By Tara Seals

“You have to absorb the culture,” said Matt Bramson, CSO at wholesale carrier Inphonex, during VON’s Latin America Summit on Tuesday. “It’s really not for the faint of heart,” echoed Fernando Rodrigues, CTO at IT integrator eLandia Group. At the same time, “Latin America is a must,” said Roberto de la Mora, director of technology architectures, Cisco Systems Inc..

In short, doing business in communications in Latin America means understanding local customs and realities, and can be challenging, but the opportunity in the area is vast for the savvy operator willing to find a good regional niche. That was the general message coming out of VON’s inaugural regional summit, as panelists in four sessions shared their expertise in doing business in CALA.

Speakers shared tips: “Doing business in Mexico and Brazil is very much a know-“who,” know-how approach. It’s all about the personal relationships,” said Bramson.

They also shared potential pitfalls: “Consider payment terms,” noted Rodrigues. “The average time to pay in the United States is 30 days. But it takes 30 days for a product to even reach the border in Latin America, then you need more time for customs.”

If one is successful in navigating the cultural differences, the rewards can be immense. For one, the area‘s governments are behind increased penetration. “The growth there represents one of the greatest economic shifts in the last 100 years,” said de la Mora. “The year 2005 was an inflection point where the GDP of the emerging world matched that of developed countries. By 2050, Brazil and Mexico will be among the top five. They’re both exploding as we speak.”

In fact, the GDP was $2.6 trillion last year for the region – it’s risen 12 percent since 2003. And inflation is at a 40-year low for the region.

IT and the Internet can be seen as the fifth great technical revolution of modern times, the others being the Industrial Revolution, the age of steam and machines, the steel era, and oil and automobiles. As IT as a percentage of capex increases, productivity of countries goes up: There’s about a 98.7 percent correlation. Thus, if one invests in IT, one improves the country. Governments have noticed this, and IP connectivity has become a key measure for CALA. “If the infrastructure in Latin America was upgraded to the level of South Korea, social inequality would be reduced by 10 to 20 percent,” said de la Mora.

For two, it’s a great market for niche players.

“Be a niche player,” counseled Alex Costa e Silva, CEO at Sao Paulo-based, wireless-only data-only operator Neovia. “We’re about one-1000th of the size of Telefonica. The story is that you can do this and stay alive in the marketplace.” Neovia targets lower-income customers with a WiMAX service that gives them the basic connectivity that they need.

“The lower classes can live without the triple play,” he added. “There are lots of leftovers for a smart guy to play a good game and fly under the radar of the big guys. Incumbents can’t be everywhere.”

Meanwhile, “our goal is full integration,” said Rodrigo Mendes, president at South American Telecom. The company is spending millions on OSS systems to implement IMS and integrate voice, data, Internet, and 3G, wireline, cable, “you name it,” he said. “All access types.”

Bramson has an interesting model as well; Inphonex supports 3,000 resellers in the area with private-label VoIP. “We don’t have to find a niche,” he said. “We’ve got several hundred of other guys out there finding them for us.”

As far as technology is concerned, panelists noted that VoIP and mobility are the biggest drivers. “We don’t see fixed-mobile convergence there,“ said Eduardo Duran Nardecchia, principal at ENTEL PCS, a wireless operator in Chile. “It’s fixed-mobile substitution. People are adopting mobile for everything.”

ENTEL uses 3G, ADSL and WiMAX to cover a good swath of the Chilean population. “Netbooks and notebooks are a big opportunity,” said Nardecchia. “They’re cheaper than PCs, offer mobility and they’re more flexible than the desktop.”

He noted that many of ENTEL’s customers use notebooks within one cell site, clearly pointing to residential cord-cutting.

In general, there‘s plenty of action. “Latin America is a very young population comparatively and they’re asking for the latest technology,” said de la Mora. “The average broadband speeds are relatively low, but the cost remains high. So generally, there’s a big opportunity to invest and win with better plans.”

“There is certainly no lack of demand,“ said Claudio Baumann, marketing director for Latin America at Telefonica. “We’ve tripled our capacity as a result.”

Also participating in the Summit were Wayne Zeuch, rapporteur for the group on standards coordination at CITEL, Guillermo A. Marmora, vice president of product marketing for voice services and collaboration for Latin America and the Caribbean at Global Crossing Ltd., and Arnaud Messager, director of business development for network solutions for the Americas, Orange Business Services.