US IT managed services provider operator Terremark Worldwide (Nasdaq: TMRK) expects to build approximately one network access point (NAP) a year for the next 3-4 years in Latin America, Terremark's Latin America president Agustin Abalo told BNamericas.
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The company is currently building a NAP in the Dominican Republic and is actively talking with private and government entities looking for opportunities to build NAPs in the Southern Cone, northern Latin America and Central America, the executive said.
"We don't want to build NAPs one next to another. We want to look at it by regions, but certainly there is a lot of ground still to cover in Latin America so for the next three or four years I think you'll see us announcing new NAPs every year or so," Abalo said.
Abalo estimates that Latin America currently represents approximately 10% of Terremark's global revenues, though predicting that figure is difficult as there are Latin Americans with businesses in Miami, which if included, would push up the percentage.
"There are a lot of synergies that are difficult to assign to one country or another," he said.
Terremark posted revenues of US$131mn for the nine months ending December 31, 2007.
DOMINICAN REPUBLIC
The company is due to complete the first phase of a new NAP in the Dominican Republic in April and the second phase by year-end, Abalo said.
Terremark chose the Dominican Republic to build its NAP ahead of what might seem like more obvious choices such as Argentina or Chile for a number of reasons.
There was strong private sector demand as the Dominican Republic is the second largest trading partner with Miami, where Terremark has a major NAP and many clients have business in both jurisdictions.
The US exports more to the Dominican Republic than it does to Argentina or Chile. Under the US-Central America and Dominican Republic free trade agreement (Cafta-DR), the key US export sectors that are expected to benefit most from immediate duty elimination include IT products, construction and scientific equipment, and pharmaceuticals, according to the Cafta intelligence center website.
Also the Dominican Republic government was very supportive of the project, which is being built in the Parque Cibernético technology park in capital Santo Domingo, alongside other technology centers such as ITLA, which specializes in training and certification in network systems. Parque Cibernético is managed by a combination of government and private sector executives.
"The present administration of the Dominican Republic was very supportive of us establishing a NAP as they see it as a strategic element in the development of the economy," Abalo said.
According to Abalo, NAPs help attract private investment to the extent that within 3-4 years NAPs can bring about a rise of 1-2% in the GDP of these economies.
"The NAP is a magnet to bring in professional communications that means once you have more competition, the communications get cheaper and you have a portal into what we call the global virtual marketplace. So it is easier for countries to compete for attracting call centers and technology development centers. All of these third generation companies that are providing services remotely need this sort of facility as an anchor in order to emerge," Abalo said.
LIKE AN AIRPORT
NAPs serve as a sort of hub, helping carriers to avoid having to invest in building expensive interconnection infrastructure, which can all be done through the NAP.
"A hub is like an airport, and we're an airport for communications. The airport requires runways and to provide those runways we require these very secure buildings, placing inside them sophisticated electronics equipment that allows carriers and their users to peer with each other, everything at zero distance within that building, which is what makes it so attractive," Abalo said.
Terremark Worldwide is also planning to launch its Infinistructure virtualized platform at its Brazilian NAP in the second quarter of the year to address demand from SMEs for outsourced IT services. The virtualized platform will be restricted to Brazil and will not be launched in the Dominican Republic this year.
