Bussines Week : Peru: Putting the Net in the Corner Store

INTERNATIONAL -- LATIN AMERICAN COVER STORY

Peru: Putting the Net in the Corner Store (int'l edition)


For Jose Soriano, the Net has been a lifesaver. In 1994, the founder and general manager of Red Cientifica Peruana (RCP), Peru's first Internet service provider, learned that doctors in his country could not treat his son, Damian, for a brain tumor. So Soriano posted the boy's brain scans on the Web for specialists in Argentina to examine. Within 48 hours, Damian was en route to Buenos Aires for an operation.

The experience convinced Soriano that the power of the Net needed to be harnessed for the benefit of the masses. ''We realized that in Peru, since there were not enough telephones and computers for everyone, we would have to share,'' he says. So he and his colleagues began setting up what they call public Internet cabins--walk-in offices equipped with personal computers linked to the Net. Peruvians who pay a fee of $15 a month can log on for up to 15 hours, including phone charges.

Now, RCP (ekekos.rcp.net.pe) manages a network of 30 Net cabins across the country. It has also provided the knowhow for other companies to set up 470 more. RCP's sales are expected to rise by 45% this year, to $6.1 million, while earnings will reach about $1.5 million. The company is powering ahead on a two-year, $51 million program designed to increase the number of Peruvian Internet users from 389,000 to 2.5 million by 2001.

To do that, RCP plans to install 400 additional Internet cabins around Peru. It will also set up 5,000 new mono-cabins, the Internet equivalent of public telephone booths, in town squares and corner stores. Soriano says he is talking to a U.S. investor about financing and may consider taking the company public in a few years.

RCP's rise won't go unchallenged. Since Telefonica del Peru, a unit of Spain's Telefonica, lost its monopoly on fixed-line telephony last year, it has been scrambling to add new services, including Net access. RCP says it controls 56% of the Net market. The rest is split between Telefonica and IBM.

RCP doesn't have Telefonica's deep pockets, but ''it has a great capacity to innovate,'' says Jose Scaffi, a telecom expert at Apoyo, an economic think tank in Lima. Soriano has already proved that a good idea in Peru can go a long way.

By Jane Holligan in Lima