Ian Mylchreest

Telscape Communications, a California-based phone company that markets itself to the Hispanic community, is now offering its residential service in Southern Nevada.

«We looked at our numbers and found that Las Vegas was the number one for long distance calls from our customers,» says Telscape’s Vice President for Carrier Relations, Jeff Compton. «There’s a strong bond between California and Nevada.»

The company started in Southern and Central California, Compton notes, because 50 percent of the U. S. Hispanic population lives in the Golden State. «Our goal is to be the premier Hispanic provider,» he adds. The company plans to eventually build its own network nationwide to provide service to the entire Hispanic population.

Currently the company is reselling other carriers’ service in Southern Nevada, but Compton says the company will be completing its own network in the next 12 months and expects to have at least one service center where customers can pay their bills and purchase phone equipment. Telscape currently has «telemercadoes,» or phone stores, in malls in Southern California.

«We’ve been in California for five years,» says Compton, «And we’ve got eighty thousand subscribers.» Unlike many carriers, which were founded in the late 1990s, Compton says TeIscape «was founded by real telephony people.» The company currently owns 50 percent of its own equipment and leases other equipment, such as switches to facilitate expansion.

The company’s solid growth has been based on focusing on the different buying and cultural patterns of the Hispanic community, according to Compton. The company insists that all customer service representatives and technicians be bilingual. «If you dial a wrong number,» he notes, «you’ll hear the message in English and then you’ll hear it in Spanish. We’re also the only company that provides bills in Spanish.» The larger competitors such as Sprint and SBC are working on that, but have not done it yet.

The company assumes that Hispanic customers prefer to meet the customer service representative in person and often prefer to pay their phone bills in person. That means the company has established a network of stores and payment partners in Southern California and it is currently using a chain of check cashing stores for local payments.

The company has also been advertising in Hispanic media such as Univision and Spanish-language radio.

Compton concedes that Telscape cannot be a deep discounter: «We know we can’t charge more than the main providers and expect to get a lot of customers,» he says, «But we’re at that price level or a little below.» Where Telscape can offer big discounts is in long distance and international calling. By focusing on Hispanic customers, almost all of its international business is focused on Mexico and South America, which allows it to provide significant discounts.

The company originally tried to offer both residential and business service, but is now focused exclusively on residential customers. «The business space is very crowded,» notes Compton, «and we found that it was really like building two separate phone companies.»

The company’s biggest obstacle so far has been trying to win «lifeline» status from the Nevada Public Utilities Commission. (That is the most basic phone service that carriers provide as a service obligation with federal subsidies). Potential customers, says Compton, are in the lowincome bracket and want the basic Lifeline service but SBC and Sprint both objected to Telscape’s application, which was withdrawn.

Compton says the objection that Telscape did not have a network and would not build one was factually incorrect. It was, he thinks, «anticompetitive.» It has reduced potential customers for Telscape by 20 percent and the company plans to refile within 30 days to answer the big companies’ objections.

SBC spokesman John Britton says the key factor was that Telscape drew a negative assessment from the PUC staff and withdrew its application voluntarily.

That view was echoed by Sprint Nevada attorney Ann Pongrascz. «The federal regulations require them to offer service to all customers in the area and their application deliberately refrained from saying that,» she says. «Sprint is perfectly willing to compete so long as it is on an equal basis.»

Telscape has been profitable over the last six quarters, averaging 35 percent growth year over year. Its revenue last year was more than $50 million. The Nevada expansion will be funded from the company’s current cash flow.