By:Matt Edgar Issue:Biennial of the Americas 2010 Section:The Americas Roundtables
A Level Playing Field is Key to Foreign Investment
Mike Fries is the CEO of Liberty Global, Inc. a Fortune 500 telecommunications company based in Englewood, Colorado. Fries participated in the Americas Roundtable on Trade with other business leaders, ambassadors, and government leaders from the United States and Latin America. I had the pleasure of spending time with him after the roundtable discussion to talk about foreign investment in Latin America, trade, Liberty Global’s impact on regions in which it operates (wages, infrastructure, etc.), and what keeps him up at night in his role as CEO of a multinational company.
While the roundtable discussion covered a wide range of topics involving trade and investment, Fries touched on the presence of “a level playing field” as a key driver for foreign investment. Curious what he meant, I asked him to expound on the phrase, specifically as it pertains to Liberty Global’s Latin American investment approach. “Number one, new entrants need to have the same access to infrastructure benefits that incumbents do. Number two, incumbents aren’t given special privileges. Number three, the regulatory framework anticipates and envisions competition,” he said. In other words, he looks for regions where the political environment doesn’t unfairly protect existing operators, because if this is the case, Liberty Global would be operating in the region with “one hand tied behind its back.”
Fries experienced this issue firsthand. When Liberty Global invested in Mexico in the mid-90’s, the idea was to provide voice and broadband services. Although the company was able to grow a “nice little cable business,” Liberty Global wasn’t able to secure a telephony license to provide multiple services. Between 2003 and 2004, Liberty Global “ran out of patience” and pulled out of the region. Fries went on to say that since his company pulled out, he thinks Mexico has “likely evolved” in terms of willingness to allow for a competitive environment, stemming from a variety of “pressures,” and due to the “rapidly changing technological environment.” "Number one, new entrants need to have the same access to infrastructure benefits that incumbents do. Number two, incumbents aren’t given special privileges. Number three, the regulatory framework anticipates and envisions competition." - Mike Fries
For Latin American trade and foreign investment success stories, one needs to look no further than Liberty Global’s operations in Puerto Rico and Chile. The company’s assets in Chile are worth over $2 billion, and its operations there purchase $250 million of U.S. equipment and content annually. This enhances trade volume and enriches the region by providing desperately-needed telecommunications infrastructure and content like 100 MB broadband speeds, 300 channels of digital television, and VoIP services. “It’s a win-win for global markets and trade," said Fries.
"We’re constantly building, buying, and innovating. Once you put someone in a market, there’s a multiplier effect.” Not only is there an impact on trade and global markets, firms have an influence on wages in areas where they operate. “Generally speaking, our wages are more competitive than incumbents because we need better talent and resources. We’re a very positive influence on wages.” And, that is hard to argue with in a global economic downturn.
Wrapping up our conversation, Fries and I chatted about what keeps him up at night regarding Liberty Global and Latin American investment. Interestingly, it isn’t things out of his control, such as the recent 8.8 earthquake off the coast of Chile and its impact on operations there, or the company’s existing operations in Puerto Rico. In fact, it’s “opportunity lost” by not being aggressive enough in terms of new market identification and entry. “We’ve concentrated in a couple of markets, and I’m constantly wondering if we should be more aggressive. When will that window open, and will I be able to jump through it? We’re all about growth and scale. Our business thrives on scale.”
It is clear Mike Fries is a bold visionary, with eyes wide open for new opportunities to grow Liberty Global and provide consumers with exciting products and services to enrich their lives through communication. Hopefully, the Biennial provided U.S. and Latin American leaders with ample opportunities to further strengthen political and economic intercontinental relationships. Based on the compelling dialog during the roundtable, and my conversation with Fries, I think the U.S. and Latin American countries are headed in the right direction in this regard.
Matt Edgar is the Owner of Community First Commercial Real Estate in Denver, Colorado, and a contributing writer for ICOSA. Matt can be reached at 720.435.2191 or [email protected].