Global Telephony / November 1997
By Larry Luxner
Telephone users in Suriname -- a former Dutch colony on the remote northeastern shoulder of South America -- will soon be reaping the benefits of competition for the first time in their country's history.
Earlier this year, President Jules Wijdenbosch announced a liberalization of the telecom sector, partially breaking the monopoly in basic phone service long enjoyed by government-owned Telecommunicatiebedrijf Suriname (Telesur). Both Telesur and an upstart competitor, International Communication Management & Services (ICMS), agree that rates should quickly drop once ICMS -- which has applied for an operator's license -- establishes itself as Suriname's second full-service telephone provider.
"Telesur is still 100% government owned, and at this point there are no decisions on privatizing the company. What is being discussed is having a second operator within Suriname, and providing a license to that second operator to be in service as quickly as possible," says Telesur's chief financial officer, Dirk Curry. "In my opinion, the introduction of competition will be beneficial to customers."
The founder and president of ICMS, John Neede, couldn't agree more.
"We expect to get at least 25% of basic and mobile telephony services," says Neede, who headed Telesur for 15 years before deciding to challenge the state entity under a little-known 1983 law that technically allowed competition, but had never been put into practice. "Suriname has one of the world's highest rates for international calling -- $2.25 a minute for calls to the United States or Holland, and over $3 a minute to the Far East."
Both executives, interviewed by phone from Paramaribo, say those high rates subsidize ridiculously low tariffs for basic phone service in Suriname, which has around 400,000 inhabitants. In July, the monthly subscriber fee was nearly quadrupled to 300 Surinamese guilders (74¢); it had been 82 guilders (20¢). Pulse charges, meanwhile, went from one-tenth of a U.S. cent to 1.2¢ per minute.
Even so, there's still a large amount of cross-subsidization, says Curry.
"Formally, no other entity [besides Telesur] has been granted a license," he explained. "Of course, if a license is granted, in my opinion, we will still have no competition on basic telephony, since our rates are so low no investor would invest amy money into that part of the business. Target businesses would instead be cellular, paging and international telephony."
Telesur has around 60,000 conventional lines and 5,000 cellular customers; last year it recorded revenues of $40 million and around $1.2 million in profits. To get ready for competition for the first time in its existence, the company in August signed a $10 million contract with Northern Telecom to upgrade Suriname's telephone network over the next four years. The deal includes 10,000 new Nortel Proximity fixed wireless access lines and 7,000 mobile lines for Paramaribo and its suburbs.
Nortel's Proximity portfolio uses radio rather than copper cable to connect homes and offices to the public switched network. It offers customers toll-quality voice and various new services such as call transfer, conference calling, data and fax services. It also enables Telesur to eventually provide ISDN and 64-kb/s data. Nortel recently signed a similar contract with GT&T in neighboring Guyana (see Global Telephony, June 1997).
"One of the benefits of fixed wireless is that it's less expensive, and takes less time to deploy," said Ernesto Ortiz of Nortel's Caribbean/Latin American operations. Fixed wireless access uses the same technology as does cellular, 800-megahertz mobile communications, except that the subscribers aren't mobile. The home phones don't look unlike what we would have in a wired system. The difference is that instead of having a wire running to a telephone pole, you've got a flat-plate antenna on the outside of the building which communicates with a base station."
Meanwhile, rival ICMS has purchased an AMPS-based Phoenician Wireless Local Loop system from Florida-based Phoenix Wireless Group Inc., in a deal believed to be valued at around $2 million. The initial deployment will serve Paramaribo and nearby Lelydorp; the system will expand to other areas over the next two years. It's designed to bring basic phone service to rural areas throughout Suriname, 90% of whose people live in a narrow coastal strip along the Atlantic coast. Current teledensity is 14 lines per 100 inhabitants, though Neede says "we feel it can go up to 30%, so the market is here."
The Phoenician System -- to be deployed in the first week of November -- consists of the system controller, multiple 24-channel base transceiver stations, network and subscriber management software, calling feature software packages, and a debit billing package. Fernando Arozqueta, Latin American regional manager for Phoenix -- which is also active in Paraguay -- says the system supports both IS-664 and non IS-664 features. Some features unique to the Phoenician System include wake-up calls, abbreviated dialing and emergency calls. Standard IS-664 features supported are call-forwarding, call-waiting, call transfer and do-not-disturb.
In addition to local calls, fixed wireless subscribers will have access to overseas dialing via interconnection to a satellite earth station in Lelydorp. In future phases, local Telesur customers will have access to the same service through a tandem trunking feature.
"The Phoenix system exceeded all of our requirements," said Neede. "We are impressed with the enhanced features available in such a compact yet robust system."
Neede adds that ICMS, already Suriname's leading MMDS cable TV provider, plans to offer high-speed Internet access by early next year, mainly for business and government clients in Paramaribo. "We have a lot of companies that want to work with us," he said.