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Puerto Rico telecom execs are the constant in an ever-changing market

Puerto Rico’s telecommunications sector has seen its share of changes and developments in recent decades. What has been a constant, however, is the leadership at the three largest carriers that currently serve the market, who have seen it all and are prepared to take on what lies ahead.

In separate interviews with News is my Business, Liberty Puerto Rico CEO Naji Khoury, Claro Puerto Rico President Enrique Ortiz de Montellano and T-Mobile General Manager Jorge Martel all agree that much has changed – with the arrival of new technologies, market competition and savvier customers – and there’s more to come.

For Ortiz de Montellano, who has been at the helm of Claro Puerto Rico for 15 years, it all boils down to rolling with the changes. When Claro’s parent company, América Móvil, bought the assets of the formerly government-owned carrier, it had stiff competition from five other wireless providers.

“We came in to modernize the network and integrate new services, like wireless, to prepare for the future. We had to modernize the fixed lines from copper to fiber optics quickly to eventually achieve 3G and 4G speeds,” he said. “We went from competing for products to competing for bundled services.”

Claro’s Guaynabo headquarters

“We came into a market that had six competitors in telecom services, and those who are no longer around, especially in wireless, isn’t because they were good or bad; it’s that they didn’t have the muscle, or scale, or products to take the next step,” he said. “If you have only one product to offer in wireless, it’s going to be tough to compete.”

Martel has been a familiar face in Puerto Rico’s telecom sector since 1999 when he started at the defunct Suncom Wireless, which was sold to T-Mobile in 2008. He has been at the carrier’s helm since 2011.

At the time, the wireless market was just beginning to bloom, as service providers began responding to a new demand for devices and services, he said.

“All business aspects were being put together, from the distribution to how to run the operation. I came in when everything started to change from direct distribution to customers to establishing retail operations,” he said. “It was like the Wild West back then because you had these well-established companies who were growing exponentially on all fronts.”

Khoury, whose 23-year tenure in Puerto Rico’s telecom sector includes leading two main providers – the defunct Centennial de Puerto Rico and now Liberty Puerto Rico – recalls the exact moment when he believes the industry began to shift.

“It was around 2005 when it all started. The proliferation of broadband and the internet at home for me is a massive event, and I would say it’s the pinpoint of the year when it all started,” he said. “The introduction of the smartphone in 2007 or so, and the upgrade from 3G to 4G wireless technology in 2011, which brought an improvement in speeds and massive network performance, were also significant.”

As wireless providers dropped out by merging or selling their operations to the larger players, they left a market that “corrected” itself, Khoury noted.

“You look at any market in the world, the U.S., Latin America, Europe, and between two and four players is the sweet spot. So, it’s working well, and the market is regulating itself in terms of prices and offers,” he said.

At the end of the day, it’s consumers who reap the benefits as carriers launch faster and better services.

“It’s a very competitive market, to the point that if you don’t offer a superior service experience, you invest in the service experience, it can be the problem,” said Martel. “You also have extremely savvy, demanding consumers, who know they have options, they can just go to the next provider.”

While consumer mindsets may have evolved, so have providers, who once upon a time could lure customers with a free $100 handset. Today, the average handset costs upward of $1,000, yet carriers continue to subsidize these for the sake of competition.

“We offer an expensive device for basic rent. Yes, we have family plans now, but in the end, the customer wins. Puerto Rico is different from Latin America, where 90% of the market is prepaid and all phones must be bought in cash,” Ortiz de Montellano said. “But Puerto Rico and the U.S. mainland are markets that are used to living on credit.”

In 2018, T-Mobile was lighting up 600 MHz Extended Range LTE, laying the groundwork for 5G.

Before and after Hurricane María
In 2017, Hurricane María marked a “before and after” for telecom providers who had to practically rebuild their networks from the ground up in the wake of the storm’s devastating damage. After the initial shock and several days of an islandwide signal blackout, providers rushed to set up temporary facilities to enable customers to use their devices, albeit in a limited way.

“I’ve never seen such a massive recovery process, so quick and with such urgency. With humility I can say that the first plane that arrived in Puerto Rico was from T-Mobile. The entire company had their eyes on us because they knew the importance of what was happening,” Martel recalled. “We needed to bring the airport back online, and the rest of the network.”

Not wanting to “just rebuild,” T-Mobile took the opportunity to rebuild stronger, reinforcing the network with the spectrum it had acquired through its merger with Sprint.

“Right now, T-Mobile’s network in Puerto Rico is considered to have the greatest availability of 5G technology in the world. And when I started working in telecom in 1999, I wouldn’t have thought that I would be able to say that Puerto Rico is on the leading edge of technology in the world, surpassed only by Korea, if you read the Open Signal report,” he said.

The report confirms that T-Mobile provides the fastest average speeds in Puerto Rico, while Claro triumphs with its 5G video experience. Liberty has an overall win for availability of wireless connections on the island.

Liberty’s lead is likely due to its acquisition a few years ago of the incumbent at the time, AT&T Wireless’ assets. It added a wireless division with more than 1 million customers who are now under the Liberty Mobile umbrella.

Looking ahead
Cutting-edge services based on artificial intelligence and blanketing the island with broadband connections are two of the predictions high on the carriers’ list of developments in the immediate future and down the road.

In three years or so, Claro expects to reach 1 million homes with its fiber optic broadband connections to homes, especially those that are remote or hard-to-reach. T-Mobile and Liberty foresee competing, but in the wireless arena.

“We want to be able to look at a future that’s prosperous and of growth for the sector. Households need to have broadband and they also need education and the world it opens for them,” said Khoury. “There’s expertise on the island that we could use in higher quantities; we have to find a way to become a technological hub and attract talent from universities – professors and students – because once you do that, you create an environment where there’s a never-ending pace of change.”

For Martel, the engineers and technological experts coming out of Puerto Rico universities like the University of Puerto Rico’s Mayagüez Campus (known as RUM) and Polytechnic University are already known for building the best network in the world.

“The engineers we have are extremely capable and have proven it. Many leave the island, although we need them, but for them to stay, we need a viable economy,” he said. “It’s a complex topic but it needs to be said. We can say that we have a group of Puerto Rican engineers who received the best available resources in the world, and they created the best network in the world.”

For Ortiz de Montellano, over the next three to five years, the wireless sector will be “more focused, efficient and with many products in stores to be able to sell more to your customer base from a single location. For customers, it’ll still mean good rates and good equipment because there are three big companies fighting for them.”

Liberty Puerto Rico’s Hato Rey headquarters

Hosting innovation
By creating the right environment, Puerto Rico’s wireless sector could also be host to innovation “including the incredible use of artificial intelligence, where we obviously haven’t scratched the surface yet,” Khoury said.

“Providers, academia and the government have to take it on, especially the education aspect. Its something that as a society we have to think through, then you have to talk about the ethics of it, which as a society we cannot shy away from,” the CEO said.

“But we’re at an inflection point in my view, when something else needs to happen and providers like us will continue to enable it,” he added.

Looking ahead, Khoury envisions an “explosion” in the proliferation of connected devices, especially at home.

“I look at my household and at any single moment in time I can count as many as 30 fully connected devices, and this is going to increase as a new generation starts forming their households,” he said. “From lightbulbs to refrigerators, printers to washing machines, and adopting all this [connected technology] is normal for them.”

Puerto Rico is already ahead of the curve in adopting technology and making it work for society. One example is the Engine-4 coworking space in Bayamón, with which T-Mobile has partnered to work in different areas, like agriculture and the environment.

“We also believe that entrepreneurial minds in Puerto Rico should take advantage of having superior infrastructure, and create new products and services that blow up outside Puerto Rico,” Martel said. “We hope to see someone in Puerto Rico creating the next Uber or the next Airbnb.”

As for the government, T-Mobile is working with several municipalities to develop “smart cities” projects integrating AI to make procedures more efficient. In Bayamón, work has already begun between the carrier and the municipal government to install smart traffic lights across the town.

While leading separate telecom operations in Puerto Rico as competitors, the trio of executives agree that when they began their careers in the industry, they never thought they would witness the advances they have seen, nor those in the pipeline.

“I never imagined it, never. Not when back then all we had were analog products, and the ‘latest and greatest evolution’ was sending an SMS message,” said Martel.

Author Details
Author Details
Business reporter with 30 years of experience writing for weekly and daily newspapers, as well as trade publications in Puerto Rico. My list of former employers includes Caribbean Business, The San Juan Star, and the Puerto Rico Daily Sun, among others. My areas of expertise include telecommunications, technology, retail, agriculture, tourism, banking and most other segments of Puerto Rico’s economy.

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