SUBSCRIBE VIA EMAIL

RSS Feed

Argentina’s Government Decides to Kill Fibertel

August 19th, 2010 | Categoría: Economics, Politics, Technology

Share

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.

Be Sociable, Share!
 

21 Comments

ptolemyNo Gravatar says:

..Sorry to say it, but these days I follow the news of Venezuela to forecast the future of Argentina.

DiegoNo Gravatar says:

It’s sad, we should be looking at Brasil or Chile for knowing what will happen with Argentina, but instead we have to look at Venezuela or Bolivia to see how bad the one time richest country of South America will finish.

rmartinNo Gravatar says:

Cristina Kirchner truly is SUPER C**T! One of two results will come out of this:

1. Fibertel pays the Kirchner clan a bribe and all is forgotten UNTIL she pulls something else.

2. Everyone will need to switch to another provider which of course will not have a “package” deal with Cablevision. Thus, internet service price will increase and the providers that will be available will jack up their prices out of greed.

Argentina is far from “developing”. Its becoming on the par with Zimbabwe.

MarcosNo Gravatar says:

Ha! and with your reading skills I’m pretty sure your from Haiti.
Read, books and newspapers does not bite, and be sure to use several source, not just only one.

BeatrizNo Gravatar says:

Funny, my first thought was Venezuela also.
This plan is terrible. I hope, for once, argentineans join together to not let them do it.
Anybody knows the twitter account of Anibal Fernandez?
It will be greatly appreciated!

ArielNo Gravatar says:

The Fibertel company was disolved by the Clarin Group, and that’s why they lost their license. Fibertel as a company doesn’t exist anymore. Cablevisión is providing Interent without a license.

BeatrizNo Gravatar says:

I didn’t know that Ariel, thank you.

ptolemyNo Gravatar says:

..I don’t know what source Ariel is quoting, but most sources seem to contradict what he is saying, for example: http://www.buenosairesherald.com/BreakingNews/View/42776 There are many others. The congress itself, seems to believe that the company still exists.
Is Ariel splitting hairs with words?

Mariano says:

I live in Argentina and I’m a Fibertel’s costumer. A couple of months ago the Fibertel services invoice starts comming from Cablevisión wich is cable TV company owned by the same group (Grupo Clarin). So that Fibertel no longer exists it’s a fact and that decision was made by the owners, not the Goverment. What happen is that the license for broadband internet services was owned by Fibertel S.A. and if Fibertel no longer exists the license it’s open for someone to buy it. The “Grupo Clarin” and the Goverment are openly in different sides, if they were friends probably Cablevision could buy it or inherit the license but it wouldn’t be fair either.

Interesting post … By the way, I have a blog on checks and balances –or the lack thereof’– in Argentina (http://www.frenosycontrapesos.blogspot.com).

Regards,

Agustin Mackinlay

acNo Gravatar says:

It is my understanding that US AT&T was forced to split (and join again) several times because of monopoly concerns. For example when it split as SBC and then rejoined again as AT&T. My question is what if Fibertel becomes a separate company from Clarin, is that a viable option?

Please, no political reading, it is a sincere question.

taosNo Gravatar says:

De Vido has said that’s not an option because Fibertel simply doesn’t exist anymore, so it can’t be sold. Technically, it’s hard to see how Cablevision could offer the service through a third party. For one, it would have to get paid to do so or a host of legal problems would arise. It would be a messy situation.

Dave JNo Gravatar says:

Fibertel ws bought and absorbed by Cablevision in 2003 and it took the government 7 years to figure out it was an illegal practice. C”mon!!! When are the elections?

GusatvoNo Gravatar says:

Dave, in fact, this is half true.
Cablevision (Grupo Clarin in fact) bought Fibertel in 2003, but in December of 2008 Fibertel disappear like company. Grupo Clarin decide to close the company, and all services begin to be provided by Cablevision.
The problem is that Cabelvision did not have the permision to comercialize Internet (Fibertel had permission).
The CNC (National Communications Commission) never gives the permision to Cablevision.
Regards (and sorry my poor english)
Gustavo

rataplan says:

If they all have to make kaka I can lend them el baño de Carlitos….
Taken from a current propaganda from the tv….

benjaminNo Gravatar says:

With all respect, this article has a serious lack of objective information, both sides should be listened.
Clarin as owner of more than 60% of national media (tv, radio, newspapers), and supported by most the rest, has all means to repeat and repeat his side of the story, but with a little effort you could find the Government explanation on this issue.
Actually Cablevision explained to foreign investors that he was operating without license (no to his customers).
The Buenos Aires government (from a party that todays is claiming for Fibertel) rejected to contract Fibertel last year for the same license problem.
Ilegal is Ilegal anywhere for everyone.
Kind Regards,

BeatrizNo Gravatar says:

Cablevision is publishing that they have the rights to operate Fibertel. Besides everything, this dicussion doesn’t make any sense, because the reason the government is demmanding them is to control the media, like Chavez does. So we “ALL” has to protect our rights to decide and not have to fall in the horrible telephone companies, which will become monopolies and they are not able to absorb all the Fibertel clients, besides the terrible service they provide.
The right thing to do for the government is give them the license if they haven’t and finish with this ridiculous and very dangerous situation.

CarlosNo Gravatar says:

I am a customer of fibertel (Cablevision or the name you want). The last year i cut the contract i have with arnet because of a truly bad service (in my city, i do not know how is arnet on another cities). With arnet the connection cut anytime and the technical service on my city not exist (the installation of the modem was made by a third party “sended” by the people of arnet Bs As). The installation of the service was bad, and a family member have to remake all the connections and filters. After a year and half of suffer we decided to go for the fibertel plan ($50 pesos/month for a year, 3m). The service that fibertel give on my city is truly good (I DO NOT KNOW ABOUT OTHERS CITIES), the installation was made by people of Cablevision and the technical support listen the problem we can have.
I say all of that just to say: If the government just shut down fibertel on 90th days, then the only thing that will happen is that arnet and speddy (both of the same big group (research about telecom and telefonica on argentina)) will make a monopoly (yes the big enemy of the actual president and his family) of the telecomunications. And the sadly thing, at least on my city is that the people will have to pay for a service that is not worth (if you live on my city you will learn to HATE arnet)
If the government make the decision, then is necessary a service of equal or better quality than the given by fibertel.

BeatrizNo Gravatar says:

Hi Carlos, I live in Buenos Aires city and I had the same problems as you. The telephone companies are a disaster, and Fibertel is far the best Internet service provider.

[...] year Planning Minister Julio De Vido gave Fibertel 90 days to shut down its service, telling customers they would have to migrate en masse to [...]

Leave a Comment

 
%d bloggers like this: