Thayer Graduate Student Interns at Telecom in Santiago, Chile

-Douglas Madory, 2^nd year MS Candidate at Thayer School of Engineering, Dartmouth College

Doug with GTD Research and Development Office.

Standing behind Doug (R-to-L): Juan Spiniak, Francisco Gutierrez, Patricio Rodriguez, Tomás Gil, Fernando Gana.

For the months of October and November of 2005, I worked as an intern for GTD, a growing telecommunications conglomerate based in Santiago, Chile. My airfare and a large portion of my living expenses were covered by a joint sponsorship of the Thayer School of Engineering and the Dickey Center for International Understanding. I wish to express my utmost gratitude to Thayer and Dickey for enabling me to have this amazing experience. I would also like to thank my advisor, Prof. George Cybenko, for approving such a long leave of absence. Finally, and most importantly, I want to thank my wife, Erin, who probably assumed the days of my being gone for months on end were over when I left the military.

My objectives for this project were to gain experience living and working in South America, practice my skills in computer networking, and improve my ability to converse and work in Spanish.

Working Situation

At GTD, I worked in the Edificio Moneda, in downtown Santiago, for the head of Research and Development, Fernando Gana. R&D for this company generally means solving nonstandard technical problems for the telecom as well as trying out new technologies. Fernando wanted to set up a basic test network that would enable him to demonstrate open-source software packages the company was considering.

Nagios is an open-source network monitoring software package roughly equivalent, functionally, to HP OpenView – but without the $250,000 enterprise license cost. GTD had several enterprise clients who were interested in an HP OpenView-like picture of their network but were not interested in the price tag. GTD wanted to offer Nagios as a cheaper alternative, but had little experience working with the software.

Doug presenting at GTD Trade Show

I set Nagios up on a test network and trained myself on the basics of the software. During a trade show sponsored by GTD, I helped present Nagios in one of three booths featuring “new services to be offered.” I also trained one of the engineers in the R&D office on the software and wrote a reference manual in Spanish for the company. In the last week of my assignment, I set up software that would allow GTD to monitor and display networking statistics on its first live client network.

Language

Upon arriving in Chile, my Spanish was very basic. I had studied the language in high school and had completed a refresher course at Lebanon College during the summer before my trip. Over my two-month stay, my Spanish improved greatly. However, due to the speed and unusual pronunciation of Chilean Spanish, I never improved to the point where I could listen and understand unless the speaker spoke very slowly.

While in Chile I had no Spanish instruction, but I did find three employees at GTD who were trying to improve their English and met with each of them on a weekly basis to give them opportunities for practice. We hope to continue our regular conversations after I return to the US by making free international calls over the internet using Skype.

For the most part, my lack of Spanish fluency was not a problem because most professionals in Chile speak excellent English. I would occasionally try to use my rudimentary Spanish, but most often English won out.

Living Conditions

Fernando set me up in the guest room of one of the engineers in his office, Tomás Gil. Tomás lived in Providencia, one of the upscale neighborhoods of Santiago characterized by its tree-lined cobblestone boulevards. Thirty years ago, the area was occupied only by Santiago’s wealthy elite, but lately dozens of apartment buildings have sprung up, slightly diluting the exclusivity of the neighborhood. Interspersed among the apartment complexes in Providencia are many foreign embassies, some high-end hotels, and many old houses (including the home of the President of Chile). I stayed in Tomás’ guest room free of charge, although we split the cost of groceries and maid services during the time I was there. Tomás also loaned me his spare cellular phone, for which I bought my own minutes.

View of Andes from my balcony in Providencia.

Typically, I woke up at 6:30 a.m., showered, and ate breakfast. Then Tomás and I, dressed in suits and ties, left the apartment about 7:45 a.m. We walked past President Ricardo Lagos’ house to catch a bus downtown. After a 20-minute ride on a very crowded bus, we usually arrived at work at about 8:20 a.m. GTD’s workday begins at 8:30 a.m. (unlike most other downtown companies, which start doing business at 9 a.m.) and continues to 6 p.m.

Lunch break was not scheduled before 1 p.m. or later, so I usually had to go out for a snack each day at around 11 a.m. Like the other GTD engineers, I received a book of meal tickets each month, worth about $4 each, that could be applied toward the cost of my lunch. Depending on where we ate, this was usually a little short; but it certainly helped reduce my expenses.

After work, we would take a metro (subway) home because buses leaving the downtown area in rush hour are even more crowded than the ones we took in the morning. In my free time, I would explore Santiago and try to practice my basic Spanish. I also took advantage of Tomás’ subscription to “La Tercera,” a Chilean newspaper, translating the headlines and major news stories for practice and to build vocabulary.

Doug in Elqui de Pisco

I made a couple of weekend trips to Valparaiso and Viña Del Mar on the coast, La Serena (seven hours to the north) and Cajón De Maipo (in the Andes Mountains just outside Santiago).

For the final six days of my time in Chile, I also used my own funds to fly my wife down during her Thanksgiving holiday to join me at the oceanfront apartment of Fernando’s godfather in Viña Del Mar.

What Is Happening In Chile

Riding atop record prices for copper (Chile’s main export), the Chilean economy is quite healthy. Since the end of the reign of dictator Gen. Augusto Pinochet in 1990, Chile has enjoyed a long period of political stability marked by a dramatic reduction in poverty and corruption. Thanks to Chileans’ resourcefulness and business savvy, the country has become the most-often-cited success story of Latin America. Aside from its copper exports, Chile has pulled itself up by its bootstraps in the past 15 years through other highly-successful enterprises that include wine and salmon. With its central regions environmentally identical to California’s Napa Valley, Chile’s explosive wine industry is now competing toe-to-toe with France’s; and its huge fish-farming industry is now the largest source of salmon in the world, despite the fact that the fish is not native to Chile.

It also doesn’t hurt to be identified as “the easiest place to do business in Latin America” or to have the region’s highest concentration of communication services. If economic indicators can indicate quality of life, the people of Chile have never lived this well before; and their stable, prosperous economy appears likely to continue as record levels of foreign investment keep pouring in. Extending Chile’s growing network of free trade agreements, including one with the US – its largest trading partner, the government recently signed another FTA with China. The uniquely-pragmatic center-left government of Chile maintains a $6-billion annual trade surplus, a modest annual budget surplus, and comparatively-low unemployment. It governs by the ideal that sustainable social improvement is best accomplished through fiscal responsibility. So far, they have succeeded like no other country in Latin America.

Presidential Election

It is always fascinating to be in a foreign country during their run-up to a national election. This was the case while I was in Chile. The highly-popular center-left President, Ricardo Lagos, had reached the end of his six-year term and his party’s candidate, Michelle Bachelet, was running with a sizable lead in the polls. The right was divided between far-right former Santiago mayor, Joaquín Lavín, and center-right business mogel, Sebastián Piñera. A far-left candidate, Tomás Hirsch, placed a distant fourth, usually scoring in single digits in national polls.

Chile uses a two-round system of national elections. If no candidate receives a simple majority of the vote on December 11, 2005, then a run-off election will be held in the following month between the two candidates who received the most votes from the first round. Despite the fact that Chilean election law states that candidates cannot begin their campaigns until 30 days prior to the election, the campaigns had clearly begun when I arrived on the 1^st of October.

Use of Unidad de Fomento (UF)

Many Latin American countries suffered from astronomical inflation rates in the 1980s. In the worst cases, the rates approached 40 percent monthly! Currency fluctuations have also occurred recently – e.g., the Argentine economic collapse of five years ago. Argentina had locked the value of its Peso to the value of the dollar, artificially lifting the Argentine Peso until it finally broke because it was too overvalued. Practically overnight, the real value of Argentina’s currency dropped to less than one third its previous paper value, dramatically reducing the actual wealth of the country’s people and its businesses. Argentina has yet to fully recover.

As a safeguard against such drastic fluctuations in currency values, Chile has adopted the use of the Unidad de Fomento (Unifying Business Promotion Unit), or UF, in almost all business contracts. Adjusted daily, the UF is a monetary figure based on the currency inflation of the same day in the previous month. This protects businesses against rampant inflation by automatically adjusting the actual value of monetary dues to the recent inflation rate.

Of course, businesses get the best of both worlds because, even though they sign contracts in terms of UF, they pay employee salaries with straight currency figures. Workers' salaries don't get the inflation protection of the UF.

About GTD

The story of GTD’s origins is fascinating and centers on the initiative and vision of founder and current CEO, Juan Manual Casanueva. In 1976, Casanueva began a company based on his college thesis on the banking industry in Chile. Banks needed to know the inter-bank interest rates for loans but had no efficient way to track them. Casanueva began his business by personally calling all of the banks every afternoon to collect the rates and then publishing them in a newsletter that was distributed to the banks the following morning at 7 a.m. It was a laborious task, but he signed up every bank in Santiago to this paid-subscription service.

Over time, Casanueva realized that the banks would be better served if the newsletter could be replaced by direct telephone connections among all of the various functions of the banking industry. Using a small telephone switch (which is still in use today), Casanueva wired up voice communications for almost all Chilean financial institutions, brokers, pension administrators, and other companies needing fast communications with their branches, subsidiaries, and account executives. The new company was called Comunicaciones Capítulo Ltda., and its only competition was the slow-moving, poorly-run, state-owned telephone company.

Without an infrastructure of its own, Capítulo was forced to rent lines from the state-owned telecom, a situation that meant outage response times on the order of weeks – and new line installations on the order of months. No one was satisfied with the level of service provided by the state-owned operation.

In 1981, during a long-planned remodeling of the streets in the downtown Santiago business district, Casanueva had an idea. He petitioned the government to allow his technicians to install plumbing ductwork below the surface of the street.

With the government’s permission, Casanueva built a duplicate communications infrastructure inside this ductwork that could serve the Santiago financial community. This infrastructure became the chief asset of his newest company, Teleductos. Although the sole objective of Teleductos was initially to provide better infrastructure for Capítulo, other companies began to cancel the services they were getting from the state-owned telecom and subscribe to the superior services of Teleductos, making it an instant financial success. The state-owned telecom offered to purchase the infrastructure that Casanueva had built; instead, he allowed the government to rent his lines at premium rates.

Doug with Juan Manual Casanueva, Founder and CEO of Grupo GTD.

With the state-owned telecom and Capítulo as its major customers, Teleductos began accumulating large cash reserves that were regularly reinvested into expansion of its infrastructure. Today, this infrastructure consists of 4,000 miles of fiber-optics and copper-wire network and extends beyond Santiago to 13 other Chilean cities. Soon Teleductos surpassed Capítulo in terms of revenue and client base. In 1996, Casanueva began Telesat as a local- and long-distance telephone service to provide large-scale voice communication, primarily to the financial institutions that were already Teleductos clients. It was at this time that an acronym was born for the group of companies centered around Teleductos: GTD (Grupo TeleDuctos). Six years ago, a fourth company, GTD Internet, was founded to provide internet services to enterprise-level customers. And most recently, in October 2005, the privately-held GTD purchased the major Chilean residential ISP, Manquehue, doubling the size of GTD to 800 employees.

The newly-formed GTD-Manquehue provides residential internet services to close to 1,000,000 households; while the core GTD companies, Teleductos, Telesat, and Internet, provide 100,000 individual communications services to approximately 3000 corporate clients. Of the four major telecommunications corporations in Chile, only GTD is completely Chilean-owned and -operated. The other three are Telefonica (Spain), Entel (Italy), and TELMEX (Mexico).

Today, GTD is a booming success and Chilean business magazines describe Juan Manual Casanueva as one of the most innovative and successful businessmen in Chile.

Final Thanks

From GTD, I must first thank Fernando Gana for taking a chance on this unique internship, as well as Mr. Casanueva for approving it. I am also grateful to Tomás Gil for allowing me to stay in his apartment for two months.

In the end, the joint sponsorship of Thayer and Dickey allowed me to gain an unparalleled experience in a fantastic Latin American city. I was able to form tremendous friendships as well as invaluable business contacts. My Spanish skills have certainly improved, and I have a new and richer perspective on Latin American culture, politics, and economics.

Thanks to everyone who made this possible.

Douglas Madory