Carlos Slim scores in LatAm with semi-flat 3G offering

MEXICAN MOGUL Carlos Slim of TelMex fame wants a piece of Telefonica's big pie, as shown by CTI's new and disruptive 3G/UMTS offering in Argentina which, unlike Telecom's, is not billed per Kbyte transferred.

A by-product of Mr. Slim's global fight with Spain's Telefonica, is the arrival of new services and aggressive low rates that can only benefit the consumer. In some instances, Slim's firm is the only alternative to the incumbents in Latin America, and such is the case down in Argentina.

We wrote at length about Telecom's 3G/UMTS launch back in May this year, under the Personal mobile brand of course. I couldn't help noticing the laughable rates and "whopping" 200MB of transfer included in Telecom's least expensive option, and one gigabyte in the most expensive service plan. See "South American UMTS vacuum-cleans your wallet", here. Well, I have just checked and the firm still lists those laughable rates. Apparently, Telecom's fat cat execs haven't read about Blighty's flat-rate 3G or understand the implications of flat-rate mobile service, whose advantages David Cushman explained so well at the time of 3's flat 3G launch, over here.

But despair no more, fellow INQ reader. Carlos Slim's TelMex CTI launched this month a big marketing blitz on TV promoting the firms' "semi-flat rate" 3G service. Of course, the "semi-flat" definition is mine, not theirs. But nevertheless, CTI's ad for its 3G are the best telco adverts I've seen in a long long time. Basically the ads say "go out, internet is everywhere, you don't have to be locked at home any more to experience it. Broadband speeds, everywhere". Of course followed by pictures of happy fell-good 20-somethings with a notebook on a green prairie. A very powerful message for the YouTube generation.

That message will reach a lot of people who previously suffered the slow and expensive GPRS data service -Argentina's three mobile networks all use GSM so the next step in 3G is UMTS/HSDPA, there's no EV-DO here. I just wish they made clear in adverts that its flat rate carries no billing surprises, in other words, there's no per-packet charge. I don't think the "flat rate" issue -which is one of the service main advantages- is pointed clearly.

Not all roses
However, not all is roses. I call CTI's 3G service "semi-flat" because what you get is three gigabytes per calendar month of allotted transfer. After you reach that level, the service speed is reduced to 128 Kbps. So you can continue fetching your e-mail and IM'ing at flat rate with a decent speed, but there's " no more YouTubing for you!". There's also another surprise... the company implements bandwidth throttling based on service. I don't know if it's done at the TCP/IP port level, or they actually have an IDS/packet sniffer of sorts throttling bandwidth by sniffing the protocol type.

According to Carlos Slim's firm, you enjoy the full 1Mbit speed for "web and e-mail". I assume that means POP3 (port 110) and http (port 80). But then firm says IPSEC, "VPN" (IPSec is a VPN, so by VPN they probably mean PPTP), and " Video Streaming " speed is reduced to 256 Kbps. YouTube goes over http... so there's a grey area there. How do they differentiate an http request to a web page and an http request to a FLV file from YouTube?. It all looks like an overkill complex solution just designed to save on international bandwidth, not to mention the big iron needed to implement such bandwidth throttling. After all, if they're allowing full-speed 1Mbit for http, why bother making video streaming 4 times slower?. Makes little sense to me.

And neither does having a 3G technology which supports "1.8 or 3.2 Mbps" according to the firm's own web site and then deliver only a single Mbit. Thinking aloud: dear CTI, how about offering as a secondary option a more expensive plan with the full speed that the hardware and network can give?. And please, tell your marketing drones that "megabytes" is written with an "y" not "mega-bites" as written on the web site.

Continuing with the fine print with regards to bandwidth throttling and restrictions, P2P and VOIP are always limited to 80 Kbps... whether you are below or above the monthly 3 gigabytes xfer quota. I don't know what they fear about VOIP if the connection has a monthly xfer cap before it goes down to 128K. People using a single 3G link to install a VOIP gateway and two analogue phones and set up phone booths on the street or something?. By throttling VOIP connections to 80Kbps I think they are effectively limiting you to a single VOIP connection per 3G link. This chart of VOIP over here shed some light on the matter: according to it, 80 Kbps is not an arbitrary figure, it's the TCP/IP bandwidth used by one 64Kbps VOIP channel using G.711 PCM modulation.

Still a good deal

While originally there were four mobile operators, first Telefonica bought Movicom from Bellsouth, and now Spain's Telefonica has some interest inside Telecom Italia, which owns Argentina's other incumbent and mobile operator, Telecom. So when it comes to the mobile space, from the original four companies it's now down to the two incumbents, and CTI part of Carlos Slim's empire. CTI has 13.5 million mobile customers, and the firm has made a $270M dollars investment in its network during 2007 to finally deploy 3G.

Of course, there are more questions than answers about how all this performs in the real world. Still, if we believe the company's claims, CTI's semi-flat 3G service is orders of magnitude better than Telecom's (Personal) 3G offering, as there's no chance of getting "surprise bills" worth a thousand dollars just because Windows XP in your notebook decided to download and install Service Pack 2 and all the MSIE hotfixes released since the dark ages.

CTI's 3G service dubbed "Internet Movil" (mobile Internet) has a monthly cost of 119 Argentine pesos, which translates to around $38 US dollars, 25.50 EUR and 18.26 UK quid at today's exchange rate, which is not too bad at all, and the same end price most people pay for 1Mbit wired broadband at home after the usual introductory pricing promotions expire. The company provides either a Cardbus card for notebooks or apparently also an USB HSDPA adapter. Of course the service also works without extra hardware on 3G smartphones. I just wish Carlos Slim's TelMex offered some disruptively cheap deals on symmetric fixed internet links which as you know it still does not.

A final thought with regards to the data transfer quota imposed on the service is that all references to it talk about "calendar month". That means that by, say, December the 1st, everyone is enjoying their full speed, but by Dec 20th a lot of people would have exceeded the 3Gbytes/month quota so they'd be back at 128Kbps speed. Kinda makes the CTI 3G network all very congested the first three weeks of the month and as all unused and fast the last week of the month. Does that make snese?.

In any case, if this service is affordable for locals, imagine how amazingly inexpensive it will be for the hordes of tourists and expats who not only organize local chapters for their favourite political party but also surely enjoy roaming the streets of Buenos Aires.

I contacted CTI's PR exec offering to do a hands-on review of the 3G service, but while he read my e-mail -thanks the heavens for Return Receipt notifications- to this date I only have heard a deafening silence from the firm. But stay tuned, this scribbler can't take no for an answer... and I'd love to get the interweb when outside the bubble, as well. So, stay tuned. Mr. Carlos Slim, me escucha usted? µ

L'INQs
TelMex and Telefonica step on the gas pedal in Latin America
CTI national roll-out plan (Spanish)