Peru bill challenges Microsoft

By Craig Mauro
Associated Press

LIMA, Peru — Computer software could make Bruno Crespo's job much easier — if only he had the cash.

Tax collection workers in Callao, Peru, struggle to assist residents, using an outdated computer system. Associated Press

But like many city governments in impoverished Peru, scarce revenues can barely provide for basic public services, let alone computer programs for municipal workers.

Crespo says he would need $120,000 just to pay licensing fees for 200 versions of the latest Windows office suite. That alone is about four times Callao's annual computer budget.

If Congressman Edgar Villanueva gets his way, Crespo might have some more maneuvering room. Swimming against the Microsoft tide, Villanueva is pushing legislation to obligate all public institutions to convert exclusively to open-source software.

Villanueva's office has also coordinated with similar legislative initiatives in Argentina, Spain, France and Mexico, said Jesus Marquina, an adviser to the congressman.

Open-source programs, embodied by the Linux operating system, have underlying code available to anyone who wants to modify or customize it.

Such software, in unadorned form, can be downloaded from the Internet for free. The value that developers add by customizing open-source software for specific needs — and supporting it — generates income.

In proprietary software like Microsoft's, the source code is mostly secret. Companies charge licensing fees. Users update it by buying a new version.

Villanueva's measure would apply to all software — from server operating systems to databases, word processors and e-mail. It allows for exceptions only if no open-source solution exists.

If passed, the legislation could be the first of its kind in the world — the first government-authored legal restriction that aims at Microsoft's dominant operating systems and the commercial software industry that has grown around them.

Open-source still represents only a small share of the global software market, but governments around the world have begun turning to it for various reasons.

Federal agencies in major industrialized nations such as France, Germany, China and the United States have adopted Linux for servers, mainly because it's cheaper, stable and deemed less susceptible to viruses and hacker attacks.

For poorer governments in Latin American and elsewhere, open-source would mean big savings without losing functionality.

"The basic issue, really, is that governments are paying a high price for commodities," said Miguel de Icaza, chief technological officer at Ximian software company in Boston. "A country shouldn't be paying between $200 and $700 for each workstation to run word processors, spreadsheets, Web and calendars, and e-mail."

De Icaza is a lead developer and promoter of open-source software, including in Mexico, where he is from. His company sells for $60 a Linux desktop with a modified version of OpenOffice.org, the free, open-source competitor to Microsoft's Office.

For Callao, open-source could take the expense out of software upgrades, and allow Crespo to spend his computing budget on developing database systems.

Villanueva says the Peruvian state owes about $30 million in overdue software license fees. A government study last year estimated Peru would have to pay $18 million in licensing fees to cover the pirated software it uses.

The same study painted a stark picture of Peru's overall IT situation. Many government PCs still run Windows 95 and about a third still use the outdated Pentium II processor — or earlier versions.

Villanueva says budget savings is not the primary goal of his proposed law.

"Our philosophy is to try to give access to technology to the most people possible, especially young people, and that the state should play a fundamental role in that process," he said.

Villanueva hopes his measure triggers activity in Peru's software industry by freeing programmers from the constraints of working with coding controlled by a few large companies.

Microsoft officials contend the legislation is based on misconceptions and unproven theories. Along with Peruvian software companies, Microsoft has lobbied congressmen, government officials, academics and businesses with that message.

The office of the chief of Peru's Cabinet already has voiced opposition to the measure.

"There are several challenges that the government would face if it approves that law," said Mauro Muratorio, Microsoft's corporate strategy director for Latin America.

Muratorio said software comprises just two to three percent of an organization's technology costs. More than 90 percent goes to services, such as technical support, training and development, which could be even more costly with open-source, he added.

Sales of Microsoft products — mostly made through local businesses — encourage local growth, Muratorio argued.

Microsoft Peru expects $27 million in sales this year, which would generate about $70 million for local businesses, Muratorio said.

Rolando Liendo, president of the Peruvian Association of Software Developers, said the country's fledgling software industry — which produces $40 million a year in mostly proprietary software — could be hit hard by Villanueva's legislation. Roughly a quarter of its business goes to the government, he said.

But Villanueva argues that the freedom created by his bill would far outweigh any temporary losses.

With proprietary software, "a systems engineer graduate ends up being a user. Call him 'programmer' in quotation marks, but in the end he's a user. If he had access to source code, that engineer would have the possibility to transform, to modify, to adapt to his needs, to create," Villanueva said.

"We're just giving them a legal tool so they can go forward. We'll see if it happens."