Executive summary
Puerto Rican telecommunications in need of renewed investment
Puerto Rico has some of the highest rates of teledensity, mobile penetration and internet usage in Latin America. However, despite being a US territory, Puerto Rico lags well behind the USA states in terms of fixed-line and broadband penetration. This is partly due to a deep economic recession, high unemployment rates and poor telecommunications investment in a market largely dominated by the incumbent Puerto Rico Telephone Company.
The Puerto Rico Telephone Company’s fixed-line market dominance was augmented following its acquisition by the largest wireless company in Latin America, Mexico’s América Móvil. In contrast, with six network operators, the mobile (cellular/wireless) market has been experiencing more robust competition and growth. Although América Móvil’s Claro recently took the lead from AT&T Mobility in terms of subscriber numbers, AT&T regained the top position by late November following its acquisition of Centennial Communications. AT&T’s leading position in the mobile market would be cemented should the FCC approve its proposed acquisition of T-Mobile.
With an emerging VoIP sector, a growing broadband market, and a healthy cable and satellite TV sector, the growth and convergence of digital media looks promising. Nevertheless, all telecommunication sectors experienced a slow down following the global financial crisis and Puerto Rico’s recovery is forecast to be slower than other countries in the region.
Market highlights:
- At the beginning of 2011, Puerto Rico’s unemployment rate remained at around 17%, the highest level since 1931 during the Great Depression. The economic downturn was felt in the telecommunications sectors, yet the industry, in particular the mobile and data sectors, weathered the crisis better than other industries.
- The AT&T acquisition of Centennial allowed AT&T to supplant Claro as the mobile market leader having lost that position to Claro in 2007.
- In March 2011, AT&T announced its intention to acquire T-Mobile. Pending regulatory approval, which involves hurdles not insignificant for the Puerto Rican market, the acquisition would increase AT&T’s share to around 50% of the mobile market.
- In 2010 AT&T Mobility announced it had completed an upgrade to HSPA 7.2 technology across its 3G network. The upgrade is expected to pave the way for the future deployment of LTE (4G) technology, which AT&T intends to start deploying in 2011.
- In early 2011 the Puerto Rico Telephone Company and Claro commenced deployment of a 16,000km long cable from Puerto Rico to landing points in the USA, Dominican Republic, Jamaica, Colombia, Mexico and Brazil. The cable is expected to have a transmission capacity of over 90Tb/s.
- Cable TV subscriber numbers continued to decline, due in part to growing competition from satellite and to a deepening recession.
Data in this report is the latest available at the time of preparation and may not be for the current year.
Lawrence Baker
April 2011
