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Puerto Rico Telephone (PRT): A New Way of Doing Business

Puerto Rico Telephone’s Jon Slater turns the company around with new emphasis on customer satisfaction, technological innovation, and $1 billion investment in the next five years

This is not your father’s PRT

In the wake of its privatization, Puerto Rico Telephone’s new owners refit the company to make it the most complete telecommunications provider in the island’s newfound competitive environment.

"We’re not a government entity anymore . . .and we’re not the only game in town."--Jon Slater, President, Puerto Rico Telephone


July 6, 2000
Copyright © 2000 CARIBBEAN BUSINESS. All Rights Reserved.

Jon Slater, president and CEO of the Puerto Rico Telephone (PRT) arrived in Puerto Rico 16 months ago with a mission: to rebuild the formerly government-owned telecommunications company into the most complete, innovative, technologically advanced, and competitive telecommunications provider on the island.

Slater is well on his way to achieving his goal. His strategy? Constantly reminding PRT’s employees, management, and customers that the company is not a government agency anymore. And that the competition is stiff around town.

Early last year, the government of Puerto Rico sold 51% of the Puerto Rico Telephone Company (PRTC) to a consortium led by Texas-based GTE Corp, which included Banco Popular, giving GTE controlling power over the local exchange carrier.

It was, bar none, the most significant privatization of a government agency in Puerto Rico. Indeed, it was one of the most important business stories in the last quarter century. Controversial and acrimonious, once completed, the sale of PRTC left questions in the minds of many as to what would happen to the company and the island’s telecommunications industry.

Slater and his management team took on the task of transforming the local exchange carrier, servicing more than 1.3 million customers, into a lean, customer-oriented, technology-driven company.

A little more than a year after the historic deal, the results are beginning to show. And newly-named Puerto Rico Telephone is building its future on what its management labels a "new way of doing business," putting PRT well on its way to becoming the telecommunications hub of the Caribbean.

To build that future, its president and CEO has slated more than $1 billion in new investment for network infrastructure over the next five years. The investment will allow PRT to offer far more reliable service, advanced technology, and improved service.

Bang for the buck

"The first thing we did when we came in was to conduct a thorough study of where the deficiencies were and then, prioritize. We asked ourselves where we would we get the most results out of our first $20 million. In other words, what do we have to do to get the best ‘bang for the buck’," queried the PRT president.

Slater already has some results to show: pending installation orders have dropped 20% and repairs completed in 24 hours or less–at 64.6%–represented a 50% increase, both as compared to a little over a year ago. Installations done in 10 days or less increased 7.3%–from 15% in January 1999–to 22.3% in May 2000.

Slater also noted that this last number should have been higher and closer to the company goal of 65%, but labor disputes with the independent company contracted for installations made it drop considerably.

"We had less than 50 people for installation when we usually have more than 600," said Cristina Lambert, vice president/general manager wireline for PRT. "Though the problem is solved, there is a backlog of orders. So the number will increase, but it will happen slowly."

As of May 2000, PRT’s service complaints dropped 55%, customer service calls not terminated decreased 92%, and calls to repair centers are down by 30%, all compared to March 1999.

"Recently, the Telecommunications Regulatory Board visited various municipalities to hear people’s complaints about our service. To the surprise of some, no one showed up. We suspected this would occur, based on our own numbers," said Slater.

Operator service (0 and 00 calls) has also improved, with calls answered in 20% less time. "We haven’t seen over the horizon yet, but we’re on our way," said Slater.

Going back to Basics

To improve customer service, PRT’s new management targeted key areas in customer service and technology that would help achieve its goals. This required changing the way things were done at PRT extensively. "We are not trying to change the local culture of our employees, just the way business is conducted," Slater explained. "We need to be customer and market sensitive in order to succeed."

With that in mind, PRT last year spent more than 160,000 hours on employee training–to be hiked to 200,000 this year–so that customer service would improve. The numbers reflect their tactics are working.

Slater sees an important message to the employees in these numbers. "We’re not the only game in town anymore. What you do or don’t do may give an opportunity to the competition," he reiterates.

It seems to be working. "Ongoing communications with employees is very important because when it comes to contact with customers they are at the frontline," added Slater.

Slater also reduced management layers from nine to five further streamlining internal operations of the company. "It took a year to put together the executive team but we now have the right people for the job," said Slater. "We don’t have any current plans for work force reduction because we are on track with employee numbers." Instead, Slater’s strategies to right-size PRT’s workforce are attrition and redeployment, i.e., putting employee on the right jobs.

At the moment 1,200 employees have taken early retirement and the positions haven’t been filled. Meanwhile, union relationships have improved considerably, according to various PRT management members, with both union contracts pending negotiations. Union leaders are invited to meetings organized by PRT’s management team–to exchange ideas or present problems.

Occasionally, Slater leaves the office and goes into the field to experience problems in the company first hand. "I visit offices around the island to meet with employees and see how things are running," added Slater.

A new advertising campaign–divided in three phases–is aimed at taking the message of PRT’s mission to clients this year. Through April, the campaign focused on process, i.e., ongoing changes in the way the company does business. Through the end of this month, advertising highlights technology. Finally, the campaign through November will totally revamp PRT’s corporate image. "Some of our partners told us we never advertised, so we increased advertising to be more aggressive," said Slater.

PRT’s new ads feature dynamic, technology-driven themes. "We are moving away from orange and brown–colors that identified PRTC–and bringing every product under a single brand," added Slater. "The new advertising campaign is aimed at presenting us as the leading telecommunications company in technology and customer service."


When PRT came under GTE’s command, it already had one of the most advanced telecommunications networks in the U.S., but the new wave of high-tech services, like faster broadband Internet access and wireless data capability, require a boost in infrastructure.

Between 1999 and 2003, $1 billion will have been invested. "Last year, the investment in network infrastructure was $224 million and this year, it will be more than $228 million," said Slater. "Recently, the GTE Network specialists who evaluated our network told us we were far better prepared for new technology than some GTE stateside operations."

Most of this infrastructure expansion will be targeted at PRT’s wireless, Internet, and data divisions. "Once we finish, we will be able to provide all kinds of telecommunications service and compete with the new wave of telecommunication companies, like cable TV networks offering Internet access and telephony service. Over time–as we deploy new technologies–prices will come down. But the current investment is very large and we can’t lower prices yet. At the moment, that would result in losing money," added Slater.

The backbone of PRT’s network is its fiber-optic network comprised of eight rings, which are also self-healing. "If one of the fiber optic cables is cut or damaged, traffic can be re-routed through another automatically without clients noticing any change in the quality of service," said Roberto Correa, vice president network planning and engineering for PRT.

PRT’s microwave network has also been updated but now it is used as a backup to the fiber optic network.

A recent implementation has been the asynchronous transfer mode (ATM) network, which delivers high-speed data transfer. ATM is a networking protocol designed to move multimedia data around with high reliability and speed, which makes it a natural for telecommunications carriers and Internet service provider (ISP) backbones. "Right now, the ATM network moves data but as technology advances, all voice traffic will be carried over the ATM network. This is what is known as voice over Internet protocol (VoIP), by which voice becomes data. We expect to start shifting voice to the ATM network as early as 2001," said Correa.

The ATM network is also used to deliver frame relay service to corporate customers. This service allows a user to gain access to more bandwidth based on demand and then scale back to lower levels when there is less bandwidth demand. This saves money and doesn’t overcrowd the network.

High speed Internet access service

By the end of July, PRT’s network developments will be coupled with a new service–Asymmetrical Digital Subscriber Line (ADSL). This will be the flagship Internet access service for consumers and will provide speeds of up to 1.5 Megabytes per second or roughly 30 times faster than current modem connections. The service will be launched in the metro area, Ponce, Mayaguez, Aguadilla, and Arecibo. "This has been a complicated rollout that won’t be launched until ready. It has to be user friendly," added Slater.

Momentarily, a new remote access service (RAS) program has been implemented islandwide, allowing localized regular modem-based Internet access through a single telephone number. The RAS system is also connected to the high-speed ATM network.

Ever-increasing data traffic has prompted PRT to secure capacity on the Americas II and ARCOS submarine fiber-optic cables that will be connected to the U.S. mainland. Also in the plans is a point-of-presence (POP) switching facility that would make Puerto Rico a hub for GTE communications in the Caribbean and South/Central America.

"Once we have our own POP coupled with the submarine cables we will be able to provide outbound and inbound traffic services at lower costs for our clients," said Slater.

PRT’s wireless division, Celulares Telefonica, will also receive data capabilities, allowing cellular phone users to browse the Internet and have two-way messaging. The recently launched web portal will be its wireless Internet access platform by which clients will configure their Internet options.

Scheduled for this year, is building 25 new cellular sites and expanding 3,500 new voice channels to increase the wireless network’s reach and capacity. Roaming–the ability to use a cellular phone in other countries–has been expanded to the U.S. mainland, the Dominican Republic, and Venezuela.

Next in line as new wireless services are short messaging system (SMS) and Internet access over the current time division multiple access (TDMA) network. "Our studies indicate that we will be able to offer all future services over our TDMA network. If for any reason we couldn’t provide some service through it, we have a license to deploy a PCS CDMA network," said Slater.

PRT has replaced 4,800 payphones with new smartphones, which are more sophisticated and durable, and they signal the central office when there is a problem. "Although these phones help us be more efficient, the real problem is vandalism, which complicates the payphone business," said Slater. More than 20% of payphones suffer vandalism each month. The company has decided to remove payphones that are in problem areas as well as those that aren’t profitable.

"We want to be careful how we deploy new technology. We don’t want to fall in the same traps other companies have and make customers’ lives more complicated by not having a reliable, easy-to-use product. Products must be both user-friendly and useful before they can be launched," said Slater.

Howvever, not all of PRT’s investment in technology is for deploying new services.

The company recently closed a multi-million-dollar agreement with Lucent Technologies by which Lucent will provide PRT with a fiber optic cable test and surveillance system to improve preventive maintenance, especially outside the metro area. Also in the works, a new dispatch system for orders and repairs will improve PRT’s efficiency as will its new billing system, similar to the one used by Celulares Telefonica, set for deployment in 2001.

The local market

PRT is no longer alone in the local telecommunications market and the competition is heating up in sectors like wireless and Internet. "Our advantage is that we have such a wide array of services that place us as the only true full telecommunications service provider," said Slater.

Slater commented that six wireless carriers in such a limited market would be difficult to sustain. He also mentioned that the paging market is also shrinking because of the new capabilities and better pricing of cellular services.

As for PRT’s Internet business side, Slater added that recently launched’s market is not limited to local users, but is also targeted at the Hispanic market in the continental U.S.

"We are getting close to our goals but there’s still work to be done. The more we get out of the way, like repairs, the more we can concentrate on new things," said Slater. "We need to reduce costs and be more efficient. But the company is not small and it wasn’t built overnight, so it will take time."

Chart 1
Number of companies offering telecommunications services by segment
Service Number of carriers
Local Telephone 3
Long Distance calls 7
Payphones 14
Internet 30+
Wireless 5*
Pagers 7
*Sprint’s entrance in the local wireless market is expected this year, pushing the number of wireless carriers to six
Source: PRT

Chart 2
Puerto Rico Telephone Market Share by segments

Intraisland calls

Date Market Share
February 1999 100%
November 1999 59%
May 2000 55%
Source: PRT
Off Island calls
February 1999 0%
November 1999 9.4%
May 2000 9.2%
Public Pay Phone
Before 1995 100%
1998 75%
November 2000 71%
May 2000 70%
1996 44%
2000 37%
1996 0%
1998 23%
1999 18%
2000 50%*
*Includes numbers of Coqui.Net
Source: PRT
Source: PRT

Puerto Rico Telephone Market Share by segments


Date Market Share Number of Competitors
1996 49% 2
1997 37% 3
1998 36% 4
1999 31% 5
2000 31% 5
Source: PRT

This Caribbean Business article appears courtesy of Casiano Communications.
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