Finance Americas Executive Editor Loren Moss was recently in Santo Domingo, Dominican Republic where he was able to speak with Julissa Cruz, the Executive Director of Indotel, the Dominican Republic’s telecommunications regulatory commission.
The island nation has been accelerating its technological progress over the last decade, as it seeks to position itself as a regional player in outsourcing and information technology. This is evidenced by recent wins such as outsourcing firm Glowtouch selecting the capital of Santo Domingo for its newest contact center, and the deployment of 5G mobile services, ahead of many peer countries in Latin America and The Caribbean.
Finance Americas: I’m happy to come back here after a few years to Santo Domingo, super happy to see the progress. My first time in the Dominican Republic was in the 90s I think, and to see more and more progress is impressive.
Julissa Cruz: Thank you! How good you say that, because comments like that are a motivation to keep working on this and the country keeps growing and developing, but especially translated to the improvement of the life quality of the people, progress with human development.
Finance Americas: I understand. I remember for instance when visiting some textile factories in a free trade zone in San Pedro de Macorís in the 1990s where they were manufacturing clothes I think, but tomorrow I’m going to the opening of the new site of Glowtouch that is opening here in the capital, that’s another reason for my visit, so seeing the Dominican Republic moving up the value chain, from the factories to bringing knowledge opportunities, to work with minds, not only with hands.
Julissa Cruz: Yes, just like that. We’re getting more sophisticated.
Finance Americas: I see you are doing a revision of the legal framework, updating decrees here, and since I saw the presentation that you did with 5G Americas, with José Otero, I want to ask why is this necessary? Because I see you are doing a revision process of several decrees, and several laws from previous years in the Dominican Republic, why is it necessary?
Julissa Cruz: Well, our telecommunication law in the Dominican Republic dates back to 1998. Despite being a law with a futuristic vision, and that was the pioneer when the century began, in terms of sector growth, it has become necessary since this law has turned out to be outdated. There are things that are good, principles, that have led to the Indotel of today, but there’s a moment where having an implemented 5G network, a 2030 agenda, and an aggressive plan of digital transformation throughout the country, we need a legal background with bigger force than a decree.
A robust legal background that allows the development of the Dominican Republic will experiment in terms of the digital economy, digital transformation, and every aspect of life. So, it’s now necessary; not only a telecom law, but a ICT law that includes the regulatory aspects and also has guidelines for the execution of public policies and the 2030 vision that has been planned in our digital agenda.
Finance Americas: Excellent, I’m here visiting Santo Domingo today for the opening of a new BPO in the country, Glowtouch, and they chose the Dominican Republic. It’s an international company with operations in the US and India, and I asked them why they chose the Dominican Republic, and they said that everything was wonderful and ideal for them, except that they didn’t open here before. But my question is what are the challenges? For example, is there good connectivity here? The first thing I did when I arrived here was to go to Claro and buy a SIM card to have internet, and it’s wonderful, but speaking of data, the internet connectivity here is below average. Is there a reason for this? Is this a challenge? Are the people of Indotel working on that?
Julissa Cruz: Yes, well, we have to look at it from different points of view. The Dominican Republic has a good situation in terms of service coverage since we have around 96% to 97% of the population with at least one telecommunication network. Despite that, there is a very low insertion, starting with the fact that we are one of the countries with the highest taxation on this utility, even though it was declared as a universal right by our government, meaning the access to the internet. The state still has strong taxation on luxury goods, a selective tax.
“As we manage to make governmental processes more efficient, we gain competitiveness as a country.” – Julissa Cruz
Regarding the discussions on this topic, which were frozen given the world economic environment, the taxation on this service is one of the main discussion topics on the agenda, given the necessity of the population to have access to the internet; decent access with a productive objective of the technology. On the other hand, there are certain market conditions that Indotel has in consideration. For example, number one, the massification of the offer, the improvement of providers in the market. When the market is competitive, the quality improves and the user experience improves, and better prices are expected. Indotel is currently easing authorizations and concessions to cable companies or community services so that they can offer the services.
Another topic is also that fiber optics on the RTED (Dominican Electric Transmission Network) is about to be launched, which will democratize the national transportation of data, which is very important when providing this service. So, this is an infrastructure that is now deployed, despite being installed for years without working and not being started, so next month we will have the launch for this business unit for the company that will democratize this utility.
Another topic is international connectivity. You know that the Dominican Republic has the submarine cables, though they belong to two economic groups, so it’s necessary to incentivize and improve the economic conditions to be more competitive in that market and allow a more extensive offer and reduce the current prices for international connectivity. We at Indotel are executing a project with the Inter-American Development Bank to bring a new submarine cable to the Dominican Republic with government participation. So, we are tackling two areas; one, simplifying paperwork to attract whoever wants to come here, and also the fact that the Dominican State will be part of the investment. So, related to international connectivity, we are executing a very aggressive short-term plan.
I think that with the implementation of these policies and given the international environment, it’s not possible for the Dominican state to reject these funds, but these taxes could gradually be reduced along with all the regulations I’ve been talking about. Besides an aggressive program of digital skills development for the population, the demand for utilities should be generated, improving the access to the service in the Dominican Republic.
Finance Americas: Excellent. Just by curiosity, is residential fiber optic connectivity available?
Julissa Cruz: That is the biggest challenge of the Dominican Republic, we are very behind in this situation when it comes to deploying fiber optics to the home, and that’s why this administration has assumed an operation with the IADB (Inter-American Development Bank) to improve the conditions of connectivity for domestic use in the country, and this year, Indotel will introduce an application to deliver residential fiber optics in 26 municipalities in the Dominican Republic, which today do not have any communication network, so obviously we will do that with fiber optics. The distribution here is by province which is the largest entity, municipalities, and then municipal district; we are going to cover the second layer. So once we have the 26 municipalities covered, we will have the second layer completed, all in urban areas.
Next year, when this project has already been launched, we are going to deploy the project at the lowest layer, which corresponds to municipal districts. By the end of this project, the Dominican Republic with have the best connectivity available to the home.
Finance Americas: It’s super important because one of the things that I’ve seen is that, for example, I live in Colombia now and in 2020 when coronavirus arrived the president said “whoever can work from home, should work from home,” so connectivity became such a key factor when it comes to who can and who cannot, and since now it’s the popular way of working, especially knowledge workers, I mean software, BPOs, and professional services have that flexibility, so one thing I’ve seen is that the most competitive countries look for that, they have good connectivity. Not only that, citizens…anyone can work from Santo Domingo, from San Francisco de Macorís, today there are options to attract the investment.
We have seen that in Colombia where they created a special visa for professional nomads, knowing that someone makes $100k a year is going to spend all of that money in their country, so they have this kind of strategy, not only big companies but for individuals as well. It’s suitable for tourism, so people would like to come in here and stay because there is good connectivity, there are no blackouts. The Bahamas is a good example of that strategy, “I don’t need to charge you taxes, because I know that if you’re here, you’re spending money,” so that’s why it’s important. So we talked about digital transformation, you have a national broadband plan and you have a biennial development fund for telecommunications, can you explain to me the national broadband plan and biannual development fund for telecommunications?
Julissa Cruz: Sure, so the biennial project plan is executed with the funds that Indotel gathers from the CDT (Telecommunications Development Contribution), which is the 2% of the billing for this utility. And every two years we establish different projects. This current year, we are executing the most beautiful projects in all of Indotel’s history, this product has chosen 17 communities that as of today don’t have a single telecommunication network, they are totally out of it, so that’s why they’re very poor.
Finance Americas: Yes, without that connection, there is nothing. There is no education, no work, and the economic and social gap gets wider by the lack of connectivity.
Julissa Cruz: There are no jobs. The socioeconomic breach deepens as a consequence of the lack of connectivity. So, we’ve chosen these communities and we’re bringing connectivity to them. Besides, this project is benefitting 2,000 families where the head of the family is a woman. Now they have a smartphone with subsidized telecommunications service for two years. And, on top of all that, these women have entered a training program to learn how to use the device in a productive way, with a specific approach for entrepreneurship and employment. Say, Mrs. Juanita from the countryside makes good coconut dessert; she can make a Facebook page, an Instagram account and start selling her dessert there. That starts on a small scale, but who knows? Maybe in the future it can become a Dominican online pastry shop. These women haven’t gotten the chance to get prepared, to have access to connectivity. They are so poor they can’t pay for the service. I’m sure that this program’s impact on these women’s lives, and the multiplier effect on their families, will be impressive. This is a project that closes breaches and changes lives. That’s why I say that this is Indotel’s most beautiful project ever.
Now, when it comes to the broadband project, that’s something more complex in terms of infrastructure goals, today’s situational analysis, to see how far we want to go in each one of these respects in terms of connected schools, healthcare centers, government institutions. This national broadband plan has a description of every project that aims to take the Dominican Republic through the digital transformation we expect in our 2030 digital agenda. The connectivity and broadband are the pillars for all the things we want to build from there. You can see our well-structured plan, released last August.
Finance Americas: Excellent. The Dominican Republic has an advantage by not being too big, nor a too small country. That makes this easier. For example, I live in Colombia and there are places where they don’t even have terrestrial access routes, you can only get there by boat. That’s part of the issue when it comes to safety and those things, so, I think the good thing for you is that it’s less hard to create an impact.
Julissa Cruz: You know, this thing you’re talking about; everybody says: “Oh, great, the Dominican Republic has great connectivity levels.” Yes, that’s true, but we’re 48,500 square kilometers. It’s not the hardest thing in the world. Of course, in Colombia, due to the country’s own characteristics, having jungles, deserts, there are areas that are very hard to reach. But, you know, Loren, I’m very keen on seeing the glass half full. Technology itself has started developing opportunities for facing each country’s challenges. The development of satellite internet is great for this. All we have to do in the government is to promote these operations in our countries, to make permits, processes efficient, so there are more offers of every service, in every technology; so there are more offerings in different technologies, so the user has the chance to compare, to try different experiences. Satellite internet is a great opportunity to treat the connectivity in hard-to-reach areas.
Finance Americas: Efficiency, good service to the population. For example, if you see all the requirements you have to do to start a business. I talked with someone last night and I asked them if there’s still a lot of “buscónes,” (Dominican informal ‘street lawyers’), and they told me, “No, not anymore because now things are more efficient.” I remember the old times. I remember when my daughter was born in the Dominican Republic, it was very hard to find her birth certificate, but now having things online, it makes it all more efficient, cleaner, more transparent, and the citizens have a bigger trust in their own government.
Julissa Cruz: Of course. This is all true, we have fewer buscónes, there’s the massification of governmental public services, but the very ambitious project that we’re starting and plan on getting ready in a few years is the interconnection, the centralization of the government’s information. If you need a birth certificate to get your passport, a background check, and something else from some other place, you should just pay the fee for all of that, so the institution that needs your documentation is the one that gets that information through an internal process, without the citizen having to go to each of those institutions or having to check different websites because many of them are digital, right? So, paperwork simplification, elimination of bureaucracy, we are on the road to getting this. As we manage to make governmental processes more efficient, we gain competitiveness as a country.
Finance Americas: I imagine that to centralize all this work on infrastructure, you need cybersecurity, to beware of attacks.
Julissa Cruz: Yes. In relation to this, last year we passed a cybersecurity bill in the Dominican Republic. Indotel is one of the main actors. It’s been created a center for cybersecurity incidents. The biggest threat to this technological development and digital transformation that the governments are working on is, precisely, cyber attacks. So, as long as we can keep training professionals who can work and be digital soldiers for the government, it will be better. Now, going back to the competitiveness, I love that word because it makes us different from the other countries, it makes us leaders, protectors of our neighbors. So, we are inaugurating, with the help of the Estonian government, of the European Union, in Indotel’s Colonial Zone facilities, the Center for Training in Cybersecurity for Latin America and the Caribbean, recognizing the necessity of preparing our professionals to execute across all the actions that make us stronger against cyberattacks.
Finance Americas: Very important, that’s a critical thing. One last question. You’ve been very kind with your time. I know you from the presentation you did with José Otero from 5G Americas. How is the 4G coverage in the Dominican Republic, and when will we be able to see 5G?
Julissa Cruz: Well, look. 5G is already available in Santo Domingo and with one of the carriers, in Santiago. Let’s see. In the National District, in Eastern Santo Domingo, which is the majority of the city in the province of Santo Domingo, across the bridge, I don’t know if you remember that, and in Santiago. And the rollout that was proposed by the carrier Claro to be developed in three years, will now be developed in just one, so, by the end of the year, if the suppliers fulfill their job in terms of deliveries—you know there’s a challenge in terms of logistics for the companies—but if everything goes according to plan, that carrier would have the coverage expected for the three years. The tender for the spectrum, they would have it done in this first year.
The second carrier, Altice, which initiated its operation in the colonial area, in the oldest part of the city, and in Santiago, with the commitment of a coverage that stays in line with what’s been established in the tender. They will keep up with the schedule, a less aggressive plan, but complying with the expectations in relation to 5G. Now, when it comes to 4G, I would say that 90% of the coverage of mobile networks in the Dominican Republic is 4G already. Some will say, from the marketing point of view, 4.5, LTE, well, call it what you want, but it’s 4G, and there are very few remaining 3G stations in the country, because the companies have been doing the upgrades.
What they don’t want to shut down is the 2G network. There’s no way, Loren, for them to shut down that network yet. There are users who keep using that network. That’s an issue; Indotel promotes technological change, but it’s obviously a choice for each company. We don’t have the legal mechanisms; it seems intrusive to us to try to intervene in this. They will shut it down when it’s best for them, monetary and technically speaking.
Finance Americas: There’s a lot of resistance to this in Colombia because of the shop owners. Which, say, the corner store, has its devices and they work in 2G. The structure is already implemented, it can be a small business owner, they say they just bought the devices, and many say that they want to have that, more and more for the market’s demands…They just bought that, and now they’ve been told that they have to change it, so it brings a lot of resistance. Besides that, there’s the devices. Not only in that way, but also, those IoT (Internet of Things) ecological systems that measure creek levels, things like that, all those structures need to be changed, so…The good thing is that you told me that you’re very advanced in 5G, that’s impressive. I asked and I thought you were going to tell me something like, Sure, in the future, but no. It’s already there, and that’s great.
Julissa Cruz: Truth is, we’re very happy about it. We released the RFP in February 2021, it concluded in September, and in December we already had the first carrier, Claro, releasing it in 27 sectors of the National District, and it’s been very aggressive, hyper aggressive in the release for the other cities in the country, so that keeps up very happy. However, the biggest challenge, Loren, is to make the productive sectors take advantage of this opportunity that the Dominican Republic offers, compared to other areas, so that the 5G network can be useful for the efficiency of processes, for innovation, for the development of 5G solutions in the agricultural area, mining, transport, for the development of smart cities. Taking into account that we live off of tourism, so the ideal thing would be to make a smart Punta Cana, or a smart Santo Domingo, at least the colonial zone. That’s attractive, that’s an opportunity for the Dominican Republic to take advantage of this from a touristic approach, so on top of being paradise, it has the latest in technology, you get me? This is something we need to take advantage of, so we’re promoting it with the private sector, with academia, as an opportunity for the innovators. Because taking advantage of the 5G network, it’s all there is to do. We could export technology, apps and 5G developments.
Finance Americas: Yes, that’s true. Is there anything else you’d like to mention? Anything that I didn’t ask and that you might want to mention, or any news that you’d like to share.
Julissa Cruz: Well, I think that the last thing I’d like to mention, and which is something very important that we’ve been doing this year, is that we’re finally about to finish the process to implement digital television. This is a commitment that we’ve had with the television channels that are taking place on the 700Mhz band, and that they provided to the state so that this could use and launch the approval and have availability for the 5G network. So, this is something that has been on the table since 2010 and that was being tackled, but it was now definitely launched, the board approved the project so that the Dominican Republic State can acquire the converter boxes that will be delivered to the 1 million poorest inhabitants of the Dominican Republic that don’t have TV devices to receive the service.
Finance Americas: Excellent! Julissa, is the head of Indotel, which is the regulatory agency that promotes communications here in the Dominican Republic. Thank you for your time, you’ve been very kind.
Julissa Cruz: Thanks to you. It’s a big pleasure, and I hope that next time the meeting takes place in person.