CANTO WEEKLY NEWSLETTER – BNAMERICAS

CANTO WEEKLY NEWSLETTER – BNAMERICAS

Thursday, June 21, 2018

Beyond connectivity: Cuba prioritizing digital literacy for healthcare, culture – Cuba
VTR raises US$474mn in Chilean market – Chile, Regional
Costa Ricans fast migrating from phones to internet – Regional
2G migration requires public-private cooperation – Colombia, Regional
How the AT&T-Time Warner merger could pressure the LatAm pay-TV sector – Regional
Our Mission
“Influence the innovation and development of ICT solutions for the benefit of members by developing, navigating and leveraging relationships with all stakeholders.”

“Advocate for policies, legislation and rules which advance the creation of an environment which facilitates the deployment of services and technologies around the region.”

Vision
“To become the leading authority in shaping information, communication and technology in the Caribbean Region and the Americas.”

Beyond connectivity: Cuba prioritizing digital literacy for healthcare, culture – Cuba

Being connected to the internet is key for social and economic development. However, much of the emphasis is often put on the connectivity itself and the speeds and less on how it benefits the population.
Studies have shown that poverty is not the only reason that many people in developing nations are still not connected to the internet, another being that they don’t find value in it.
Cuba, the host nation of this year’s Latin American Telecommunications Congress (CLT18) on June 11-15, has one of the lowest levels of internet connectivity in the region. However, there are numerous ongoing projects being applied in the areas of education, healthcare, tourism and culture.
CLT18 was jointly organized by the Latin American telecommunications association Asiet, the global mobile operators association GSMA, Cuba’s communications ministry and state telecoms provider Etecsa with input from the UN International Telecommunication Union (ITU).
During the plenary session, communications minister Maimir Mesa Ramos revealed that there are now 4.5mn Cubans accessing the internet, or 39% of the population and the aim is to reach 50% internet in homes and 60% mobile penetration by 2020.
CUBA 2030
Despite the US embargo, Cuba has developed a digital roadmap with 22 projects and two key strategic areas – rollout of ICT infrastructure and the production of digital content and services.
The plan requires local governments to draw up their own ICT use strategy with a special focus on software, the creation of technology parks in conjunction with universities and opening up to foreign investment.
The plan contemplates opening up e-payment to promote e-commerce. Etecsa has promised that 3G services will be launched this year.
A total of 1.7mn Cubans use the Nauta mobile internet card system and 36,928 use the Nauta Hogar home internet service. Some 2.4mn Cubans use the state e-mail service.
The island is developing its own operating system called NOVA that will be included by default on computers sold in Cuba as well as its own mobile OS called AndroNOVA.
Also under development is C.U.B.A, a search and messaging platform akin to Google.
EDUCATION
Cuba’s IT university UCI presented its plan at CLT18, which includes installing 14 software development centers for innovation, where 1,000 specialists and academics will develop software projects for over 100 local institutions.
The national university network Red UNIV has 35,000 computers online, 28 nodes connected to fiber and more than 550 Wi-Fi access points.
Under development is the digitalization of libraries for universities, educational content for distance learning, online courses, and social networks for education.
The education ministry is also working on two macro projects: an integrated system for teachers, and public, interactive learning platforms as well as increased and improved connectivity in schools and tailor-made software.
The Cubaeduca virtual platform includes a social network for schools called Ula, Ula, the Academus school management platform and digital libraries for students and teachers.
HEALTHCARE
The national plan also touches Cuba’s renowned healthcare system. Some 1,640 healthcare institutes are already connected to broadband, while 70 centers are connected to a national integrated hospital and clinic management system known as SISalud that manages capture, storage and sharing of hospital records and images.
The Infomed portal provides information and training in the healthcare sector and receives 12mn visits and 160,000 emails per year.
CULTURE
The culture ministry’s Cubarte portal is composed of an online newspaper, blog, multimedia repository and cultural events calendar with links to more than 300 cultural sites.
Another site, Papeleta, is for finding and purchasing tickets for cultural events. Dritmo, meanwhile, is an app that allows for the downloading of songs of Cuban bands.
TOURISM
The tourism ministry is promoting the use of digital networks to reserve hotels and trips to attractions as well as Cuba Maps which shows where these places are located.
According to Etecsa, 72% of hotels now have some sort of connectivity and the goal is to reach 91% in 2018.
Deputy communications minister Jorge Luis Perdomo Di-Lella told BNamericas at CLT18 that recent talks between Google and the government are designed to improve the positioning of Cuban content on the internet.
VTR raises US$474mn in Chilean market – Chile, Regional

Chilean cable TV and triple play operator VTR has raised US$474mn in the local market.
The company, which is a unit of Liberty Latin America, secured a 174bn-peso (US$271mn) syndicated loan and a credit line for US$180mn and another for 15bn pesos (US$23mn).
The high demand shown by banks meant that the loan was 40% oversubscribed compared with the original objective of 125bn pesos.
In a statement, the company said the funds would provide it with greater liquidity and demonstrated investor confidence.
The transactions were the first peso-based loan granted to VTR and the first syndicated loan since January 2014, when VTR Finance issued international bonds for US$1.4bn with a coupon of 6.875% maturing in 2024.
Scotiabank, BBVA and Itaú acted as loan arrangers, while BCI acted as mandated lead arranger.
Liberty Latin America, which controls VTR, Cable & Wireless Communications and Liberty Puerto Rico, split off in January from Liberty Global and has said it is actively seeking an inorganic growth strategy to better position itself in the region.
The first acquisition, of 80% of Cabletica for approximately US$250mn from the Picado family, was announced in February and is still awaiting final approval in June or July.
VTR has said it will take on an administrative role in overseeing future acquisitions of Liberty in the region.
Costa Ricans fast migrating from phones to internet – Regional

Costa Ricans appear to be migrating fast toward internet services while ditching more traditional fixed and mobile calls and messages, according to the latest data from the country’s telecoms watchdog Sutel.
The regulator’s latest statistical report shows that mobile internet traffic grew by 10% in 2017, while mobile calls fell by 11%. And as internet-based communications apps like WhatsApp take their place, mobile texts (SMS) contracted drastically in the year by 37%, it added.
Costa Rica has one of the highest mobile densities in the region, with 179 lines per 100 inhabitants, the report said.
Despite a reduction of 4.2% in traditional fixed-line telephone subscriptions, the country saw a 60% jump in fixed-line internet traffic last year, Sutel added.
Costa Rica ranks in the top 10 countries in the Americas in terms of ICT development, according to the International Telecommunication Union (ITU), just ahead of Latin America’s largest economy, Brazil.
Manuel Ruiz, a member of the Sutel board, was quoted as saying that “easy access to internet in the country make users substitute traditional communications with platforms such as WhatsApp, Viber [and] Telegram, among many others.”
2G migration requires public-private cooperation – Colombia, Regional

Shutting down 2G networks and migrating those users to 3G or 4G has clear benefits in terms of cost savings as well as promoting use of mobile broadband. However, the transition will require a clear coordinated public-private strategy given the cost of buying new handsets but also because 2G is used for more than just voice.
Germán Darío, head of Colombia’s communications regulator CRC, told BNamericas that the watchdog is in favor of switching off voice centric 2G networks as are operators given the high costs of maintaining numerous networks lit at the same time, but the costs of doing so could be prohibitively high in the short term.
Eduardo Ricotta, CEO for Brazil at telecom equipment provider Ericsson, told BNamericas last month that he predicts that in 2018 and 2019 the cost of maintaining 2G networks could surpass that of the income they generate.
The cost of migration is mostly associated with handsets, as the majority of users still on 2G networks are located in rural areas where many people will have difficulty in affording new phones.
CRC estimates there may be some 10mn handsets still in use in Colombia. In addition, in some parts of the country 3G networks are not available. The watchdog estimates that the cost of financing the migration from 2G to 4G could reach US$1bn.
According to a report by consultancy Ovum, GSM connections totaled 174mn, or 25% of the 690mn total mobile subscriptions in the region at the end of last year compared to 29% LTE connections and 45% HSPA.
According to 5G Americas, citing 451 Research, Colombia is expected to have some 62.5mn mobile lines in 2020 of which 51.2% will be LTE compared to 35.6% in 2018, the remainder being 2G and 3G.
“I think that once users see the benefits of 3G, if they see that it improves their quality of life, they will make the effort to pay for a plan,” Darío said.
“Governments and operators need to reach agreements to switch off 2G in a reasonable timeframe.”
José Juan Haro, Telefónica’s Latin America director of public policy and wholesale business, compared the migration from 2G to 4G to that of the analog TV switch off.
“You have to set a date to work towards and try to encourage the maximum level of migration on the part of the private sector and then supplement that with subsidies for the segments of the population that cannot afford the handsets. However, there are many that can pay,” Haro told BNamericas.
According to the executive some 100mn Latin Americans live in areas where there is no mobile internet coverage, of which 40% have 2G networks and the remainder, no network coverage of any description. He said that the incremental cost of upgrading base stations is clearly lower than that of starting from scratch.
BRAZIL
Leonardo Capdeville, CTO of Brazilian telco TIM, said last month that shutting down 2G is a complex task given that a large number of point-of-sale (POS) devices used by retailers for card payments are still using 2G networks.
In addition, 2G EDGE is said to be an appropriate technology for internet of things (IoT) sensors, which don’t require much bandwidth.
Speaking on a panel at the 5G & LatAm Summit in Rio de Janeiro last month, Sebastián Cabello, Latin American director of telecom industry association GSMA, said he expects 3G to be switched off before 2G because of what 2G is being used for and because most of what 3G does can be done by 4G.
How the AT&T-Time Warner merger could pressure the LatAm pay-TV sector – Regional

By Tomás Sarmiento in Mexico City and Pedro Ozores in São Paulo
Free HBO with your DirecTV subscription? Unlimited access to “Game of Thrones” reruns? As US giants AT&T and Time Warner go ahead with their US$85bn merger in the US, competitors of the company in the Latin American pay-TV market might be hard-pressed to keep up with their already formidable rival.
The US judge that allowed the merger to pass on June 13, opening up the field for a slew of other consolidations between distributors and content developers, followed long-standing jurisprudence allowing companies from different sectors to consolidate, despite government arguments against the potential for lesser choice for consumers.
But the new content could prove vital for viewers south of the Río Bravo, where AT&T’s DirectTV Latin America unit is locked in a fight against América Móvil’s Claro units in most of South America.
Under the deal, AT&T will own massively popular entertainment content producers such as HBO and Warner Bros, as well as news channel CNN. HBO in particular is part of most premium content packages in Latin America’s pay TV providers.
The move is “a major shot across the bow toward other cable and wireless players as this communications and media behemoth is now hitting the ground running,” said GBH Insights head of technology research Daniel Ives in a recent note to investors.
“In particular, we would expect aggressive bundling of HBO, CNN, and other proprietary sports content (NBA, NCAA, MLB) from Time Warner into the AT&T network as a key incentive for current and new AT&T wireless customers.”
THE LATIN AMERICAN GAMBIT
Back in April 2017, AT&T had already made HBO available free of charge for US customers with an “unlimited plus” wireless plan, as well as for DirecTV customers. Similar offers could help the company turn the tables on its competition in Latin America, where its single-play satellite DTH service is no match for Carlos Slim’s Claro, which leads the market by pairing cable TV with fixed voice and broadband services.
AT&T subsidiary Vrio, which holds the company’s DirecTV Latin America and Sky Brasil assets, had 13.6mn subscribers in 11 countries in Latin America in the first quarter. The company also owns 41% of Televisa-controlled Sky México, the leading satellite pay-TV provider in Mexico with 8mn subscribers.
Claro, for its part, reported 21.5mn pay-TV subscribers across South and Central America as of March. But the company does not own a content generating unit nearly the size of Time Warner. Its streaming service Claro Video only recently started to finance and produce original content.
“Certainly an alliance of this nature can generate substantial power in the market, unless the other network operators also acquire their own content sources and then compete with similar services,” Manuel Molano, deputy director of Mexico’s competition think tank IMCO, told BNamericas.
“Until the competition reacts, the only loser will be the consumer.”
But there could be some wrinkles in the alliance.
On Friday, Brazilian regulator Anatel gave Sky Brasil 15 days to explain the effects of the AT&T-Time Warner merger on the local market. Brazil’s competition regulator Cade signed off on the deal in October with conditions.
Sky did not respond to BNamericas’ request for comments.
Sky Brasil accounts for about a third of the local pay-TV market, while Time Warner sells pay-TV programming in the region via its content distributor Turner International.
To offset competition problems, the companies entered into an agreement with Cade whereby they agreed to comply with a series of obligations imposed by the antitrust body, such as maintaining separate legal entities with their own administration and governance structures.
Also, Sky and Turner will not be able to exchange sensitive information with each other nor discriminate against competitors.
Time Warner will have to offer its channels – such as Warner and HBO – to all carriers and Sky cannot refuse to broadcast channels from other programmers nor impose prices or conditions that are considered to be discriminatory.
A DOWNWARD MARKET
In an interesting twist, México is the only country where AT&T and América Móvil compete directly is also the only one where they cannot face each other in media and pay TV. But América Móvil has been barred from offering pay TV or broadcasting services in the country since the privatization of Telmex in 1990.
The country is seen as the largest pay TV market in Latin America with close to 29% of the region’s customers by 2023, according to a recent report by Dataxis. But the regional pay-TV market has been on a downward trend recently.
According to a recent Latin America Pay TV Forecasts report by Digital TV Research, the number subscribers in the region was flat last year at 70.4mn and the expansion is set to remain slow over the next years, with fewer than 5mn additional pay TV subscribers expected to about 76mn.
That trend could make it more difficult for AT&T to keep investing in the region, considering that its takeover of Time Warner has left it with around US$180bn in debt and a earned it a ratings downgrade from Moody’s Investors Service, which considers it “the most indebted non-government controlled, non-financial rated corporate issuer,”
Among the assets that the company has considered divesting is Vrio, which was expected to raise over US$650mn in a now cancelled IPO.
Copyright 2017 Business News Americas

Tel: (868) 622-3770/4781 Fax:(868) 622-3751 e-mail: cramlal@canto.org Website: www.canto.org

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

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