Thursday, April 12, 2018
Brief: Puerto Rico suffers major power outage – Puerto Rico
Puerto Rico’s electricity authority AEE was working Thursday to restore power to 840,000 clients after a tree fell on a transmission line. According to executive subdirector Justo González, the company was expecting service to return Thursday evening.
Puerto Rico to receive US$18.4bn in disaster relief – Puerto Rico, Virgin Islands
The US granted US$18.4bn of disaster relief money on Tuesday to Puerto Rico, mainly to finance infrastructure and housing reconstruction.
The housing and urban development department (HUD) granted the resources as part of a US$28bn grant covering disaster relief and mitigation efforts for events dating back to 2015 for nine US states, Puerto Rico and the US Virgin Islands.
In September 2017, hurricanes Irma and María rampaged through the Caribbean. In Puerto Rico María destroyed around 90% of cellphone towers and severely damaged the power infrastructure, leaving the island without power for weeks. Nevertheless, the country’s telecoms market has seen an uptick.
“The grants announced today represent the largest single amount of disaster recovery assistance in HUD’s history and include more than $12 billion for major disasters that occurred in 2017 and nearly $16 billion to support ‘mitigation’ activities in areas that experienced major Presidentially declared disasters since 2015,” the HUD said in a statement.
It added that “grantees are required to spend the majority of these recovery funds in ‘most impacted’ areas as identified by HUD.”
The US Federal Communications Commission has also proposed a US$954mn aid package to restore communications networks both in Puerto Rico and the US Virgin Islands.
ICT: The week in 10 stories – Regional
Mexico will launch bidding processes to allocate spectrum for digital terrestrial television (DTTV) as well as AM and FM radio and satellite complementary services in the second half of 2018, according to an official publication of the country’s telecoms regulator IFT.
Telefónica has initiated corporate procedures to list its Argentine subsidiary on the Buenos Aires stock exchange (pictured), with the ultimate goal of cutting its debt level and raising funds for fiber optics expansion, Reuters reported citing sources close to the company.
Panama has reached 93% of coverage in its digital TV rollout phase, which includes Colón, Panamá and Panamá Oeste provinces, according to regulator Asep. The coverage represents 62% of total homes in Panama.
The finance ministry has dispatched to congress a bill proposing to modify norms regarding the management of the science and technology fund (FCTI), and open it up to public tenders.
Bolivia’s satellite Tupac Katari has generated US$80mn in revenue since it was launched four years ago, Iván Zambrana, director of Bolivia’s space agency ABE said.
International roaming charges among the countries of the Mercosur free trade area could end by mid-year, according to Teresita Palacios, head of Paraguay’s telecoms watchdog Conatel.
Venezuela became one of two Latin American countries that were assessed in 2017 where access to and use of the internet is not free. The other country was Cuba, as a cocktail of heavy financial restrictions, government regulations and legal uncertainty have reduced internet access while limiting information online, according to a report by advocacy group Freedom House.
The government, through its e-gov agency Agesic, invited eligible companies to express interest in an IDB-financed tender for the acquisition of contact center services. Services sought include support and a centralized web system to provide CRM-like functionalities and reports.
Luxembourg-based satellite group SES offered a public-private partnership to the Brazilian government for the defense segment
Speaking at the “Meeting” event in Santiago, Oracle Chile manager Rodrigo Astorga underscored how conversations with companies have gone beyond the CIOs to other areas like operations and marketing, and how digital transformation is impacting banks and airlines.
Summit of the Americas overshadowed by Lava Jato – Regional
The Summit of the Americas, which will be held in Lima, Peru this week, will have as its central theme Democratic Governability in the Face of Corruption.
Few could have guessed 18 months ago just how appropriate that motto would be.
Since the last Summit of the Americas held in 2015 in Panama, the Odebrecht scandal, known as Lava Jato in its home country Brazil, has rocked the region, embroiling government leaders and business moguls alike, forcing countries to cancel or suspend tens of billions of dollars in infrastructure concessions and slashing several percentage points off regional economic growth.
As a result, various high-ranking officials have been either jailed or are facing prosecution in countries from Brazil and Argentina to Peru, Ecuador and Panama. Peru’s president Pedro Pablo Kuczynski was ousted weeks before the summit, raising doubts as to whether the event would be held at all.
The summit, scheduled to take place in Lima from April 13-14, gathers leaders and other officials from the 35 member nations of the Organization of American States (OAS) to discuss issues including regional infrastructure and trade initiatives and the fight against money laundering and organized crime.
Odebrecht, which in December 2016 admitted to paying hundreds of millions of dollars in bribes to secure contracts across the continent, operated dozens of major infrastructure concessions awarded in 10 Latin American countries over the course of decades. That has made tackling corruption in the region even more urgent.
While judiciaries in the US and Brazil have been cooperating more freely with other countries in the region on the Lava Jato case, analysts and government officials alike admit much more needs to be done to halt the flow of everything from illicit funds, weapons and drugs to illegally-extracted gold and tropical hardwood across borders.
Corruption in the region has reduced investment by 5% and increased the cost of doing business by 10%, according to NGO Transparency International. At the same time, global tax evasion, embezzlement, bribes, money laundering and smuggling keeps US$1tn/y from entering government coffers.
“We’re preparing a document of the commitments that can be freely adopted by the member states to reinforce governability against corruption,” said Canada’s Ambassador to Peru, Gwyneth Kutz. “It’s an obligation of democratic governments to improve legislation to block these practices and reinforce the citizens’ stance against this problem.”
Lima, which in recent years has hosted the World Economic Forum, the UN Climate Change Conference (COP), the IMF–World Bank general assembly and the APEC summit, also stands to bring in US$80mn as a result of the arrival of at least 6,000 visitors for the summit, according to the national tourism chamber (Canatur).
Adding to the opportunity to do business, the OAS is also hosting a CEO Summit which will tackle specific business issues common to regional members, a two-day event to be attended by 750 general managers from 30 countries and a dozen government leaders.
Regional challenges include sustainable use of water during the era of global warming, with Latin America – which could add 125Mha of arable land – contributing 16% of the world’s food and agricultural exports, including more than 50% of soybean, sugar and banana exports.
Latin America also lags in terms of global value chains and workforce training at a time when sales of intermediate goods make up 60% of global trade, while automation and technological innovation are expected to have an impact on 1.1bn workers.
Meanwhile, regional infrastructure initiatives that have stalled in recent years include the bi-oceanic railway, oil and gas pipelines and power grids, as governments and companies have been stymied by legal, technical and financing issues.
Average Latin American investment in infrastructure from 1992-2013 ran at the equivalent of 2.4% of GDP, compared to a global average of 4-8.5%, according to the OAS. The region will have to invest 5% of GDP, or an additional US$150bn/y, over the next three decades, to close the gap.
And due to a young and fast-growing population, regional electricity demand is expected to nearly double by 2040, while the hydrocarbons industry will have to invest US$550bn through 2030 to maintain current levels, according to the organization.
“It’s not a good time to look at infrastructure with so many of the region’s largest construction companies caught up in Lava Jato,” said Fernando Rospigliosi, a political analyst and former interior minister. “There are also major differences between the governments.”
The difficulty of continuity in policies is underscored by the fact the region may see up to nine countries change government over the next two years, as Costa Rica, Paraguay, Colombia, Venezuela, Mexico and Brazil all hold elections this year, followed by Argentina, Bolivia and Uruguay in 2019.
And while the summit was first devised in 1994 as a means of creating the Free Trade Area of the Americas (ALCA in Spanish), the region remains split amongst a series of other initiatives, including Unasur, Mercosur, the Pacific Alliance, the Andean Community and ALBA, while Mexico, Peru and Chile have also joined the Asia-Pacific Economic Forum (APEC).
The summit comes at a time when the region has become increasingly divided by both political shifts and border tensions. Both Peru and Bolivia have taken Chile to the International Court of Justice in the Hague over border issues in recent years, while the humanitarian crisis in Venezuela has flooded neighboring Colombia with half a million refugees.
While the organizers excluded Venezuelan President Nicolás Maduro for unilaterally bringing forward general elections this month amidst accusations of fraud and human rights abuses, the summit will also study ways to channel humanitarian aid including food and medicine to Venezuela, something the Maduro regime has blocked until now.
The Venezuelan crisis has become more acute since 2014 due to slumping prices of crude oil, which accounts for 95% of the country’s export revenue, forcing 2mn residents to emigrate. Venezuela, a member of OPEC which holds the world’s highest crude oil reserves, has seen oil production dwindle to an estimated 1.9Mbbl/d from levels of over 3Mbbl/d in 1997.
Maduro, a former bus driver, rose to power as an ally of former President Hugo Chávez, who began his socialist revolution in 1999. Maduro succeeded Chávez upon his death in 2013. The Venezuelan presidential term lasts seven years.
“It’s a country that has ignored the constitution and human rights,” said Ernesto Velit, an international analyst. “There is repression, abuse and political prisoners, which is worrying and a bad example for the region.”
LatAm pay-TV prices creeping up as content improves – Regional
In most Latin American countries the average price for basic pay-TV services increased in 2017 compared to 2016, despite the increased presence of OTT options, a study by Business Bureau reveals.
The regional average is now US$22 for a standard pay-TV package, up from around US$18 in 2015.
Uruguayan providers proved most expensive in 2017, at US$36, while operators in Honduras, Nicaragua and Guatemala charge an average of US$12, US$13 and US$14, respectively.
Year to Year Variation of Basic Pay TV Fee, BB AUDITV 4Q17
Contrary to the view that OTT players represent competition, and therefore pressure on prices, the statistics show that pay-TV users have not been abandoning traditional service in favor of OTT, Business Bureau executive vice president Tomás Gennari told BNamericas. “Instead, we believe the two options are complementary,” he said.
Most of the countries where prices for basic service have increased have also seen increases in subscriptions, indicating a certain degree of client base inelasticity, the analyst explained. The reason for this is that the price increases correspond to more comprehensive service, such as a greater number of HD channels in the package, Gennari said, adding that content providers have also been investing more in content generation, adding to the cost.
Regionwide, 78% of pay-TV accounts are digitalized and 53% include HD content.
Based on direct surveys with pay-TV and digital content consumers, Business Bureau estimates that roughly 48% of all video content consumers (pay-TV + OTT) resort to subscription VOD services like Netflix.
In the case of cord-cutters, SVOD adoption is slightly higher at 50%, while among traditional pay-TV clients 45% supplement it with an OTT service. Among video consumers who have never signed up for pay-TV, SVOD reaches 34%.
To varying degrees, all three consumer types also use internet to access illegal VOD, TV Everywhere, Transactional VOD and Free VOD.
Netflix has a 36% share of OTT accounts in Latin America, and Business Bureau has identified 257 OTT options in the region, up from 211 options in 2016.
The consultancy estimates that there are around 89.4mn homes accessing traditional pay-TV services in Latin America, meaning 51% penetration.
Argentina and Venezuela lead with 78% and 76% penetration, respectively, while Nicaragua, Guatemala and Bolivia lag behind with 31%, 28% and 22% penetration, respectively.
The information presented and opinions expressed herein are those of the author and do not necessarily represent the views of CANTO and/or its members