CANTO Weekly Newsletter – BNamericas 04/10/15

“We expect the operating synergies to be significant; together, the new merged company creates the opportunity to invest more, grow faster, and provide an improved customer experience,” CWC CEO Phil Bentley said.

The new company will merge CWC’s fixed and mobile communications offerings with Columbus’ residential cable TV and broadband, bringing converged services to the region.

The two companies will also merge their markets in the Caribbean and Central America, as well as expanding into South America. The project predicts to reach 50 countries in Latin America and the Caribbean, which mean overtaking Jamaica-based Digicel, which is present in 26 countries in the Caribbean and 32 worldwide.

CWC currently operates in 13 markets in the region (Barbados, Jamaica, Cayman, Antigua, Turks & Caicos, British Virgin Islands, Montserrat, Grenada, St Lucia, St. Vincent, Anguilla, Dominica, St. Kitts and Nevis) under the LIME brand, plus Bahamas with BTC and Panama as CWC.

Columbus provides services to eight countries (Trinidad, Jamaica, Barbados, Grenada, St. Vincent & the Grenadines, St. Lucia and Curaçao) under the Flow brand, and Antigua under the Karib brand.

Trinidad is currently served by Columbus International (CREDIT: AFP).

Columbus’ chairman and CEO Brendan Paddick said the combined geographical footprint would help provide opportunities to strengthen the company’s position in Colombia, Peru, Guatemala, Costa Rica, Honduras, El Salvador, the Dominican Republic and Puerto Rico.

Bentley pointed out that the next step in the merger would be to integrate the brands under which the company operates. The timeline for that integration, as well what the resulting brand will be, has not yet been defined. Flow and LIME will remain as they are for the time being.

CWC drew up synergy plans as early as a month after it announced the merger, with a projected US$400mn investment in expanding its fiber broadband to 50,000 km. The company would also be capable of providing 1Gbps broadband speeds and creating 500 new jobs in Latin America within the next five years.

Cable & Wireless Communications (CWC) finally completed its acquisition of Columbus International for US$3.02bn in March, five months after it was first announced.

Approval was opposed by workers’ unions and Digicel made a vocal rejection of the deal, pointing to concerns over a potential monopoly arising from the merger.

Several institutions listened to Digicel’s concerns, and started probes into the merger, which eventually led to approval, from both regulatory institutions and governments.

The Barbados’ Fair Trade commission approved the merger in March. Barbados was the last major roadblock for CWC to obtain full permission to go ahead with the transaction.

Barbados follows several other regional regulators in giving their stamp of approval to the merger. Trinidad and Tobago regulators approved the deal on Friday and Jamaica, where Digicel has its headquarters, gave the green light to the transaction in January.

Columbus reported US$248mn in revenues for the first half of 2014, building on US$505mn revenues in the previous fiscal year. CWC posted 5% year-on-year growth in global revenue during fiscal Q3 ending December 31, with the total reaching US$444mn.

Why has Brazil’s broadband speed improved so little? – Brazil, Regional In spite of Brazil being Latin America’s largest wireless and internet market, the country still has sluggish broadband speed indicators compared with its neighbors and other emerging markets.

According to Akamai’s quarterly State of the Internet report, Brazil saw its average broadband speed in Q4 grow less than any all other Latin American countries, up just 1.6% quarter-on-quarter to 3Mbps. The year before, the country’s average connection speed was not much different at 2.7Mbps.

By comparison, Chile, Peru and Bolivia saw growth of 23%, 11% and 10% respectively in the same period.

Brazil also showed the lowest rate of adoption (1.6%) of high broadband connectivity – referring to connections above 4Mbps – among the major Latin American economies evaluated by the Akamai study. Moreover, the increase from the previous quarter was just 16%, compared to 73% in Chile and Colombia.

Only 0.5% of Brazil’s broadband connections are faster than 15Mbps, compared to 18% in the US and 3.2% in Uruguay and, worse still, that rate is down 5.9% from the previous assessment.

NETFLIX INDEX

Another analysis of data transfer speeds, from over-the-top (OTT) video streaming service Netflix, shows that Brazilian operators offered average speeds of 2.56Mbps in February. The company makes a monthly assessment of the performance of its service on the networks of telecoms carriers in several of the countries where it operates.

In Brazil, TIM’s fiber-to-the-home (FTTH) service Live TIM recorded the highest wireless internet speed for Netflix, at 3.46Mbps.

Brazil doesn’t do too badly in the Netflix index and does, in fact, have some of the highest averages in the region. But this is most likely because the majority of Netflix subscribers have connections based on fiber optics or high-speed internet plans.

BROADBAND A PRIORITY?

The government is not blind to the issue. Broadband has been added to the national agenda as one of the priorities of Brazilian President Dilma Rousseff in her second term.

Rousseff promised to double the country’s average broadband speed from a reported 12Mbps to 25Mbps by the end of her tenure. She also wants to enable fiber optic connections in 90% of the country’s territory and in 45% of households during her administration. The project is expected to rely on public-private partnerships (PPPs).

The pledge, however, could be jeopardized by the country’s recent spending cuts and fiscal adjustment initiatives. The country’s new communications minister, Ricardo Berzoini, admits that the program will receive cuts, although he has said they will be “marginal” given the importance of the project.

TELCOS

BNamericas questioned local telecoms operators about the slow growth in broadband speeds. In a statement, carriers association SindiTelebrasil said measurements such as those of Akamai and Netflix are affected by factors “completely unrelated to the actions of providers, which can degrade the speed offered by the companies.”

SindiTelebrasil lists domestic Wi-Fi networks, low-performance routers and processors, devices and tablets infected by viruses and memory exhaustion.

The entity said its affiliates are evaluated on a monthly basis by telecoms watchdog Anatel, and that they have been meeting the goal of delivering 80% of the speed contracted in most of the localities assessed.

According to SindiTelebrasil, Anatel’s methodology is internationally recognized and eliminates factors external to the network. The regulator uses special meters installed in users’ households.

Finally, the association said companies have been investing “heavily and continuously” in network capacity.

Eduardo Tude, head of consultancy Teleco, underlines that faster broadband speeds depend on progress in rolling out high-speed networks based on fiber optics in regions where only ADSL (copper) is available.

“Lots of investments are required and the implementation tends to be slow,” he told BNamericas.

Security concerns for mobile payments decline in 2014 – Mastercard study – Regional Security became less of a consumer concern for mobile payments in 2014 with the priority being placed on an improved digital shopping experience, according to a study carried out by Prime Research for Mastercard that tracked 19.1mn comments on various social media platforms.

In general, 94% of the conversations tracked globally regarding mobile payments were favorable compared with 77% in 2013 and 70% in 2012.

Positive comments centered on innovation, rewards and loyalty programs. The vibe was most positive in Latin America, with positivity at 96% compared to the 91% global average.

Security appears to have improved over time as 91% of security-related comments regarding mobile payments were favorable in 2014 compared to only 20% in 2012.

In Latin America 73% of security-related comments were positive compared to 25% in 2013.

Increased use and understanding of biometrics and tokenization contributed considerably to the more positive evaluation in 2014, the study said.

Notwithstanding the positive conversations regarding security, the volume of these conversations was a small percentage of the conversations as a whole.

Conversations regarding digital innovation and the improved mobile user experience accounted for 71% of the total in 2014.

The convenience of mobile payments was the issue that saw the most positive comments overall, with a 94% positive rating as consumers enthusiastically shared positive purchasing experiences on social networks.

In Latin America both consumers and retailers showed great acceptance of the mobile shopping experience, with comments on this issue accounting for 41% of total conversations on social networks.

The study tracked comments on the most popular social networks including Twitter, Facebook, Instagram, Foros, Weibo, Google + and YouTube.

Investment in quality of experience essential to stay competitive – Telefónica CTO – Regional With 5G still on the horizon, Telefónica is nonetheless working to achieve the quality experience one would expect from 5G in 2020, but using its existing 4G networks today, Telefónica’s CTO Enrique Blanco told BNamericas in an interview.

At the Mobile World Congress in Barcelona this year the company gave a sneak preview of what is to come with 5G technology with a demonstration of speeds of up to 375Mbps using LTE-Advanced carrier aggregation, where the capacity of multiple bands is combined to enhance speed.

“You may ask, why don’t you just wait for 5G to arrive? Because we want to be competitive. My ultimate responsibility is to ensure we’re competitive in every country we operate in. So we can anticipate 5G using 4G LTE technology,” Blanco said.

However, the executive said that one of the areas Telefónica is most focused on is not merely download speeds, but also being able to provide a better customer experience across the board regardless of the time of day.

“As a user you don’t measure your quality of experience based on how fast you can connect in the early hours of the morning when you have the whole network to yourself, but rather when you’re connected on a Saturday morning or at 9pm on a weekday,” Blanco said.

“We’re working to bring the level of quality that will be attainable on 5G but on 4G networks when maybe 100 people are connected to the same cell, but have a user experience that’s superior to what they have today,” Blanco said, adding, “But that will take some time.”

In Spain Telefónica is using three carriers with the 800Mhz, 1,800MHz and 2,600MHz bands. In Latin America, the bands that are widely available are 700MHz, 2600MHz, 1800MHz, and the AWS band (1700MHz/2100MHz.)

In complement to its plans to improve the customer experience, Telefónica this week announced a four-year agreement with Accenture and Alcatel-Lucent to deploy customer experience management software.

With the technology, customers will gain more control over their broadband experience, including self-help tools to reduce calls to customer care and shorten resolution times. Telefónica will use the technology to automatically detect, diagnose and resolve device issues.

Ericsson’s Latin America president Sergio Quiroga told BNamericas earlier this year that Latin American operators must continue to invest in network quality despite slower economic growth in their countries or they will lose customers to the competition.

Telefónica teams up with Alcatel-Lucent, Accenture to boost customer care – Regional Accenture and Alcatel-Lucent have announced a four-year agreement with Telefónica to deploy Alcatel-Lucent’s Motive Customer Experience Management software to expand customer service capabilities for residential customers in European and Latin American countries.

The agreement results from a partnership formed by Accenture and Alcatel-Lucent last September to help operators and enterprises implement integrated ultra-broadband solutions to address the challenges of rising costs and increased data consumption.

Alcatel-Lucent’s Motive Customer Experience Management includes device management, service management and analytics, while Accenture’s Motive Delivery Center provides system integration and other key delivery functions.

Customers will gain more control over their broadband experience, including self-help tools to reduce calls to customer care and shorten resolution times, according to a statement. Troubleshooting will be possible through mobile devices, laptops and IP set-top boxes.

Telefónica will also use the Motive technology to automatically detect, diagnose and resolve device issues.

“With common processes and diagnostic tools across our entire operation, we can now address the cost-related challenges of increased demand for digital services, while providing consistent, automated, self-care capabilities to our residential customers around the world,” said Telefónica’s director of operations & OSS, Juan Manuel Caro.

Customer management solutions provider Amdocs recently told BNamericas that traditional telcos still have an advantage over over-the-top (OTT) players in terms of customer care and experience. The experience with OTT players tends to be more distant and impersonal.

Amdocs’ Customer Experience Spotlight 2015 survey showed that 80% of respondents would not consider replacing their current service provider even if companies like Amazon, Google and Facebook offered them connectivity. The top three reasons were privacy issues, internet quality and distrust.

And Ericsson’s Latin America president Sergio Quiroga told BNamericas earlier this year that Latin American operators must continue to invest in network quality despite slower economic growth in their countries or they will lose customers to the competition.