The Miami Herald / October 31, 1995
By Larry Luxner
WASHINGTON -- Chile, the first South American country slated to join NAFTA, also wants to become the continent's first nation with interactive video services.
The country's recently privatized telco, Compania de Telecomunicaciones de Chile (CTC), has announced aggressive plans, throught its Intercom subsidiary, to become a "multimedia outlet with the ability to provide video conferencing, home shopping, home banking, video-on-demand and distance learning services."
Few details are available about the $140 million Multimedia Pilot Project, as it has been code-named. Daniel Bonacic, chief of CTC's international relations department, declined to discuss specifics because, as he says, "the telecom environment in Chile is extremely competitive, much more than in the United States. We must study this project carefully before we can speak about it."
Nevertheless, industry sources say an enormous interactive network will in fact be constructed in Santiago, and that it involves some 450,000 to 500,000 homes in the Santiago metropolitan area (population 4 million). CTC is already South America's first telco to be 100% digitalized, with high-speed data transmission, videoconferencing and other ISDN services throughout Santiago and other major cities.
According to Jorge Candia, chief of CTC's special projects department, the massive undertaking will involve the installation of 12,000 kilometers of bidirectional fiberoptic and coaxial cable throughout the country, with at least 2,500 kilometers of cable linking Santiago, La Serena, Valparaiso, Rancagua, Concepcion and Temuco by early 1996.
C-COR Electronics Inc. of State College, Pa., is among CTC's chief suppliers in the deal. It says construction has already begun on the project, and is expected to continue for three to five years as the network expands throughout the rest of the country.
In August, C-COR announced it had received orders for additional 750-megahertz FlexNet line extenders and bridger amplifiers for the first phase of the multimedia network. CTC has ordered an additional 5,400 line extenders, for a total of 7,290 such components since C-COR signed the deal with CTC earlier this year.
In addition to highly specialized equipment, C-COR says it will provide product training, design and field engineering services for the installation and construction engineers of both CTC and C-COR's authorized distributor in Santiago, RimpexChile S.A.
Richard E. Perry, chairman and chief executive officer of C-COR, refused to comment on the interactive project, except to say in a prepared statement that "we are very excited to be a part of this continuing project with CTC. I am optimistic that things will continue to move forward just as smoothly as the initial shipments did earlier this year."
Although Chile's telephone density remains quite low by Western standards -- less than 12 lines per 100 inhabitants, compared to 54 per 100 in the United States -- its foray into interactive video should surprise no one. According to government officials, the country's per-capita income now stands at $4,548, up from $3,720 in 1994 -- and should easily hit $4,900 by the year 2000 if the GDP continues to rise at 6.5% a year. If Chile succeeds in gaining membership in NAFTA, the country could see an influx of U.S. and Canadian investment that will gradually propel its 14 million inhabitants into the First World -- and give them the money and leisure time to want and afford such services.
According to an internal document published by CTC, the pilot project is divided into four phases, to be developed over a period of three years. The first -- projected for 1996 -- will offer pay-per-view, pay TV (access to specific real-time programs) and basic segmented cable (packets of channels oriented towards distinct socio-economic groups). In 1997, CTC hopes to initiate Phase II, which will include tele-education, video games and digital music. The third phase, planned for 1998, will offer "near video-on-demand" and interactive games. The fourth and final phase, expected to be implemented by 1999, will include telemedicine, full video-on-demand, home shopping and high-definition TV.
CTC says the pilot project has four clearly defined objectives: to make clear that CTC is interested in multimedia, to find out what are the clients' likes and needs, and develop a product that responds to those needs; to develop a product that is sufficiently user-friendly that customers don't need a manual to understand it, and finally, to "send signals" to the government with respect to the direction CTC intends to proceed in the future.
"Our idea," says Candia, "isn't only to enter the world of [multimedia], but also to protect our telephone business. In Chile, with this new network that we're constructing, this is possible, but for now, the legislation doesn't permit us to offer both services through the same medium. In any case, we must be prepared."