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

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 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

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,

UUNet is a close neighbor.

That’s going to be important in a time of exploding growth for Internet use
in Latin America. According to IDC’s Latin America department and its
America Internet Services, 1999”
, a 41 percent compound annual
growth is predicted between 1998 to 2003, bringing the number of Internet
users to nearly 30 million. According to estimates, use is currently about
13 million users.

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