2008 Latin America - Telecoms, Mobile and Broadband in the Andean Bloc

BuddeComm’s Annual Publication on the Andean Bloc countries, 2008 Telecoms, Mobile and Broadband in Latin America – the Andean Bloc, profiles four nations that occupy the north-west and centre-west side of South America, bordering the Pacific Ocean – except for Bolivia, which is land-locked. With a total land area of 3.8 million sq km and a population of 99.5 million, these countries are characterised by tropical lowlands, snow-capped mountains, and extremely ragged landscapes.

The Andean Community of Nations – Comunidad Andina de Naciones (CAN) – is a trade bloc comprising Bolivia, Colombia, Ecuador, and Peru. CAN’s membership decreased from six to four countries following the withdrawal of Chile in 1976, and of Venezuela in 2006. Founded in 1969, the trade bloc was called the Andean Pact until 1996. CAN’s headquarters are in Lima, Peru.

Bolivia, Colombia, Ecuador, and Peru are among the poorest countries in South America, with the worst macroeconomic indicators in the region. Fixed-line teledensity is limited throughout the Andes by the low population density and the rough mountainous landscapes, which hinder the laying of copper wire. Bolivia has South America’s lowest mobile penetration and second lowest fixed line teledensity. On the upside, there is considerable room for growth in all four markets, and good investment opportunities, particularly in alternative technologies suited to the area’s rugged terrain.

This report presents a concise overview of sector liberalisation and privatisation in the Andean 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

·          The fixed-line market has been liberalised in all four nations. Apart from Peru, which has one fixed line incumbent that dominates the last mile, the other countries have several regional operators – Bolivia has 15 local telephone cooperatives, and Colombia has around 30 local providers that operate municipally, regionally, or nationally. Long distance telephony is extremely competitive in all four markets. VoIP telephony has been adopted by a number of operators and is available through Internet cafés and telecentres.

·          Due to the poor fixed-line teledensity, mobility has become the chosen alternative in the Andean countries, leading to a ratio of around 4.5 mobile phones for every fixed-line in service. Prepaid cards have played a significant role in driving growth, making mobile phones accessible to many customers who do not meet credit requirements for postpaid services.

·          Besides mobile telephony, operators have been using various wireless and satellite technologies to reach isolated communities. WiMAX has become the future hope for this region, and the first WiMAX or pre-WiMAX networks have been deployed in all four countries.

·          Broadband uptake is below the South American average, varying from about 2% in Peru and Colombia, to 0.1% and 0.6% in Bolivia and Ecuador respectively. ADSL is the leading technology by far. In Colombia, however, cable modem is strong and WiMAX has gained a 5% market share.

·          Triple play strategies combining telephone, broadband, and pay TV services have been adopted or are being rolled out in all four markets. Colombia is the most advanced of the four in the area of convergence, with several major players offering triple play service, while the Peruvian government has created a single licensing system in the hope of encouraging convergence.

Mobile penetration and annual growth in Andean countries – 2006

(Source: BuddeComm 2008)