Tele.Com / October 16, 1999
By Larry Luxner
If you visit the sprawling Montego Bay Free Zone along Jamaica's northern coast, don't expect to see garment workers cutting fabric for blue jeans -- that's in the past. These days, you're far more likely to find roomfuls of well-dressed women at computer screens -- taking airline reservations, processing credit-card orders and even accepting sports bets over the phone.
Thanks to the Montego Bay Digiport -- an earth station that provides direct links to the rest of the world -- a growing number of companies are investing here. They range from tour wholesaler Apple Vacations to English Sports Information Processors Ltd., a company that helps Americans place bets on anything from dog races to pro basketball -- a practice that's illegal in the United States.
"We have a very good reputation and presence here as the No. 1 tour wholesaler to Jamaica," said Cindy Guzel, manager of client services and training at Apple Vacations. "One reason we came was the 30% unemployment rate here and the ability to recruit. Also, we were approached by the free zone and asked if we'd be interested in putting an office here."
In fact, telecommunications -- ranging from basic phone service and cellular telephony to Internet access, data-processing and online gambling -- has become one of the Caribbean's hottest growth industries.
"It's a very simple formula," says Che Douglas, an investment consultant at the Eastern Caribbean Investment Promotion Service in Washington. "Companies are looking not just for cheap labor, but middle-tier, value-added services. The Caribbean is uniquely located for that, in that it's about two and a half hours from the U.S. coast, it's in the same time zone, it's English-speaking, and the labor is cost-effective.
"Moreover," he says, "the quality of the worker has been found to be of a standard that's easily molded into telecom services. Riding on all of that is Cable & Wireless, which has recently begun to soften its stance as rates rates are concerned, and has allowed the region to become more competitive."
C&W is easily the largest single investor in the English-speaking Caribbean. Over the last five years, C&W has poured over $1 billion into the development of the region's telecom infrastructure; it plans on spending another $1 billion between now and 2000.
The company now has around 900,000 lines in place throughout the islands, and recently introduced its $60 million Eastern Caribbean Fiber System -- which links 14 islands from the British Virgin Islands in the north to Trindad & Tobago in the south. The ECFS replaced the Digital Eastern Caribbean Microwave System and is considered the world's most advanced telecom cable link. Other important investors in the region include AT&T, MCI, Telefónica de España, Telecom Italia, Telmex and Northern Telecom.
Douglas says while similar data-processing opportunities are offered by Ireland, Scotland and India, those countries aren't in the same time zone as the eastern U.S. Another advantage is that most of the Caribbean falls under the North American Numbering Plan, meaning calls can be dialed from the U.S. without having to use country codes.
"We've seen the industry develop faster over the last six to eight years in the Eastern Caribbean, as opposed to Jamaica or Trinidad," says Douglas, whose agency promotes investment in Antigua, Barbados, British Virgin Islands, Dominica, Grenada, Montserrat, St. Kitts-Nevis, St. Lucia and St. Vincent. "Overall, the Eastern Caribbean has collectively done more than any of the bigger guys."
Meanwhile, Caribbean islanders are logging onto the Internet as never before. One firm, Teleglobe, says its Caribbean revenues have jumped tenfold in less than two years. Strategic investments in the region's fiberoptic cable and satellite systems have enabled it to become a leading provider of global Internet connectivity services in the Caribbean.
Teleglobe currently provides Internet connectivity via its Globeinternet worldwide backbone to Antigua, Aruba, Bahamas, Barbados, Cayman Islands, Curaçao, Dominican Republic, Grenada, Jamaica, St. Martin, Trinidad and Turks & Caicos. This brings to 12 the number of Caribbean access customers Teleglobe has secured in the past 18 months.
Yet despite having some of the most advanced telecom technology in the world, the Caribbean isn't without its problems. In Communist Cuba, there are only 400,000 lines for 11 million people, and in Haiti, fewer than one person in 100 has access to a phone lines.
Here's a roundup of telecom developments in the larger islands:
BAHAMAS: Telecom facilities are highly developed in the Bahamas, where 80,000 phone lines connect a population of 284,000 living on 29 of the country's 700 islands. In addition to basic phone service, Bahamas Telecommunications Corp. (Batelco) -- currently the focus of a bitter privatization debate -- offers fax, data-packet switching, paging, telegraph, telex, cellular and VHF maritime mobile services. AT&T recently won a $26 million contract to build a 470-kilometer undersea fiberoptic cable linking the islands with Florida.
BARBADOS: Cable & Wireless owns the Barbados Telephone Co. (Bartel), which operates 100,000 lines; C&W also provides international services through its Barbados External Telecommunications Ltd. subsidiary. In 1997, Bartel completed its $48 million Bridgetown fiberoptic ring, which connects the island's major urban centers.
CUBA: The Caribbean's most populous country, with 11 million people, Cuba nevertheless has only 400,000 lines -- around half of them located in Havana. Due to U.S. State Department limits on how much the Cuban government can make per minute of long-distance traffic, the split on long-distance revenue has been about 54.5% for the U.S. carriers, and 45.5% for Cuba. Since the 1992 provisions went into effect, Cuba has earned about $173 million in foreign exchange from this traffic.
DOMINICAN REPUBLIC: GTE Corp. owns the Dominican Republic's largest phone company, Codetel, which has around 735,000 lines and is fully digital. Earlier this year, GTE announced it would invest $40 million over the next five years in new digital Personal Communications Services (PCS). Lucent Technologies will design Codetel's PCS network based on CDMA technology.
GTE's biggest competitors are Tricom and All America Cables & Radio. Tricom, a venture between Motorola and Grupo Financiero Nacional, is installing a $24 million digital system and expects to invest $200 million over the next five years. Meanwhile, Latin America's first Network Access Point has been inaugurated in Santo Domingo. The project is an alliance between Codetel and Washington-based CAIS Internet.
HAITI: The poorest nation in the Western Hemisphere, Haiti also has its lowest teledensity -- about 0.8 per 100 inhabitants. Haiti's president, René Préval, wants to privatize Teleco -- which with 64,000 lines is the only state entity making money -- though the plan is unlikely to succeed given fierce labor opposition.
Meanwhile, rich Haitians are enjoying cellular phone service for the first time ever. Several thousand people in west-central Haiti have already signed up for the new service, being offered by Rectel S.A. and two other entities. Phones will cost $450, not including a $100 start-up fee. Monthly charges will be around $20, plus 25¢ a minute for calls.
JAMAICA: Telecommunications of Jamaica Ltd., a unit of Cable & Wireless, has 370,000 lines in service -- a number projected to reach half a million by 2000. Earlier this year, C&W put into operation a $36 million digital cellular system for Kingston, Montego Bay, Ocho Rios, Negril and Mandeville.
When completed, the new Ericsson TDMA network will serve 80,000 subscribers, says Steve Twomey, senior vice-president of mobile services for C&W Jamaica.
"What makes this project unique is the fact that we kept the analog system. We'll have the two systems talking to each other," Twomey explained. "We are going to redeploy the NEC analog sites to provide service in remote, rural areas of Jamaica."
A total of 68 cell sites are now scattered throughout the mountainous, 11,000-square-kilometer island, which is home to 2.7 million people.
PUERTO RICO: With 1.3 million access lines, 155,000 cellular subscribers and over 237,000 paging customers, the Puerto Rico Telephone Company -- taken over by GTE Corp. last year in a massive and controversial privatization -- is the largest phone entity in the Caribbean. Puerto Rico has a teledensity of 43 lines per 100 inhabitants -- among the highest in the Caribbean, but lower than the U.S. mainland average of 63 per 100.
TRINIDAD & TOBAGO: All basic telecom services in this nation of 1.3 million people are privided by Telecommunications Services of Trinidad & Tobago (TSTT), a joint venture between the government (51%) and Cable & Wireless (49%). TSTT operates 209,000 lines and enjoys a monopoly on basic services until 2010. By then, the company hopes to have half a million lines in operation.