Puerto Rico: A Hotbed for Telecommunications
Puerto Rico is considered among the most advanced and fastest-growing telecommunications markets in Latin America, with one of the highest rates of mobile tele-phone penetration and Internet users per capita. Yet when it comes to fixed lines and especially broad-band Internet access, the local market still lags behind the U.S. mainland.
For years the local telecommunications market was almost completely controlled by the Puerto Rico Telephone Co. (PRT). First owned by ITT, the company was bought by the local government in 1974. The PRT's long-distance branch was then sold to Telefónica Internacional based in Spain in 1992 after which GTE Corp., later known as Verizon, bought a control-ling interest in PRT in 1997.
Since the 1996 Puerto Rico Telecommunications Act, also known as Law 213 and which effectively deregulated the telecom industry, significant growth has been felt in the sector due to the entrance of other players in the local arena which, in turn, stimulated competition, additional investments in infrastructure and special offers for consumers.
This prompted an unprecedented penetration in telephone usage, reaching approximately 93% by 2007, just a little over 10 years after Law 213 was signed. Meanwhile, the industry has grown by an estimated $5 billion in new products, services and infrastructure. The voice segment alone, which includes telephone and wireless, has increased to more than three million lines of which 60% are mobile phones and 37% are regular landlines. In total, it almost equals one line per eligible consumer on the island.
PRT, the incumbent local exchange carrier now owned by Mexican telecommunications powerhouse América Móvil, still controls much of the landline telephone business on the island. However, long-distance and mobile-service companies, most of which have been established during the last decade, have proven extremely competitive to the point of threatening the incumbent's landline business.
This has resulted in dramatic change on the part of PRT and others in regard to establishing a cost for their services, such as dropping inter island long-distance charges, reducing the number of calling zones from 68 to 10 and dropping general long-distance rates from 15 cents a minute to as low as three cents. This highly-contested market has a regulating body in the form of the Puerto Rico Telecommunications Board, which behaves in a similar manner to how the Federal Communications Commission (FCC) works in the mainland U.S.
Among the major cellular phone signal providers, the largest one is AT&T Mobility (formerly known as Cingular Wireless), with an estimated 700,000 subscribers and some 950 employees. It is followed by Claro (part of Puerto Rico Telephone), which has 500,000 subscribers and 4,430 employees (including those in the PRT) and Centennial de P.R., with approximately 400,000 subscribers and 1,550 employees. SunCom Wireless is fourth with 314,208 subscribers and 280 employees, trailed by Sprint with an estimated 290,000 subscribers and 300 employees and by Open Mobile (formerly Movistar), which declared bankruptcy late last year, with a subscriber base of 180,000 and 300 employees.
Meanwhile, as far as Internet access goes, Puerto Rico is still way behind the mainland U.S. with just about a fourth of local residents having Internet access for a penetration rate of only some 25%. This places the island as the third in market penetration among countries in the Caribbean region but it is expected the number of Internet users will grow to 1.5 million by 2008 from the little more than one million that are currently logged on. As for broadband (or high-speed) Internet access, the market penetration is even lower despite the rise of proven technologies such as DSL and also cable companies get-ting into the business, offering voice, data and cable through one triple-play platform.
Despite this, Internet-related technology is poised to revolutionize telecom even further through Voice over Internet Protocol (VoIP) which allows voice transmissions through data channels such as broadband Internet. Instead of traditional dedicated voice transmission lines, VoIP routes voice conversations over a general-purpose network, mostly the Internet itself or any other Internet Protocol-based network. Although just 3.7% of all Internet consumers are using VoIP currently, consumer migration to the technology is expected to rise exponentially in the near future as broadband connections become faster and more common in Puerto Rico.
