Daniel Pimienta, firstname.lastname@example.org, Head of Foundation Networks and Development (FUNREDES)
COPYRIGHT: FUNREDES 11/1995
This paper focuses the relationship between Telecom Operators and Research Networks in Developing Countries. The concept of a mutual benefit relationship is presented as a desirable objective. Telecom Operators would benefit from the Research Networks in terms of creation of the data communication and value-added networks markets, as well as in the transfer of technical know-how in the field of networks. The Research Networks would benefit from the Telecom Operators services, primarily with the access to high speed dedicated lines, which represent a large proportion of their expenses. Such synergetic relationship would furthermore represent a benefit for the development of the country. The reasons why negotiation between the two partners is a valuable approach are presented. Some guidelines are shown for the Research Network to direct an efficient negotiation process. A set of arguments are listed for the Telecom Operators to make them confident this is a correct way to pursue, business wise. The paper refers to corresponding ITU/UNESCO recommendations and to the Dominican Republic Research Network experience (REDID, one of the REDALC projects) which served as a prototype for this approach.
The key importance of Telecommunications for development have already been shown (see for instance "Telecommunications and Economic Development", by R.J. Saunders and al, A World Bank Publication, Johns Hopkins, 1983). For different reasons, Science and Technology, is another well identified development asset. Besides their importance for the development of a country, both areas are vital for its independence.
At the time when the technologies and markets of telecommunications, computers and media are merging to create the most important challenge/opportunity for the world development, namely the information infrastructure (or "infostructure"), careful attention should be paid, in the South, to create a synergetic relationship between the Research world and the Telecommunications industries. This is a matter which goes beyond the direct interests of the two groups: it will serve as the basis for appropriate research and development as well as technology transfer, from domestic knowledge and lessons learned abroad. A new form of flexible collaborative research is developing using networks, where research is deployed to actual use with feedback changing both research agendas and use. As a vehicle for research collaboration and distance education, for all sectors, it will build human resources and institutional capacity. The relationship between telecom operators and research networks is, in the developing countries, a perfect opportunity to start trying this new model.
The tariff advantages which could be obtained in such relationship should not be considered as a form of subsidizing (which would come into contradiction with the global liberalizing movement which is on the way in the Telecommunication industry), but rather treated for what it is really: a balanced economic exchange, since there are clear business reasons for the Telecom players to participate in a partnership which both strengthen domestic capacity and the demand for telecom services.
In one side, the cost of international and national communications still represents the most important item in a national Research Network budget and very often the principal difficulty for the growth of these networks in the South. In the other side, in most of the developing countries, the data communication and value-added network markets are slow to emerge and the chicken and egg syndrome between users and services could not be cut easily with classical marketing tectonics.
This actual situation and the practical possibility of a balanced exchange implies a unique opportunity for the creation of partner- type relationships which benefits to both entities and, eventually, the whole country's development.
Looking at the trends for the future of the telecommunication market (in terms of the relative importance of voice and data, and also of information providing vs. data transportation), acknowledging the importance of the role of the research community in shaping the tools and the culture of the information society, the Telecom Operators should understand that partnership with the research people could be a valuable investment for the medium and long term range. In some specific cases, the Telecom Operator may be very sensitive to the short term and then reluctant to loose immediate revenues from that particular market segment, in spite of the expected medium term return of investment. In those cases, they should then perceive the opportunity for a risk-venture where the investment is extremely marginal and where the potential long term benefits could be of major importance. The telecommunications markets are changing too fast and too deeply to justify attitudes with arguments from the past.
This paper pretends, generalizing the successful results of one of the REDALC projects, to conceptualize a framework for negotiation between Research Networks and Telecom Operators based on the concept of mutual respect and mutual benefit.
A UNIQUE STRATEGY
The foundation of the strategy is that: There is an area of common interest between the Telecom Operators and the Research Networks: the development and growth of a base of users.
Both groups are interested in the growth of the propensity of the citizens and professionals to become fluent users of the New Information and Communication Technologies. One for obvious business reasons. The other one because its vocation is to help the maximum number of researchers in their way to the professional benefits of becoming satisfied and skilled network users. Also, because the most empowered research users from the South, the strongest will be this group to represent and defend the global interests of the South in the emergence of the New Information Society.
The Research Network people presents, for the Telecom Operators, the following unique advantages:
High influence for indirect revenues
However, the researchers represent a unique and very strong influence upon the market. First, because they teach the future executives, and, second, since most of them represents an example for private companies in terms of capacity for dealing with technology. Furthermore, in most of the countries of the South, economical circumstances drive the researchers to create their own structure (business or NGOs) and to involve them more tightly to the business environment. Last but not least, as non-profit information sites multiply, from research, academic and public sources, the commercial users are accessing them: this benefits business, development and telecom revenues.
No systematic survey and analysis have been made; however the point which is made is intuitively understandable. If one could scientifically measure the correlation between the buying decision of a customer and various parameters such as:
The vocation of Research Networks is to facilitate the access to the network services to the researcher community, and not to sale services to the whole market. Although, given local circumstances (like the absence of commercial offerings or extremely high data transmission price at any international standards) and the decrease of international support, non profit oriented organizations may be pushed to more business-like practices in order to balance their finances, at cost recovery.
The situations where Research Networks have turned real competitors
to Telecom Operators should progressively disappear:
ARGUMENTS FOR NEGOTIATING WILL
From the Research Network side
The first and obvious reason why a national Research Network should enter negotiation is to try to alleviate its telecommunication bill, the heavier part of its expenses. But they are more reasons, such as:
There is another business reason. The national information infrastructure is usually slow to get organized in the South. Encouraging the research world to fulfill the initial requirements could help them to get a first level of national information basis, a necessary complement to arise the national users interests for getting the connectivity, but also, a primary element to open their market to the outside customers. This, additionally, will provide the local information sites for collaboration and development at the local level.
The last reason is that they could enhance their image as a development -minded player in the country.
The conditions exist for a mutual benefit relationship where:
To transform these conditions in real and effective partnerships, there are some requirements, which are simply the translation of effective management and mutual respect:
From the Research Network side:
From the Telecom Operator side:
The independence of the research people from business matters must be respected and also their freedom to create multiple deals with companies in open competition. The last is clearly one of the most touchy issue in that negotiation and should be managed with the appropriate tact from the Research Network side. Here, the experience of EARN people in managing to get parallel support from the main computer industries leaders in the years 80's should be taken as model. Although, one should realize that the economical context in the South is not always mature enough and then room should be reserved for a progressive learning curve process. The stronger the Research Networks project themselves in terms of Netiquette, the stronger they will be in making the Telecom Operators accept them as non exclusive partners.
With a good relationship. this concern will fade as experience grows and as market expands, making the research network uses a small share of a growing user base. Their qualitative importance should not however be forgotten.
The perspective for successful negotiation are very different depending of three basic factors:
In the situation of strong monopoly and low propensity to negotiate directly with Research Networks, it could be wise to involve official representatives of Science and Technology or Education and let them negotiate on the Research Network behalf. Some case may occurs where the situation is totally blocked and the Telecom Operator representatives, immediate term oriented, are not even willing to recognize they are creating the conditions for a "by-pass" market. In those cases, some alternative tactical moves may be called for, such as satellite links or direct dial to other countries. In extreme situations, the practical solutions may turn into contradiction with the strategic guidelines offered; it should not be forgotten though they are tactical actions aiming at changing the objective conditions for the negotiation and that when this eventually occurs the role of a Research Network is definitively not to compete with the Telecom Operators.
TIPS FOR SUCCESS
The future of the Information Society is wide open. In this area of very fast technological changes, the social and economical impact of the technology is still to come and difficult to predict, especially in the South where the Internet represents a complex mixture of challenges and opportunities. The recent emergence of a powerful commercial Internet adds to the complexity of the forecast pattern and to the risks side of its development in the South. Whatever are the scenarios of the growth of the Internet in the South, the need for a strong networking area in Science and Technology, capable to drive the creation of national and regional infostructures is clear. The path towards sustainable and active research networks requires the creation of new type of relationships between the various field actors, and primarily between the providers of telecommunications services facilities and the administrator of Research Networks.
ITU and Unesco organized a meeting in Geneva, Nov. 1993, for the "Economic Constraints to Effective Utilization of Telecommunications in Education, Science, Culture and the Circulation of Information". In the activity where representing persons from the "Unesco communities" (news, research and culture) and from Telecom. Operators (Tariff group) entered a open and frank dialog. Among the conclusion statements which will serve as reference for the ITU General Conference in Buenos Aires, in March 1994: "encourage partnership and joint-venture between Telecom. Operators and Unesco community user's". It was very interesting noticing than the persons the more reluctant to accept the argumentation during the meeting have in common belonging to a strong national telecommunication monopoly and focusing exclusively the voice market.
REDID have been operated since its birthday, in May 1992, thanks to the support of the company Codetel, a GTE subsidiary, which give a free of charge access to its UUCP e-mail facility and convey the research traffic to the Internet from and to the University of Puerto Rico, at its cost. The agreement have been formalized as a renewable one year contract defining the rights and obligations of each parties.
Starting July 1995, a complementary venture associate REDID with the company AACR, where both will together create a body of trained students to sustain their respective plans for INTERNET services providing. AACR will within this agreement allow free use by REDID of its channel facilities.
Most of the concepts and considerations apply to other type of non-profit networks (such as networks of NGOs or freenets).
There is a growing understanding of the fact that networks will be important for efficient and effective relationship between civil society and the public sector. The time factor has become critical for what it at stakes, since the open evolution of the Internet towards a business media.
Indeed, in the case of REDID, with the deal, 20% of the customer of the commercial service went to the free market. However, they were not lost as customers for complementary services, and the growth of REDID, without any commercial campaign triggered the growth of the commercial service-the influence effect being extremely clear in the total number of user curves.
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In the case of the Haitian Network (REHRED) a deal was created with a private telecom company at the creation stage but unfortunately did not last. Our perception is that, beyond political reasons proper of this country, the special condition of the Haitian market makes the NGO's telecom usage such a huge proportion of the short term market that the private company stepped back. The result of the management decision will be measured in a larger time frame, when a research network will build its own infrastructure and the market start maturing.
In the case study of REDID, after the first year of the agreement, REDID reached more customers than the commercial service (due to a more aggressive marketing) , but after the second year the coefficient of the commercial curve arise drastically, in spite of the lack of commercial campaign.
This is the release, response, revise model of service provision research which is more and more used by the big players of the software industry.
For instance, if a researcher is having an e.mail access by his/her condition and at the same time is managing a business, he/she must be informed that his/her business e.mail must be purchased in the commercial segment and that the use of the research e-mail for business is a serious offense to the by-laws of the Research Network implying legal action. In that very aspect, the experience has been totally positive in REDID, in spite the suspicion of some commercial agents of the Telecom Operator.
In the case of REDID, the early negotiation started in 1989, when the situation was of private monopoly. The deal was cut in 1992 when the entry of two private contenders provoke a fierce competition in the voice field (but the data field remained of very low attractiveness for the short term). Between, 1993 and 1994, complementary deals were made with AACR. In 1995, the conditions exist for the organization of complementary partnerships with each Telecom company. A possible framework would be that Codetel focus more particularly the Academic part, AACR the NGOs component and TRICOM the training of network technicians.
This is the only, but how frustrating, drawback REDID got with its deal with Codetel. The plan was set up for such campaign but for reasons remote from REDID will it never occurred. The occurrence of such action would have given a decisive impulse to the creation of the national e-mail market. Such matters does belong to the sphere of exclusive decision of the companies. Definitively, the history of networks would have been drastically different in that country would this campaign have happened.