Interlink Invests in Ecuador

By Jeff Goldman | Jul 19, 2006 | Print this Page
http://www.enterprisenetworkingplanet.com/unified_communications/Interlink-Invests-in-Ecuador-3621026.htm

Interlink Global recently announced an agreement with local partners and government officials in the province of Manabi, Ecuador to create a private telco called Manabitel. The new company, of which Interlink will own 30 percent, will provide the state with wireless broadband Internet access as well as voice over IP (VoIP). Startup capital is estimated at $23 million.

Severino Rivano, Executive Vice President at Interlink, says Ecuador currently has very little in the way of telephone service. "Today, the penetration for telephony is only 12 percent," he says. "That's way below the average for the area, for this region in South America, and well below the average in the world." And in Manabi, Rivano says, the penetration is even lower, at 6 percent: 1,128,000 people and 62,000 phone lines.

Still, Rivano says that kind of problem can serve as a significant opportunity for a VoIP provider like Interlink. "We were invited to look at the area to see if we could provide a fast and inexpensive solution," he says. "We went there and analyzed the situation, and we saw that of course there's a market—because everybody wants telephone service, but they can't get it."

The price of telephone service in Ecuador is regulated by the government, with poorer areas paying less and industry paying more—which Rivano says may be the reason for the current lack of telephone service: Companies simply aren't motivated to serve poorer areas. Manabitel's rates, he says, will be slightly higher than the rate for traditional telephone service, but cheaper than cellular rates, which aren't regulated.

Wireless infrastructure
In order to make the system both efficient and affordable, the entire infrastructure will be based on wireless connectivity, including satellite, Wi-Fi and WiMAX. "There were other projects on the table there that were based on classic telephony systems with switches and ground wires," Rivano says. "However, those projects were very expensive compared with wireless voice over IP."

While Interlink is primarily a VoIP company, Rivano says satellite and wireless connectivity are crucial for deployments like these. "Half of Colombia is just jungle and flat lands, and the only way to get into some communities is by satellite," he says. "There are no other ways to get into those places—it's geography that doesn't allow you to do anything else, unless you want to run fiber through the jungle!"

Still, because Interlink is working with local partners in Ecuador, Rivano says the company is officially leaving open the possibility of establishing wired infrastructure at a later date—though he doesn't think that will ever be needed. "You have to understand that this will be the first public telephone operation based on [wireless VoIP] technology, and for them, it's really new," he says.

Return on investment
Rivano says the new company expects to start installing and selling service within the next three months. The total investment once the project is completed is anticipated to reach $40 million, but Interlink expects to recover its investment in three years—the company says Manabitel's gross revenues should average $13.3 million a year or more.

And it's not just residential. By offering both VoIP and Internet access, Rivano says Manabitel will be providing a much needed service to the local fishing industry, which currently lacks a modern telecom infrastructure. "The fishing industry in that area is mostly for export, so they need international communications both by Internet and by phone to do their business," he says.

Beyond the Manabitel project, Rivano says Interlink is also looking at opportunities in Colombia and Venezuela. "We want to interconnect Ecuador with Colombia, and Colombia with Venezuela, to start having an active interchange of traffic between the three countries," he says. "Today, they have to go through international lines to communicate, and they could do it directly."