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Jamaica Eyeing Vonage VoIP Phone Service

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And Now. The Battle for Cyberspace

July 17, 2005

By Claude Robinson

With Digicel emerging as the undisputed winner in round one of the liberalised telecommunications market in Jamaica by dominating the mobile telephony sector, Cable & Wireless now appears to be moving aggressively to take round two, the coming battle for Internet-based services.

At least, that's my reading from the presentations and roll out of services at the Cable & Wireless Horizon 2005 exhibition at the National Arena in Kingston last week, which attracted hundreds of technology buffs and those of us who are just curious about the exciting new world of media and communications.

Magnus Johansson, vice-president for broadband business development at Cable & Wireless, in an interview, says "broadband is the next utility of the world", affirming that C&W is not going to miss the boat.

The company is clearly betting a lot on three inter-related services and offerings - faster and cheaper broadband connections to the Internet, more access to computers by the general population, and integrating Internet telephony into its package of services.

C&W has been on a media blitz promoting its broadband service starting at US$29.95 per month, down from US$45 and way below the US$90 a month they were demanding just over a year ago.

At the exhibition and other promotions they also unveiled a new basic computer called Max, as well as plans to launch their own Internet telephony by August.

Jamaica's telecommunications market was liberalised in 2000 with the termination of Cable & Wireless' monopoly. Many other Caribbean territories, where C&W also had a monopoly, have also liberalised their markets. As was the case in Jamaica, step one was to grant additional mobile telephone licences.

In every market, there has been an impressive increase in mobile telephony, due mainly to the aggressive roll out of services by Digicel, the Irish challenger to the British Cable & Wireless. Digicel is now operating in eight Caribbean countries and eying three or four more.

There are some 1.8 million cellular users and 500,000 landlines in Jamaica, giving the island a tele-density rate of 80 per cent, up from 30 per cent before liberalisation, Phillip Paulwell, minister of commerce, science and technology, said at the 9th Caribbean Telecommunications Conference in Jamaica in April.

Digicel reportedly has some 60 per cent of the cellular market, estimated at between J$30 billion and J$40 billion.

Another C&W monopoly will shortly end when two additional undersea fibre-optic cable networks being constructed by Fibralink Jamaica Limited and Trans-Caribbean Cable Company Limited come on stream, probably before year-end.

In the first round of liberalisation, C&W appeared to use a strategy of delaying the arrival of competition and making it difficult for new entrants to get up and running.

The strategy in round two seems to be to look at where the market is heading and position the company to get there quickly.

Johansson says the company will also take advantage of the synergies it has as a global company and build on its installed capacity.

For example, strategy is basically to "retrofit" the massive wire infrastructure already in the ground to provide broadband services.

"The goal is to have 80 per cent of wire lines broadband-enabled over the next three to four months". Johansson acknowledges that that is a "very aggressive roll out", considering that only 20 per cent of the service is now broadband-enabled.

One aim is to get more current landline customers to sign up for broadband services by dramatically lowering the prices, and secondly by getting new customers who do not have a landline by introducing Max.

Max is a sort of simplified personal computer that can perform many of the functions like surfing the Internet, word processing, spread sheet, games and so on. The downside is that the customer cannot download directly from the Internet.

Johansson says the device is not a substitute for the personal computer. It's more a starter kit for new users and a second machine in the home for experienced computer users. He says it is particularly geared for public access spaces like cafes, libraries, post offices and also in schools where it can be a research tool supplementing PCs in the computer lab.

Customers will pay for the device and the line in one package spread over two years, after which they will own the device. Max "will be offered as an integrated service with broadband", says Johansson.

The third part of the puzzle is where to position the company in Internet telephony, which goes by the cumbersome name of Voice Over Internet Protocol (VOIP), one of the newer technologies that enables consumers to use the Internet for telephone calls, thus bypassing telephone companies.

Big, incumbent telephone providers like C&W spent a lot of time and resources opposing the introduction of Voip and used litigation to challenge upstarts.

Despite laws and regulations against bypass in some countries, the technology is in use and will continue to grow. In the United States, for instance, one of the leading purveyors of this service is Vonage, a small company founded in 2001.

It has more than 500,000 subscribers and is adding 40,000 customers a month, chief executive Jeffrey A Citron said in an interview reported in the Washington Post recently.

Another bypass technology links one computer to another with software that enables the parties to talk for as long as they want without additional cost.

The market leader of this technology is Skype (it rhymes with 'hype'). In their promotion they say, "What we've got is a simple bit of software we want to give you. It'll let you make free calls to your friends all over the world. And we don't want any money for it. It's free".

Recently they added software enabling their customers to talk to people with plain old telephones, whether of the landline or cellular variety.

The BBC technology editor reported last week that they have more than three million customers around the world.
With the technology moving merrily along, it is not surprising that companies like C&W are moving to embrace it into their regular networks rather than fighting against it.

Voip works with a computer, but the consumer is required to have high speed, broadband access to the Internet. For a flat fee of about US$25 a month, plus a high speed connection, subscribers can call anyone, anywhere, anytime at no additional cost.

Anecdotal evidence suggests that many Jamaicans are using both computer-to-computer technology, as well as Voip to bypass C&W and other local networks, hence the response was not unexpected. Incidentally, C&W has already rolled out Voip service in the Cayman Islands at CI$35.95 per month.
Over the next few months, we will be better able to assess the effectiveness of the new look Cable & Wireless.

One thing we can predict from the competition in the mobile market is that Digicel and third placed MiPhone are not going to walk away. It can hardly be a coincidence that last week Digicel announced that it will shortly offer Blackberry mobile service, suggesting that it too will be a player in the next-stage Internet league.

For the rest of us, the prospect of free access to the libraries and books of the world, of downloading music cheap and fast, viewing movie images and photographs of family reunions that we missed - the prospect of all of that, and more, is simply wonderful.

Emily willing, we will look at some of those prospects next week, especially the emerging opportunities for education and learning.

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†AK and HI residents pay $29.95 shipping. ††Limited time offer. Valid for residents of the United States (&DC), 18 years or older, who open new accounts. Offer good while supplies last and only on new account activations. One kit per account/household. Offer cannot be combined with any other discounts, promotions or plans and is not applicable to past purchases. Good while supplies last. Allow up to 2 weeks for shipping. Other restrictions may apply.

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