Spectrum auctions in Latin America will trigger massive broadband growth, from 9 percent at year-end 2008 to 70 percent at year-end 2014, according to a new report from Pyramid Research.
Fixed broadband penetration in Latin America, is currently 5.0 percent, according to the report, or roughly 30 percent below the global average of 6.5 percent. 3G mobile penetration, at 3.4 percent, also ranks well below the global average of 7.8 percent.
Much of the spectrum that regulators have awarded has ended up in the hands of the region’s two main operators, Telmex and its international spinoff Telmex International. Telmex, headquartered in Mexico City, provides telecommunication services in Mexico and in many parts of Latin America, such as Argentina, Brazil, Chile, Colombia, Ecuador, and Peru.
According to Quantum WiMAX, TelMex, has deployed a Mobile WiMAX network around the city Brasilia, and Neovia, and set up a fixed WiMAX network in Sao Paulo, in Brazil. TelMex has also established an extensive set of WiMAX networks in Argentina, Chile, Colombia, Peru, and Ecuador. Colombia received its first WiMAX system in July of 2006 from the Internet Service Provider Orbitel. In addition to Orbitel, the main license holders in Colombia are Telecom and Avantel. In Paraguay, the company Tigo Banda Ancha offers a WiMAX plan for the equivalent of $41 USD in several cities. In Venezuela, Movilmax has established a commercial Mobile WiMAX network (802.16e) in Caracas using CPE modem and PCMCIA laptop cards.
“Regulators now look to accelerate the award of broadband spectrum, specifically WiMax and 3G, to close the connectivity gap and inject additional competition into the market — this will, in turn, reduce prices, extend coverage to underserved areas, and make more bandwidth capacity available for the introduction of robust Internet applications,” says Jose Mario Lopez, Research Manager at Pyramid Research and co-author of the report.
In an attempt to encourage the entry of new players in the market through upcoming 3G and WiMax auctions, regulators in Venezuela, Chile, and Mexico are establishing strict limits on incumbents or current frequency holders, encouraging participation by new market entrants.
The result, according to the report, will be an expansion of Latin America’s broadband subscriber base from 48 million at year-end 2008 to 426 million at year-end 2014, a compound annual growth rate of 44 percent. Pyramid Research expects a full 87 percent of broadband net additions to come from mobile platforms, either 3G or WiMax. The 15-page report includes case studies of Chile, Brazil, and Mexico, examining each market in more detail.
