BellSouth and its partners operate 10 wireless companies in Latin America (Argentina, Chile, Colombia, Ecuador, Guatemala, Nicaragua, Panama, Peru, Uruguay and Venezuela). Telefonica has operations in seven Latin American countries (Brazil, Mexico, Argentina, Peru, Chile, El Salvador and Guatemala). With the acquisition, Telefonica will add six additional countries to its footprint and 10.5 million new customers.

According to Duane Ackerman, Chairman and CEO of BellSouth, “the sale of our Latin American operations enables us to continue to strengthen our domestic businesses. This transaction improves our flexibility as we focus on our growth opportunities.”

The transaction is subject to due diligence, governmental approvals and other closing conditions. It is expected to close in stages as closing conditions are satisfied, with the final closing expected to occur in the second half of 2004. BellSouth expects to record a gain on the transaction based on the book value at closing. Based on current book value, the after-tax gain would be approximately $1.9 billion.

IP phone provider to expand retail channel
- Viper Networks signs distribution agreement with Best Telecom Inc.

Talk is cheap claims the old adage, right? Well on this day in technology, Viper Networks (OTC:VPER) and Best Telecom bring words into action. On Feb. 24, 2004 Viper Networks signed a distribution agreement with Best Telecom, Inc. to distribute the Viper Networks’ vPhone, a USB telephone device for Voice over Internet calling, and other VoIP (Voice over Internet Protocol) products, into high volume chains like CompUSA.

Best Telecom, Inc. started in the prepaid phone card business in 1994 as Tri-State Communications with a million-dollar contract with MCI, and became a large distributor in Western Pennsylvania, West Virginia and Eastern Ohio. A privately owned corporation, Best Telecom, Inc. currently serves over 250 distributors in more than 40 states and has retail sales averaging approximately 40 million dollars per year.

Rick Sallade, Best Telecom’s owner, spoke energetically about where Best Telecom has been, and where they are going. With this new parternship with Viper Networks, Sallade expects to be in 28,000 locations within a year. He believes the land line will become second to the vPhone because of the money people will save. He boasts that 2.5 cents a minute to call overseas will make the world even smaller. “I am excited about the future of communication. The vPhone and other prepaid products will spare dollars without sparing quality.”

Viper Networks’ vPhone will be available to the consumer at an affordable price across the country and via the Internet. Ron Weaver, Viper Networks chief executive officer, remarked, “In the retail market, it comes down to resource utilization and how fast products can be placed into several thousand stores, and Best Telecom has the relationships in place to make this happen quickly. They have built a formidable distribution company and Viper Networks’ vPhone will be introduced into Best Telecom’s channels using their proven approach to mass marketing.”

Regarding call quality, Weaver says, “The more you know about Voice over the Internet, the more attractive Viper Networks will be to you!” He continued to speak about the quality of a call through the Internet, and noted, “The quality is equal or better than the land telephone. And wherever there is an Internet connection, with a USB hook-up, users can use their vPhones.”
-- Jackie McNiff

Different telecom patterns for hispanics
- Hispanics cellular bills higher than national average

NEW YORK – Scarborough Research, a research firm that specializes in identifying the shopping, media and lifestyle patterns of consumers in the United States, released a study which found that Hispanics spend more on their monthly household cellular phone service than the national average. According to the study, the average monthly household cellular bill for Hispanics is $67, which is more than 10 percent higher than the national average of $60. Nationally, 64 percent of Hispanics live in a household with a cellular phone subscription. This is virtually equal to the national cell phone penetration rate of 66 percent.

Hispanics also report spending more on their monthly household long distance and local telephone service bills. The average household long distance bill for Hispanics is $33 versus $27 for all consumers. Hispanics average $36 per month for local service which is slightly higher than the national average of $34.

Nineteen percent of Hispanic consumers who said they or a member of their household subscribes to wireless service plan to switch carriers in the next year. They are 22 percent more likely than all wireless subscribers to do so.

“Hispanics are consuming products and services at a rate equal to, and, in certain instances, greater than the general population. These consumers, characterized as the ‘largest minority group’ in the 2000 Census, are in fact a consumer force to be reckoned with,” said Bob Cohen, Ph.D., President and CEO, Scarborough Research. “In the case of telecom, Hispanics tend to place great value on social and family ties, which makes being connected very important. This cultural nuance places Hispanics among the telecom industry’s best customers.”

Hispanics are 24 percent more likely than all consumers to have spent $150 or more on their monthly household cellular bill last month. They are 86 percent more likely than all consumers to spend $100 or more on their monthly long distance service and 41 percent more likely to spend $100 or more on their monthly local phone service.

The Scarborough study also found local market differences when it comes to household cell phone penetration among Hispanics. Miami and New York lead local Hispanic markets* in cell phone penetration. Seventy-four percent of Hispanics in Miami and 71 percent in New York said they or a member of their household subscribes to cellular service.

“The growth of the Hispanic marketplace in the U.S. is a national phenomenon, but marketing to these consumers requires a local focus,” said Dr. Cohen. “Cultural differences, shopping patterns and language preferences are important factors that distinguish Hispanic segments and these are driven at the local market level. Through better understanding Hispanics where they live, marketers can maximize their multicultural budget, make more informed media decisions, streamline the marketing process and expand their brand’s reach.”

Illinois considers amendment
to Public Utilities Act
- Seeks input from industry leaders

Martin Sandoval, a Democratic State Senator in Illinois, has sponsored an amendment to the Illinois Public Utilities Act that would require prepaid service providers to file details of their product offerings with the state ICC. Sandoval introduced the amendment, numbered LB2731, in conjunction with Lieutenant Governor Pat Quinn. It is currently in the Environment and Energy Committee, of which Sandoval is a member.

As currently drafted, the amendment would require prepaid calling service providers to provide the ICC with all terms of the service offered, including “the expected number of cards” it will introduce into Illinois and the rates and surcharges associated with the cards. The amendment would require the Commission to approve a certificate granting the service provider the right to sell cards in Illinois.

Howard Segermark, Executive Director of the International Prepaid Communications Association said, “The IPCA will be working with the Illinois legislature to change this proposal so the industry can live with it. But, we also think it is important to first look at enforcement of current laws.” Segermark said that he believes that existing laws on telecom regulation and deceptive trade practices are not being enforced. He said it would be preferable to focus on “those few phonecard firms” that are not providing the consumer what they promise, before forcing legitimate companies to bear added regulatory costs.
Attorney Edward Maldonado, of the Law Firm of Maldonado and Glenn in Miami disagrees. He said, “While cards are specifically mentioned, I think that prepaid services provided to Illinois consumers, and disclosure to them, is the real thrust of the legislative intent here. The way this is crafted is to require disclosure compliance by someone with knowledge of the company’s policies and practices. It’s all about protecting consumers and retailers.”

The certificate would include details about the service provider and corporate officers, along with the approved rates and terms, and would be required to be available at each retail location where the cards are sold. Fines for non-compliance would be based on the Commission’s review, and could be up to $50 or five times the value of the card, whichever is greater, fined against the retailer.

Attorney Rishi Garg, Policy Advisor for the Lieutenant Governor, is seeking comment from industry participants on the amendment before it is enacted into law. He can be contacted at Rishi_Garg@ltgov.state.il.us.