YOU ARE AT:Archived ArticlesCELLULAR MARKET FLOURISHES WHILE PCS STUCK IN COURT

CELLULAR MARKET FLOURISHES WHILE PCS STUCK IN COURT

WASHINGTON-They announced it, delayed it, set deadlines and then extended them-each one of these at least once and often amid accusations of scandal and preferential treatment. Currently, the tender process for two 1.9 GHz PCS (Personal Communications Services) licenses to serve a 100-kilometer area including the greater Buenos Aires region is again on hold, this time due to a judicial complaint filed by Canadian company Telesystem International Wireless Inc.

This most recent injunction claims that modifications made to the bidding rules would favor the joint bid by interior-region cellular incumbents Unifon and Personal. Considering the high stakes involved and the potential to serve the 14 million people that live in the area, most analysts expect the legal battle to go all the way to the Supreme Court of Justice.

The government of Argentina is auctioning two 40 megahertz PCS licenses for this large, urban region. In addition, it will present the cellular incumbents in Buenos Aires-CRM Movicom and Miniphone S.A.-20 megahertz each, at 50 percent of the average price paid by the two new operators.

Six months after the Buenos Aires licenses are granted, two licenses for each of the interior regions (North and South) will be auctioned, following the same principle: two new 40 megahertz licenses will be sold, and the incumbents will each receive 20 megahertz.

According to the licensing rules, an operator cannot participate in the auction for the 40 MHz licenses in the region where it already offers cellular service.

Despite the uncertainties and legal wrangling over PCS, the Argentine wireless market is still attractive both to operators and equipment manufacturers worldwide. Although the Brazilian B-band auctions dominated the headlines last year, “Argentina’s market was larger than Brazil’s,” said John Althoff, director of sales for Ericsson Mobile Phones’ Latin America region. “One reason for this unexpected market explosion was the pending award of PCS licenses, which motivated cellular operators to become quite aggressive for customers. And it is quite ironic that PCS was delayed.” Ericsson provides TDMA (Time Division Multiple Access) technology for the three Argentine A-band operators.

The cellular sector has averaged an overall growth rate of 331 percent since January 1997, with increased competition among the five mobile operators. A major factor that contributed to this exceptional growth was the introduction of Calling Party Pays (CPP) on 15 April, 1997. By the end of 1996, the country had about 660,000 subscribers. One year later, more than 2 million Argentines had a cellular phone in hand.

Currently, Argentina boasts 2.4 million cellular subscribers, with an overall national density of almost 7 percent, and 10 percent for greater Buenos Aires.

In addition to CPP, other factors were involved in stimulating this growth. “Cellular companies started to offer a wider range of services, from prepaid to the utilization of new technologies, which allowed the incorporation of new features … ,” according to Juan Felipe Manavella, legal adviser at Argentine regulatory agency Comission Nacional de Comunicaciones’ (CNC) Office for International and Institutional Relations. “Also, I think that the population started to gradually understand the benefits of [cellular].”

Movicom initiated services in 1989 in the Buenos Aires region, and CTI Movil has been serving the interior North and South since 1993; both use the B-band. Also in 1993, Buenos Aires gained a second operator in the A-band, Miniphone. A-band competition in the interior regions did not start until 1996 when Personal initiated services in the North, and Unif

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