regions such as East Asia and the Pacific. International institutions such as the Inter-American Development Bank and many countries in the region have established programmes, policies and laws to encourage R&D and public-private collaboration as a way to promote regional development. ICT, a recognised driver of innovation and economic growth, has helped stimulate growth by attracting massive amounts of foreign direct investment, especially in areas such as mobile telecommunications.

Full Article

The case for innovation It is tempting to underestimate the importance of innovation when looking at todayís Latin America. After all, the region is enjoying a three-year economic boom unmatched since the 1970s, propelled by high world commodity prices, sustained growth in its trading partners, declining inflation and low global interest rates. Annual growth in the region for 2004-2007 should exceed five per cent and future prospects are good.1 Social trends are also generally improving. Like the lyrics of a popular song by Mexican singer Aleks Syntek, todayís Latin America is awakening to find itself now ìm·s fuerte de lo que pensabaî. 2 A longer-term outlook, however, requires more diverse economic development. Although no one is forecasting an immediate decline in world oil prices, commodity-led export booms have a disappointing economic history, as boom cycles are typically followed by declining prices as overinvestment in production capacity eventually generates an oversupply in the market. Realistically, Latin America should consider dedicating itself to the business of innovation and to retaining competitive access to foreign direct investment, FDI, to empower its economies to compete at a higher level in a globalised world economy. The inflow of FDI into Latin America has been less than half the global share of FDI absorbed by Asiaís developing countries in recent years. The regionís unemployment rate – over eight per cent – is more than double that of East Asia and Pacific countries. Latin Americaís share of world exports between 1980 and 2004 remained relatively constant at around five per cent, while East Asiaís share experienced strong growth, surpassing 30 per cent3. World Bank indices that gauge the readiness of a country or region to compete in todayís knowledge-based world economy paint a challenging situation.4 In measurements of education, innovation and Information and Communication Technologies, ICT, Latin America scores below the world average and that of all other regions except South Asia and Africa. Yet across the entire Latin America region, opportunities abound for increased innovation investment that will lead to diversifying and expanding economies for years to come. Stimulating innovation In response, farsighted strategic Latin American policy-makers have begun a push to raise Latin Americaís competitive standing by focusing on innovation, ìan idea, practice or object that is perceived as new by an individual or another unit of adoptionî or simply ìa new way of solving a problemî.5 They are pioneers, recognizing that globalization has transformed competitiveness. Previously determined largely by capital and labour costs, the general business environment and superiority in technology or management competitiveness is increasingly related to information age capabilities. These include access to information, such as market information and requirements, application of knowledge to production processes, and speed and quality ingredients of productivity and lower costs. Continuous support for innovation throughout the production process has become a recognized ingredient for success. Initial steps toward a public support system for innovation in Latin America are removing barriers to public-private cooperation. Brazil has passed an ëinnovation lawí that permits private companies to fund research and pay researchers at public institutions. Uruguay recently declared that innovation would become a state policy. Chile has announced support for active public-private collaboration, with participation by companies, universities, research centres and state agencies, funded by an US$80 million tax on mining revenues. Such efforts are also enjoying multilateral support. Luis Alberto Moreno, President of the Inter-American Development Bank, IDB, has noted that to ìwin a more competitive position in the world, the countries of Latin America and the Caribbean must establish or strengthen national innovation systems as an integral part of their national economic and social development plansî.6 Mobile sector innovation Public efforts to foster innovation will build upon the pioneering achievements of the private sector, especially investment in ICT, a critical element of todayís knowledge-based economies. According to the World Bank, private investors contributed most of the over US$241 billion in investments that transformed the regionís telecommunications sector between 1990 and 2005. Projects with private participation for the mobile sector alone amounted to over US$71 billion, with major segments of an additional US$100 billion in funding for projects involving mobile service tied to long distance or fixed services, or both. This investment has generated unprecedented connectivity, the transfer of critical knowledge and understanding through investment in local research and development centres, and the ability to leapfrog technology cycles by deploying solutions-based global standards. In terms of connectivity, massive private investment has promoted Latin American connection like never before. Between 1998 and 2006, the number of fixed lines in the region almost doubled, from 53 to 96 million, while the number of mobile users grew over 1,400 per cent, from 20 to 308 million. Additionally, the number of Internet users grew by 1,500 per cent – from six to 96 million.7 Major telecommunications vendors have invested hundreds of millions of dollars in research and development centres that work closely with local universities and foundations to transfer expertise to local engineers and train future experts as well as provide well-paying jobs for current experts. Finally, because this investment has developed state-of-the-art networks that build upon global standards, network operators are implementing the latest innovations in communications technology and solutions, thus leap-frogging legacy architectures from earlier in the development cycle. Nowhere are the contributions of ITC investment in innovation more visible than in the mobile sector, especially from investment that has occurred to deploy the dominant standard in the region – the GSM-based family of technologies. Once regarded as a European-only standard, GSM has become the dominant network solution throughout the world and Latin America, adopted as of June 2007 by 251 million subscribers. GSM accounts for a full 74 per cent of the regionís mobile users, versus only 18 per cent for CDMA and a shrinking six per cent for TDMA. Moreover, 35 network operators in 21 countries in the region have deployed advanced mobile data solutions using EDGE packet data networks, and the most recent advances in the standard, third-generation UMTS/HSDPA technology, has already been deployed commercially in Argentina, Chile, Mexico, Puerto Rico and will very soon be deployed in Brazil and Uruguay. Investment in GSM/GPRS/EDGE/HSDPA networks in Latin America is supporting a culture of innovation – a lifestyle shift that brings innovative solutions to the challenges of everyday life and business. The GSM-based family of technologies supports innovation in two specific ways: first, by empowering robust mobile networks with the technical qualities for the widest variety of dependable and flexible services; and, second, by serving as platforms for personal and business solutions. Price innovation and service innovation are characteristics of the mobile sector in general but the GSM-based family of technologies builds upon global economies of scale, with 2.5 billion GSM users worldwide representing 85 per cent of the mobile wireless market, including 135 million third-generation UMTS/HSDPA users. This vast mobile community generates impressive economies of scale that translate into innovations of world-class quality. Price innovation facilitates connectivity for customers from all socio-economic segments through the use of innovative prepaid, calling party pays, and shared minutes plans. Service innovation allows consumers to strengthen ties with family and friends while enjoying tailored infotainment services and higher levels of personal security. For businesses, service innovation through GSM-based technology translates into numerous benefits: instant communication, regardless of location, faster response to service demands, more timely maintenance and control of production, reduced processing time, improved inventory control, reduced repair time and improved work force efficiency through better scheduling and reduced travel. Examples of innovative solutions in the GSM-based family abound. Chileís GSM-based operator Entel PCS offers a Secure Home option that allows subscribers to control home security systems via text messages. Telefonicaís InfoMovil and InfoLogistic provide mobile platforms for placing sales orders and for responding to customer service orders by dispatching service fleets. Mexicoís Telcel Datum services offers group messaging, mobile office solutions, fleet tracking, and even an object tracking service. Throughout Latin America, GSM operators are offering the latest in technical innovation on wireless devices, such as email services, GPS, and larger and better screen resolution. Such companies as HP, Motorola, Nokia, Palm, Research in Motion (BlackBerry), and Sony-Ericsson manufacture these devices. Moreover, since international roaming is an inherent capability of the entire GSM-based family of technologies, and GSM networks are available in 218 countries or territories worldwide, GSM subscribers receive service throughout every country in Latin America and the Caribbean and worldwide. Latin American operators also have the benefit of rising roaming revenues from foreign travellers. As Latin American public and private sectors confront the challenges to become more innovative to face global economic competition, they could well benefit from turning an eye toward the successful experiences of the GSM family of wireless technologies in the region. These stand at the forefront of creating innovative approaches, tailored to local tastes and needs, to the regionís personal and business-based challenges. Innovation, for the GSM-based family of technologies in Latin America, is a way of life that already exists and will continue with the deployment of third-generation HSDPA wireless networks, leading to increased innovation investment for the entire region.

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