Good Morning Thank you to the person that introduced you My name is Karen Zens. I am the Minister Counselor for Commercial Affairs at the US Embassy here in Mexico City. I thank the organizers and my colleagues here on the panel for the opportunity to speak with you about VoIP and the future of this exciting technology in Mexico.
Technology for the sake of Technology is not the answer to anything. The role of new technologies and services that offer such technologies is to improve the everyday life of people. Through greater access to global trade, improved economic development, educational programs and cultural initiatives a society, like Mexico’s, increases its competitiveness in the world market. The technologies that bring consolidation and convergence are wonderful in themselves, but it is the service provider, the company or organization that can develop new business models, successfully commercialize them and deliver the service that makes the technologies successful. As has been seen in other economies, like our own, competition … in the case for VoIP competition for last mile access increases digital coverage in all areas, but in particular, it can increase coverage in underprivileged rural areas. Competition brings service … service brings new technologies … new technologies bring benefits to all.
If new Technologies bring benefits, what are the technologies, what are the benefits and who will take advantage of them. There are new options for access such as broadband, wireless and VoIP These bring new options for services such as convergent services (voice, data and video) and other value added services, such as telemetrics, GPS systems. These services are not just for large companies or the wealthy. There are new options for smaller consumers (SME and individuals) And users have new options for location. It is all now mobile and convergent, go anywhere use anything. The current business opportunities: equipment, content, and networking - this reflects the new options above. Technology, and in this case, VoIP, is a dynamic process. It is permanently evolving, and there’s a need to constantly learn, adapt and use technology to increase competitiveness.
VoIP is being developed all around the world. It is being developed in the third world to provide access to the under-served. It is being developed in countries like Chile and Venezuela … Mexico’s competitors … to improve economic competitiveness by offering new connectivity options and lowering the cost of communications. Chile and Venezuela are developing a regional IP solution to include corporate VoIP services similar to the ones in the US
There’s no perfect regulator that can adapt to the high speed evolution of technology. The US is no exception, but it does have the will to make new technologies work for companies and individuals. The first example is how the Federal Communications Commission – FCC reacted to complaints by fining Madison River Communications for blocking VoIP of other operators, as a result, promoting the use of this technology In the 2 nd note, an example of the high rate adoption of VoIP. Average customer adds of 8,000 a week between two companies (Cablevision and Time Warner Cable)
VoIP is not coming, it’s here! VoIP is not new to Mexico. It has been in use by corporations and other savvy users for a number of years. Other ‘creative’ users are finding ways to utilize VoIP services. This shows that there is inherent value in the services. For users already taking advantage of VoIP they see a technology that is Mature, Secure, Redundant and, above all, reliable. Mexico has the infrastructure, the solutions, and the corporate know-how, and it’s identified that VoIP with increasing demand in Mexico Unfortunately, it appears that the general public and small companies do not have clear the concept of VoIP and its value. Smaller users need to be educated, though. Hopefully conferences like this will help get the word out. This technology is available now. There are operators that can offer these services to corporate, PyME and individual users. VoIP will keep changing as the technology and regulatory environment keep changing. It is a dynamic process of development.
VoIP and other new technologies will not stop evolving. No matter of legislation, use, market, etc Broadband is growing fairly well, due to the fact that it is the spinal cord for all value added services based on the Internet Protocol. However narrowband VoIP will also exist. Cable TV operators are ptentially the main competitors for traditional telephone providers because they don’t need to lease telephone lines to offer their services. They have their own direct cable into people’s homes (better know as the Last Mile Access) Cable TV operators are technically able to offer Internet and VoIP, but they’re limited to only Internet (as a value added service) To offer voice services they need a license which telcos have, so they have to partner with them. Cable TV might now be able to offer voice services independently, which will be a huge move toward competition, especially for Last Mile Access. Right now, traditional telephone companies dominate the broadband market and therefore the potential for VoIP. As seen in the next two slides, Broadband internet, the backbone of VoIP is growing dramatically, as is the use of VoIP in the corporate arena, as demonstrated by the number of Internet PBXs being deployed in Mexico.
According to Select. ADSL is growing at a phenomenal rate. This growth leads to the next slide
That shows how voice equipment for larger clients or PBXes has shifted from being traditional phone service equipment, to Internet Protocol based. IP telephony represented only 6% of the market in 2002, but grew to 49% in 2004, incredible growth.
Reiterating the message from before. New technologies bring new services, which then bring benefits to productivity and competitiveness across the entire economy. Basically the main challenges are about allowing new technologies to compete in a new economy without letting the burden of regulatory reforms slow it down. Regulation needs to consider the trends of convergence, and the ability to empower smaller companies and new businesses to develop. We are in this together. North America is facing strong competition from both the developed and developing economies of the world. We need to work together. The New Economy implies networked economies and technologically intensive industries. It is not about cheap labor anymore.
All three countries, the United States, Mexico and Canada, have experienced extraordinary growth in exports over the last 10 years, since NAFTA was implemented. To put it all in perspective: Trade between the United States and Mexico has nearly tripled, and we now trade more with Mexico in a day than with Paraguay in a whole year; more in a week with Mexico than with Chile in a year; and, more in a month with Mexico than with all of the Mercosur countries (Argentina, Brazil, Paraguay and Uruguay) in a year. Much of this growth is attributed to the elimination of barriers in many different Industry sectors sectors, like Telecom The Future: “Afta NAFTA” What we have learned from NAFTA: Economic success is clearly not about cheap labor It is about integration of the North American marketplace It is about moving up the value-added chain It is about maintaining and increasing competitiveness and productivity in all three economies. The U.S., Mexico and Canada have seen business, especially for sectors that are labor intensive, and the jobs associated with these businesses, move to Asia and Central America in search of cheaper labor. From our perspective, it is only through the integration of our economies, with a focus on increasing efficiency and productivity in sectors where we have a comparative advantage that we will be able to ensure competitiveness globally. In order to compete, the U.S., Mexico and Canada must concentrate on: quality, productivity, price and innovation. Integration of North America’s economies will play a key role in all three countries maintaining their global competitiveness as a region. This is where two regional initiatives, the Partnership for Prosperity and the Security and Prosperity Partnership come in.
In 2001, Presidents Fox and Bush launched the Partnership for Prosperity (P4P), a bilateral initiative to realize the economic potential of all Mexican citizens, particularly those in less developed areas of Mexico. This means greater economic prosperity for all, more purchasing power in all regions of Mexico, and less reason to migrate to large Mexican cities or “neighboring” countries. Goals for P4P include: Enhancing competitiveness; SME innovation; Greater Access to Credits; Remittances; 2 nd and 3 rd Tier Suppliers; Development and Financing of Housing; Workforce and Rural Development; Securing the Supply Chain; and Infrastructure Development. There are several working groups in P4P. One, the Technology and Innovation working group is working to improve competitiveness and increase PyME innovation through the use of Information and Communications Technologies. This working group is Private-Sector led by CCE and the American Chamber of Commerce in Mexico.
The Security and Prosperity Partnership (said in both Spanish and English) This trilateral initiative was announced by Presidents Bush and Fox and Primer Minister Martin on March 23, 2005 The three goals of the SPP, as shown on the slide, are: Establish a common approach to security Enhance competitive position of North American industries Provide greater economic opportunity for all Improve quality of life for all of our sitizens This government-led program of cooperation was 3-Years in the making The Partnership has 10 Working Groups under the Prosperity agenda. Including the E-commerce and Information and Communication Technologies working group. Its main focus to make trade easier and smoother through the increased use of e-commerce and homogenized certification and standards The goals of the e-commerce and ICT working group are presented here.
Our countries believe this initiative may: help significantly to raise ICT penetration levels to inaccessible areas by as much as 50% during the initiative’s life; substantially improve the flow of e-commerce between the Parties and accelerate ICT use within them; eliminate redundant testing fees thereby making ICT technologies more affordable for everyone; facilitate upgrading of online transactional security in each Party to acceptable levels, thereby raising consumer confidence in doing business online and increasing business to consumer (B2C) revenue or transactions in each Party by as much as 10%; and prevent the creation of artificial barriers, in order to mitigate increased costs and limit regulatory barriers to industry and other stakeholders.
My section of the Embassy, the Commercial Section. Works with both Mexican and US companies to establish links, works with the Mexican government on exchanges of information and technical support and with US companies to ensure that their access to the Mexican market is fair and open. For Mexican firms, we focus primarily on matchmaking Mexican firms with US partners that can provide high-quality or innovative goods and services. We offer seminars and workshops to help learn about technology and trade, we provide matching services in the US and Mexico at trade shows and individually. Other support that we can provide is education and coordination with the US’s Export Credit Agency, Ex-Im Bank, which can help finance exports of product from the US.
As we have services for U.S. firms, we also have a number of products geared towards helping Mexican firms identify U.S. partners and/or suppliers of goods and services. Suffice it to say that we stand ready to help and DO have services to assist you in your work with US firms.
One such matchmaking event is SuperComm 2005 in Chicago. We are hoping to take a delegation of Mexican firms to Chicago from 6-9 June. The program we offer is on the screen. Please contact Juan Carlos Prieto for more information.
I want to thank you for participating in this event. I want to thank the organizers and my co-presenters. I just want to leave you with the thought that new technologies can enable you and your company to do more. We need to increase the regional competitiveness of our economies. Technologies like VoIP can help to do that.
U.S. Commercial Service U.S. Embassy
U.S. Commercial Service U.S. Embassy MEXICO <ul><li>IP TELEPHONY: </li></ul><ul><li>THE MEXICAN MARKET </li></ul>Todd Avery Commercial Attaché U.S. Embassy – Mexico City
Role of New Technologies <ul><li>Facilitates global trade, competitiveness, and economic development </li></ul><ul><li>Consolidation and convergence bring new business models </li></ul><ul><li>Direct competition for last mile access </li></ul><ul><li>Increased digital coverage in underprivileged rural areas </li></ul><ul><li>Convergence increases the benefits of Information and Communication Technologies to all </li></ul>
New Technology Trends <ul><li>Broadband, Wireless and VoIP technologies </li></ul><ul><li>Value Added Services </li></ul><ul><li>Focus on SME’s </li></ul><ul><li>Convergence and mobility </li></ul><ul><ul><li>Business opportunities: </li></ul></ul><ul><ul><ul><li>Telecom equipment: Wireless, VoIP, security devices </li></ul></ul></ul><ul><ul><ul><li>Content: Enterprise applications, Entertainment </li></ul></ul></ul><ul><ul><ul><li>Networking: Unified messaging, Collaboration, Multimedia, Conferencing, Telemetrics, and broadcasting </li></ul></ul></ul>
VoIP Around the World $10USD million earmarked for Interlink’s VoIP project, April 11, 2005 US-based operator Interlink Global is undertaking a USD10 million regional IP telephony upgrade project in Chile and Venezuela, and says it hopes to spread its VoIP services to the whole of Latin America. The project will involve rolling out corporate VoIP services similar to those that it currently offers in the US, including Wi-Fi access. Interlink Global was created when Interlink (Chile) launched services aimed at business users in partnership with an American start-up company last month. It recently introduced services in Venezuala after acquiring a local operator and currently offers pre-paid cards for conventional local, long-distance and international telephony. http://www.telegeography.com/cu/article.php?article_id=6686 CHILE VENEZUELA
VoIP Around the World FCC acts to end VoIP blocking The Federal Communications Commission (FCC) has fined North Carolina-based broadband provider Madison River Communications USD15,000 for blocking VoIP calls. A consent decree by the FCC prevents Madison from blocking VoIP calls for 30 months. VoIP provider Vonage has confirmed that it complained to the FCC about Madison River last month, leading to the FCC’s investigation. Cable companiess report strong VoIP takeup, April 12, 2005 According to a report by the Financial Times, New York cable company, Cablevision, is adding 1,000 telephony customers a day, reporting 350,000 in total at mid-March. Time Warner Cable, meanwhile said that at the end of 2004 it had 220,000 VoIP customers, adding 10,000 per week. http://www. telegeography .com/cu/article. php ?article_id=6704 USA USA
VoIP Perceptions in Mexico <ul><li>Market sees good projected growth for 2005 – 2006 </li></ul><ul><li>Technology developments in IP and Broadband provide for Convergence: voice, data and video; in time it will incorporate broadcasting services as well </li></ul><ul><li>Users see IP based solutions as: </li></ul><ul><ul><li>Mature </li></ul></ul><ul><ul><li>Secure </li></ul></ul><ul><ul><li>Redundant </li></ul></ul><ul><ul><li>Reliable </li></ul></ul><ul><li>Operators are offering integrated solutions: </li></ul><ul><ul><li>Infrastructure </li></ul></ul><ul><ul><li>Consultancy </li></ul></ul><ul><ul><li>Administration </li></ul></ul>
Market Trends <ul><li>The development of new technologies, VoIP, will not stop </li></ul><ul><ul><li>Convergence will lead technology innovation based on wireless and IP Protocol solutions </li></ul></ul><ul><li>Narrowband maintains a market niche </li></ul><ul><ul><li>Older users, less savvy users, occasional users </li></ul></ul><ul><li>CATV: will they be able to offer voice services directly? </li></ul><ul><ul><li>This could promote a more competitive market </li></ul></ul><ul><li>Incumbent dominates Broadband deployment through copper cable, ADSL, and rents its lines to other operators </li></ul><ul><ul><li>ADSL will outgrow cable modems 3 to 1 by 2006 (Morgan Stanley) </li></ul></ul>
How Fast is ADSL Growing in Mexico? Source: Select
Voice Equipment in Mexico <ul><li>IP PBX systems growing in demand </li></ul><ul><ul><li>Participation moved from 6% in 2002 to 49% in 2004 </li></ul></ul><ul><li>Hybrid systems also with strong growth, from 8% in 2002 to 21% in 2004 </li></ul><ul><ul><li>Those users most likely will eventually move to complete IP systems in the future </li></ul></ul>Source: Select
Challenges Ahead <ul><li>The development and implementation of new technologies in the fixed and wireless telephone services, and broadband Internet access can help boost competitiveness and productivity </li></ul><ul><li>Regulation that considers convergence and competition will support other needed reforms such as in energy, fiscal and labor issues </li></ul><ul><li>Cheaper prices in telecommunication services through competition </li></ul><ul><li>Global competition forces the US and Mexico to strengthen their trade and other relationships between each other </li></ul><ul><li>North America needs to move away from competing through cheap labor, and integrate within the New Economy environment </li></ul>
US – Mexico Cooperation <ul><li>NAFTA </li></ul><ul><ul><li>Greatest opportunity for economic growth </li></ul></ul><ul><ul><li>U.S.-Mexico Trade increased 186% from USD 88 billion in 1993 to USD 252 billion in 2003 </li></ul></ul><ul><ul><li>Elimination of Barriers in Key Sectors </li></ul></ul><ul><li>Partnership for Prosperity (P4P) </li></ul><ul><li>Security and Prosperity Partnership (SPP) </li></ul>
Partnership For Prosperity P4P <ul><li>Goals: </li></ul><ul><ul><li>Greater Economic Prosperity </li></ul></ul><ul><ul><li>More Purchasing Power </li></ul></ul><ul><ul><li>Decreased Migration </li></ul></ul><ul><li>Tools: </li></ul><ul><ul><li>Technology and Innovation Working Group </li></ul></ul><ul><ul><ul><li>CONACYT and CCE </li></ul></ul></ul><ul><ul><ul><li>US Embassy and AMCHAM </li></ul></ul></ul><ul><ul><ul><li>Increase use of ICTs for PyMEs </li></ul></ul></ul><ul><ul><ul><li>Increase investment in infrastructure for commerce </li></ul></ul></ul>
Security and Prosperity Partnership SPP – Mexico, Canada, and U.S. <ul><li>Goals: </li></ul><ul><ul><li>Establish a common approach to security </li></ul></ul><ul><ul><li>Enhance competitive position of North American industries </li></ul></ul><ul><ul><li>Provide greater economic opportunity for all </li></ul></ul><ul><ul><li>Improve quality of life </li></ul></ul><ul><li>E-commerce and ICT Working Group </li></ul><ul><ul><li>Reduce online business costs </li></ul></ul><ul><ul><li>Encourage private sector self-regulation </li></ul></ul><ul><ul><li>Support a transparent, predictable, just and nondiscriminatory legislative and regulatory regime </li></ul></ul><ul><ul><li>Eliminate redundant testing and certification requirements </li></ul></ul>
Security and Prosperity Partnership SPP – Mexico, Canada, and U.S. <ul><li>E-commerce and ICT Working Group </li></ul><ul><ul><li>Raise ICT penetration levels </li></ul></ul><ul><ul><li>Improve the low of e-commerce </li></ul></ul><ul><ul><li>Eliminate redundant testing fees </li></ul></ul><ul><ul><li>Upgrade online transactional security </li></ul></ul><ul><ul><li>Prevent the creation of artificial barriers. </li></ul></ul>
U. S. Commercial Service <ul><li>An Agency of the U.S. Department of Commerce </li></ul><ul><li>Mission is primarily to help small and medium size, export-ready companies to enter new markets, and to protect U.S. Business interests abroad </li></ul><ul><li>Network of 100+ offices in the U.S. and 160 world-wide </li></ul>
Services for Mexican Firms <ul><li>International Buyer Program </li></ul><ul><li>Commercial News USA </li></ul><ul><li>Business Service Provider Program </li></ul>
US Commercial Service Events <ul><li>Supercomm 2005 </li></ul><ul><li>Delegation of Mexican entrepreneurs to assist at the largest IT and telecom trade fair in the US. </li></ul><ul><li>Focused meetings </li></ul><ul><li>Hotel and air discounts </li></ul><ul><li>Workshops </li></ul><ul><li>Contact: </li></ul><ul><li>[email_address] </li></ul><ul><li>https://www.buyusa.gov/mexico/es/supercomm.html </li></ul>
U.S. Commercial Service U.S. Embassy MEXICO <ul><li>IP TELEPHONY: </li></ul><ul><li>THE MEXICAN MARKET </li></ul>May 3, 2005 KAREN L. ZENS MINISTER COUNSELOR FOR COMMERCIAL AFFAIRS THANK YOU!