The Jamaican telecoms market has been the most dynamic of the lot in the Caribbean over the last few years, a position accomplished mostly by the bitter rivalry between the long standing Digicel Jamaica and the newcommer Claro Jamaica. The rivalry actually dates back to 2007 when Digicel entered Claro’s backyard of Central America and within a year took El Salvador and Honduras, a move that angered Claro. The capture of both these strategic countries were more of a political problem for Claro than it was an economic one; it did not hurt Claro’s pocket but it put them in a situation where they were left with their northern flanks exposed, the flanks that constituted its largest territory and money earner: Mexico. Claro had to do something, they had to not look weak, they had to launch a counterstrike, and they did – they hit Jamaica.
Claro is vast, many times the size of Digicel both in total customers and potential customers as well as economic value. Claro spans 2 continents and over a billion people, with yearly revenue in excess of 30 billion USD and a boss that is worth over 70 billion or just about 5% of the GDP of Mexico. Claro at the time Digicel landed in central america was the 3rd largest network in the world with over 180 million customers, dwarfing Digicel’s 7 million, sizewise they were in
different leagues. Claro was also more intertwined in the society of latin america than a telecoms company normally would, with their boss holding prestigious positions in its home country of Mexico as well as having large and well organised aid foundations across the region. Claro’s economic and political clout made them an incredibly opponent
to any other telecoms company, they were able to defeat heavy weights such as AT&T and Verizon with ease in their homeland, they were in everyway almost invincible.
Digicel is a fresh, fast growing Caribbean telecom owned by Irish businessman Dennis O’Brien. Digicel is better know as the liberator in Jamaica where it introduced GSM to the country and relieved the incumbent Cable and Wireless of it’s number 1 position. Since that day Digicel has been involved in pitch battles with C&W (now LIME Jamaica) in a long and protracted war of attrition that has lasted almost a decade to date. The war consisted of intensive use of the court and advertisment, and while LIME have won more times than not in the court they have slowly conceded ground to Digicel over the past years.
Digicel, while not being an overly large company, has very low debt and high margins of borrowing which enables them to be much more flexible in spending than most companies of it’s size is capable of. Digicel also came on the block with new and innovative means of attracting customers, all of which have been adopted by competitors.
The time period mostly accepted as the starting time of Claro-Digicel rivalry is 2006-2007, a period where Digicel won the mobile network bid in Panama and entered El Salvador and Honduras.
Digicel quickly overtook Claro as the second largest telecom network in El Salvador and within a year managed to gain as much as 700,000 customers, a result that was not only surprising for Claro but also worrisome for them. Digicel’s quick victory in El Salvador was mainly attributed to it’s innovative strategy of using flashy advertisements, quick fire promotions and reasonably good rates in unisome, a move that can quickly overpower any competition even if they offer cheaper services in the long run. This combined and sofisticated strategy enabled Digicel to quickly take most countries they land in, and having used it to overtake a latin american country, they seemed unstoppable.
Claro took notice of Digicel’s regional blitzkreig and began to devise means of stopping or even slowing Digicel’s advance until they can be stemmed permanently.
While Claro was trying to find means of stopping Digicel’s encroachment into their territory, LIME was desperately trying to hold unto valuable customers as Digicel’s expansion began to threaten their small but extremely loyal caribbean userbase. While trying to hold onto the main base of their mobile phone revenue LIME launched their own offensive to gain customers from Digicel, this failed to gain reasonable ground however and the company was left pondering the next move as they turned in loss after loss every quarter.
Claro’s method of containing Digicel was to be an ambitious move to the offensive which was to involve the invasion of Digicel’s home country of Jamaica and the booting of them from the number 1 spot in the country in 2 years, a result that would have been a huge psychological blow to Digicel. Claro immediately went into implementing the plan which first involved the annexation of the struggling CDMA network of MiPhone, then rebranding to Claro Jamaica, followed by a massive ‘public information’ campaign to ‘educate’ Jamaicans on rate differences between the new Claro Jamaica and Digicel Jamaica.
The appearance of Claro also benefitted LIME which was seen mostly with the reduction of cross network rates between the two and a new revolutionary tower sharing deal. The partnership between the two, both competitors in their own rights, did well to isolate Digicel who at that time controlled as much as 65% of the entire mobile phone user-base of the island. Claro, with their flanks now completely secured, could now focus their entire resources on annihilating Digicel and forcing it to concede it’s territorial advances in Latin America, it would seem as if they wanted to run digicel dry in a move to force them to retreat.
Multiple press releases in the summer of 2009 gave only a glimpse of what was to come in the Christmas season. Statistics showing the advances of Claro were pumped out by their PR department while Digicel issued their own counter claims, all this while Digicel and LIME squared off in court over cross network rates issues. The two front war for Digicel and the continous assault by the allied Claro and LIME was to intensify as the festive season drew closer, with Claro releasing statistics that it surpassed LIME as the number 2 network in Jamaica and that in 100 days it managed to gain over 100,000 customers. These releases were rubbished by both LIME and Digicel with Digicel going as far as claiming that Claro have no more than 250,000 customers or just the same that they acquired MiPhone with.
The christmas season started with what could be said to be the most intensive ad campaign in Jamaica since the general election frenzy in 2007. Salvo after salvo of ads from Digicel, Claro and LIME struck the airwaves with the assault being so intense at times that ads from all three companies would appear in a row, one after the other. The war generated huge shockwaves through both the public and the pockets of the radio and tv stations, with major television broadcasters racking up record profits for the period.
The battle was also intense in the promotion sector with numerous roadshows, Digicel’s gimme 5 promotion, Claro’s trade in’s and free phones and LIME’s phone discounts generating intense heat and pressure in the sector. Never before, and probably never again have/will Jamaica ever experienced this large amount of discount and value in the mobile phone market.
The Christmas battle lasted from November to early February and ended with several changes to the mobile phone sector:
- Digicel continued it’s gimme 5 promotion after the end of the period.
- Claro etched itself into the minds of Jamaican’s, however it was to be the final major battle for Claro in Jamaica.
- LIME finally stemmed it’s gradual erosion from the minds of Jamaicans and began to make tiny headway into the mobile phone market yet again after being dormant for over 8 years.
- The Jamaican populace benefitted from millions of dollars of discounts presented to them, it was a true happy time for the poorer segments of the population.
The War Rages on
The Christmas Battle of 2009-2010 ended with parties exhausted and in need of a refresh, however Claro seemed to be the most adversly affected with a lul in their mindshare and the slow but gradually disintegration of their once organised and mighty war machine. Throughout the year of 2010 Claro threw poorly organised and coordinated campaigns that yielded little result.
Digicel launched their long anticipated Wimax network in the latter part of the year in a bid to open up a whole new business sector in Jamaica. Mobile Wimax caught on, and while there have been problems experienced by some users(including me), Digicel managed to gain mostly positive feedback and to this date have cemented the word ‘4G’ (if it can be called a word) into the mind of the basic people of Jamaica.
LIME continued it’s slow and gradual comeback with the launch of it’s revolutionary DVB-H mobile tv service in late 2010 in a bid to grab a niche but quite capable entertainment section in the mobile phone market. The launch of the service, with the massive amount of ads and promotions, finally after 8 years enabled LIME to outshine it’s competitors in a christmas season. So while a full blown battle never took place in the Christmas Season of 2010-2011, LIME’s coordinated move has given hope that the company might be finally getting things together.
Any basic analysis of the entire period of rivalry between Digicel and Claro might leave questions and suggestions that may cause the balance to teether either way to a Claro or Digicel victory. The recently announced Digicel Jamaica acquisition of Claro Jamaica and the subsiquent Claro acquisition of Digicel Honduras and El Salvador more or less spells the end of the immediate rivalry between the two telecoms. Immediate analysis of the set strategies of Claro Jamaica however spells a predicted future that was far different from what actually took place.
When Claro came to Jamaica they vowed to take the number one spot from Digicel in 2-3 years, a vow that they looked set to persue up till the astonishing announcement that they will be acquired by Digicel got into the airwaves. The question goes: why the sudden change? It could have been that this was the plan all along, threaten Digicel and force them to back down in latin america… Or it could have been that Claro failed its objectives and had to cut a peace treaty while it still could. Whatever it was Claro Jamaica will be no more in a few months, it will be absorbed by its arch nemesis.
The ultimate analysis here would be that Claro failed to gain it’s main objective, and failing that objective meant they failed their mission, and lost the war.
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