Paul Thomen

Friday, 8 March 2013

Latin America – Fixed-line, Internet and Broadband Statistics Tables

Weak competition and insufficient bandwidth push up broadband prices in Latin America


Most telecoms markets across Central American and the Caribbean have been liberalised, with the notable exception of Cuba and some remaining instances where the state has retained a significant interest in the incumbent operator. 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. Alternative telcos have been able to establish themselves in a number of smaller markets where poor penetration of services and small populations provide limited potential for growth. Nevertheless, in the Caribbean the key players LIME and Digicel have shown renewed commitment, maintaining investment and engaging in M&A activity in recent quarters to consolidate their interests in the region.


In the broadband sector, most incumbents have secured a virtual monopoly in the delivery of ADSL access. The only competition is across technologies, from cable modem and mobile broadband. Local Loop Unbundling (LLU) is rare in this region, and wholesale activity not very well developed. The concern 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. Nevertheless, change is on the horizon: the region’s largest market, Brazil, approved LLU regulations in late 2012.

International connectivity

All of Latin America suffers from insufficient international connectivity, both between countries and with the rest of the world, as submarine cables are inadequate to meet the escalating need for bandwidth. This has pushed up broadband prices. In Bolivia, the most expensive country for broadband, 1Mb/s connection costs a staggering 55% of GDP per capita. In other LAC markets, the cost ranges between 1.3% (Uruguay) and 19.5% (Nicaragua) of GDP per capita – while in countries such as Spain and France, 1Mb/s connection costs 0.18% and 0.06% of GDP per capita respectively.

Developments, however, have been witnessed in submarine cable activity, with evidence that the ALBA-1 cable from Venezuela to Cuba is now carrying traffic from Cuba, so ending that country’s reliance on satellites for international comms and internet traffic. Similarly, América Móvil recently contracted for the 100Gb/s AMX-1 submarine cable linking Latin America and the US, with landings in Colombia, Brazil, the Dominican Republic, Mexico, Puerto Rico and Guatemala.


As in the rest of the world, consumers in LAC are turning increasingly towards mobile solutions and away from the traditional telephone. Despite a low 19% teledensity (in most Western European countries teledensity is between 40% and 60%), LAC’s fixed-line market has been stagnant since 2001, while the number of mobile phones continues to grow.


LAC’s estimated fixed broadband penetration was 8.4% at end-2012, slightly below the world average of 9.2% but ahead of other developing regions such as South Asia and Africa.

Hurdles in the Latin American broadband market include:

- Weak competition and insufficient bandwidth (hence, expensive and/or slow services);
- Inadequate fixed-line infrastructure (hence, service unavailability in many areas);
- Low PC penetration, poverty, and unequal income distribution (hence, limited demand).

On the positive side, bandwidth has been increasing in most countries, leading to higher speeds and lower prices, while regulators seek measures to promote competition. Given the region’s general economic indicators, there is ample room for expansion.

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