RealTime IT News

UUNet Looks For Gold In Them Thar Hills

Like California panhandlers in the early 1900s, telecommunications and Internet service providers are seeing gold in them thar hills and rapidly expanding Latin America operations to grab a bigger stake in the new "gold rush."

The latest to stake its claim is UUNet, which hopes to become an early leader in the network services category. The company is setting up shop in Sao Paulo and Rio de Janeiro, Brasil, the number one Latin American country with Internet users at 41 percent, according to the International Data Corp..

The company is leveraging the Internet presence established by Worldcom Inc., which owns UUNet and Latin America telecommunications giant Embratel. The telco owns and operates one of the two national and international wireline networks in Brasil.

Bob Hartnett, UUNet president and chief executive officer, said the expansion underscores Worldcom's commitment to broadband services in the exploding market down south.

"UUNet's expansion into Latin America strengthens our commitment to provide a truly global Internet solution," Hartnett said. "Internet use in Latin America is explosive, growing faster in the region than anywhere else in the world. Today's expansion in Latin America underscores WorldCom's lead in offering reliable, high-performance services to customers worldwide."

The company plans to initially offer dialup and dedicated Internet access services. As Internet use expands in the small and large business sectors, the company will be perfectly situated to offer Web hosting, co-location, virtual private networks and security services.

UUNet is also extending its current network, laying STM-1 and E-3 lines between network hubs in Buenos Aires, Sao Paulo, Rio de Janeiro and San Juan.

Two factors weigh into Worldcom's decision to expand operations in South America.

America Online Inc., is making huge gains in Latin America, opening up regional sites in Mexico, Brasil and Argentina. The sites' huge popularity has prompted the world's largest ISP to spinoff into AOL-Latin America (which is using AOL Brasil as its home page), raising $200 million in its initial public offering (IPO).

AOL is a major user of UUNet connectivity and services in the U.S. Like lampreys on a shark, AOL's increased presence prompted the carriers increased role in those countries. Headquartered in Brasil, UUNet's offices are centrally located for expansion in other Latin American countries.

Worldcom also has a vested interest in the network operations conducted down south. Through its ownership of Embratel, the U.S. carrier gained access to the network but also the inefficiencies of the telco's infrastructure.

After the government-mandated privitation of Telebras (think AT&T before the breakup in the '80s), Embratel became the only national and international network in Brasil, with three other companies formed to oversee the country's local telephone traffic. The years leading up to the breakup saw a major decline in the telecommunications infrastructure, with no network expansion and a steady degradation of the copper lines already in the ground.

UUNet, which is setting up its Latin American headquarters in Rio de Janerio, is the number one backbone provider in the U.S., and has the infrastructure and know-how to bolster the aging network. With Embratel also based in Rio de Janeiro,