Cyber Security Needs on the Rise

Q: How has CAR-SA transformed its business model to meet the the evolving needs of the industry?

A: CAR-SA started out as a systems integrator and has been in the telecommunications market for 14 years. One of our first business partners was the Chinese company Huawei and we were one of the few companies in Mexico that distributed its products at that time. Huawei was just beginning to take off in Mexico and we began working with its data communications division, which represented routers and LAN switches for networks. Our first mayor project was with 7-Eleven back in 2003 when we participated in connecting its more than 300 stores and created an online nationwide data network. We have managed and operated 7-Eleven’s network for 12 years with third-party business partners and our own resources.

After a couple of years, Huawei formed a joint venture with 3Com after a legal dispute with Cisco and with this joint venture, our portfolio expanded to security, telephony and other solutions Huawei did not have. It was much easier doing business with 3Com because it was a local company. This joint venture allowed us to grow exponentially and along the way 3Com bought Huawei’s shares, which were later bought by HP. HP allowed CAR-SA to enter a brand new area of solutions including servers and storage but the company then realized our product portfolio was too big, which increased our operational costs and made it more difficult to deliver quality results. We had to drastically narrow down our portfolio and began to focus solely on data networks. This radically changed our business to a services model, which by default became a financial business model. Now we invest in the technology our customers need and offer a managed services solution for our clients moving from a CAPEX model to an operating expenses one.

Q: What challenges hinder the growth of telecom companies?

A: It has been a challenging year for the company because Mexican banks do not offer financing for technology as easily as they do for other industries such as automotive and real estate, especially for small players like us. Our new business model allows us to offer our different services from a common-frame contract and it changed the financial perspective of the company that investors and customers had. These service contracts give us long-term security and have allowed us to grow as a company since December 2014. It was difficult to adapt our traditional business partners to this new program because they are used to transactional deals and CAR-SA’s service model is a long term business opportunity that does not necessarily match the time objectives of our technology partners. We have staff in more than 16 cities nationwide and are expanding to 54 cities to reach actual and potential customers looking for a single provider across Mexico. We divided our services offer into three different types of categories, data networks, unified communications and security.

Q: What are the competitive advantages of CAR-SA’s service portfolio?

A: Companies, especially in retail, needed to integrate their various stores from across the country and there was only one company that could provide service to them, which was Telmex. Telmex continues to dominate the Multiprotocol Label Switching (MPLS) networks in Mexico and the necessity of a larger bandwidth limits the growth of the business because of its cost. Many operators offer commercial services and large companies do not want to convert to these commercial services because there are no Service Level Agreements (SLAs) to guarantee service availability.

These large retail companies that manage thousands of transactions a day will not take the risk of the service working incorrectly. CAR-SA guarantees a percentage of availability to these companies, ensuring the client will be connected to the network by adding a second commercial grade link to an existing commercial grade link. We became an intermediary for these customers to have access to SLA services. The odds of both connections failing is extremely low and the bandwidth available is higher than that in an MPLS link at a fraction of the cost. Most of our clients look to us as their service provider because it lowers their operational costs, especially for retail businesses. The connections we offer are through the main mobile networks for backup services in retail networks and primary services in the M2M industry.

Q: What opportunities will arise from the Telecommunications Reform?

A: Our main service provider for cellular services is Telcel and the service is strong but in a couple of years AT&T will become a strong competitor and services will further improve. The infrastructure AT&T bought needs to be restored and enhanced and it is doing so. AT&T is number three in the market and we hope it will rapidly grow in the next couple of years to a position where it can go head-tohead with Telcel. Eventually I hope Telefonica and smaller players can benefit from the Telecommunications Reform and play a solid role.

Q: How have cloud services evolved in Mexico?

A: CAR-SA attempted to enter the cloud services market but it is extremely challenging in Mexico. Nontraditional operators such as Amazon have been successful as they established a pricing standard for cloud storage that offers a much cheaper, higher quality cloud service than other companies. Cloud servers and storage services will grow in Mexico and even though they are low-margin profits, the sales volume is extremely high. The services CAR-SA offers create added value for companies and allow us larger profit margins in the unified communications cloud market but will not address the cloud market for servers and storage.

Q: What are the trends in the telecommunications industry?

A: Two trends that allowed our company to grow were the necessity for a larger bandwidth and the rapid growth of e-commerce. More than 35 percent of retail store sales are online. This trend makes it necessary for companies to have multiple connections to ensure they always have a working network. It does not matter how many availability contracts a company has signed, there is still the possibility that the network will fail and when it does, our connection will be there to keep the networking going.

Q: How will the demand for new security solutions change the way companies create their business models?

A: By being able to integrate all of these different types of communications, we have become an important service provider and have gained the trust of our clients, allowing us to offer other types of services and solutions. We are strongly pushing for security and integrated communications for both our existing and future clients. Security is an extremely complicated subject due to evolving technology. Hacking is an intangible problem for many companies because they only become interested in acquiring these services once they have been attacked. This is becoming an important subject in leading companies and they are searching for new ways of protecting their valuable assets. This will be one of our strongest services this year and although it is risky, we will be able to give companies the monitoring information they need to ensure the security of their information systems. Years ago, hacking was a personal attack but now anybody is vulnerable to cyberattacks.