José Juan Dávila, General Manager AT&T Mobility

Puerto Rico’s wireless telecommunications market has historically been intensely competitive. In the past decade, carriers have managed to sign up a combined 2.7 million local customers, a number that more than triples the amount of fixed lines on the Island.

Competition has lead to aggressive offers, trend-setting scenarios (Puerto Rico was the first U.S. jurisdiction to offer “allyou- can-talk” packages) and commercial success, despite a sagging economy.

Less than two months ago, the wireless sector experienced its latest change — the marriage of New Jersey-based Centennial Communications Corp. and AT&T, through a deal in which the latter purchased the former for about $940 million in cash.

The union of the former number three and current number one carrier has created a powerhouse operation with more than 1 million combined customers, making it the biggest wireless provider on the
Island, leading Claro, T-Mobile, Sprint PCS and Open Mobile. In an interview with Empresarios, José Juan Dávila, vice president and general manager for AT&T in Puerto Rico and the U.S. Virgin Islands, says it has been smooth sailing since the unified company launched in July.

“It has gone wonderfully. Customer traffic to our stores has increased by approximately 75 percent, and we’ve learned that former Centennial clients are extremely happy with the equipment choices they now have,” says Dávila, who has been at the helm of the local AT&T operation since December 2005.

Possibly the most attractive aspect of the fusion is the accessibility that Centennial’s former clients have to a broader line of devices, particularly those marketed exclusively by AT&T, such as the Apple
iPhone and the Blackberry Torch.

“Centennial was a smaller company, so it did not have the leverage to strike partnerships with manufacturers,” like AT&T has with Apple and Research in Motion, maker of the Blackberry, Dávila points out. In fact, during the first few days after the new company was launched, AT&T ran out of iPhones, and the Blackberry Torch has been selling briskly, he says. “We have the fastest network in Puerto Rico and the U.S. mainland and offer devices that require having fast networks so
they can be enjoyed to the fullest. When you combine these two factors, clients are happy,” he notes.

As part of the acquisition, AT&T added 75 points of sale — both stores and kiosks — formerly under Centennial’s flag to its network, which now totals 240 outlets. Currently, the carrier is analyzing how many stores it will keep, to serve its expanded customer base. “There is duplication in some areas, but we won’t be making any decisions until the end of the year. We do know that it will be a minimum number of stores that will close, because the plan is to keep the biggest distribution network possible,” says Dávila. AT&T’s store in Arecibo is one that will likely close.

AT&T has, however, already closed a number of Centennial kiosks that were located inside grocery stores and were generating low
business volumes. It has opted to keep kiosks inside malls, for now, he says.

INTEGRATING DIFFERENT NETWORKS

One of the challenges AT&T had to face was integrating the different technologies used by the two carriers. While Centennial’s network was based on Code Division Multiple Access (CDMA) technology, AT&T uses a third-generation Universal Mobile Telecommunications System (UMTS) network to offer its services.

To overcome that challenge, AT&T invested $30 million in Puerto Rico to make sure that there was overlapping coverage by both networks, to limit service interruptions or dropped calls. “We made sure that where a Centennial client had coverage, there also had to be coverage by the UMTS network, so we added 86 cell sites to increase our capacity and make sure we would be able to absorb the wave of new customers and that their experience was better for it,” Dávila says.

For the better part of its corporate existence – a little more than a decade – Centennial’s local wireless and broadband divisions were cash cows, virtually carrying the entire operation. So it is not surprising that upon taking over, AT&T found that Centennial already had “an excellent network in terms of coverage and signal, and now it’s even better,” Dávila says.

Now, AT&T is revving up to migrate toward 4G technology starting later this year, Empresarios learned exclusively. By 2011, AT&T’s transition into an infrastructure with the capacity to offer blazing
transmission speeds, seamless connectivity and global roaming across multiple networks, and high-quality multimedia support, should be 40 percent complete. “This investment proves the seriousness with which AT&T serves its markets,” Dávila notes.

AT&T BUSINESS SOLUTION DIVISION TAKES FLIGHT

Upon completing the merger, AT&T gained access to Centennial’s broadband network, through which it competed headon with the likes of Puerto Rico Telephone and local cable companies by offering traditional telephony services. Over the years, Centennial gained ground among the corporate sector by offering bundled voice and
data services at competitive prices. Postmerger, AT&T integrated the services, and is now offering “a complete service via a single network,” says Dávila.

“Centennial was doing a similar thing, but it had neither the scope, nor the portfolio of products that AT&T has. Now, customers who sign up to the corporate service gain access to point-to-point connections throughout the globe,” Dávila points out. Part of the strategy called for keeping the management team in place, who now
report to AT&T’s business division, he notes. “It is an excellent group who continue to grow the business, which now is branded by AT&T,” he says.

THE CHANGING FACE OF THE LOCAL WIRELESS MARKET

Puerto Rico’s wireless market has always been known for boasting clients who are sophisticated, savvy and demanding when it comes to technology. Statistically speaking, the Island’s wireless consumers
are also the chattiest in the world, pulling down the highest monthly averages when it comes to talk times. However, it must also be noted that for many years now, handsets have become more about data and less about talk.

“In Puerto Rico, consumers are increasingly looking for smartphone devices that meet their needs of not just talking, but texting, participating in social networks, downloading applications and navigating the Web,” Dávila says. “AT&T is better positioned than any of the other companies in the market to offer all of that to consumers.”

In the last three years, AT&T’s data traffic has increased by 5,000 percent, he says, noting the trend that is quickly taking over the industry and for which carriers need to be ready. “Puerto Rico’s wireless population will continue to grow as long as we continue to offer devices that make their lives easier. Data, for one, will continue growing, but for that to happen, companies need to continue investing in their networks and offering pricing structures that make sense,” he says.

In the long-run, Dávila says partnerships between carriers and handset manufacturers will become more the norm, rather than the exception, to keep up with specific —and growing — customer
demands.■