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2008 Latin America - Telecoms, Mobile and Broadband in Central America

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Last updated: 10 Mar 2008 Update History

Report Status: Archived

Report Pages: 122

Analyst: Stephen McNamara

Publication Overview

The Central American countries are Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama, all of which are small countries with generally low GDP per capita but with considerable scope for development in all telecom sectors. This annual report offers a wealth of information on the trends and developments in fixed-line telephony, mobile telephony, Internet, broadband, digital TV, and converging media including VoIP and IPTV developments. Subjects include:

·         Key statistics and forecasts;

·         Market and industry overviews;

·         Government policies and regulatory issues;

·         Historical information;

·         Major players (fixed-line, mobile, broadband, and pay TV);

·         Telecom infrastructure (national and international, fixed and wireless);

·         Mobile voice and data markets;

·         Internet market and VoIP;

·         Broadband (DSL, cable, wireless);

·         Convergence, pay TV, and developments in digital TV.

 

Researcher: Lucia Bibolini

Edition: 7th

Current Publication date: February 2008

Next Publication date: February 2009

 

Executive Summary

BuddeComm’s Annual Publication on the Central American countries – 2008 Telecoms, Mobile and Broadband in Latin America the Central American Countries profiles seven small countries, ranging in size from 20,720 sq km (El Salvador) to 120,254 sq km (Nicaragua), and in population from 311,000 people (Belize) to 13.3 million people Guatemala.

 

Poverty is more widespread in these countries than in the rest of Latin America, and this is reflected in the development of telecommunications. Apart from Costa Rica, fixed-line teledensity in the Central American nations is lower than average for Latin America, while in mobile telephony, only El Salvador and Panama are slightly above the regional average. Nevertheless, all telecoms markets are growing. Investment opportunities are promising, and there is good scope for the testing of new technologies, particularly in the areas of wireless systems, mobile phones, and broadband.

 

This report presents a concise overview of sector liberalisation and privatisation in the Central American sub-region, government initiatives and regulations in the telecom industry, the development of product offerings for both mobile and broadband technologies, essential country and operator statistics in all telecom sectors, and the emergence of convergence and triple play.

 

Key highlights

·         Liberalisation of the fixed-line market is at different stages, from Guatemala, which has been open to competition since 1996, to Costa Rica, which remains a state-owned monopoly. Interestingly, we find that Costa Rica’s fixed-line teledensity is one of the highest in Latin America and well beyond what could be expected given its other macroeconomic indicators. Teledensity in Guatemala, on the other hand, is about 40% lower than the overall Latin American average, which would indicate that fixed-line privatisation and competition are no guarantee of development in this market. Nevertheless, Guatemala’s teledensity is no more and no less than would be expected given the country’s other macroeconomic indicators.

·         Honduras has yet to privatise its telecom incumbent, and has only partially liberalised its fixed-line market. Differently from Costa Rica, teledensity is low, only slightly higher than would be expected considering Honduras’s other macroeconomic indicators.

·         Guatemala, El Salvador, and Panama have fully privatised and liberalised their fixed-line markets, and competition is growing, especially thanks to fixed-wireless deployments.

·         Nicaragua and Belize have privatised their fixed-line incumbents. They have also theoretically liberalised their fixed-line sectors, but proper implementation has been delayed by political and legal wrangles. These countries present the worst case scenarios in Central America in terms of fixed-line development, since privatisation without liberalisation places a telecom incumbent in a position of hegemony where it can charge high prices and is under little pressure to improve services.

·         Due to low fixed-line teledensity, the nations of Central America have leapfrogged directly into mobile communications. Mobile competition is keen, and penetration is far higher that would be expected considering their other macroeconomic indicators. Costa Rica is the only exception, and a colossal one, since it has a single state-owned mobile company, no prepaid cards, and an abysmally low mobile penetration compared with its relatively high GDP per capita. This is a good indication that mobile telephony thrives best in private hands and in a competitive environment. Costa Rica’s mobile market, however, is in the process of liberalisation. With the start of competition and the introduction of prepaid plans, mobile telephony is expected to soar. For the country overview, see chapter 2, page 14.

·         Broadband uptake varies greatly among these seven countries – from a penetration of around 2.2% in Costa Rica, to less than 0.4% in Nicaragua and Honduras.

·         In Panama, the country that is slated to be Latin America’s best performer in terms of economic growth, broadband penetration is only 0.6%, far lower than would be expected considering its GDP per capita. The provision of ADSL in Panama is dominated by the incumbent, but there is good scope for investment in alternative technologies. For the country overview, see chapter 7, page 92.

·         Despite the generally low telecoms indicators in Central America, these countries have witnessed some of the region’s most advanced technological deployments, such as IPTV in Panama, High Definition TV in Honduras, and WiMAX in El Salvador. This phenomenon is partly due to the leapfrogging of conventional systems often found in developing countries, and partly due to the sharp social disparities, where certain urban areas, particularly in capital cities, enjoy first world telecom services, while rural areas lack even basic telephony.

 

Mobile penetration and annual growth in Central America countries – September 2007

Country

Penetration

Annual growth

Belize

53.3%

14%

Costa Rica

31.9%

1%

El Salvador

65.8%

51%

Guatemala

61.4%

47%

Honduras

46.3%

80%

Nicaragua

40.2%

42%

Panama

72.4%

29%

(Source: BuddeComm)

 

For those needing high-level strategic information and objective analysis on this region, this report is essential reading and gives further information on:

·         Regulatory developments and spectrum auctions;

·         Fixed-line developments, including the adoption of alternative technologies such as VoIP;

·         Mobile telephony growth, and the up-take of mobile data services;

·         Broadband growth and the incursion into wireless technologies such as WiMAX;

·         Convergence, triple play, High Definition TV, IPTV, and other new technologies;

·         Scenario forecasts for the fixed line and mobile market in Panama.

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

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