In January 2022, Ericsson filed at least 12 preliminary injunction requests against Apple before different judges in Colombia. All those actions were filed as ex parte proceedings, in which an alleged patent infringer needs to be stopped in order to prevent illegal action causing an actual harm to the patent owner. Two of them were filed before the Superintendence of Industry and Commerce (SIC). At the same time, Ericsson filed all the remaining known actions before conventional courts, also with general jurisdiction over patent infringement.

These lawsuits concern the license for patent “5225,” regarding 4G or LTE wireless technology, entered into agreements in the year 2008 with the corporation Apple, whose purpose consisted of a cross license, which included patents that were within telecommunications standards. Subsequently, and in light of its expiration, Ericsson asked Apple to negotiate new terms to authorize use of the patent, which only occurred in the year 2015, when a second license was signed, which recently ended. According to Ericsson, the importation, marketing, and use of Apple devices, which comply with 4G standards, are then in violation of the mentioned license, since such equipment is configured to handle 2G, 3G, and 4G SEPs (Standard Essential Patent) of the license.

Ericsson has also initiated numerous patent cases against Apple and its various subsidiaries, in the courts of Belgium, Brazil, Germany, the Netherlands and the United States. Ericsson has argued that it had to do so because negotiations between the parties to renew the license failed, and barely began taking place. According to Apple’s counsel, “Ericsson initiated many lawsuits against the Apple group in secret, so that Apple would not have knowledge of the litigation initiated by Ericsson”.

Even though new iPhones are a status symbol in Colombia, the country only accounts for 0.2% of Apple sales globally.

Apple’s counsel also maintained that “Ericsson did not provide evidence on the essential characteristics of its patents, and it appears that, in fact, Ericsson’s patents are not really essential to the 4G or 5G standards”.

Prohibition for iPhone 12, 13 and 14

Despite the fact that the 5G network has not yet been introduced in Colombia, Ericsson is demanding payment from Apple for using its proprietary technology. It demands a $5 charge for each iPhone, but Apple has so far declined to pay.

On July, Court 43 of the Circuit of Bogotá granted Ericsson’s request for an injunction and entered orders to Apple Colombia prohibiting the import, sale, commercialization and advertisement for all equipment using the allegedly infringed patent, which are all current devices using 4G or 5G technologies, including iPhone 12, 13, and iPhone 14, introduced in September. Apple briefly hinted that the iPhone 14 would finally be available in October; in a press release, Apple initially stated that iPhone 14 Plus would be available in Colombia on October 28. But the firm corrected the press release by removing this note.

When contacted, Adriana Huerta, head of corporate communications for Latin America at Apple, only stated that “for now, we do not have more information than what is available in our Apple press room in Colombia about the latest releases of our products.” Ericsson’s attorney in Colombia, Carlos Olarte, confirmed that the lawsuit goes ahead, and Apple still cannot market its iPhone 14 in Colombia. “Talks continue between Apple and Ericsson, and there is clearly a mutual desire to reach an agreement. Everyone is hopeful that a mutually satisfactory negotiation will be reached,” he ensured to Finance Colombia. No further details regarding the discussions were disclosed, as they are confidential.

Besides, a Colombian court denied Apple’s emergency request for relief, upholding the constitutionality of the sales and import ban.

Apple considers that this prohibition is “highly unnecessary since 5G technology is not operational in Colombia; not effective as the inclusion of features that support 5G technology does not necessarily imply the use of Ericsson’s patent rights; and nonproportional as it will cause a greater damage to the Colombian consumer particularly as the real infringement of the patent has not been demonstrated and in any case it would be occurring supposedly only while the parties reach a monetary agreement and in a very small section of a very complex device.”

In contrast to other countries like the United States or even the Dominican Republic, 5G networks are still not available for consumer use in Colombia.

Two important dates

Apple’s counsel also commented that Apple and Ericsson have previously agreed that active litigation between the parties in the US District Court in the Eastern District of Texas will be the action that will determine the FRAND (Fair, Reasonable, And Non-Discriminatory) terms for a license that will cover both parties’ portfolios of “patents declared essential to the standards,” including patents that Ericsson has asserted against Apple in Colombia. In other words, “both Ericsson and Apple have asked the judge to determine whether Apple’s and Ericsson’s offer is reasonable,” Olarte explained to Finance Colombia. “And depending on this determination, it will help to reach an agreement in Colombia. Essentially because the judge will tell them that either Ericsson’s price is reasonable, or Apple’s offer is reasonable, or that both proposals are reasonable. That may motivate the parties to reach an agreement.” This lawsuit in Texas will take place in December.

Another important date is set on the calendar: as Ericsson is also suing Apple in Germany, some hearings are expected in Mannheim over the coming weeks. The decision should also influence the parties in finding an agreement, Olarte pointed out. “For example, if they grant an injunction in favor of Ericsson, that would be one more country to add to the list where Apple is losing. And that could also motivate Apple to settle,” he told Finance Colombia.

According to Olarte, Apple’s annual sales in Colombia represent about 0.2% of the company’s global market. This raises the question whether it is really worth it for Apple to resist so fiercely. Why not accept Ericsson’s licensing terms straight away? “One could say that Apple should take into account the very small size of this market,” says Ericsson’s attorney. “But another analysis suggests that Apple has a reputation to defend. Apple does not like to be accused, or even less to be declared infringing in a country. And there’s also the real impact, beyond the small percentage. If you multiply 0.2% by Apple’s global sales, it comes out to a big number. That number hurts someone. Even Colombia being as small as it is, it’s a major irritation.” As an example, Apple declared that just the net sales of Ishop,  one of the distributors of Apple Colombia within the Colombian territory, in 2017 were $2,642,637 USD. “It is also a message that Apple sends to other countries, where it is fighting similar lawsuits,” concluded Olarte, a statement that the company does not intend to give up so easily.

The company is increasingly seeing opportunity in Latin America. It has made large inroads in Colombia, where it says its chips are used in more than 40% of the phones sold in the country. Mexico and Peru have also proven to be fertile ground.

Photo: “We aim to deliver the best possible technology at a reasonable price,” says Finbarr Moynihan of MediaTek, “and then, honestly, we want to then step back and let our customers innovate.” (Credit: MediaTek)

Recently, Finbarr Moynihan, general manager of international corporate sales for MediaTek, was in Colombia to meet with customers at the company’s year-end event. He sat down with Jared Wade of Finance Colombia to talk about the company’s strategy to continue its growth — in Colombia and beyond.

Finance Colombia: Can you explain your role and how MediaTek has expanded in recent years? You’ve been with the company for almost 10 years now?

Finbarr Moynihan: Yes, I came to MediaTek about nine years ago when they acquired the business from Analog Devices. Mediatek will be over $8 billion USD in revenue this year, and we have 15,000 people worldwide.

The way I tell the story of our mobile business is that we’ve said for a while that about one in three phones uses MediaTek. So of all the phones made every year in the world, about one in three uses MediaTek chips.

If you look at our businesses very broadly, I would say about two-thirds of our business is mobile — so, phones — and about one-third is what we call “home,” meaning digital TVs, set-top box, DVD players, home routers, WiFi connectivity, retail broadband, all that kind of stuff. Then also we have some businesses in Internet of Things. But, broadly, it’s two-thirds vs. one-third.

Of course, if you look at the industry, there’s also been a lot of consolidation of the chip industry, and frankly a lot of our former competitors abandoned the mobile chip business over the years. Broadcom, Marvel, and many others. So there’s been consolidation, and it’s become Qualcomm and MediaTek as number one and number two.

Finance Colombia: Qualcomm, in the United States anyway, has more brand recognition. Because of the Padres ballpark in San Diego, I’m sure. How much of a push are you making to be more known among consumers?

Finbarr Moynihan: It’s the usual reaction. We don’t have a ballpark. I think if you go to Asia and China, we’re much more well known. MediaTek’s challenge has been — and a part of the journey we’re on is — really globalizing the company.

I run the international sales organization — North America, Latin America, Asia, India, all these regions — and we’ve been growing that activity over the years and also globalizing the shipments and the customers into more high-tier global brands. Pretty much, today, every brand shipping Android phones uses MediaTek in some part of their portfolio. Some will have very high market share, some less. But Sony, LG, HTC, Alcatel, ZT, Huawei, Lenovo, Moto — they all ship with MediaTek.

Another part of our business has always been a focus on the local brands, so for us about one third of our volume ships to the local brands, as we call them. These local brands, they exist all over the world. I think they were a phenomenon that grew out of emerging markets mostly, but it’s now becoming a phenomenon in Western Europe. We are starting to see some signs of it in the U.S. market as well, and these are brands that, just by their definition, focus on a specific region,

Lanix is a good example here. Lanix operates in Mexico, Colombia, Peru, and some other local markets. Bmobile is another one. And Blu is another one.

Over time, some of them have got bigger and expanded into other regions, but that’s also been another part of our focus because they help drive the feature set for the local market. There are always aspects — features, niches, price points — that fit the local market. We think the local brands understand that better.

MediaTek recently hosted its year-end event for customers in Colombia at Bogotá’s legendary restaurant Andres Carne de Res.

Finance Colombia: So you see LatAm — and specifically Colombia — as a good opportunity because there’s not such an entrenched brand loyalty necessarily? A lot of people are still buying their first smartphones.

Finbarr Moynihan: In some senses, the U.S. market is the most boring, right? It’s Apple, Samsung, maybe LG, and then it falls off a cliff very quickly. That’s changing because of some of the stuff that’s going on with the open market, with online and Amazon and retail — particularly with the carrier subsidies going away. But it’s still in its early days, right?

So what’s interesting about here — particularly in LatAm, in Mexico, in Colombia, in Peru — is that there’s a very broad, diverse range of brands that operate in the market. Some focus on the carrier channel. Some focus on the retail channel. You have a much more vibrant mix of retail and operator channels here than we do in the United States.

That also means that there’s opportunity for new brands to come in. Obviously, every brand has to find what they stand for, what they are focused on, and how they’re going to position themselves to the consumers. You have some brands that focus very closely on the operator channel, and they’ll work very closely with their carrier partners to make sure that their devices are hitting exactly the right modem-features set and the right price points. Others maybe are focused more on the retail, so they focus more on user features, design, colors, camera, display — things that a consumer will gravitate more towards when they pick up the devices.

What’s happened with Android becoming the great equalizer — and with companies like ourselves delivering what we call “turnkey reference designs” or “reference solutions” — the barrier to entry for the core technology is reduced. There’s room for people to innovate on top of that. They can ask, “what features am I going to put together in the device that is going to target the particular segment I’m going after?” Or it could be geography. It could be demographic. It could be country, retail, or operator. It depends.

But that’s created — in some markets, like Colombia — a very diverse portfolio of products that are offered to the consumer. Then the consumer picks what makes sense for his requirements or his budget or whatever the preferences might be.

Finance Colombia: So there’s the potential for a lot more creativity? There’s going to be more chance for winners and losers as opposed to the two or three big brands in the United States just doing whatever they want and people accepting it?

Finbarr Moynihan: Exactly. There are obviously socioeconomic spending-power differences between the countries as well that have a factor. But overall we like experimentation. That’s good, right?

Our approach has always been that we aim to deliver the best possible technology at a reasonable price and enable our customers to deliver at a reasonable price. I’m not saying “cheap” — but good performance for the price, and putting as much technology as we can into the different features and segments. And then honestly, we want to then step back and let our customers innovate.

We don’t prescribe what materials to use, what cameras to use, what display to use. We will deliver the same core platform to different customers, and one of them will make a phone with one feature set and another one will make something that looks completely different. Because they make different decisions. That’s how we think device diversity innovation happens. If you let it play out, the best will win.

Finance Colombia: In Colombia, what’s your market share now, and how do you see your business progressing here?

Finbarr Moynihan: Within Latin America, for us, Mexico, Colombia, and Peru are our bright spots right now. I think on the average, those economies are probably doing better than Brazil and Argentina.

Looking at Colombia, IDC estimated in the first half of this year, our market share — if you take all phones sold in Colombia — 43% of them were powered by MediaTek. That would give us the number-one share, slightly ahead of Qualcomm, which was at 41% maybe. It’s almost down the middle.

Finance Colombia: So that would make Colombia one of your best countries?

Finbarr Moynihan: Yeah. China would probably be our top market. Our share in China is probably up there — maybe 50%. But then in the U.S., our market share is in the single digits today.

Overall, I think the LatAm region is probably close to the global average, about 33%, so you can kind of tell from that. Mexico and Colombia for sure are over our average in that sense.

Finance Colombia: In addition to pure growth, what else are you focusing on now — in Colombia and beyond?

Finbarr Moynihan: Right. While market share is one metric, it’s probably not the most important metric going forward. I think the more important one is to try to grow value share and grow into higher-tier devices. So again, as these markets get more mature, people are not buying their first smartphone. They’re buying their second or third smartphone. In most cases, they’re looking to trade up. They want more features. They want more performance.

MediaTek grew from the entry space. That’s where we came from. So 2G feature phones — emerging markets — that was our entry into mobile. Now, where we’re putting a lot of focus, and where we’re putting a lot of investment, is into what we call our Helio series, our brand for our high-tier products.

We have two series, an “X” and a “P.” Helio X is kind of the flagship — extreme performance — and Helio P is one step down from that. It’s more about a balanced power/performance position. Those segments are all about delivering high-end features: displays, cameras, multimedia, graphics, computing, modem, or whatever you want to do.

Carlos Graham is ETB’s chief customer officer, and his area of the business that has been undergoing some dynamic change. While users will be more familiar with the new forward-facing product offerings and service upgrades, he has been spearheading a customer service overhaul that is leading to some impressive returns that can be measured in dollars and cents.

To detail some of the improvements, explain ETB’s current strategy for growth, and tease some upcoming product announcements looming for later in 2016, Graham recently sat down with Finance Colombia Executive Editor Loren Moss.

Carlos Graham, ETB’s chief customer officer

Finance Colombia: ETB is one of the major telecom carriers here in Colombia, and you have experienced tremendous growth over the past few years — especially over the past year. You have an impressive offering in Bogotá and have been rapidly capturing market share against some of the other bigger carriers. What has been the key to growth in this challenging environment?

Carlos Graham: Just to give you a few numbers based on our first quarter results of 2016, we’ve gained a little bit over 1 percentage point in market share in our TV business, we’ve gained around 0.3 percentage points in our basic, copper-line broadband, and we’ve gained 0.3 percentage points in our mobile business. All those increases in market share in TV and broadband are basically in Bogota, which is our “battleground,” so to speak.

On mobile, that figure is nationwide, and our offering is kind of new. In mobile, it’s like you’re the new kid on the block. Recently there was an article in the Dinero magazine in which there was an analysis of the presence of certain brands in social networks, and ETB was among the first five. This was influenced by our branding of our mobile services.

You’re going to see some very interesting surprises in the second half of the year, during which we’re going to re-vamp our mobile offering. So that has helped us push those market shares in those three product lines. It’s a combination of customer service and actual product experience.

As far as TV is concerned, our offering — our IPTV and real broadband — has received a very attractive uptake from customers. The product is great. I mean, nobody else offers the quality of broadband that we provide or the TV experience. It’s pushing a lot of the product. In Colombia, still, this type of TV experience is something new compared to in other countries. And our offering is very attractive, not only as far as the quality of the product is concerned, but also the pricing.

In broadband, our copper-line broadband is kind of the first. We are seeing a rise in market share, primarily due to improvements in our customer service as far as broadband customers, and mainly copper-line customers, are concerned. For the first time we’re seeing a reduction in churn from our copper-line.

From the close of July, as far as churn is concerned, we’ve reduced churn by maybe 3% in basic copper-line customers. But most importantly, we’ve reduced our customers’ intentions to churn by 46%. Even though our retention rate has pretty much stayed the same, that’s what we see.

Finance Colombia: Fascinating. In a business like telecom, where you have a choice between service providers, it’s going to come down to: Why do people churn, why do people leave? Sometimes it’s cost, but a lot of times people get angry. They get angry because they’ve had a bad experience with an outage or they’ve had a bad experience calling for service.

That has been less of a factor in markets like Colombia but it seems to be becoming more of a factor as more of the population gets used to doing things online and more of the population “becomes banked” and actually has the means to go and pay bills online. How have you made customer support and customer service more robust to help to reduce that churn?

Carlos Graham: I will first share some figures. In the first semester of 2015, in our revenue mix, our copper revenue was 61%. Now it’s 54%. Our fiber revenue, from our IPTV product or broadband, in the first semester of 2015 was 3%. Now that has gone up to 11%. And our mobile services in the first semester of 2015 was 3% and now it’s 8%. So we’re seeing a shift in the revenue mix, with more-sustainable revenue, so to speak.

As far as customer experience is concerned, towards the end of 2014, we realized that we were entering the market with some very interesting products — our fiber-optics product and our mobile product — but we still had something of a “to do” list left. That was customer experience and customer service. We wanted to make that a differentiator.

And it’s not only Colombia. It’s worldwide. Telcos’ customer service ranks at the bottom of the pile, so we figured that we could differentiate ourselves with a better customer service that will, in turn, reduce our churn, increase our retention rate, increase revenue, and increase market shares.

So we set up a program, which is called “Customer Service Excellence” in 2014. We analyzed what’s most important within our customers’ journey, in all our customer segments. Mobile was still a new area — a “green field” — at that particular moment. So we came up with quite a number of initiatives along the customer journey that needed to be fixed.

First we began focusing on fixing the basics to just be competent. We not only identified those issues, but we also designed a customer experience ecosystem in which we monitored the customer on a permanent basis, based on the voice of the customer. We used customer satisfaction, customer effort score, and net promotor score (NPS), and we correlated with our KPIs.

We did our homework. We did our customer journey. We identified where the “hurt points” are for the customers and we designed certain initiatives, and for residential there are nine initiatives. For corporate initiatives there were five big initiatives, such as making sure the installation process work, making sure that there were no network outages on a permanent basis, making sure that we would improve our customer service contact-points, and making sure that the billing was right. We call it the “Five I’s” to actually change the culture of the company more towards the customer: Inform, Inspire, Instruct, Involve, and Incentivize.

Finance Colombia: Are you seeing the benefits in terms of numbers and revenue figures?

Carlos Graham: We’re not doing this to improve only our customer satisfaction scores. There has to be a direct correlation with the finances of the company, either to reduce cost or increase revenue. So all of these initiatives, as far as the overall impact of these initiatives, two-thirds of those customer experience KPIs improved by more than 5% from the first semester of 2015 compared to the first semester of 2016. Our NPS score in the residential segment went from -14 to 4. Right now we’re at around 6. Our corporate NPS went from -10 to 18. Right now we’re more or less at the same level.

Customer service costs reduced. For all our residential customers, we reduced our customer service costs by 2%. And only for the copper-line customers, we reduced it by 14%. We have our fiber-optics customers increasing at a dramatic rate, and with our copper-line customers, we’re maintaining that base.

Sometimes it’s difficult to correlate these initiatives to revenue. But, for example, a lot of initiatives in the corporate segment were focused on our premium customers, which generate more than 50% of the revenue in the corporate segment. And that segment increased by 11%. So you could actually feel safe to say this initiative had a lot to do with that increase. And the ROI of the program, we’ve made some investments in this program as far as capital expenditures and OPEX expenditures are concerned, and during 2015 that ROI was like 622%.

Finance Colombia: ETB has made tremendous investments — spent a lot of money — but now it’s kind of a time of austerity, as your president has said publicly. So how do you continue to improve upon those metrics? How do you continue to grow market share and improve the customer experience — and make the customers more loyal — when you’re at the same time in this austerity mode?

Carlos Graham: Oh, that’s a huge task. That’s a huge challenge. We have three strategic priorities now, starting this year with the new executive team on board.

One of them is to be able to maximize that profitability of the investments that we have made, especially in fiber. Two is austerity. And three is customer service.

Those are our three pillars. And how do you improve customer service and at the same time reduce your costs? I think that a lot of customer service costs are attributed to bad service.

From infrastructure to branding, ETB is growing its presence throughout Bogotá. (Credit: Jared Wade)

Finance Colombia: Exactly. It costs more every time. If somebody has to call four or five times, not only are they mad — but you’ve got four times, five times the expense.

Carlos Graham: Exactly. So just to give you a few numbers, we project our customer service costs to decrease by 12% at the end of the year. And we expect our NPS to increase. So we have found a lot of opportunities within the channels. It’s the whole process, starting from the installation, the billing process, and the fact that people cannot resolve at the different channels.

So therefore we continue to get involved at the beginning of the chain to be able to find the root cause of why customers call us or why customers complain, and therefore reduce costs. So when they tell me, “Well, we don’t have any money,” I say “No, we have a lot of money — the thing is that there is a lot of waste within the money that we’re spending.” And I project in the next two years to reduce our call center costs by 20% because I’m going to reduce the amount of calls that customers make.

Finance Colombia: So ETB has this tremendous fiber and ITV offering here in metropolitan Bogotá. And you have 4G LTE mobile service nationwide. What’s the strategy from here? How do you continue to grow and differentiate yourself? Are there more products to be developed? Is there an expansion of your geographic footprint? How does the company continue to compete against the competition, some of which are much, much larger than ETB?

Carlos Graham: Well, right now it’s a very tough competition. During the second semester of the year you’re going to see a launch within our fiber-optic product proposition, a combination of product and pricing — better product and pricing combinations. And also on our mobile service you’re going to see, like I mentioned before, a very interesting type of product-type combinations: more products with more pricing options.

As far as increasing our fiber-optic portfolio, as far as coverage is concerned, we’re still going to concentrate on Bogotá. We still have a lot to cover in Bogotá, so we don’t have any plans on expanding as far as our fiber-optic network is concerned, and that’s part of our main focus in increasing the profitability of what we have already invested. It’s starting to pay off. We are looking into what other types of products we can put into that pipe of maybe 150 megas to provide at home. And we might have some interesting alternatives as far as OTT-type options are concerned.

So, yes, we see in the future maintaining our copper-line customers as happy as possible because they are the future of the rest of the products, and we have to still continue fixing the basics on those. And on the other products, there are some new things coming.

Finance Colombia: Great. I’ve already seen the innovation. Your plans are different. What you’re doing here in Bogotá is also very innovative. Very few cities in the world — I don’t care where the country is on its scale of development — have 150-megabyte fiber into the house. So, you know, I think that’s probably a bragging point for Bogotá.

Carlos Graham: Yes. Remember that we were born with kind of like a focus on data, 4G. Of course, that market has also taken us slowly also into the 3G-type market, but yes, our mobile-type proposition is to be completely different — completely different — from what the market is doing, and we would like to do that.

Our fiber-optic network is the fourth largest in Latin America, taking into account what they have in Mexico City and in Sao Paolo. We’re kind of neck-to-neck with one in Montevideo. But yes, as far as the offerings are concerned, this offering is probably one of the most aggressive.

This interview has been edited and condensed for clarity and length.

With an average data speed of 8.07 megabytes per second, Colombia ranks fourth in Latin America, trailing only Uruguay (10.21 mbps), Peru (9.11), and Chile (8.77). Users in Colombia are able to access 3G or better speeds 84.6% of the time. By comparison, Chile ranks first in the region at 91%, the United States comes in at 92%, and South Korea boasts a near-perfect 99%.

Latin America Data Speeds

“In general, South America’s data networks are behind much of the developed world in speed, with all nations, save Uruguay, providing an average mobile data speed less than 10 mbps,” wrote Open Signal in a blog post. “But most of South America did admirably in terms of 3G/4G signal availability.”

Among large Latin American nations — those with more than 20 million people — only Peru outperformed Colombia. Mexico offers comparable speeds at 7.93 mpbs, but Brazil (7.43), Argentina (6.52), and Venezuela (3.88) all fare considerably worse. Brazil also can only offer 3G or better speeds 75.2% of the time. “Having a large population or economic influence had little bearing on countries’ performance in the region,” wrote Open Signal.

Colombia also stacked up well in another recent study, Spanish telecom Telefónica’s “Index on Digital Life.” Though not looking strictly at Latin America data speeds, the analysis ranked the Andean nation among the world’s best in terms of digital development and policies aimed towards further improvement. “Colombia is Latin America’s most outstanding over-performer in digital life relative to its GDP per capita,” said the study.

Despite its standing the Telefónica report still highlighted how much room remains for improvement. Colombia lagged behind Brazil, Argentina, and Chile on digital adoption rates and ranked below Chile, Costa Rica, and Uruguay on privacy and security. It also compared poorly to its regional peers when it comes to business application of ICT technology and software spending.

The levels of adoption of LTE in Colombia are forecast to accelerate in 2014 as a result of the spectrum auction that was held in June 2013. This process resulted in the aggressive investment by the three major mobile operators in the country in the deployment and expansion of the geographical coverage of their LTE networks.

In the fourth quarter of 2014, Colombia had 54.2 million mobile devices active, of which 1.2 million are subscriptions LTE. According to international consultancy Pyramid Research, LTE will be 19% of Colombia’s mobile devices in 2019, a projected 66.3 million mobile lines in total.

• Pyramid Research projections show that LTE will represent 19% of total mobile lines in the country in 2019.
• In 2019, 96% of handsets sold will include mobile broadband technology. 
• Award of radio spectrum in the 700 MHz band will be key to the expansion of LTE.

LTE growth in the coming years will be driven by the allocation of new concessions of radio spectrum, with the 700 MHz band being more attractive in the short term. This band is scheduled to be awarded later this year, with portions of spectrum in 900 MHz and 1900 MHz also available. Industry trade group 4G Americas believes it is imperative to avoid a slowdown in the adoption of LTE, and that the 700 MHz spectrum is allocated on an open and non-discriminatory basis to all those interested in and capable of investing in the deployment of this technology.

The market for devices

The LTE coverage expansion in the coming years will be complemented by an increase in the number of devices that can connect to this technology. Data provided by 4G Americas and Pyramid Research shows that by 2019, 96% of mobile phones sold in Colombia will be able to connect to mobile broadband technologies, with more than half of these are compatible with LTE devices.

Finance Colombia was able to discuss this market growth, especially as it relates to Colombia’s vibrant and at times, contentious domestic wireless mobile telecommunications market, with José Otero, 4G Americas’ Director of Latin America And The Caribbean.

José Otero, 4G Americas’ Director of Latin America And The Caribbean.

Finance Colombia: Latin America’s adoption of LTE has really grown, from 2 million connections in 2013 to 12 million in 2014. What kind of growth should we expect over the next 3 years?

José Otero: The period from 2011 to 2014 could be described as the first phase of LTE deployments in Latin America. During these four years, LTE deployments were characterized by their limited geographic coverage (main exception being Brasil) and low number of operators offering the service in the same market.

The spectrum allocation processes that took place at the end of 2014 in Argentina and Venezuela paved the way for LTE to enter a second phase in its evolution. Starting in 2015 the main characteristic of LTE in Latin America and the Caribbean will be geographic coverage expansion and accelerated subscriber growth. LTE will surpass the 100 million subscriber mark in the region before the end of 2018.

Finance Colombia: What can you tell me about growth of 4G LTE in Colombia specifically?

 José Otero: Colombia is one of Latin America’s LTE leaders. The growth of this technology in the country will only accelerate in the coming years. According to data from Pyramid Research, by 2019 Colombia will have more than 12 million LTE subscribers with Smartphones capable of LTE, surpassing in sales those capable only of HSPA+ services.

Finance Colombia: Do we know the mix between prepaid and invoiced subscribers?

José Otero: The numbers won’t vary much from what we currently have in the market. Since contracts are no longer valid in Colombia, we’re seeing operators trying to retain their invoiced subscribers with better offers and services.

Finance Colombia: What differences in usability, beyond higher speeds, will users experience as they migrate from HSPA to LTE devices and services?

José Otero: It will depend on the location and how many channels are dedicated to HSPA+. But, initially Smartphones capable of working with LTE will tend to be more sophisticated than previous devices as the technology main advantage is to allow customers to interact with an increasing number of applications and services that require high connectivity rates. The interface will be mostly dictated by the device’s operating system with Android, iOS and Windows being representing the vast majority of handsets.

LTE is the first mobile technology that will provide users similar and sometimes greater speeds than their wired counterparts

Finance Colombia: In Colombia and most other CALA countries, we still have a significant portion of the population living on modest incomes. How relevant and accessible is LTE to that market segment? Is it still just a luxury service, or are there devices and service plans that are accessible to the mass market?

LTE Infographic 4G Americas

José Otero: Colombia has adopted measures to accelerate the adoption rate of new technology. From no taxation on mobile devices to the free delivery of tablets in low income areas, people from strata 1 and 2 now have more opportunities to access mobile broadband technologies. As time passes by and LTE gets better economies of scale, its adoption rate among the lowest income segments of the population will increase.

Finance Colombia: Beyond mobile phones, how else is LTE adoption changing the way that people interact with friends, and media sources in Colombia and other LatAm countries?

José Otero:  LTE is the first mobile technology that will provide users similar and sometimes greater speeds than their wired counterparts. This is a change in the traditional paradigm where mobile connections only complemented wired connections.

Finance Colombia: Any specific insight, observations or comments related to Colombia in particular?

José Otero: As mentioned before, speeds offered by LTE will in many instances be superior to those offered by wired alternatives. This is especially true in rural and suburban areas where DSL or Cable Modem speeds are below 10 Mbps. Thus the launch of LTE will force wired broadband providers to improve their service to remain competitive before the mobile alternative and not risk suffering from the fixed to mobile substitution that occurred in the voice market.

4G Americas maintains a current list of LTE deployments in the Americas on its website.  For more information and to view a variety of statistical charts on the 3GPP family of technologies, visit www.4gamericas.org. Subscriber and forecast data is from Ovum. The infographic is courtesy of 4G Americas.

Above photo, ETB President Saul Kattan Cohen (left), Bogotá Treasury Secretary Ricardo Bonilla

The President of ETB, Saul Kattan Cohen, highlighted the progress of the company, reconfirming for the second consecutive year, the increase in income of the company, a trend that began in 2013, after more than eight years of losses and despite the continued decline in fixed telephone line revenues, the company’s largest generator of income. This fiscal year, revenues were $371 billion pesos. Liquidity is $1.1 trillion. Share value of the company grew 16% during 2014 compared to a decrease of 5.81% in Colombia’s COLCAP index.

The only financial debt is an international bond issue of $ 530 billion.  The company’s decision to issue this debt in pesos has mitigated the negative effects of the current decline of the peso against the dollar in recent months. The bonds have a term of 10 years and a rate of 7%, one of the lowest rates obtained by a Colombian firm on international debt markets in recent years.

Kattan reported progress in service innovation this past year, with the launch of three new services: Fiber to the Home, Digital Interactive Television and 4G LTE Mobile Telephony Services. In ETB’s service area of 900,000 homes, 30,000 households have already been wired for fiber optics. The goal in 2015 is to connect 140,000 households.

In ETB’s Interactive television service, more than 10,000 homes are subscribed, and enjoy benefits such as greater speed in changing channels, the ability to record up to five channels at the same time, and rewind to play back up to an hour of live programming. The goal this year is to install 80,000 interactive vable television connections.

ETB’s moble service already has more than 50,000 users. ETB managed to sell its shares in Millicom’s Tigo (wireless carrier) worth over 240 million dollars, with a clause in the sale creating an infrastructure sharing agreement valued at $800 million dollars, enabling ETB, partnering with Tigo’s infrastructure, to launch a mobile service nationwide less than 1 year after obtaining the spectrum.

ETB won for the second year in a row, recognition by the organization Transparency for Colombia, for having good corporate governance practices, and for the first time achieved environmental sustainability certification under the ISO 14001 standard.

New Board of Directors

The assembly also elected a new board. The holders appointed are:

• The Mayor of Bogotá, Gustavo Petro
• District Secretary of Education Oscar Sanchez Jaramillo
• Civil engineer and economic analyst Eduardo Sarmiento
• Business and marketing manager Juan Pablo Morris Rincón
• Economist Fernando Arbelaez
• Attorney Mauricio Duarte Duarte
• Economist Francisco González Barnier

The following alternate board members were also approved:

• Martha Lucia Zamora Avila, current General Secretary of the Mayor of Bogota
• Helga Maria Rivas Ardila, District Secretary of Habitat
• Leader of the Confederation of Workers (CUT) union, Fabio Arias Giraldo
• Social Communication expert José Manuel Alarcon
• Civil engineer Carlos Fonseca Hildebrand
• Utilities attorney Carlos Rey Arturo Parra
• Héctor Bermúdez