My Thoughts on Technology and Jamaica: Digicel buys CLARO Jamaica - Jumanji Exchange is no Robbery

Sunday, March 13, 2011

Digicel buys CLARO Jamaica - Jumanji Exchange is no Robbery


He frivols though the livelong day
He knows not poverty, her pinch,
His lot seems light, his heart seems gay;
He has a cinch

Franklin P. Adams, The Rich Man

Two (2) Earthquakes occurred on Friday March 11th 2011 aside from the one in Japan, which is now looking more like a Chernobyl-type disaster than an earthquake as stated in the article  Japan's double jeopardy - Earthquake, explosion at Nuke plant; disaster toll rises”, published Sunday March 13, 2011, AP, The Sunday Gleaner and confirmed in the article “As death toll mounts, nuclear scare widens evacuation”, published March 12, 2011 12:31 PM PST by Elizabeth Armstrong Moore, Health Tech - CNET News. As this earthquake has implications for the Tech Industry, a follow-up blog article is also coming out soon on the Geezam Blog.

These other two (2) earthquakes may be of some significance to those Rothschild conspiracists, among us. These events have my head in such a spin, combined with my INCREASING work load at Amazing PC in Bargain Village, May Pen, Clarendon that I had to take a break from blogging until Sunday March 13th 2011!

Whew!! Never knew there were so many Computers and Laptops in Clarendon with the same problem: illegal copies of Microsoft and Virus infections that cripple the Windows Operating System. Can you say Format and Reinstall Windows OS? Better yet, can you say Fedora or Ubuntu Linux, which are more reliable as stated in the article “Why you need to Have a Linux LiveCD”, published February 11, 2011 6:31 pm by Katherine Noyes, PCWorld

First the Apple iPad 2 landed with an earsplitting roar in New York and San Francisco, dashing my hopes of a global launch of this global-village ready device. The lines - and the excitement! - were long as can be evidence from this AFP video entitled “Apple fans snap up the new iPad”, uploaded by AFP on March 11th  2011, YouTube.

The crowds were phenomenal even if you followed the launch via live blog on CNET News as stated in the article “Live from NYC, SF: iPad 2 launch (semi-live blog)”, published March 11, 2011 3:45 PM PST by Marguerite Reardon and Josh Lowensohn, Apple – CNET News.

Apple iPad 2’s were snapped up in record-setting pace at over two hundred and thirty six (236) stores in San Francisco, Washington and New York starting 5:00pm as stated in the article “Apple fans snap up the new iPad”, published Friday, March 11, 2011, by Sebastian Smith, AFP, Yahoo! News.

More stores + no pre-orders = Bigger crowds, an equation proven Q.E.D at this launch. Worshippers at the Altar of Apple’s Cathedral (?) came from as far away as South Korea to get their Apple iPad 2 fix. More on this on my blog article coming soon on the Geezam Blog.

So what was the second big earthquake? Digicel Group and America Movil engaging in some very strange horse trading! The billionaire owners swapping horses, namely CLARO Jamaica Ltd, owned by America Movil’s Carlos Slim Helu in exchange for Dennis O' Brien owned Digicel Groups operations in El Salvador and Honduras based in the initial reports in The Jamaica Observer and The Daily Gleaner respectively.

The articles entitled “Update: Digicel set to acquire Claro”, published Friday, March 11, 2011, The Jamaica Observer and the article “Digicel acquires Claro Jamaica”, published 2011-03-11 17:16:17, Go-Jamaica gave very basic information on what effectively is an Equity and Debt Swap i.e. two (2) companies swapping assets and some cash upfront to pay off the difference in value of the assets.

Reminds me of the swapping of serfs in Russian in the time of the Tsars, with the employees of the respective companies being merely dolls in bundles being traded around the table for the pleasure of their owners! Only this time, unlike in Russia, you don’t have to move from one plot of land to another; you land is already renamed for you! Truly odd, but not, I must say, surprising.

Usually when such events of this magnitude occur, it is good to stand back a little and let people be excited and then when they calm down, analyze the chips where they fell later, when cooler heads can prevail. Obviously, this is not a done deal as it is pending regulatory approval. When this deal becomes solid, each company will have to undertake a detailed audit of their assets, inclusive of staff, equipment and infrastructure and decide what stays and what goes.

Very much like horse-trading, except I prefer to use the example of a vehicle swap between two (2) wealthy gentlemen, as after all, we are in the 21st century. So the same concept applies in my following analysis supported by newspaper articles.

Details are important and The Jamaica Observer article entitled “Claro calls time on Jamaica Dream”, published Sunday, March 13, 2011 by Julian Richardson, The Jamaica Observer is an excellent Sunday morning read. Again, as with prior announcements, no details as to the pricing of the deal, but as I had worked at Telecom Provider CLARO as a Radio Frequency Technician……..

Thus, based on the six hundred and twelve (612) Node B or Mobile Cell Site, the licenses for Microwave links as well as for the 1900 MHz spectrum and the 850 MHz Spectrum being used for the CDMA (Code Division Multiple Access) and GSM (Global System Mobile) respectively. Throw in the now seven hundred thousand (700,000 +) plus customers, based on Telecom Provider CLARO claims and I would value their asset at around US$350 million.

Most of the Mobile Cell Sites under construction, called “Greenfield” Sites, have been blocked due to non-payment of the necessary Parish Council fees, such as the ones in Corporate area that the KSAC (Kingston and St. Andrew Parish Council) have recently blocked earlier in January 2011 as stated in the article “KSAC seek injunction over CLARO Cell towers”, published 26 January 2011 at 17:44:48, Go-Jamaica.

They have now begun to pursue a strategy of using cheaper Rooftops Cell Sites (Cell Sites atop Residents houses; Telecom Provider CLARO pays you utility bill!!!) instead of building more Greenfield Sites, which can cost up to US$150,000 per Cell cite to construct.

Co-Location Cell Sites, where Telecom Provider CLARO shares location with another Telecom Provider, is also an increasingly attractive option, provided that the Telecom Providers play fair in how they grant each other access to their Cell Sites.

Throw in the fact that their Network is still Microwave Radios from Alcatel Lucent, which were up to the time of the deal being cabinetized and changed out to Ericsson RBS (Radio Base Station), due to increasing demands for capacity on the Alcatel Lucent Radios as their 3G service is, despite its slow speed, very popular.

This as most Jamaicans only surf the internet, with the Data Hogs as I like to call TechJamaica peeps preferring to go with Digicel 4G Broadband for their downloading as per in my blog article entitled “LIME vs Digicel - The Truth About Charlie”.

Thus Digicel Group acquisition of CLARO Jamaica Ltd is not all bad news, as the Dennis O' Brien owned Digicel Group may opt to keep the 3G HSDPA (High Speed Downlink Packet Access) Data Network and just re-brand the Mobile Phone instruments on the Voice Network. Close a few stores and consolidate the smartphone offerings onto one (1) Network.

Digicel Group  may even upgrade CLARO Jamaica Ltd to HSDPA+ to match with their WiMaX 4G Broadband offerings as a precursor to LTE (Long Term Evolution) planned launch, which the Digicel Group may also wish to continue with as suggested in my blog article entitled “FLOW vs LIME, Digicel, CLARO and Municipal Wi-Fi - The Empire Strikes Back Part Deux”.

They may also choose to annex the various offers in the Voice Network, being as their popularity was responsible for the meteoric rise of Telecom Provider CLARO Jamaica Ltd – not to mention all those ultra-cheap refurbished phones. This earthquake in the Telecoms Sector which has occurred in Jamaica has repercussions longer than the nine (9) month intervals between the refresh of the Apple iPad.

Even Senator Phillip Paulwell, Opposition spokesman on Telecoms and ICT issues, spoke the obvious on John Public’s minds in the The Daily Gleaner article entitled “Not good for Telecoms Market - Digicel-Claro deal could hurt consumers, says Opposition”, published Sunday March 13, 2011, The Daily Gleaner, quote: “With the removal of a player like Claro, it is my fear that we are moving to a situation where competition is going to be obviously lessened”.

Say goodbye to “free” everything? Wait, there is a bigger issue at stake: MNP (Mobile Number Portability)!

He then went onto tell Nadisha Hunter, Daily Gleaner Reporter that with the competitor being reduced to a two-man horserace, there is still no safeguard for the customer, muchless word on the implementation of MNP.

His words express this best, quote: “The policy would allow consumers to use the same number across networks. It would also deal with identification of Network so that when someone is calling another Network, they will know before they start being billed, and other consumer protection that ought to be put in place is not yet in place”

MNP, much touted by Senator Phillip Paulwell, Opposition spokesman on Telecoms and ICT issues as evidenced from the article “Paulwell calls for number portability”, published, Wednesday April 21, 2010, Daraine Luton, Senior Staff Reporter, The Daily Gleaner, is a much bigger issue.

Senator Phillip Paulwell concerns are somewhat misplaced, however, as the pending implementation of MRSI (Mandatory Registration of Subscriber Information) as stated in my blog article entitled “MRSI and MNP - Where the Spies Are” may kick-start an MNP implementation, especially as, pending Regulatory approval, there will be two (2) Telecom Providers in Jamaica.

As for the human side of things, job losses and store closures are expected, albeit not wide scale, as Telecom Provider CLARO relied mainly on low-end Store Locations, mainly staffed by young people [ages 18 to 25] and Third-Party Dealer owned resellers of their Products and Services with their main branches being inherited from the original owners of the MiPhone brand name, Oceanic Digical Jamaica, mainly:

  1. Portmore
  2. New Kingston
  3. Ocho Rios
  4. Half Way Tree
  5. May Pen
  6. Mandeville
  7. Mobay

Plus obvious clues of this coming deal could be seen from their latest promotion entitled “The Claro Million Dollar Calls” as stated in the article “Callers to win millions from CLARO”, published Friday March 11, 2011, The Daily Gleaner. At least the advertiser, Advertising and Marketing Jamaica Ltd, made their name from this partnership with Telecom Provider CLARO!

Find Newspapers a tad hard to believe? Then the *.pdf official statements by America Movil’s on their website entitled “America Movil to acquire Digcel's operations in Honduras and El Salvador and to sell its operations in Jamaica” is worth noting (and printing!) for historical references.

Especially if you are Generation Y [aged 17 to 28] as this is indeed a historical occurrence on par with the Liberalization of the Telecoms Sector in 1997 and thus the coming of Digicel to Jamaica. In fact, this action, pending approval by the relevant regulatory bodies, will effectively reset the competitive landscape back to the year 2008AD, somewhat akin to the ending of the movie Jumanji (1995).
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