Research and Markets: Latin American Telecoms, Mobile and Broadband Overview 2010

Latin America and the Caribbean include some of the worlds most important emerging markets. This report covers trends and developments in telecommunications, mobile, Internet, broadband, pay TV, and converging media.

Market and industry analyses, trends and developments; Facts, figures, and statistics; Government policies and regulatory issues; Telecom infrastructure (national and international, fixed and wireless) Major players, revenues, subscribers, ARPU; Internet, VoIP, IPTV; Mobile voice and data markets; Broadband (ADSL, cable TV, WiMAX, BPL, etc); Convergence, pay TV, and digital terrestrial TV.

High-growth industry in Latin America

Telecommunications is generally a high-growth industry in Latin America and the Caribbean (LAC), particularly the mobile and broadband sectors, but the fixed-line market is mostly stagnant.

Telecom infrastructure varies from rudimentary or even non-existent in some of the poorer rural areas to well advanced in the major cities. Despite a low 19% teledensity (in most Western European countries teledensity ranges between 40% and 60%), fixed-lines in service have grown little since 2001, with consumers favouring mobile devices over traditional phones.

In fact, Latin Americas fixed-line market is even shrinking in some countries, with incumbents reluctant to invest in fixed infrastructure. New entrants using VoIP, wireless technologies, or triple play solutions are attracting a growing number of subscribers, but their market share remains comparatively small. Almost invariably, the incumbents continue to dominate the fixed line industry.

Local Loop Unbundling is rare in this region and wholesale activity not very well developed. In the broadband sector, most incumbents have secured a virtual monopoly in the delivery of ADSL access. The only broadband competition is across technologies, from cable modem and WiMAX services.

Nevertheless, a few governments are looking into network sharing and Local Loop Unbundling (LLU), which could boost both the fixed-line and broadband markets. The implementation of fixed number portability in several Latin American countries may also help new market entrants.

The fixed broadband options available in the region are ADSL, cable modem, wireless broadband, and Internet via satellite. Of these, ADSL has emerged as the clear leader.

The LAC region is about 6

Estimated broadband penetration in the LAC region is about 6.5%, well below the world average of over 8.0%. The slow uptake of broadband in the region can be attributed to poverty and unequal income distribution as well as to industry-specific factors such as limited bandwidth, high prices due to insufficient competition, and insufficient fixed-line structure to carry ADSL.

On the positive side, bandwidth has been increasing in most countries, leading to higher speeds and lower prices, and the fixed broadband market is expected to increase substantially over the years to 2020. With the growing awareness of how important broadband penetration can be for a country's economic development, governments are looking at ways to promote Internet access through universalisation projects and regulatory reforms.

The other hand

On the other hand, fixed broadband is close to saturation in some of the regions major urban centres, while provincial towns and rural areas may end up turning to mobile rather than fixed broadband.

Number portability has been launched in Mexico, Brazil, Ecuador, and Peru, and is in the process of implementation in Argentina, Chile, Colombia, Costa Rica, and the Dominican Republic. Telecom liberalisation is under way in Costa Rica, with the first alternative operators launching services in mid-2010 and a mobile spectrum auction to be held before end-2010. Telmex and America Mvil have announced plans to merge operations, creating a single regional telecoms giant capable of offering bundled fixed, mobile, broadband, and pay TV services. Telefnica is changing its trading name to Movistar in order to unify all services (fixed, mobile, broadband, and pay TV) under the Movistar brand, previously used only for mobile telephony. Panama has become one of the first countries in the world to offer free wireless access nationwide with a speed limit of 256Kb/s, reaching 80% of the population. Brazils government has been drawing up plans to spread broadband across the vast country in one of the worlds largest infrastructure projects. A new media law in Argentina seeks to open the broadcasting market to new players, promote competition, and restrict monopolistic trends in the pay TV market. America Mvil and Telefonica compete against each other in most of Latin Americas major economies. Between them, they serve about 62% of the regions mobile subscribers. For every minute spent talking on a mobile phone, the average Venezuelan sends two SMS messages. Driven by the shortcomings of the fixed broadband market, the growth of mobile broadband in Latin America and especially in Brazil has been nothing short of spectacular. The success of mobile broadband is expected to continue, especially when the faster speeds of 4G mobile (LTE) become available.