Voice over: the data revolution—late to Latin America but coming nevertheless—promises to change how people think of their cellular phones

Latin Trade, March, 2005 by Andres F. Velazquez

In 2002, America Movil nevertheless installed an extensive GSM network in Mexico. The Telefonos de Mexico unit controls Telcel, the largest cell phone operator in Mexico, and operates in 10 other countries in the hemisphere, part of Mexican billionaire Carlos Slim's empire. The logic behind this investment called for spending on technology, that the market demanded, says the company.

Patricia Ramirez, head of corporate communications at America Movil, says that GSM allows for economies of scale and better synergies at the global scale for the group. "We believe that the important thing was to create a market for 3G services," says Ramirez. "It's not enough to say 'We have 3G technology' and that's it. In fact, technically, neither in Mexico nor in any other part of Latin America are there 3G networks in operation."

Apparently, the road taken by America Movil has been profitable. According to the company, Telcel's data transmission as a percentage of total revenues grew to 10% by the end of 2004 from 6% in February of that year. Ramirez says the rate of downloads of ringtones and similar applications are growing. Yet people, depending on who they are, are still evaluating whether this service is worth paying for. Unlike in Asia and Europe, Latin Americans are less interested in data, she says. "Culturally, we Latins are more interested in the warmth of voice" Ramirez says. Wired world. It's clear that, up to now, the majority of mobile applications in the region do not require more modern telephone accessories or networks with greater data-transmitting capacity. In Brazil, however, mobile telephony is beginning to provide things that were once unthinkable in the region: Watching television on a cell phone and using a phone as a GPS satellite-tracking device. Just talking, although always the bread and butter for carriers, will soon be passe as a new generation of young users swarms to all the wired world has to offer.

Although these latest-generation services are barely beginning to roll out on a massive scale, there are trends such as downloading ringtones and images, as well as games, that have been much more readily accepted in some market segments, especially in Brazil and Venezuela. If downloading these basic services in the short- or medium-term leads to Latin Americans watching television on their telephones, mobile phone operators in the region can boost revenues significantly. A lot depends on the price of these services--and how much new investment the carriers are going to have to make.

ANDRES F. VELAZQUEZ

MIAMI