Hooking Up
Elias Chavando’s mom got a big surprise on her 64th birthday last month. Touring the Mexico City offices of her son’s new company, she found herself in a small room decorated sparsely with a pigskin chair and big-screen TV.
With a flip of a switch, she came face-to-face with her children and grandchildren, beamed by satellite from the conference room of Chavando’s Studio City company. They wore party hats. Chavando showed off his newborn girl. His 1 1/2-year-old danced on the table. Fifteen-hundred miles away, his mother ate cake and cried.
The satellite videoconferencing technology that brought Chavando and his mother together forms the heart of his business, launched Wednesday in Huntington Park at one of 10 Southland video parlors that will put immigrants in close touch with relatives in 16 similar parlors across Mexico.
Through TVO Communications Inc.--a play on the Spanish “te veo,” which means “I see you”--Chavando is hoping to cash in on the homesickness of the Southland’s largest immigrant community. This group contributed to $1.8 billion worth of calls from the U.S. to Mexico in 1996. His effort has attracted attention from Sony Electronics, Hughes Network Systems and Comsat Mexico--TVO suppliers working with Chavando to expand the service.
Hughes and Sony officials at the launch described TVO as key to helping them flourish in the personal videoconferencing and Latin American markets. Both corporations provided technical assistance, some free services and discounted equipment to TVO, which will distribute their equipment.
“Sony and Hughes are working very closely with TVO on every aspect of their business,” said Kenneth T. Kalinyak of Hughes’ Satellite & Video Services. “[Before TVO] no one really identified the right market to make this succeed. The Hispanic market niche in Southern California--it’s a natural.”
The service is the most novel communications product yet aimed at Latino immigrants, many of whom lack home phones but maintain close ties with relatives.
Among the services already booming are prepaid telephone calling cards and “direct inbound dial”--or DID--which offers access to voicemail, call-forwarding to pagers, and outgoing dial tones to the phoneless.
“Here you have a very dense network of interpersonal relationships,” said Raul Hinojosa, research director of UCLA’s North American Integration and Development Center. “Beyond the business communities, this is the first obvious mass market you would turn to.”
In Mexican immigrants, who account for more than 70% of the country’s Latinos, Chavando may have found the market that brings videoconferencing out of the boardroom. Popular in corporate, legal and educational circles, it has never quite taken off among consumers.
Corporate videoconferencing generally relies on high-speed digital ISDN lines unavailable in much of Mexico. The small U.S. market in consumer videoconferencing, on the other hand, has mostly transmitted video via less costly Internet or basic phone lines, with compromised quality. In contrast, satellite technology allows access to remote areas while delivering TV-quality video, analysts said.
Sony and Hughes officials said Wednesday that they envision the service expanding to remote parts of China and India.
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While some analysts said the price--$38 for the first 10 minutes and $30 for subsequent 10-minute blocks--is low compared with corporate rates, others said it is still prohibitive.
The immigrant market “doesn’t make a lot of money, and it’s going to be in addition to basic calling service,” said Carlos Guzman-Perry, Latin America director for the Boston-based Yankee Group, a technology and communications market research and consulting firm. “Are they going to spend a significant portion of their income on this? Maybe they will once a month, but that’s certainly not enough to build a business on.”
Chavando has plans to expand TVO to other states in the U.S. West and parts of Central and South America next year. He has also begun selling the service for corporate and educational use between Mexico and the U.S., including border enterprises, or maquiladoras.
The service is not the first. A Brooklyn company operates a video parlor that caters to Pakistani immigrants. But that company, Satellite Tech Telecommunication, lacks the bulk satellite volume, corporate alliances and investors that Chavando has lined up, and it has not touched the much larger Latin American market.
TVO began taking reservations Wednesday and unveiled Spanish-language television ads, to be followed by a broader ad campaign when the parlors open Aug. 15.
Other Southland parlors are in Santa Ana, Anaheim, Pomona, Wilmington, Van Nuys, Oxnard, Pico Rivera and Los Angeles. Several are free-standing; the others are located inside markets and indoor swap meets. The Mexican parlors are near pueblos that have emptied vast numbers of immigrants into the Southland over the last decade. From Ameca in the state of Jalisco, to Fresnillo in Zacatecas, Chavando hopes families will make the trek to the parlors to receive calls from the north.
The parlors hold up to six people and customers can purchase videos of their conversations for $10. Using a foot pedal, they can also snap still photos off the 27-inch screen.
Mexican immigrants already spend heavily on long-distance phone service, making Mexico the largest market for U.S. long-distance carriers in revenue and the second-largest in minutes, after Canada, according to the Federal Communications Commission. A TVO survey of 300 Mexican immigrants found that they spent an average of $160 on calls monthly.
The idea grew out of longings that Chavando and his wife, Pilar, felt for their own families. Now 30, Chavando immigrated to Los Angeles at 18 from Mexico City, working at a carwash while pursuing a business degree by night. In 1992, he formed a consulting business with Pilar, who now serves as TVO’s chief marketing officer.
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Launched with the implementation of the North American Free Trade Agreement, their firm conducted quality management seminars for Mexican companies that feared new competition. The Chavandos sold the client list in 1995 and founded a pool repair and cleaning business.
Long interested in technology, Chavando attended a computer trade show in 1996 and saw that “everything was Internet and videoconferencing.” That was the spark for TVO.
The Chavandos spent their savings researching the technology and searching for investors. By December, TVO had commitments from three. Elias Chavando will say only that one is from Taiwan, one from Mexico and one from the United States and that they invested “millions and millions.”
The Chavandos also hooked up with Raul Padilla, who left his job as marketing director for AT&T; in Mexico in January to become TVO’s chief technological officer and director of Mexican operations.
TVO is purchasing all transmission equipment including satellite dishes and antennae from Hughes, sound and videoconferencing equipment from Sony, and satellite capacity from Comsat Mexico.
“It’s the right idea at the right time,” said Glen Adamo, vice president of videoconferencing for Sony Electronics Broadcast & Professional Co. “[Chavando] has access to the Mexican market. He has access to the U.S. market. He understands the technology . . . the culture.”
Others who sell telecommunications products to Latino immigrants are less optimistic. Los Angeles-based Hispanic Communications Group has marketed prepaid calling cards for three years and also has 100,000 DID subscribers.
CEO Sal Osio said the company studied the issue and concluded that “to [bring] satellite technology to the rural areas [of Mexico] would be prohibitive. . . . It’s just not going to work.”
Counters an enthusiastic Chavando: “I hope all my competitors continue to think that it’s not feasible.”
