Just as Cellular Digital Packet Data has been slow to take off in the United States, it looks like it will take a little pushing and shoving for the technology to thrive in Latin America as well.
So far only a few hundred CDPD terminals are deployed commercially in the region, and they are all through one carrier-Tele 2000, which is the B-band operator in Lima, Peru. In October, Tele 2000 became the first company in Latin America to commercially deploy CDPD.
The only other installation is by Grupo Iusacell S.A. de C.V. in Mexico, whose CDPD network is now commercial but only has trial customers. Iusacell has 22 cell sites installed with CDPD and projects it will have 2,000 to 3,000 end users by year-end 1996, according to project leader Rolando Espimosa.
CDPD vendors agree that carriers in Latin America still are hesitant about the technology.
“In South America, any technology that comes up in the U.S. is watched, and then deployed once it becomes successful,” noted Premal Kazi, product marketing manager of international business for Pacific Communications Sciences Inc., which has not yet announced any CDPD contracts in the region.
In the United States, CDPD growth has been slow, he said, which has caused carriers to become more hesitant.
Other carriers are considering the technology, including Colombian carriers Comcel and Celumovil, but both are still in the “browsing” stage.
“I agree with the fact that it’s a hard sell,” said Comcel President Peter Burrowes. “We’re looking at it, and we’re trying to make a business case out of it. Worldwide, there hasn’t been much success with it. But with our low wireline penetration [in Colombia], we might be able to make a case of it.”
Latin American carriers shouldn’t rely on the United States for developing a business case, said Michael Zito, wireless data marketing manager for Hughes Network Systems Inc., which won the Iusacell contract.
The factors driving wireless data in the two markets are very different. Zito explained that in the United States, the target audience for CDPD is the mobile business person who wants the convenience of being able to send and receive data wherever he or she is. In contrast, the initial target market for CDPD in Latin America is for applications where wireless can serve primarily as a substitute for wireline data services-i.e., point of sale and telemetry.
One reason CDPD hasn’t taken off quickly in the United States, say vendors, is that the mobile business people have many options for sending the data-including superb wireline connections anywhere in the country. Although wireline networks in Latin America are improving, they still are insufficient to meet the demand and provide spotty service in many areas.
“Data is very unforgiving when it comes to landline quality,” said Chris Licata, CDPD manager for AT&T Network Systems, which garnered the Tele 2000 contract.
While CDPD also may serve as a wireless data connection in the region for mobile professionals in the future, vendors believe their best sales pitch for now is more basic services.
They all tell stories of checking out at a grocery store, department store or hotel in Latin America, trying to pay with plastic, and waiting 10 to 20 minutes while the sales clerk tries to call out on the wireline network to get an authorization number from the credit-card company. With CDPD, they say, authorization would take seconds.
Other possible applications, they say, are for remote communications with vending machines, ATM machines, meters and alarm systems.
They suggest more unusual deployments, as well. In Latin America, there’s some interest in taking an ATM machine, bolting it on the back of a truck and driving through rural villages to provide residents with banking access once a week-like an “ATMmobile” instead of a Bookmobile, said a PCSI spokesman. The link back to the bank would be a CDPD connection, of course.
But carriers still don’t seem to be sold on how they can make a business case out of CDPD, as evidenced by the small number of contracts awarded.
“I have not been able to figure out how to get them to shift their paradigm,” said Licata. “I tell them to ask their customers. Your customers will tell you what they want to do. And the amount of customers that ask you will tell you how much money that you can make.”
David Murray, commercial vice president for Celumovil in Colombia, said he doesn’t think CDPD is necessarily a hard sell in Latin America, but that carriers have just been so busy with the tremendous growth in traditional cellular that it’s hard to get their attention.
Also, he added, “I don’t think CDPD … is ready yet.” From a network standpoint it is, Murray explained, but the technology is being held back by a lack of supporting billing systems that allow carriers to offer flexible packages. Celumovil, a Northern Telecom Ltd. customer, is interested in CDPD, but it wants to be able to offer customers more than just flat-rate billing.
Nortel CDPD Product Manager Brad Fink acknowledged that billing systems for CDPD need more development, but added, “Our experience so far with most customers getting started is that it hasn’t been a real issue.”
The real issue starting out, he said, is getting customers on the network. Fink suggested carriers work out flat-rate agreements to garner initial contracts, which would provide the financial justification for building out new billing systems.
In Peru, Tele 2000 has been operating its CDPD system since August and started commercial service in October. It reports 400 to 500 commercial end users already installed and projects 1,000 users by the end of its first year of offering service and 10,000 by the end of year two.
Tele 2000’s CDPD system is integrated with AT&T’s Autoplex system, which Tele 2000 uses for its traditional analog-based cellular network.
AT&T’s Licata said he attributes Tele 2000’s decision to deploy CDPD to “vision.”
“Somebody [at the carrier] really had the courage to say, `The only way we’re going to get out of this mess and make some money is to’ ” deploy new services such as CDPD, he said. “They deployed the technology because they could make money at it.”
New revenue is important to cellular providers in Peru. Cellular penetration in Peru has been low, although it picked up speed in 1995. Tele 2000, which has offered cellular since 1990, reported a 52 percent increase in subscribers last year-from 26,278 at year-end 1994 to 40,000 at year-end 1995.
Year-end 1995 figures from Pyramid Research Inc. show Tele 2000 and competitor CPT-Celular together posted 73,000 subscribers; with a population in Peru of 22 million, that represents only a 0.33 percent penetration. In comparison, carriers in Colombia have achieved 0.6 percent penetration after just 18 months of operation.
CDPD could bring on additional customers for Tele 2000 that wouldn’t compete with existing voice customers or take up network capacity. CDPD is designed to transmit packet data over cellular frequencies by exploiting unused airtime and without affecting cellular voice traffic.
“We were interested in CDPD as an alternative to the existing data transmission networks because in Peru there are not enough data lines available to satisfy the growing demand,” said Salvador Raggio, vice president for Televan, Tele 2000’s value-added services division. “CDPD is a good solution for POS applications, alarms, lottery and others that do not require dedicated lines and get advantage in costs through CDPD.”
Raggio indicated that CDPD will fill a gap in the market. Tele 2000 views point-of-sale applications as the most important application for CDPD and already has a contract with a Peruvian credit card company for 3,000 end user installations that will come online in the next two to three years.
Lottery also is an important market for the technology, he said, because lottery companies want to be able to remot
ely monitor their automated lotto ticket machines. Tele 2000 also has received interest from a company that wants to use CDPD for remote betting on horse races.
“The main problem with CDPD is it is not yet commercially available in every place,” he said. “But many people anticipate that CDPD will be a very interesting system [when it does] become more available for subscribers.”
Raggio acknowledges that it can be difficult to introduce any new technology, but said that for a carrier to dismiss CDPD now is like a shoe salesperson thinking shoes can’t be sold in a particular country because people there don’t wear shoes.
“You can sell a lot or not sell any,” he said. “We decided to take the risk.”