2007 Telecoms, Mobile and Broadband in the Americas - Geographic Reports

Latin America

The Latin American region has been making giant strides in the field of telecommunications since it recovered from the 1999-2003 economic recession. There are wide differences among the various nations, and indeed within each nation, due to the pronounced inequalities between rich and poor, and between urban and rural areas.

The Latin American economy grew by 5.0% in 2006. Forecasts for 2007/08 show a slowing down of economic growth, to 4.3% and 3.9% respectively.

Despite a low 17% average teledensity, fixed-line growth in Latin America continues to stagnate and there is a marked trend towards the use of alternative systems in fixed-line telephony, especially WLL and VoIP.

Broadband grew at an annual rate of around 54% in 2006, making Latin America one of the world's fastest growing regions in terms of broadband uptake. But broadband penetration at end-2006 was only 2.5%, considerably less than the global average of 5.4%. With its level of GDP per capita, Latin America should in principle have ended 2006 with a broadband penetration of 3.5%.

By early 2007, broadband subscribers exceeded dial-up accounts in all of Latin America's major markets. ADSL continues to be the prevalent broadband technology in Latin America, retaining a 73% share of the broadband market.

The Latin American broadband leaders are Brazil, Mexico, Argentina, and Chile. In early 2007, these four countries accounted for around 80% of all broadband subscribers in the region.

Latin America is at the forefront of global WiMAX deployment. WiMAX Forum certified networks have been launched in Argentina, Brazil, Chile, Colombia, Ecuador, Guatemala, and Venezuela, while pre-WiMAX systems are operating in Costa Rica, the Dominican Republic, Jamaica, Mexico, Peru, Puerto Rico, and Uruguay.

Several companies are planning to launch IPTV, but some must wait for regulatory reforms because in a few countries (eg, Argentina) telcos are not allowed to offer pay TV services. Telefnica, in particular, is hoping to launch IPTV in Chile, Argentina, and Brazil, where it could replicate the service it already offers in Spain under the brand name Imagenio. Other companies with plans to launch IPTV include UNE-EPM and ETB in Colombia, and Telemar and Brasil Telecom in Brazil.

TV companies in Mexico began to offer Latin America's first HDTV services in 2005 and 2006, following the government's formal approval of the ATSC standard for DTTV in July 2004.

In June 2006, the Brazilian government officially adopted the Japanese digital TV standard, known as Integrated Services Digital Broadcasting (ISDB).

Honduras was the third country in Latin America and the first in Central America to elect a standard for digital terrestrial TV. It officially adopted the ATSC digital TV standard in January 2007.

There has been much disagreement in Latin America on the issue of DTT standards, since there is a strong lobby that favours the ATSC system, while supporters of Europe's Digital Video Broadcasting (DVB) are also active, and of course, Brazil is exerting pressure on its neighbours to adopt the ISDB standard.

Mobile telephony is one of the most dynamic industries in Latin America, growing 37% in 2005 and 28% in 2006. Subscriber additions were slowing down towards the end of 2006, however, which could be an indication that the region's largest markets are nearing maturity.

Mobile phones have overtaken fixed-lines in service in every Latin American country except Cuba. In early 2007, there were 308 million mobile subscribers in Latin America compared with 96 million fixed-lines. Paraguay leads the trend, with ten mobile phones for every fixed line in service.

By early 2007, mobile penetration in the region had surpassed the 50% milestone, but there are considerable variations from country to country. Apart from a few small Caribbean islands with mobile penetration is over 100%, the highest rates are found in Chile, Jamaica, and Argentina, with 80.5%, 80.4%, and 74.8% penetration respectively. Cuba continues to stagnate at 1.4% mobile penetration, while Haiti shot up by 323.1% in 2006 to 19.8% penetration, thanks to the launch in May 2006 of Digicel's low-priced GSM phones.

Seven countries - Brazil, Mexico, Argentina, Colombia, Venezuela, Chile, and Peru - claim around 84% of the region's mobile subscribers. Brazil and Mexico together account for 51% of all mobile subscribers in Latin America.

GSM is the preferred technology by far, with a market share of around 69%, CDMA continues to increase sluggishly, and TDMA is on its way out. Every country in Latin America and the Caribbean (including, since 2006, Haiti) enjoys GSM-based mobile services.

3G spectrum auctions are expected to begin in Brazil and in Chile before the end of 2007. Differently from Europe and Japan, Latin American countries do not anticipate expensive 3G licences.

Mobile Average Revenue per User (ARPU) in Latin America has stabilised at around US$17, increasing slightly during 2006 in some of the major markets.

Amrica Mvil and Telefnica Mviles (jointly with Portugal Telecom in Brazil) compete with each other in all of Latin America's major economies. Between them, they serve around 65% of the region's mobile subscribers.

USA

The US telecommunications markets continue to undergo significant transformation as technologies converge toward a triple play model of bundled voice, Internet and TV services.

The downward trend in landline revenues is forecast to steepen due to increasing competition from mobile and new technologies. For instance, mobile revenues are forecast to grow at over 10% CAGR over the next five years, reaching approximately $200 billion in 2010. Similarly VoIP is forecast to treble in subscriber numbers by 2010. In addition, recent substantial investments in WiMAX as a 4G platform indicate that the technology is being considered as a realistic disruptive technology.

As the cable TV companies move into the telcos' traditional sector with VoIP services, the telcos are responding by aggressively deploying high-bandwidth fibre networks which will chart their path into the IPTV market. These fibre networks, together with the mega-mergers of SBC/AT&T, Verizon/MCI and the pending AT&T Inc/BellSouth acquisition, position the telcos to secure dominance in the broadband market. The extent to which the RBOCs can control the triple play market will depend in part on US policy towards network neutrality and on the extent to which new broadband technologies, such as BPL and WiMAX, will penetrate the market.

CANADA

By early 2000 Canada's telecoms and broadband sector was among the most advanced in the world. However, by 2006 Canada's performance in areas such as broadband penetration and mobile penetration was starting to lag behind its OECD counterparts. This has led to calls for further reform of Canada's telecommunications regulatory regime to a lighter-handed framework. Hence 2007 and 2008 are likely to be characterised by further regulatory reform towards a more market-based approach.

During 2006 traditional fixed line voice revenues continued to decline as subscribers switch en masse to mobile services and at even greater growth rates to VoIP services. This trend is forecast to continue during 2007 as VoIP gathers momentum. Additionally, the market will continue its transition to a triple play model, though during 2007 the cable companies are forecast to make greater gains in the telcos' voice sectors than the telcos' gains in the broadcasting sector.