Virus impact over each market - telecom operators, government agencies and regulators' responses - revised forecasts for the next 5 years.
Last updated: 21 Sep 2010 Update History
Report Status: Archived
Report Pages: 95
Analyst: Lucia Bibolini
Latin America and the Caribbean include some of the world’s most important emerging markets. This report covers trends and developments in telecommunications, mobile, Internet, broadband, pay TV, and converging media. Subjects include:
Researcher:- Lucia Bibolini
Current publication date:- September 2010 (9th Edition)
Next publication date:- September 2011
Telecommunications is generally a high-growth industry in Latin America and the Caribbean (LAC), particularly the mobile and broadband sectors, but the fixed-line market is mostly stagnant.
Telecom infrastructure varies from rudimentary or even non-existent in some of the poorer rural areas to well advanced in the major cities. Despite a low 19% teledensity (in most Western European countries teledensity ranges between 40% and 60%), fixed-lines in service have grown little since 2001, with consumers favouring mobile devices over traditional phones.
In fact, Latin America’s fixed-line market is even shrinking in some countries, with incumbents reluctant to invest in fixed infrastructure. New entrants using VoIP, wireless technologies, or triple play solutions are attracting a growing number of subscribers, but their market share remains comparatively small. Almost invariably, the incumbents continue to dominate the fixed line industry.
Local Loop Unbundling is rare in this region and wholesale activity not very well developed. In the broadband sector, most incumbents have secured a virtual monopoly in the delivery of ADSL access. The only broadband competition is across technologies, from cable modem and WiMAX services.
The concern many governments face is the shortage of fixed line infrastructure, tied to the fear that operators will cease to invest in their network if they are forced to unbundle their local loop or lower wholesale prices. Of course, telecom companies have done their best to encourage this fear.
Nevertheless, 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 new market entrants.
The fixed broadband options available in the region are ADSL, cable modem, wireless broadband, and Internet via satellite. Of these, ADSL has emerged as the clear leader.
Estimated broadband penetration in the LAC region is about 6.5%, well below the world average of over 8.0%. The slow uptake of broadband in the region can be attributed to poverty and unequal income distribution as well as to industry-specific factors such as limited bandwidth, high prices due to insufficient competition, and insufficient fixed-line structure to carry ADSL.
On the positive side, bandwidth has been increasing in most countries, leading to higher speeds and lower prices, and the fixed broadband market is expected to increase substantially over the years to 2020. 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.
Indeed, mobile broadband has become an important option for broadband services throughout Latin America. The service is commonly used with either a USB modem that plugs into a computer, or with netbooks, notebooks, or laptops that have a built-in 3G receiver. In 2008/09, several Latin American mobile operators entered into agreements with manufacturers to launch mobile broadband plans with a netbook or notebook included.
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%. We must bear in mind, however, that over 80% of the region’s mobile subscribers are on prepaid plans.
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.
Data in this report is the latest available at the time of preparation and may not be for the current year.
As you know, I have resigned from the Labor Ministry and have decided not to re-contest the seat of Charlton at the next election – both for personal reasons.
Before leaving Parliament, I particularly wish to record my thanks to you for your generous and constructive participation in the deliberations that generated significant economic policy reforms for the Australian community. Continuous economic transformation is a key challenge that faces all Governments.
The development of sound public policy should always be contestable. Ultimately, good and equitable outcomes are not concessions to any particular interest group, but the careful balancing of interests to create the greatest possible benefit for the nation. You have contributed to that, and I sincerely thank you for it.
Greg Combet, Former Minister for Climate Change, Industry and Innovation
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