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Signals Consulting: Telmex videophone unlikely to boost subs
[November 22, 2005]

Signals Consulting: Telmex videophone unlikely to boost subs


(BNamericas.com)Mexican fixed line incumbent Telmex (NYSE: TMX) is unlikely to see a large uptake in subscribers in the short term as a direct result of launching its videophone service last week, Jos Otero, president of Signals Telecom Consulting told BNamericas.



Telmex launched its video calls service as a complement to its Prodigy broadband internet service.

According to Otero, video conferencing, which has been available for years, has never caught on and video calls are unlikely to be any different.


"How many people actually care about seeing the other person when they are in the conference room?" Otero asked.

To ensure image quality will require a high-speed internet connection, which restricts the potential client base to the high-end segment of the market, Otero said.

Subscribers will pay 24 monthly installments of 89 pesos (US$8.35) to acquire the phone and pay 1 peso a minute for national calls.

However, the launch is good marketing for Telmex as it shows that the company is at the cutting edge of technology, Otero said, adding he is surprised that the firm has not started marketing the service as triple play because it is technically a video service.

"If you asked me if this new service is going to be good in terms of marketing and positioning and whether it looks innovative to have a phone where you can see a person speaking, I'd say yes. But if you asked me is it going to have a huge positive impact on operator revenues, I'd say no," Otero said.

Looking ahead Otero sees the idea catching on once there is greater integration between fixed and mobile services and people start doing video conferencing on their cell phones. However, that is not going to happen in the near term, Otero said.

"That is not going to happen in Mexico any time soon because the phones that are able to do that are 3G phones," Otero said.

"And on the EVDO side, the amount of handsets that are able to offer video conferencing are minimal and there are even fewer in service," Otero said.

Not all analysts agree with Otero. A report from Santander Serfin brokerage welcomed the launch saying it would help the company retain customers and confront competition from incoming VoIP providers.

"We believe the launch of the video call service is good news for residential users as it will help the company retain customers and increase its average sales per line, [as well as helping it] compete against VoIP services," the report said.

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