Pockets of wireless local loop operations and fixed cellular services are emerging throughout Latin America and the Caribbean. Small-scale operations and field trials are underway in Argentina, Belize, Brazil, the Dominican Republic, Ecuador, Jamaica, Mexico, Peru and Uruguay. But many of these areas may not see pervasive fixed-cellular or even extensive basic telephone coverage until well into the next century.
Deployment
To extend their service areas and provide basic telephone service, many cellular carriers in the region are erecting additional cell sites to connect new customers into their network. Primary applications are for residential service with limited mobility and for pay phone service to villages that don’t have any telecommunications.
Fixed cellular also is a solution for new basic service providers that want to build out a network in far less time than it takes to construct a wireline infrastructure. In addition, WLL is being employed by wireline carriers such as Telecom Argentina and Telefonica de Argentina to extend their networks.
“The biggest trend in wireless local loop [and fixed cellular] operations is that they are being deployed,” said Linda Barrabee, senior associate for the Latin America/Caribbean group at Cambridge, Mass.-based Pyramid Research Inc. “With the advent of competition, countries and governments are finally getting serious about providing service, and they recognize the need to install the infrastructure quickly.”
It takes months to deploy a WLL or fixed cellular system vs. years to install a wireline system. In addition, fixed cellular and WLL solutions require far less capital outlay than wireline systems. In Mexico, for example, it costs Telefonos de Mexico $1,800 per subscriber to install service for a wireline subscriber, but it will cost Grupo Iusacell S.A. de C.V., Mexico’s largest A-band cellular operator, $400 to $600 to bring up service for a subscriber under its fixed cellular deployment plan, according to Grupo Iusacell.
A factor that adds cost to-or can even prohibit-wireline deployment in Latin America is the difficult terrain that must be crossed. Mountains and jungles serve as obstacles to traditional wireline systems in many parts of Latin America and the Caribbean.
Wireless solutions sidestep the necessity to dig trenches for copper or fiber-or to install telephone poles. Sparsely populated rural areas, which include regions directly outside large cities, also are expensive venues for wireline-system installation because of large distances between homes and villages.
Rita Gomez, senior consultant for Washington, D.C.,-based MTA-EMCI Telecommunications Consultants, agreed that Latin American governments are allocating more and more spectrum specifically for WLL operations, and added that last year, a higher percentage of cellular phones were sold for fixed purposes than for mobile cellular usage in the region. But while the circumstances are ripe for these fixed applications in Latin America, deployment remains spotty.
Barrabee offered several reasons why fixed cellular still represents just a small segment of Latin America’s telecommunications market:
Inherently, cellular technology is a mobile technology, and operators have been concentrating on reaching and serving mobile customers.
Residential fixed-cellular customers must absorb the cost of the terminal equipment, which can be costly.
Unless operators receive the freedom to set different tariffs for fixed and mobile service, the service itself also will be quite costly for the fixed customer.
In fact, until the price of wireless service drops, wireless should not be viewed as a substitution for wireline, said Marta Kindya, research manager for Northern Business Information in New York. “Wireless is extremely expensive,” she said.
Mobile cellular has been extremely successful in Latin America. But it has been successful only with business people and upper-class, wealthy residents up until this point. They can afford it.
The problem in Latin America is that there isn’t really a middle class. The question then remains whether the large lower class-the target customer for most fixed deployments-can even afford fixed cellular service in their homes. In many areas it may remain a pay phone service only.
In addition, there’s the question of a mobile cellular phone as a status symbol. Because it is the very rich who have pocket phones, many lower class people covet them and often would rather have a pocket phone than a fixed handset.
“Pocket phones are very much status symbols in Latin America,” Kindya said. “They have snob appeal.”
Mexico mission
The most ambitious plan for this technology thus far is Iusacell’s plan to create a nationwide system with 1.7 million fixed-cellular subscribers by 2000.
During the past year, Iusacell has been conducting a field trial of fixed cellular in the Toluca-90 minutes from Mexico City. The 2,200 trial subscribers have handsets with an antennas they can plug in to connect with the wireless network. Users can take their phones outside their houses and even next door.
“But this is not a pocket phone,” asserted an Iusacell spokesman, explaining that the company does not want to compete with its own cellular market of 207,000 subscribers.
Iusacell originally hoped to initiate service in September, but Mexico’s regulatory agency, Secretariat of Communications and Transport, has not yet approved the project’s commercial and technical plans. Iusacell hopes to gain approval and offer service during the first half of this year.
Iusacell awarded a $330 million contract to Northern Telecom Ltd. for Time Division Multiple Access equipment to build out the network.
Iusacell will charge its subscribers $380 for the wireless terminal, with an average monthly fee of $20 per customer-10 percent to 15 percent more than the price of wireline service. These prices are too high for Mexico’s lower class, but the company said many middle-class people need a phone. Mexico has 9.5 telephone lines per 100 people; the SCT’s goal is to have 20 lines per 100 people by 2000.
Other deployments
Pyramid Research has cataloged these other fixed-cellular and wireless local loop deployments in the Caribbean and Latin America:
Argentina-Telecom Argentina and Telefonica de Argentina are prohibited from providing fixed cellular service, but have several WLL projects planned and underway.
Brazil-A government-mandated program will offer fixed-cellular service-either via pay phones or full residential service-to roughly 186,000 people by 1998.
Colombia-Working with local carriers, Motorola Inc. has installed three WLL systems, with a fourth planned for this year.
Dominican Republic-Under an agreement between Codetel and Tricom, the two offer fixed cellular service to more than 2,000 customers.
Ecuador-As part of their concession guidelines, Conecel and Otecel must provide rural and pay phone cellular service throughout the country.
Jamaica-Telecommunications of Jamaica, Ltd. (Telecom Jamaica), serves about 1,200 remote subscribers via fixed-cellular technology. Telecom Jamaica also has installed 300 card-operated public telephones that are linked to the public network via fixed-cellular technology.
Mexico-Portatel del Sureste has installed about 450 cellular pay phones throughout the country.
Peru-Tele 2000 has invested $5.5 million in its public cellular pay phone network. Telefonica operates some cellular pay phones and plans to install fixed cellular networks in rural Peru.
Uruguay-Antel provides mobile and fixed-cellular services over the same infrastructure. Antel estimates that its fixed-cellular subscriber base will reach 20,000 by the year 2000.
