Telefônica triples investments in optic fiber network
Valor Econômico
Telefônica has decided to accelerate the implementation of a network of residential optic fiber technology that allows offering super speed broadband and high definition videos. The carrier has increased to R$ 200 million (US$ 125 million) the investments planned for the service this year. It is almost three times the R$ 70 million (US$ 43.8 million) intended for infrastructure in 2010. "The change is part of the strategy of Telefônica of getting prepared for a scenario in which broadband will be the war horse among the telephone carriers", says the Director of optic fiber of the company, André Kriger.
The goal is that the fiber be available for 1 million households by the end of the year, twice the current level. The carrier - which provides the service in the noblest regions of nearly ten municipalities of São Paulo - will strengthen the coverage in some neighborhoods of the capital and take the network to four more cities: Jundiaí, Piracicaba, São Jose dos Campos and São Vicente. According to Kriger, the number of subscribers of packages based on the optic fiber network should go from 20 thousand to 50 thousand until December. "Initially, it was a product that only attracted the most attuned customers. The use is now spreading out", he says.
Behind the expansion, says the Executive, is the increase of the demand for online videos. Another important reason is the arise of web-connected TVs. The two factors drive the demand for super-fast broadband connections, since they require high capacity access. Telefônica offers two internet speeds through the fiber network: 30 megabits per second (Mbps) and 100 Mbps. Associated to regular telephone and TV services, the packages cost from R$ 159 (US$ 100) and can get to more than R$ 400 (US$ 250), depending on the range of TV channels chosen.
With the spread of those services, Telefônica plans to strengthen the weapons to face competition. The biggest rivals of the company - Net and GVT - also have optic fiber-based broadband up to 100 Mbps, although they adopt different technologies. In the case of Telefônica, the fiber goes up to the customer's home. At Net, the fiber goes up the telephone exchange, but what gets to the households is the coaxial cable that carries their TV services. GVT takes the fiber to the subscriber's street, and from then on, the signal is transmitted through copper wires.
Betting on the residential fiber, Telefônica wants to attract subscribers of greater purchasing power. The model opens the potential to deliver broadband speeds much higher in the future. This way, the operator tries to defend its market amid the arrival of GVT. Headquartered in Curitiba, GVT operates in some cities of São Paulo and it should star in the capital in early 2012. In other markets, the company obtained expressive participation with plans for high-speed internet at prices below those of the local telecommunication companies. Optic fiber is also part of the strategy of Telefônica to recover customers of high value it lost to Net in recent years. According to Kriger, half of the subscribers of those packets come from the competition. The other customers of the very Telefônica who choose to migrate to more sophisticated service plans.