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Aug 28

PODER 360 SPEAKS TO JAIME VALLES, CISCO’s Vice President on Latin America: Latin American Coming IT Revolution.

Latin America continues to drag behind the rest of the world when it comes to information technology, a brake on the region’s competitiveness. But Internet access is expected to explode there this decade. Leading that charge is California-based Cisco Systems, the fast-growing world leader in IT infrastructure with more than $35 billion in sales and 65,000 employees.

Cisco has been on a buying spree the past two years, bolstering its digital resources in high-speed optical networking, IP-based mobile infrastructure, data center automation and video communications, including its purchase of Pure Digital Technologies, creator of the best-selling Flip video cameras, and Tandberg’s TelePresence video-conferencing system.

The company is turning its attention to the region by forming new partnerships that will boost the level of IT skills in many Latin American countries. The demand for Latin American professionals with Internet skills is forecast to greatly outpace supply, so Cisco is seeking to help Latin America meet that need through technology for cheaper basic communication, education through distance learning and government support systems. Joint initiatives between the Cisco Networking Academy and the governments in Brazil, Mexico and Colombia have created opportunities for 150,000 Academy students. Other countries such as Costa Rica and Chile are also becoming involved with these public-private partnerships.

“I have never in my professional life seen this level of commitment to IT education in this region,” says Jaime Valles, Cisco’s vice president for Latin America. Born in Spain, Valles, 44, has spent 20 years living in Mexico, where he worked for Sun Micro Systems before moving to Miami for Cisco. Valles sat down with PODER to discuss the company’s plans.

[JAIME VALLES] Cisco has a capacity to really improve a country’s competitiveness, the quality of life for citizens in the region. We are convinced that by utilizing technology and specifically broadband, a country can see GDP growth while offering key services to citizens [in areas] such as safety, health, and education and other public services. When you have technology it makes your key players more relevant to the marketplace and governments today realize that. Education is critical for Latin America’s success and technology is a key player in that
Cisco’s message and our mission is appealing to governments in Latin America because we are offering them a better and more competitive way to provide public services.

[PODER HISPANIC] How has Cisco worked itself into this position where it can offer this level of services?

[JV] We have partnerships with the key service providers in each country, with government institutions and a large network of partners that allows us to offer best technology.

[PH] And what’s the main area now of your business? What’s the big growth area for Cisco?

[JV] Right now what we are seeing in the market is a unique moment. I don’t want to get too technical but it’s convergence of the traditional communications world with the traditional computing world, in a model that is offered as a service to the consumer. In computing you have the Cloud concept where you turn on the computer and you have all of the data centers and all of the processing power somewhere providing you a service. The same thing is going to happen in communications. Forget if it’s your normal fixed line telephone or your cell, you as a user will receive a service whatever way you like to receive it.

Cisco is well-positioned because of the investments that Cisco has made in three or four key areas. One is our traditional communications networking that gets you access anywhere. Second is the data center that offers the computing power to process and offer you the services. Third is the collaboration, because at the end what happens is it allows people to interact. We convert them into a single solution so the customer receives the service. That is why our message today is so strong in the marketplace, be- cause we can put everything together, we have the right partner- ships and offer you, as an individual consumer, the service that you require.

[PH] How big is digital divide between the U.S. and Latin America? How are you able to help the region catch up?

[JV] Latin America today has a unique opportunity because what’s happening is there is a lot of focus on the region, and economically it’s a solid region. Latin America doesn’t have the deficit issues that you are seeing in other regions. So the governments right now have financial capabilities to invest in infrastructure, and the governments realize that the infrastructure has to be put in place. The other key is that Internet penetration is so low. In other regions we are talking about 50 percent to 60 percent penetration. In Latin America we are at high single digit penetration. So we have a lot of opportunity to grow. Just to give you a data point, the World Bank estimates that for every 10 points of broadband penetration your GDP growth accelerates 1.3 points.

So what happens is you have the technology available, you realize the importance, you have the opportunity to leapfrog so you can go to the latest Internet-based technology in order to offer that connectivity, including mobile and fixed. You have governments that are realizing the importance of that, so they can address the key issues they have to address including competition, regulation, investment etc. And then you have a company like Cisco that offers you a fully integrated solution with the partners and with financing.

[PH] So if you had to rank the countries in Latin America, which would you put at the top in terms of understanding that message and pursuing it for the betterment of their citizens, and who would you put at the bottom?

[JV] It’s hard to answer that question because every country is doing something. Chile has been always a leader in terms of broadband penetration. Brazil has just announced a national broadband plan, and Mexico and Colombia have their own infrastructure plans. So it’s hard to say that any government is better or worse. What we are doing is saying why don’t we help each of them in whatever they require in order to be more successful, because what happens is every country needs something different. In some places it’s education, in some places it’s financing, and in some places it’s access to the technology and the right partnerships.

So, we build a plan for the country. In Mexico, we talked about manufacturing and location. John Chambers, our chairman, went to Mexico two years ago and confirmed a huge $5 billion investment over five years. We have pilot programs in about 40 schools right now in Mexico to improve educational access, graduation rates and teaching standards. We really plan for the country. We ask, ‘What can we do to make this country better?’ And we put forth the people and the resources to make it better.

[PH] What kind of roadblocks do you see in Latin America in terms of resistance to technology? Cuba is obvious. What about Venezuela, which is a fairly well-connected country?

[JV] We don’t get into politics at all. What we do is we realize the importance of technology, independent of any ideology. You know, in Venezuela, we do very good business with Cantv… We believe that Cantv is a great partner for Cisco in order to offer services to the marketplace. So, we have a large team in Venezuela. And we continue investing in Venezuela.

Our vision is to best partner for governments and companies to increase Latin American growth and improve the quality of the citizens. It does not say the country has to be this ideology or the other one. And we have been very good at that and not making [distinctions] at all because we believe you have opportunities everywhere. The market today really represents a huge opportunity. Here are two numbers that I can share because this is a public disclosure we have made. In the last quarter Internet penetration in Brazil grew [year to year] 80 percent, and Mexico 63 percent.

So, you have solid growth and solid opportunities all across the region. What we are convinced is that the growth in the region by leveraging technology could be key in order to make the region more successful. Internet traffic in Latin America will grow 51 percent compounded over the next four or five years. It is the fastest growing traffic region in the world. And Cisco is the leading company in Internet technologies. We have a strong presence obviously, and a huge opportunity to grow.

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