Fixed-line firms face services challenge

THE TELECOMMUNICATIONS market has plenty of room for growth and as competition increases, services will continue to expand to meet demand. While mobile telephony is the most cost-effective in the largest country in Latin America, the established fixed-line network remains a core provider for both city-based businesses and homes.

CARLA CICO CEO of Brasil Telecom

Brazil has the eighth-largest fixed-line network in the world, with more than 66 million subscribers—half of all Latin American fixed-line customers. With such a subscriber base and substantial capacity for expansion, the huge potential for providing new services is hard to miss.

As fixed-line penetration is still well below Western levels—at around 22 fixed lines for every 100 citizens—and with a population estimated to grow to 180 million by 2005, Brazil represents an attractive market for new entrants. There are currently three major local loop operators that were former monopolies and still control about 90 percent of the market, but since liberalization began a few years ago, new operators have slowly made inroads.
Carla Cico, Chief Executive Officer of Brasil Telecom, says privatization is good for the country because it brings in money, while competition has had the effect of driving down prices and sharpening up the business environment.

“The market expects us to be more than just an installer of telephones. It expects us to be a service company,” she says. “There is going to be revolution among fixed-line operators, who will have to become service operators.”
As telecommunications have become more flexible, as well as more specialized, meeting the needs of different clientele has opened up niche markets for some operators. For example, Ms. Cico points out the power telecommunications possesses as an educational tool. “Telecommunications and education means business, and that is good,” she says.

And more consumer transactions are increasingly being made by telephone which is to the advantage of Brasil Telecom. “In reality,” says Ms. Cico, “we are a monopoly in residential terms. But we have to fight to win corporate clients.”
As a major player in the fixed-line market, Brasil Telecom has reasons enough to feel confident about its future. “The Brazilian telecoms market is undergoing the same process of consolidation that all other markets are facing,” says Ms. Cico. “In the medium to long-term, Brasil Telecom is a very safe and stable investment.”

The speed with which fixed-line networks can be rolled out is expected to accelerate over the next three years. By the end of 2005, the aim is to provide every community of 100 inhabitants with at least one public telephone, while in towns and cities with more than 300 inhabitants it is expected that installation of a fixed-line should take no longer than a week.

Ms. Cico says that everybody today is able to access the same information, so information alone is not going to give a company an edge. “People are the key,” she says—her goal is to employ the best people in the telecommunications business and make Brasil Telecom a company “from which other companies are trying to poach its managers.”