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Simón Bolívar to the rescue
Global Telephony / May 1996

By Larry Luxner

In March, the leaders of five South American nations -- Bolivia, Colombia, Ecuador, Peru and Venezuela -- formed the Andean Community trade bloc, a bold move to encourage economic and political integration among the countries' 100 million inhabitants.

To further that goal, the Committee of Andean Telecommunications Authorities (CAATEL) is pushing for the region's very first satellite, dubbed the Simon Bolívar project after the 19th-century South American liberator. The ambitious program -- which will cost anywhere from $200 million to $385 million -- aims to launch a satellite that will dramat-ically boost the number of long-distance telephone lines, radio, voice and data circuits in a region that has traditionally had South America's lowest teledensities. Until now, the only Latin nations with their own satellites have been Mexico, Argentina, Brazil and Chile; the five Andean countries lease whatever space they can on Intelsat and Panamsat birds.

"We think there's a strong window of opportunity for an Andean satellite so that the regional telecommunications market can increase. Our pre-feasibility study shows this," says Sergio Martínez Londońo, president of the Cámara Colombiana de Informatica y Telecomunicaciones in Bogotá.

The U.S. Trade and Development Agency (TDA) has given a $400,000 grant to Conatel, Venezuela's telecom regulatory entity, to do a second feasibility study for the satellite; several U.S. firms have already expressed interest, including Hughes Network Systems, Lockheed-Martin, GE and McDonnell Douglas.

The project, first proposed in 1977 as Condor, is being driven by demand for VSAT services, satellite news broadcasting, TV distribution to homes and voice and data transmission services. The Venezuelan telecom agency Conatel estimates that 36 transponders would be leased upon satellite commission. According to a TDA study, "on the supply side there is sufficient C-band offering but a low offering of Ku-band. In principle, Ku-band transmission quality is less than C-band transmission for the Andean region. On the other hand, Ku-band equipment is cheaper than C-band."

As it stands now, the Simon Bolivar project consists of buying two satellites from a manufacturer; the first will be launched to geostationary orbit, while the second will be used in case of a failure and/or increased demand.

"One of the major projects this year for Venezuela is rural telephony," said Frances Mejias of the U.S. Embassy in Caracas. "It'll be an important aspect of the satellite. When the national phone company was privatized, the contract said they had to put new phone lines every year. Even though they've kept to their schedule, there are still very remote areas with no phone service. Rural telecom can be provided by satellite links in a short period of time."

Adds Gustavo Montoya, an engineer at CANTV: "Asking for capacity from Intelsat or Panamsat isn't the same as having your own satellite, which permits you to organize your services better."

To date, 77 participating companies are considered the project's founding members. Martínez, whose organization represents 29 Colombian firms seeking to invest in the project, told Global Telephony a feasibility study would be commissioned later this month [May] and should yield results by September or October. He and counterparts from the other four nations met April 11-12 in Lima, Peru, to draft a regulatory framework under the auspices of the Andean Multinational Corp. (EMA in Spanish), the entity which will manage the program.

"After 20 years of government indecision and postponements, the project is progressing rapidly due to the fact that the governments of the five Andean countries have transferred responsibility to the private sector," according to the U.S. Embassy in Caracas, adding that the five countries have established an operations committee with $1 million in operating capital, with equal shares contributed by the participating countries.

In principle, private companies from the five Andean nations will be the sharehold-ers. However, if any countries decide not to participate at any point during the project's development, the EMA may be owned by companies from as few as two countries. Under the new rules, 60% of the capital must be Andean. For the remaining 40%, Latin American capital will get preference; if that 40% isn't completely subscribed by regional companies, international investors will be allowed to participate. CAATEL, currently headed by Adolfo Loza, the telecom superintendent of Ecuador, will grant the concession for the satellite system to the future EMA.

"Participating companies are intent on starting operations as soon as the EMA is legally incorporated. Since the building and launching of the satellite will take some time, they are considering hiring available satellite space. Mexican, Brazilian and Argentine companies have initiated contacts with the operations committee to offer their services.

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