2010 Latin American Telecoms, Broadband and Mobile Forecasts

Mobile races ahead while broadband has a way to go in Latin America

Telecommunications is generally a high-growth industry in Latin America, particularly the mobile and broadband sectors, but the fixed-line market is mostly stagnant.

In fact, in the lower growth scenarios, Latin America’s fixed-line market could even shrink over the years to 2020. Incumbents generally seem reluctant to invest in fixed infrastructure, although new entrants using VoIP, wireless technologies, or triple play solutions are attracting a growing number of subscribers. The market share of these companies, however, remains comparatively small, and the incumbents continue to dominate the region’s fixed line industry.

In the higher fixed-line growth scenarios, on the other hand, assuming healthy GDP growth rates and appropriate regulatory measures, the number of fixed lines could begin to increase again, because teledensity is low and operators may eventually need to roll out more lines to meet the demand for ADSL broadband. Furthermore, a few governments are looking into network sharing and Local Loop Unbundling (LLU), which could boost both the fixed-line and broadband markets. The implementation of fixed number portability in several Latin American countries may also help the new market entrants.

Like the rest of the world, Latin America is turning increasingly towards mobile solutions and away from the traditional telephone. Actually, Latin America is well ahead of the world average, having reached 93% mobile penetration in mid-2010 against a global rate of around 73%.

Many Latin American countries have passed or are close to passing the 100% mobile penetration milestone, and growth is set to continue beyond this mark. More and more people own multiple mobile accounts – either one phone for work and one for personal use, or one phone for each mobile company in order to take advantage of special offers. The growing popularity of mobile broadband also means that an increasing number of users require at least two SIM cards, one for their mobile phone and one for their USB modem.

The fixed broadband market in Latin America should increase substantially over the years to 2020, as regional penetration is low compared with the world average (in early 2010, it was about 6.3% versus 8.0% global rate). With the growing awareness of how important broadband penetration can be for a country’s economic development, governments are looking at ways to promote Internet access through universalisation projects and regulatory reforms.

On the other hand, fixed broadband is close to saturation in some of the region’s major urban centres, while provincial towns and rural areas may end up turning to mobile rather than fixed broadband. Although ADSL penetration still has some room for growth within the existing infrastructure, eventually it may hit a bottleneck due to the low number of fixed lines. In this scenario, fixed broadband may be replaced by mobile broadband, especially when the faster speeds of 4G mobile (LTE) become available.

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