In a surprise announcement Thursday, Argentina’s government said it will kill Fibertel, the country’s leading Internet Service Provider.
“Fibertel doesn’t exist anymore,” Planning Minister Julio De Vido said at a press conference.
Of course, Fibertel does exist. De Vido was speaking idiomatically. Indeed, I posted this article to the web via Fibertel.
But if De Vido gets his way, Fibertel won’t exist three months from now.
De Vido said Fibertel, which is owned by the government’s sworn enemy, the media giant Grupo Clarín, is using an illegal license to operate in the telecommunications and broadband industry.
Fibertel has more than a million customers. De Vido said they now have 90 days to find another Internet service.
Despite the dramatic announcement, however, it seems unlikely that Fibertel will be dismantled within 90 days.
Grupo Clarín described De Vido’s plans as “arbitrary, illegal and unprecedented.”
Clarín said the government’s claims have “no legal substance” and that it will fight them in court. Clarín also vowed to continue providing Internet access to its customers.
The courts will likely take a long time to resolve this issue. Meanwhile, Fibertel will keep operating as Argentina’s No. 1 broadband provider, ahead of the telephone companies Telecom Argentina (which offers Internet through Arnet) and Telefonica Argentina (which offers broadband through Speedy).
De Vido said Argentines have “a great quantity” of ISPs to choose from apart from Fibertel. But in reality, Arnet and Speedy are the only viable options for hundreds of thousands of customers. In some cases, customers may have no viable options, giving them no choice in the matter.
Presidential Cabinet Chief Anibal Fernandez said in his blog Thursday that Argentina has over 200 “trustworthy” Internet providers. Good luck finding them in your neighborhood.
What’s relevant to consumers is not how many ISPs there are in Argentina, but how many providers there are in any given neighborhood.
Killing Fibertel would effectively give Arnet and Speedy a duopoly on Internet access in Argentina. In some areas, either company would be the only provider available. This is ironic given that the government has repeatedly criticized Grupo Clarín for being “a monopoly.”
It was the government itself that authorized Clarín to operate this way in 2007, when it formally approved a merger between Multicanal and Cablevisión, the country’s leading cable providers.
If the government were to shut down Fibertel within 90 days, the result could be logistical chaos for consumers.
If you’ve ever spent time waiting in line at a Cablevisión branch office, or on the phone with customer service at Arnet or Speedy, imagine how hard it would be to get Internet installed if more than one million customers requested it all at once.
It’s hard to imagine how this would not be a nightmare for customers and possibly even the companies themselves. In addition, it may be technically impossible for Arnet and Speedy to provide broadband for all of Fibertel’s customers.
The decision to kill Fibertel comes just days after Grupo Clarín chief Hector Magnetto met with key members of Argentina’s opposition parties. It also comes after Magnetto met with the Argentine Business Association and the Argentine Industrial Union, which represents the country’s leading industrial manufacturers.
Magnetto is Public Enemy No. 1 for Argentine President Cristina Fernández and her husband, former president Nestor Kirchner. For a look at the battle between the Kirchners and Grupo Clarin, check out this article I wrote about Argentine politicians and their use of Twitter.
In 2007 Kirchner’s government approved the merger between Cablevisión and Multicanal. At the time, Clarín was widely accused of biased support in favor of the government. After getting approval for its merger, Clarín said it would invest $500 million through 2010 to improve service in the cable and broadband industry.
But the government’s relationship with Clarín has changed markedly in recent years.
And now, in 2010, according to Clarín, the government is going after the company for something that the government itself authorized Clarín to do years ago, which is provide Internet access through Fibertel. De Vido didn’t say what has changed since 2007.
Given Fibertel’s popularity and market penetration among the middle class, opposition parties will likely use the attack on Fibertel to pound the government before next year’s presidential election.
Opposition Congressman Francisco De Narvaez has already highlighted the issue.
“We absolutely reject this policy from (Minister) De Vido (versus) Fibertel,” De Narvaez said in a tweet. “It’s another abuse of power by (the Kirchners) and, as always, people are the hostages.”
Even those customers who have long hated Fibertel may change their mind now that the government has told them that they have even fewer options in choosing a broadband provider.
As Mark Twain wrote of his character, Tom Sawyer, “He had discovered a great law of human action, without knowing it — namely, that in order to make a man or a boy covet a thing, it is only necessary to make the thing difficult to attain. ”
It’s easy to imagine that instead of being angry at Fibertel, customers may now start to covet the service and turn their anger toward the government, whose decision could leave them with even worse service, or no service at all. For others, the cost of Internet access may rise.
As the economist Lucas Llach noted in his fine blog, La Ciencia Maldita, it’s hard to know what will end up happening with Fibertel.
But it’s equally as hard to see how killing the country’s top Internet provider, and leaving customers with fewer Internet options, is good politics.