Telecom and ATSC in Argentina: The Visit of Ambassador

UNCLAS BUENOS AIRES 000082 SIPDIS SENSITIVE SIPDIS EEB/CIP FOR NICK FETCHKO, EMILY YEE USDOC FOR ITA/MAC/OLAC/PEACHER USDOC FOR ITA/MAS/LASTOR E.O. 12958: N/A TAGS: ECON PREL EINT ECPS OVIP TSPL AR SUBJECT: Telecom and ATSC in Argentina: The Visit of Ambassador David Gross REF: BUENOS AIRES 56 ¶1. (SBU) SUMMARY: Ambassador David Gross, U.S. Coordinator for International Communications and Information Policy, and Jamie Estrada, Deputy Assistant Secretary of Manufacturing and Services for the Department of Commerce, visited Argentina on January 17. The visitors were unable to meet with GoA officials (reftel),but private sector meetings provided insight into: 1) current telecom regulations, which a former official says haven't been followed closely since the beginning of Nestor Kirchner's administration; 2) the motivations for a possible GoA decision on a high-definition TV standard, which remains uncertain, and strategies to address them; and, 3) challenges and opportunities facing the telecom industry, especially U.S.-owned TV broadcasters. Despite uncertainties in the market, the private sector is convinced there are real growth opportunities in telecom and television at present. END SUMMARY. -------------- REGULATORY FRAMEWORK -------------- ¶2. (SBU) Henoch Aguiar, former Secretary of Communications from 1999-2001 and still a major player in the telecom industry as a private lawyer, gave Ambassador Gross and DAS Estrada a positive report on the current telecom regulatory framework (which he helped design),but criticized how it was being implemented. For example, he noted that the time needed to obtain a license should be around six months, but that it has averaged over a year during the last five years (i.e., roughly since Nestor Kirchner became President in 2003). He also commented that license cost should be fairly low, but that his clients sometimes had to pay more than required by existing regulations. He said that spectrum auctions should be taking place every six months on average, but none had been held since Nestor Kirchner became President. He noted the rise of unregulated internet service providers in the provinces, in large part because there was little prospect of getting approval through proper channels. Finally, he spoke positively about Argentine human capital in the IT sector, particularly notable in the outsourcing of services to foreign firms, and expressed optimism that this trend would continue. He noted that new Buenos Aires Mayor, Mauricio Macri, is planning to establish special units to promote IT investment and e-government in the capital. -------------- HDTV STANDARD -------------- ¶3. (SBU) Interlocutors were ambivalent about the possibility of ATSC adoption as Argentina's standard for TV broadcasting. Jorge Rendo, Director of External Relations for Clarin Group (Argentina's largest media conglomerate),opined that the decision would rest on GoA perception of benefits in terms of domestic job creation, and might therefore be swayed by promises of opening TV manufacturing plants in Argentina. Sebastian Rial, Senior Sales Manager of Samsung in Argentina (other companies represented were LG and Harris, plus the regional ATSC rep),agreed in a separate meeting that domestic employment would be the determining factor. Clarin's Rendo commented on how the competing standards seemed to have much more funds at their disposal, and were using them to directly influence GoA officials and elected representatives -- funding trips (especially to Europe) and trade fairs (by the Japanese) in Argentina. ¶4. (SBU) Samsung's Rial also suggested focusing more attenion and publicity toward potential consumers, to highlight the benefits to them. Ambassador Wayne had earlier suggested to Clarin that interested parties prepare a fact sheet, which would include the substantial cost savings of an ATSC TV, the required converter box (another Clarin employee had heard of an ATSC box for just $37, versus about $400 in Brazil for a box to adapt the Brazilian version of the Japanese standard),and the projected energy cost of both use and transmission. Clarin's Rendo also stated that for Chile to select the Japanese standard would almost force the GoA to do the same, but that otherwise MERCOSUR could end up with three different standards in its four (current full) member countries. ¶5. (SBU) The consensus was that the longer the decision took, the more likely that the GoA would choose ATSC -- so continued delays are a positive sign. Clarin's representatives agreed that there is no urgency for Argentina to select a DTV standard at this time, since most open-air TV stations are strapped for cash and the GoA has no pressing need to recover analog spectrum from broadcasters. Besides owning one of the only two profitable open-air TV stations in Argentina, Clarin also owns the leading cable TV company in the country. Clarin is already in the process of converting to digital service using the ATSC standard. -------------- BROADCASTER OPERATIONS -------------- ¶6. (SBU) U.S. broadcasters in Argentina (Turner, Fox, Disney and MTV) reiterated Henoch Aguiar's assertion that human capital, particularly in creative and technical areas, is one of the biggest advantages about doing business in Argentina. MTV General Manager Paula Guerra called "content" exports their biggest growth opportunity at present. Turner Vice President of Corporate Affairs and Communications Juan Iramain cited the currently low cable penetration in other Latin American countries (60% of Argentina's households have cable TV, which is more total households with cable than in Mexico and Brazil combined) as the reason for potential export growth. He said that he expects Turner will be able to double its feeds to the region in the next two years. ¶7. (SBU) Rendo said Clarin Group's major opportunity would be the "triple play" - telephone, internet, and cable service combined in a single package. Clarin is currently doing well with just cable and internet combined, while phone companies (particularly Spanish-owned Telefonica) are having success with telephone plus internet. Turner's Iramain cited difficulties such as advertising maximums for cable companies and anti-U.S. sentiment within the GoA. He stated that Turner was endeavoring to portray itself more as an Argentine company to the greatest extent possible, and was developing corporate social responsibility (CSR) projects to enhance its bona fides in-country. MTV's Guerra mentioned that MTV has also recently created a "pro-social" department for its own CSR activities. ¶8. (U) This cable was cleared by Ambassador Gross. WAYNE