In a best case scenario, Latin America’s emerging nations will continue to be able to “leapfrog” over developed nations in deploying next-generation telecom solutions – not being hamstrung by old-world infrastructure. According to new studies on the region – however – some countries are more progressive than others in the provisioning of fixed and mobile services. Teledensity rates, along with mobile adoption, are soaring in telecom market hotbeds like Chile and Brazil. But what risks does the region face in meeting the needs of an increasingly bandwidth hungry marketplace?
In September 2011, BuddeComm, an independent research and consultancy company, focusing on the telecommunications market and its role within the digital economy published their study annual “Latin America – Telecoms, Broadband and Mobile Forecasts” which provides scenario forecasts, addressing the major fixed-line, mobile, and broadband markets of Latin America and the Caribbean.
Following are summarizations of their findings for Colombia, Mexico, Argentina, Chile and Brazil:
Although Colombian regulations allow foreign investors to enter the nation’s telecom market, and competition is encouraged, the number of fixed lines and the national teledensity have been decreasing. The majority of Colombians live in large cities and the study reflects that this is where most of the fixed telephone lines are concentrated.
The Colombian mobile market is dominated by three players: América Móvil’s Comcel, Telefónica’s Movistar and Millicom-controlled Tigo. While this market has shown signs of decreasing, the potential for growth is there.
Broadband is growing due, in part, to a government initiative that seeks to close the ‘digital divide,’ and provide every Colombian with internet access. The major telecom operators are required to provide local loop unbundling and wholesale services.
The telecommunications industry has historically been an economic driver in Mexico and, in recent years, the mobile and broadband sectors have been behind the sector’s growth.
The researchers determined that mobile phone use will continue to grow and fixed lines will be diminished, as is the case throughout Latin America. The satellite TV broadcasting sector will continue to grow exponentially during 2011 – 2012 and cable TV companies will continue to drive the growth in VoIP and triple play services.
Argentina’s mobile market is controlled by Movistar, Claro, and Telecom Personal and penetration rates are above 130%, which is helped by Argentinas state-of-the-art telecom infrastructure. At 23%, fixed-line teledensity is among the highest in Latin America. Telecom sales are expected to reach more than AR$44 billion (US$10.6 billion) in 2011.
It is forecasted that mobile broadband and smart phones will be the fastest growing telecom services in 2011. Competition is encouraged, fostering the growth of smaller companies, and Argentina has adopted a single licence system (Licencia Única), which telecom companies are required to obtain regardless of the services they are providing.
Increasingly, users are signing up for multiple mobile accounts since prepaid plans make owning two mobile telephones affordable. Mobile broadband is growing in popularity, driving the need for additional SIM cards for USB modems.
Chile’s boasts state-of-the-art infrastructure and a regulatory system that encourages competition, investment, and innovation in the telecommunications market. Telefónica’s Movistar, Almendral’s Entel, and América Móvil’s Claro serve the Chilean market, with two new companies, Nextel Chile and VTR, launching Universal Mobile Telecommunications Sytems.
Revenues from fixed and mobile broadband are expected to lead the telecom industry’s double-digit growth rates. It is also forecasted that lower prices, and the increased use of social networks, will of drive smartphone sales. Although mobile penetration in Chile is one of the highest in Latin America, it is lower than that in Panama, Uruguay, and Argentina.
In July 2010, Chile was the first country in the world to pass a Network Neutrality Law to ensure free and equal access to the internet for its citizenry. The researchers expect that by 2012 almost one in ten Chileans will own a 3G USB modem or portable computer with built-in 3G receiver.
Although the Brazilian telecom sector is open to competition, it is mainly controlled by Spain’s Telefónica, Mexico’s América Móvil, Oi (fixed line and mobile), which is controlled by Brazilian investors and Portugal Telecom. Satellites are an important part of Brazil’s communications infrastructure and three companies dominate the sector: Embratel’s Star One, Telesat Brasil, and Hispamar.
Brazil’s mobile market is the fifth largest in the world and subscriptions continue to grow, with many people having multiple SIM cards, however, there is a disparity with more than one out of four Brazilians not owning a mobile phone. However, it is expected that as the spending power of Brazilians increase, so will the demand for fixed and mobile broadband, mobile telephony, and other wireless products such as smart phones and mobile applications.
Brazil leads the region, and is one of the world leaders, in terms of fixed broadband subscribers, yet the country is still behind Chile, Argentina, and Uruguay with fixed broadband penetration. And it is not possible to install fixed broadband in parts of Brazil making mobile broadband the only option.
The Brazilian government has developed a National Broadband Plan, with the goal of providing broadband access to lower-income homes, and in areas where private operators have no commercial interest.
Dr. Hamadoun I. Touré, Secretary General, the International Telecommunications Union (ITU) remarked in his speech at the April 2011 Telecommunications Forum in Buenos Aires, Argentina, “ Latin American countries have shown strong growth rates in terms of access and connectivity. Many of them have reached mobile penetrations now exceeding 100%. However, we all know that these figures do not mean that the whole of the population has proper access, and that a big challenge remains in rural and even many underserved urban areas.”
Touré referred to the Argentinean initiative ‘Argentina Conectada’, a program announced by President Cristina Fernandez de Kirchner last October as an example of how this challenge is being dealt with. The initiative will provide broadband internet connections to a minimum of 3,000 schools in a period of two years, and develop Community Knowledge Centers (Núcleos de Acceso al Conocimiento – NACs).
At the beginning of April 2011, the ITU launched a joint ‘Women’s Digital Literacy Campaign’ with Telecentre.org in Santiago de Chile, with the goal of training at least 50 Chilean women to use computers and modern information and communication technology by the end of 2012. This is part of a global effort to educate one million women worldwide.
The World Summit on the Information Society (WSIS) set a target of connecting all primary, secondary and post-secondary schools to information and communication technology (ICT) by 2015. To facilitate this, ITU is implementing the ‘Connect a School, Connect a Community’ initiative based on the understanding that connected schools can serve as community ICT centers for everybody, including disadvantaged and vulnerable groups.