AT&T ups IP stakes in Latin-American revolution
By Simon Marshall, Total Telecom
01 September 2000
Some of the biggest global IP players are sparking a Latin-American revolution in Brazil and Argentina. Global Crossing's backbone has just landed in Brazil and AT&T Latin America (AT&T LA) has already bought capacity on it, in competition with WorldCom subsidiary UUNet, which only opened for wholesale business there on 29 August.
UUNet told Total Telecom on Wednesday about its aggressive plans for domination on the continent, but AT&T upped the stakes Friday buying US$46.5 million in capacity from Global Crossing, and more importantly, pledging to invest US$2.5 billion in its total broadband operation there.
The Wall Street Journal reported that US$1.25 billion of the total AT&T Latin America infrastructure investment would be spent in Brazilian operations, which is also the initial focus of UUNet. In addition, AT&T LA plans an issue of 35 million shares either next month or during October dependent on financial market conditions.
The newspaper also reported that Telecom Italia SpA is forming a new company called Latin America Nautilus, of which the Italian incumbent will hold 70%, with Telecom Argentina, Entel Bolivia and Entel Chile, holding 10% each. Nautilus will have about US$120 in capital to invest immediately in a planned 30,000 kilometer fiber network connecting South American capital cities with Central and North America. The venture will also yield about US$800 million in investment, and may involve Brasil Telecom Participacoes SA in the project, which aims to win 20% of Latin American internet market.
AT&T LA's capacity buy from Global Crossing will connect Sao Paolo, Buenos Aires, Santiago, Bogota, and Lima to the U.S. by mid 2001, and Brazil could be online as soon as October this year. UUNet told Total Telecom it would link Buenos Aires, Sao Paolo, Rio de Janiero and San Juan with its backbone. It too said it would attempt to finish infrastructure build-out during 2001, setting the scene for a contest to complete fiber links and start filling the pipes with corporate and wholesale IP traffic.
With the majority of the world's Web sites hosted in the U.S., the potential for browsing traffic between there and Latin America to increase is enormous, even before packetized voice, multimedia or ASP services are added to the equation.
So far AT&T LA, UUNet, Nautilus and Teleglobe have declared huge expansion plans into the continent within weeks, even days, of each other in a drive to begin offering IP capacity and services.
The landing of Global Crossing's 18,000km SAC submarine backbone in Argentina in July and now Brazil introduces another element into play. Not only may both AT&T LA and UUNet be leasing capacity from the Bermuda-based company, but both could soon be in competition with Global's own IP service offerings.
In a separate development, AT&T LA said it is currently reviewing whether to participate in the Brazilian government's wireless spectrum auctions.
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