Information Technology in Argentina

 

Since 1989, the Menem Administration has pursued wide-ranging economic reforms designed to open the Argentine economy and enhance its international competitiveness. Privatization, deregulation, the lowering of import barriers and a fixed exchange rate have been cornerstones of this effort. All these changes have dramatically reduced the role of the Argentine state in regulating the domestic market.

With privatization in late 1990, the former state-owned telephone company, EnTel, was divided into four entities: Telecom Argentina (owned by Telecom of France) and Telefonica de Argentina (owned by Telefonica of Spain) were licensed to provide the national telephone service (center-north and center-south of the country, respectively). Telintar, the new long distance company, took charge of providing international service and services in competition (data transmission, e-mail, data banks) through its affiliate Startel. CRM (Movicom; Bell South; Motorola) was licensed to provide cellular telephony in the City of Buenos Aires and Greater Buenos Aires in November 1989. The two land-line telephone companies began operating cellular services in the same area (second band) as Movistar (Miniphone) in 1993, and in late 1993 CTI (led by GTE/AT&T) was awarded cellular telephony services in all the Argentine provinces.

Other than the expansion of the telephone service, one of the most visible effects of privatization has been technological improvement. Installation of optical fiber rings started to be developed, the telephone network in rural areas grew, and there was a sharp rise in activity of industries which supply the telephone companies.

Up to 1989 the state-owned EnTel monopolized telecommunication services in Argentina, which were characterized by antiquated equipment, inefficiency and high costs. The privatization decree defined four areas of activity:

The Northern Region was awarded to a consortium composed of Telecom, Stet (Italy) and France Telecom, now Telecom Argentina; whereas the Southern Region was awarded to a consortium led by Telefonica de Espana, now Telefonica de Argentina. These two companies hold exclusivity rights during seven years, i.e. until 1997. This term, however, may be extended until the year 2000. So that, in fact, new operators may aspire to provide basic telephony services in competition with the two Argentine telephone companies as of the beginning of the next century.

 

Results of Privatization

Following privatization in 1990, Telintar has increased digitalization of international lines by 60% and international circuits in operation by 50%. In addition, in June of 1994, four months ahead of schedule, Telintar completed the Unisur project, which involved installing an underground optical fiber and digital cable connecting Argentina, Uruguay and Brazil. The project demanded an investment of US$75 million, of which Telintar put up US$27 million (36%). The remaining 64% came from 20 international companies. [1]

Unisur will link Columbus II and Americas I satellites, thus connecting the American continent to Europe, Asia, Africa and Oceania, Telintar has 2.3% of Columbus II and 5.5% of Americas I. [11]

The table below shows the results of four years of privatization. The number of installed lines has increased by 65% over the last four years; the number of pay telephones has risen by 152%, and network digitalization has grown by 658%, so that now 62.55% of the entire network is digitalized.

                              1990         1991         1992         1993         1994

Lines Installed            3,471,283    3,629,939    4,256,643    4,967,588    5,637,837

Lines Digitalized            460,284      599,000    1,189,499    2,270,390    3,488,293

Lines Subscribed           3,199,190    3,682,145    4,091,804    4,834,073

Pay Telephones Installed      22,549       25,690       36,500       47,254       56,844

Lines per Employee             75.55        90.45       101.25       121.45       154.60

Digitalization of Network     13.05%       15.05%       28.20%       46.30%       62.55%

Lines/100 residents            11.60        11.95        11.40        12.45        14.90

Total Investments*               N/A          338        1,214        1,902        2,020

*in US$Million

Source: National Telecommunications Commission (CNT)

 

The CNT's biggest challenge in the next three years will be balancing Argentina's national telephone rate structure. An unwanted result of the ENTel monopoly was the entrenchment of a rate structure that sought to subsidize cheap local service through high long distance charges and installation fees. The existing rate structure, passed in 1992, ties increases in rates to U.S. inflation and requires a reduction in installation charges to $250 by 1997. Outgoing international long distance traffic is currently twice as expensive as incoming traffic from the U.S. and has sparked an underground market in call-back services. In December 1994, Argentina's National Assembly failed to pass a plan, championed by the CNT, that would have restructured Argentina's telephone rates. As the table below demonstrates, Argentina has the highest price per international call relative to the countries listed.

International Telephone Traffic, 1995

Outgoing Telephone Traffic, Minutes Per Subscriber

 Average Price Per Call, $ Per Three Minutes
 
Argentina 27

 7.37

Brazil 24

 4.99

Chile 72

 2.79

Uruguay 83

 6.17

United States 95

 ..

Venezuela 52

 6.62

Source: ITU World Telecommunications Indicators Database,1995

Telecommunications Infrastructure

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Last Updated: 5/4/97