2009 Latin American Telecommunications Infrastructure

In the Latin American and the Caribbean region, telecom infrastructure varies from nonexistent to rudimentary, and from adequate to well advanced. Despite a low 18% teledensity (in most OECD countries teledensity ranges between 40% and 65%), fixed-line growth in most countries has stagnated since 2001, with consumers favouring mobile phones over fixed-lines.

The highest teledensity rates in Latin America can be found in Costa Rica (32.5%) and Uruguay (28.7%), where interestingly the incumbent operator is state-owned, while the lowest rates are found in Haiti (1.4%) and Nicaragua (4.6%). Venezuela recorded the fastest growing fixed-line market in 2008, following the renationalisation of its incumbent CANTV.

VoIP has become popular throughout the region, although the situation in each country is different. Some governments only allow licensed fixed-line voice operators to provide VoIP. Others require operators to be registered or to hold a specific concession. And others regard VoIP as a VAS that doesn’t require regulating and is covered by a regime of free competition. The only countries where VoIP is still a monopoly are Paraguay and Cuba. Besides making voice communications accessible to poorer people, VoIP has been instrumental for the success of telecentres and cybercafés, which have in turn been a key element for Internet growth in Latin America.

Top 10 Latin American countries for fixed lines in service – 2004; 2008

(Source: BuddeComm based on industry data with BuddeComm estimates)

Key highlights:

Argentina

Compared with the rest of Latin America, Argentina’s telecom infrastructure is relatively modern. Fixed-line teledensity is higher than neighbouring Brazil and Chile – in fact, it is one of the highest in Latin America. Nevertheless, like other Latin American countries, Argentina suffers from a marked discrepancy between urban and rural areas. While teledensity is about 39% in Buenos Aires, in a couple of regions this figure is lower than 8%. VoIP is well developed in Argentina. Since deregulation in 2000, a large number of companies have started to offer VoIP services, bringing intense competition into the market by offering alternative long-distance telephony at significantly lower prices.

Brazil

Brazil’s fixed-line teledensity is slightly higher than average for Latin America. The country has an extensive microwave radio relay system and a domestic satellite system with 64 earth stations. In fact, satellite communications have retained a major role in Brazil. The Amazon jungles of the north make satellites the major communication facility, as it is almost impossible to lay fibre optic cable in the thick vegetation. Star One was the first operator to provide satellite services in Brazil, and remains the market leader. It operates four satellites, of which two, Star One C1 and C2, were launched in 2007 and 2008 respectively. The number of VoIP subscribers in Brazil more than doubled in 2008; VoIP services are provided by a large number of companies led by Net Serviços de Comunicação and GVT.

Mexico

Mexico’s growth in fixed lines has been steadily declining for the past eight years, from 13% in 2000 to 4% in 2008. In 2007, in fact, the number of subscribers declined. Thus teledensity continues to hover at approximately 19%, with significant disparities between urban and rural areas. Satelites Mexicanos (SatMex) is the leading satellite operator in Latin America; its fleet offers regional and continental coverage in C and Ku Bands all the way from Canada to Argentina. As access to broadband expands, VoIP has gained huge popularity in Mexico, especially with small and medium sized businesses. However, VoIP providers have the same licensing requirements as any other voice carrier.

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