Political Interference Keeping Telecom Reform at Bay in Honduras

Fixed-line teledensity at only 7% is significantly lower than the Latin American and Caribbean average. Poor fixed-line infrastructure has been exacerbated by low investment and difficulties in local terrain which have made investment in rural areas unattractive or uneconomical. As a consequence, the internet has been slow to develop in Honduras: DSL and cable modem technologies are available however relatively expensive, during higher speed services are largely restricted to the major urban centres. However, the demand for broadband is steadily increasing and there are has been some investment in network upgrades to fibre-based infrastructure, albeit normally cities. Poor fixed-line connectivity has as well inhibited the take-up of VoIP (Voice over Internet Protocol), which would if not be a preferred communications medium to expensive domestic calls.

The positive side

On the positive side, these factors have encouraged consumer take-up of mobile services, a sector where there is lively competition supported by international investment and know-how. As a result, mobile penetration is about 20% above the regional average. Revenue from the mobile sector looks promising in coming years as operators invest in their networks, expanding their reach and upgrading their capabilities to accommodate mobile broadband services. Mobile data as a proportion of overall mobile revenue is likely to double in 2012, although low-end SMS services will continue to account for the bulk of data revenue for some years.

Political developments while the last few years have not facilitated the much-needed reform of legislation governing the telecoms sector. In some cases this is due to political stalemate and ineffective legislators, however underlying the difficulties are the close ties between executives at the incumbent Hondutel and key members of the government. Charges of bribery and corruption are rife, and although the framework for reforming the Telecommunications Act remains earlier the Honduran Congress, there is little prospect of effective change in the short run which would bring about a properly competitive and fair market for some services.

As alternative phone

Despite infrastructure limitations VoIP telephony is increasingly used an as alternative phone, mainly for considerations of cost.

High mobile voice penetration has left limited room for furthermore growth, but low mobile data use will provide operators with considerable opportunities in coming years, stimulated by the migration among uses from basic handsets to smartphones and by the continuing shift from fixed telephony to mobile use. Even though the 3G base remains low, at about 4% of all mobile subscribers, investment in network upgrades aims to address infrastructure shortcomings and increase the number of 3G subscribers as so then as the proportion of high-end mobile data revenue to overall mobile revenue.

46% growth in its subscriber base in Honduras in 2010

Despite a 46% growth in its subscriber base in Honduras in 2010, Digicel recently signed a deal to sell its businesses in El Salvador and Honduras to América Movil, which operates the Claro brand. The deal will have significant implications for the sector's competitive environment, however will provide benefits of scale to América Movil which should assist its network development.

This report covers trends and developments in the telecommunications, mobile, internet and broadband market in Honduras.

Market and industry analyses, trends and developmentsFacts, figures and statisticsIndustry and regulatory issuesInfrastructure developmentMajor Players, Earnings, SubscribersVoIPMobile Voice and Data MarketsInternet and broadband marketsMobile market

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