Chilean cable moves closer to quad-play
VTR, Chile's largest and one of Latin America's most innovative MSOs, has made the case that the cable industry can't afford not to enter the market for mobile telephony and – particularly – for wireless broadband services.
The argument was made by the company's executive president, Mauricio Ramos, speaking at a presentation during the 2011 International Conference for Cable TV and Audiovisual Channels, which closed on Friday at the Hilton Hotel in Buenos Aires, Argentina.
While many other regional MSOs have seen their attempts to add a fixed telephony service to their video and broadband products blocked by regulatory or technical obstacles, VTR has been a 'triple player' in Chile for over a decade.
Now, the cable company (80% owned by Liberty Media) is gearing itself up to go a step further – at some point in 2012 it will be become Latin America's first quad-play operator.
Using a portion of the radiofrequency spectrum that it won in a 2009 auction, VTR will launch a 3G, wireless broadband service which Ramos says will be of strategic importance to the future of the company.
"When a cable operator makes the decision to go for a quad-play service offering, it does so in the pursuit of an offensive strategy," Ramos said. "For many of the operators in the region, over 50% of our income already comes from services other than the provision of video."
Pointing to the fact that wireless services make up over 60% of the entire Chilean telecommunications market (which is worth US$ 6.5 billion), Ramos warned: "If we don't take this step, we are limiting ourselves".
He stressed that, in the eyes of Chilean consumers, "we already are an integrated telecoms service provider". To illustrate this point, he said that the 2.1:3 convergence ratio that VTR currently has is one of the highest in the world. "It means that each of our 1.2 million subscribers are entrusting VTR to supply them with an average of 2.1 of the three services that we offer."
Ramos admitted that, when it comes to competing head-to-head with the cellular companies, the challenges are manifold. Among them, he acknowledged that MSOs have lost a lot of ground to the mobile telephony guys. "We are entering this business very late, and the mobile companies have had 10, 15, 20 years to reach a coverage density of practically 100% of the population," he said.
Initially, VTR will be launching as a mobile virtual network operator (MVNO), which means the company will be renting wireless infrastructure from an established cellular provider. While VTR hopes to be able to build its own base station towers in the near future, Ramos revealed the company is lobbying for regulatory changes in favour of antenna co-location rules.
This, VTR's executive president argued, would help reduce not only economic barriers to new entrants but also the environmental impact caused by launching new services by duplicating access infrastructure.