01-15-2005, 11:14 AM
Telmex meets unregulated VoIP in Mexico
Knight Ridder - Monday, November 01, 2004
The Dallas Morning News
By Ricardo Sandoval
Billionaire telecommunications wizard Carlos Slim Helu has rarely met a business challenge he could not beat.
Slim Helu, meet VoIP.
Voice over Internet Protocol _ an emerging technology that pushes digitized voice data over broadband Internet networks _ has got more and more Mexicans using Internet phones to ring family and friends across the country and across the border into the United States.
Until recently, that lucrative telecom traffic had to rely on Slim's Telefonos de Mexico, or Telmex. But as VoIP's price decreases and its ease of use increases for average consumers, Telmex is expected to see its share shrink, experts say.
Gerardo Sandoval, telecom research manager in Mexico for International Data Corp., said Telmex would notice the hit first in its business long-distance service.
To be sure, businesses in Mexico with heavy reliance on telephones have become a target for upstart Internet phone providers.
"Then, over time, voice over internet will become the way of handling international voice traffic," he added. "This will have an impact on all conventional long-distance carriers, and since Telmex has the largest market share it will be affected."
A vast consumer market is already being identified in places like Zacatecas, Mexico, a colonial city with a growing Internet infrastructure. The state has a healthy population of foreign tourists and a significant local population eager to get around Telmex's high long distance rates for calling immigrant relatives living in the United States.
"In places where you still have a monopoly on the fixed line and interconnection charges are outrageously high, the immigrant community would be an immediate market for this service," said Jose Otero, president of Signals Telecom Consulting in Miami.
Telemex controls 96 percent of the fixed line network in Mexico.
But in 2003, the company experienced some $200 million in so-called "bypass" _ a term applied for customers using something other than Telmex's wires and switches to execute a standard telephone call. And that bypass is expected to grow.
The spread of the technology throughout Mexico has government regulators and telecommunication industry leaders simultaneously intrigued and nervous.
VoIP can transmit calls more efficiently than traditional systems. Instead of direct connections between phones, VoIP breaks up chats into data packets, then sends them on multiple paths.
But VoIP is free from traditional regulations. And that may be the key Telmex uses to fight back.
Mexican regulators currently have a task force studying Internet telephony, as well as bid by cable television service providers to provide local and long distance telephone services.
In the first days of VoIP, businesses were about the only ones who could afford modem-like hardware that connected special phones to the Internet. But Internet phones today are closer to the reach of average Mexican consumers.
The newest generation feature low-cost hardware, little or no software _ or even the need for a computer _ and a big cost advantage over what Telmex now charges for local and long-distance telephone calls.
For example, a regular phone call in the middle of the day from Zacatecas to Dallas would cost about 85 cents a minute over Telmex lines compared with about 25 cents a minute with VoIP.
But do not count Slim Helu out of the Internet phone equation just yet. In Mexico, his Prodigy Internet service offers average consumers what is considered the most robust broadband Internet access in Mexico. The high-speed Infinitum DSL can run around $40 a month, and analysts suspect Telmex will eventually get around to offering its own Internet phone services.
About the only dark cloud over the growing Internet market in Mexico is the unanswered regulatory question: How might Telmex one day price the traffic that originates in the Internet, but then connects with its conventional phone network?
While recognizing emergent technologies like Internet phones, Telmex officials raise the regulatory questions as a possible red flag over the industry.
"We have to prepare ourselves to offer diverse services to our customers, and we are capable of that. Telmex has one of the most modern telecommunications infrastructures around," said Arturo Elias Ayub, spokesman for Telmex. "But what appears most important now is how this technology will function within our regulatory structure. At some point those calls must land on the existing telephone interconnection infrastructure and become a regular call."
Santiago, an American expatriate living in Zacatecas who asked that his last name not be used, does not care who provides the service or what regulations apply.
The American expatriate living in Zacatecas moved here recently from New York and bought an Internet phone which has saved him hundreds of dollars in calls to the states and to his daughter in Spain.
"There are quality problems, so this is not perfect," he said. "But how many cell calls get dropped each day? We probably don't have the best Internet service in my neighborhood, so I tolerate the glitches, mainly because I know I'm saving a bundle on my international dialing."
Santiago purchased his phone from Tazaki Kusulas Rodriguez, whose Cyberbornet Internet cafe in downtown Zacatecas is often filled with tourists and Mexican students clicking away at a dozen computers. Business is so good, and hardware prices are falling so fast, Rodriguez said, he is planning a network of cafe's and Internet phone calling stations throughout Zacatecas, supported by his parent company, Guadalajara, Mexico-based Voinet.
"The attraction to people here is simple. Telmex charges them around $5.50 for a 10-minute call," Rodriguez said. "With my phone, that 10-minute call is 80-cents. I win and the customer wins."
That business model has not been lost on others who see market potential in Mexico _ where millions of families have a relative or friend living in the United States.
"I know this won't be easy; it's never easy when you're competing against Carlos Slim," said Francisco Bunt, chief of Dialmex, a small, but ambitious company based in McAllen.
Bunt is about to expand the use of Internet phones in his network of "casetas" _ phone calling houses _ sprinkled around northern and central Mexico.
"These Internet phones are our bet for the future," Bunt said. Even larger U.S. players are looking to the rich Mexican market.
Vonage, an increasingly popular Internet phone provider, recently started issuing "virtual" phone numbers for Mexico City.
In an e-mail to journalists, company officials said they are convinced Telmex is vulnerable to low-priced bypass alternatives.
"International long distance may be first, but domestic long distance, 25-percent of [Telmex] revenue, could also be at risk," the Vonage email said.
Some 400 miles south of Zacatecas, in a busy urban Mexico City Internet cafe, Gina Colin, a 25-year-old college student, is playing with a new phone recently installed by the cafe's managers. She is eager to dial a friend in Paris _ someone she has been talking with for months via instant-messaging. She is shocked upon hearing that she will pay about 27-cents a minute.
Telmex charges between 52 and 77 cents per minute, depending on the time of day, for a call between Mexico City and Paris.
"This is great for me because I feel like I pay Telmex way too much now with my home phone and my cell phone," she said.
___
© 2004, The Dallas Morning News.
Visit The Dallas Morning News on the World Wide Web at http://www.dallasnews.com/
Distributed by Knight Ridder/Tribune Information Services.
SOURCE:
http://www.menafn.com/qn_news_story.asp ... lu1fwfzpsv
Knight Ridder - Monday, November 01, 2004
The Dallas Morning News
By Ricardo Sandoval
Billionaire telecommunications wizard Carlos Slim Helu has rarely met a business challenge he could not beat.
Slim Helu, meet VoIP.
Voice over Internet Protocol _ an emerging technology that pushes digitized voice data over broadband Internet networks _ has got more and more Mexicans using Internet phones to ring family and friends across the country and across the border into the United States.
Until recently, that lucrative telecom traffic had to rely on Slim's Telefonos de Mexico, or Telmex. But as VoIP's price decreases and its ease of use increases for average consumers, Telmex is expected to see its share shrink, experts say.
Gerardo Sandoval, telecom research manager in Mexico for International Data Corp., said Telmex would notice the hit first in its business long-distance service.
To be sure, businesses in Mexico with heavy reliance on telephones have become a target for upstart Internet phone providers.
"Then, over time, voice over internet will become the way of handling international voice traffic," he added. "This will have an impact on all conventional long-distance carriers, and since Telmex has the largest market share it will be affected."
A vast consumer market is already being identified in places like Zacatecas, Mexico, a colonial city with a growing Internet infrastructure. The state has a healthy population of foreign tourists and a significant local population eager to get around Telmex's high long distance rates for calling immigrant relatives living in the United States.
"In places where you still have a monopoly on the fixed line and interconnection charges are outrageously high, the immigrant community would be an immediate market for this service," said Jose Otero, president of Signals Telecom Consulting in Miami.
Telemex controls 96 percent of the fixed line network in Mexico.
But in 2003, the company experienced some $200 million in so-called "bypass" _ a term applied for customers using something other than Telmex's wires and switches to execute a standard telephone call. And that bypass is expected to grow.
The spread of the technology throughout Mexico has government regulators and telecommunication industry leaders simultaneously intrigued and nervous.
VoIP can transmit calls more efficiently than traditional systems. Instead of direct connections between phones, VoIP breaks up chats into data packets, then sends them on multiple paths.
But VoIP is free from traditional regulations. And that may be the key Telmex uses to fight back.
Mexican regulators currently have a task force studying Internet telephony, as well as bid by cable television service providers to provide local and long distance telephone services.
In the first days of VoIP, businesses were about the only ones who could afford modem-like hardware that connected special phones to the Internet. But Internet phones today are closer to the reach of average Mexican consumers.
The newest generation feature low-cost hardware, little or no software _ or even the need for a computer _ and a big cost advantage over what Telmex now charges for local and long-distance telephone calls.
For example, a regular phone call in the middle of the day from Zacatecas to Dallas would cost about 85 cents a minute over Telmex lines compared with about 25 cents a minute with VoIP.
But do not count Slim Helu out of the Internet phone equation just yet. In Mexico, his Prodigy Internet service offers average consumers what is considered the most robust broadband Internet access in Mexico. The high-speed Infinitum DSL can run around $40 a month, and analysts suspect Telmex will eventually get around to offering its own Internet phone services.
About the only dark cloud over the growing Internet market in Mexico is the unanswered regulatory question: How might Telmex one day price the traffic that originates in the Internet, but then connects with its conventional phone network?
While recognizing emergent technologies like Internet phones, Telmex officials raise the regulatory questions as a possible red flag over the industry.
"We have to prepare ourselves to offer diverse services to our customers, and we are capable of that. Telmex has one of the most modern telecommunications infrastructures around," said Arturo Elias Ayub, spokesman for Telmex. "But what appears most important now is how this technology will function within our regulatory structure. At some point those calls must land on the existing telephone interconnection infrastructure and become a regular call."
Santiago, an American expatriate living in Zacatecas who asked that his last name not be used, does not care who provides the service or what regulations apply.
The American expatriate living in Zacatecas moved here recently from New York and bought an Internet phone which has saved him hundreds of dollars in calls to the states and to his daughter in Spain.
"There are quality problems, so this is not perfect," he said. "But how many cell calls get dropped each day? We probably don't have the best Internet service in my neighborhood, so I tolerate the glitches, mainly because I know I'm saving a bundle on my international dialing."
Santiago purchased his phone from Tazaki Kusulas Rodriguez, whose Cyberbornet Internet cafe in downtown Zacatecas is often filled with tourists and Mexican students clicking away at a dozen computers. Business is so good, and hardware prices are falling so fast, Rodriguez said, he is planning a network of cafe's and Internet phone calling stations throughout Zacatecas, supported by his parent company, Guadalajara, Mexico-based Voinet.
"The attraction to people here is simple. Telmex charges them around $5.50 for a 10-minute call," Rodriguez said. "With my phone, that 10-minute call is 80-cents. I win and the customer wins."
That business model has not been lost on others who see market potential in Mexico _ where millions of families have a relative or friend living in the United States.
"I know this won't be easy; it's never easy when you're competing against Carlos Slim," said Francisco Bunt, chief of Dialmex, a small, but ambitious company based in McAllen.
Bunt is about to expand the use of Internet phones in his network of "casetas" _ phone calling houses _ sprinkled around northern and central Mexico.
"These Internet phones are our bet for the future," Bunt said. Even larger U.S. players are looking to the rich Mexican market.
Vonage, an increasingly popular Internet phone provider, recently started issuing "virtual" phone numbers for Mexico City.
In an e-mail to journalists, company officials said they are convinced Telmex is vulnerable to low-priced bypass alternatives.
"International long distance may be first, but domestic long distance, 25-percent of [Telmex] revenue, could also be at risk," the Vonage email said.
Some 400 miles south of Zacatecas, in a busy urban Mexico City Internet cafe, Gina Colin, a 25-year-old college student, is playing with a new phone recently installed by the cafe's managers. She is eager to dial a friend in Paris _ someone she has been talking with for months via instant-messaging. She is shocked upon hearing that she will pay about 27-cents a minute.
Telmex charges between 52 and 77 cents per minute, depending on the time of day, for a call between Mexico City and Paris.
"This is great for me because I feel like I pay Telmex way too much now with my home phone and my cell phone," she said.
___
© 2004, The Dallas Morning News.
Visit The Dallas Morning News on the World Wide Web at http://www.dallasnews.com/
Distributed by Knight Ridder/Tribune Information Services.
SOURCE:
http://www.menafn.com/qn_news_story.asp ... lu1fwfzpsv
Julian Flores
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Understand that friends come and go, but with a precious few you should hold on.
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Understand that friends come and go, but with a precious few you should hold on.