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Cablegate: Telecom and Atsc in Argentina: The Visit of Ambassador

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RUEHMN/AMEMBASSY MONTEVIDEO 6986
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RUEHBR/AMEMBASSY BRASILIA 6672
RUEHLP/AMEMBASSY LA PAZ 5083

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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.

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HDTV STANDARD
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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.

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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

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