2007 Latin American Convergence, Broadband and Internet Market

This Latin American market report covers the broadband and Internet markets, as well as convergence, pay TV, and digital media, for each of the following economies: Argentina, Belize, Bolivia, Brazil, Chile, Colombia, Costa Rica, Cuba, the Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, Suriname, Uruguay, Venezuela, and the smaller Caribbean island nations. The region’s major markets include:

Argentina

Argentina’s Internet market is the third largest in Latin America, and penetration is among the highest in the region. In the broadband market, ADSL has consolidated its leadership, overtaking cable modem, which used to be the main means of broadband access. The government is drafting a new telecom law to facilitate media convergence, the main issue being whether telcos should be allowed to offer pay TV services. Grupo Clarín has applied to merge the country’s two leading cable TV operators, having become the controlling shareholder of both in September 2006. The adoption of digital terrestrial TV has been delayed, among disagreements on the standard to be adopted.

Brazil

In terms of Internet user numbers, Brazil is the undisputed leader in Latin America. In terms of Internet user penetration, Brazil rates only slightly higher than the Latin American average, and lags well behind Chile. ADSL is the preferred broadband technology by far, although 2006 witnessed an unexpected increase in the proportion of cable modem versus ADSL users. Since the second half of 2006, Brazil has become a battleground over WiMAX licences and triple play regulations, the bone of contention being whether the country’s fixed-line incumbents should enter these markets, or whether their participation would stifle competition. Meanwhile, the government is preparing to introduce digital terrestrial TV in December 2007, having selected the Japanese standard.

Chile

Chile’s Internet and broadband penetration rates are the highest in Latin America (apart from a few Caribbean islands). Several operators provide broadband access using ADSL, cable modem, and wireless. Chile is the regional pioneer in terms of convergence, with VTR GlobalCom having been the first operator in Latin America to develop the triple play strategy, which combines video, voice, and data over one broadband platform. Fixed-line incumbent Telefónica Chile entered the triple play market in June 2006. Two companies, Entel and Telmex, have rolled out WiMAX networks.

Colombia

Dial-up Internet access is on the wane in Colombia, but broadband is expanding at an impressive rate. The number of broadband subscribers overtook dial-up customers in the first half of 2006. Annual growth figures show cable modem broadband increasing by more than 100% annually, while ADSL has been shooting up by more than 200% every year since 2004. Colombia is one of the first countries in the world where WiMAX has been deployed commercially, reaching a 3% share of the broadband market. Triple play has been adopted by several companies, and 2007 may see the first IPTV deployments.

Mexico

Internet penetration in Mexico remains below 20%, although expanding broadband networks are driving growth in usage and subscriber numbers. In particular, Telmex’s ADSL product, Prodigy, recorded very strong growth rates during 2006. The main cable TV providers, Megacable, Cablemás, and Cablevisión are also experiencing high growth in cable modem subscribers. Indeed, during 2006 broadband growth drove the number of broadband subscribers ahead of dial-up subscribers for the first time. New technologies such as WiMAX and VoIP are increasing their presence in the market. The market is also witnessing a rapid increase in the number of triple play packages becoming available. Combined voice, Internet and TV packages are being offered both in the form of alliances between telephony and cable companies, as well as, due to recent regulatory reforms, in the form of single service provider triple play packages.

Peru

While Peru’s teledensity is far below average for Latin America, Internet user penetration is only slightly below the regional average. Public Internet booths, called cabinas públicas, can be found on street corners in virtually every city and even small towns. Nevertheless, Peru’s broadband penetration is considerably lower than neighbouring countries, and the broadband market is a virtual monopoly of the incumbent, Telefónica del Perú, although a new window of opportunity is opening for other operators to provide alternative broadband access using WiMAX technology.

Venezuela

Internet penetration in Venezuela is lower than the South American average, but is growing rapidly. Broadband technologies include ADSL, cable, wireless, and satellite. Incumbent fixed-line operator CANTV dominates the broadband market with its ADSL service branded Aba. Triple player Intercable is Venezuela’s number two broadband provider, and is the leading cable TV market leader. Besides Intercable, NetUno also offers triple play service, combining cable TV, broadband, and telephony.

• For those needing high level strategic information and objective analysis on the Internet and broadband markets in Latin America, this 200+ page report is essential reading and gives further information on:
• Government policies and regulations affecting the Internet, broadband, and convergence solutions;
• The increasing interest in WiMAX, a wireless broadband technology that may solve the region’s fixed-line shortages, and is allowing new entrants to compete with dominant incumbents;
• Triple play developments and challenges;
• Recent and planned technological advances, including Broadband Powerline (BPL), digital TV, and IPTV.

Data in this report is the latest available at the time of preparation and may not be for the current year.