This report provides information on The Mercosur Countries (Argentina, Brazil, Paraguay, Uruguay) and Guyana, Suriname and Venezuela. Each country has its own chapter and covers the following subjects.
Fixed Network Operators
Mobile data services
The Southern Cone Common Market (Mercado Común del Sur -Mercosur) was established in March 1991 by Argentina, Brazil, Paraguay, and Uruguay. These four countries form a block that covers most of Eastern South America. The purpose of Mercosur is to promote free trade and movement of goods and peoples, skills and money, among South American countries. A few other countries - Bolivia, Chile, Colombia, Ecuador, Peru, and Venezuela - have associate member status. In December 2004, Mercosur merged with the Andean Community trade bloc - Comunidad Andina de Naciones (CAN) - to form the South American Community of Nations, patterned after the European Union.
Argentina: The country has made a full turn-around from its terrible recession, and the telecom sector has been growing apace. Fixed-line teledensity is 22.4%, similar to Brazil and Chile, and about 4% higher than the Latin American average, but there remains a marked discrepancy between urban and rural areas. While fixed lines have stagnated, mobile telephony has boomed, and Argentina’s mobile phones outnumber fixed line in service by more than 2.5. Mobile penetration is on a par with Brazil’s, higher than most other South America countries, but still a long way behind Chile. Three mobile companies operate in the country: Movistar, CTI Móvil, and Telecom Personal. Following the merger of Unifón and Movicom BellSouth in January 2005, the merged entity, Movistar, accumulated surplus spectrum which it must relinquish in stages, between 2005 and 2008. Three companies are vying to secure Movistar’s returned spectrum: cooperative start-up Comarcoop, CTI Móvil, and Hutchison. Argentina’s Internet market is the third largest in Latin America, and penetration is among the highest in the region. Traditionally, cable modem was the more popular medium of broadband access, but ADSL has consolidated its leadership in the country’s broadband market. Convergence strategies offer promising prospects in Argentina, and several companies are investing in triple play services. Digital terrestrial TV is under discussion: Argentina is likely to adopt the same system as Brazil, and the introduction of digital TV is expected to take place in September 2006.
Brazil: Since mid-2003, the Brazilian telecom market has enjoyed a period of outstanding growth, led by mobile telephony and broadband. But while the mobile and broadband sectors continue to boom, local fixed-line telephony stagnates. Brazil’s teledensity is about average for Latin America, and is on a par with neighbouring Argentina and Chile. As in most other Latin American countries and despite government efforts, Brazil’s fixed lines are still dominated by the incumbents in their respective regions. Fixed-line operators had to renew their contract licences in December 2005. The conditions of the new contracts include a new interconnection tariff regulation, and the obligation to bill local traffic in minutes instead of pulses, although the implementation of the pulses-to-minutes conversion has been delayed. A public consultation on number portability is being conducted in 2006. Voice over Internet Protocol (VoIP) services are growing ever more popular, accounting for around 36% of Brazil’s international calls, and causing incumbent operators to lose revenues. In terms of Internet user numbers, Brazil is the 10th largest market in the world, and the undisputed leader in Latin America. But in terms of Internet penetration, it lags behind Chile, Uruguay, and Argentina. While virtually all cable TV companies offer cable modem services, ADSL is the access technology of choice. Convergence strategies are gaining popularity in Brazil, and several companies have adopted the triple play strategy, combining VoIP, broadband and pay TV services. Fixed-line incumbents Telemar and Brasil Telecom plan to launch broadband TV (IPTV) in 2006, while the government is preparing to introduce digital terrestrial TV. In terms of mobile subscribers, Brazil is the fifth largest market in the world, behind China, the USA, Japan, and Russia. Yet, although Brazil holds more than one third of all the mobile users in Latin America, its mobile penetration trails Chile, Argentina, Suriname, and most of the Caribbean. Brazil’s mobile phone market is highly competitive, and one of the fastest growing in the world. There are eight mobile operators, of which four hold over 90% of the market.
Guyana: The fixed-line telecom market in Guyana is still a monopoly, despite numerous attempts at liberalisation. Guyana Telephone and Telegraph (GT&T), controlled by Atlantic Tele-Network, is the country’s only fixed-line operator, and dominates the mobile market. A competing mobile player, Cel*Star, launched services in November 2004, and had managed to corner about 13% of the market by early 2006. The government announced, in February 2006, that it intended to issue a new mobile licence, to Digicel. While fixed-line teledensity and mobile penetration in Guyana are both below the regional average, the country has a surprisingly large number of Internet users, much greater than one would expect from its level of GDP per capita, which is amongst the lowest in Latin America. This phenomenon could be attributed to the fact that the ISP market was the first telecom sector open to competition. A few ISPs and most Internet cafés also offer VoIP services - a controversial practice, which has led to heated complaints by GT&T, since Internet telephony is a grey area in Guyana.
Paraguay: With the lowest fixed-line teledensity and also the lowest Internet user penetration in South America, Paraguay has a fixed-line market that is still neither privatised nor liberalised. Privatisation attempts have met with strikes and violent demonstrations. The state-owned incumbent, Copaco, is known as being inefficient and overstaffed. The mobile and Internet sectors have been open to competition since 1995, and mobile phones outnumber fixed lines in service by around five to one. All four mobile operators provide GSM/GPRS services. The government is working on plans to privatise and liberalise the telecom market, which has considerable expansion potential, judging by Paraguay’s GDP, which although low, warrants greater telecom development.
Suriname: Despite economic and legislative problems, Suriname’s telecom infrastructure is reasonable compared with the rest of Latin America. Fixed-line teledensity is about average for the region, while mobile penetration is considerably higher than average, second only to Chile and the more developed Caribbean islands. State-owned Telesur is the exclusive provider of fixed-line and mobile telecom services. It operates a GSM mobile system, which it launched in September 2002. Internet access is the only market sector open to competition, but only one company, CQ-Link, offers any challenge to Telesur’s dominant ISP. Following WTO recommendations, Suriname has agreed to liberalise the telecom sector and has been developing suitable legislation to this end. The Surinamese government has expressed hopes of opening telecommunications to competition during 2006, but that the market is too small for more than two additional companies to compete with Telesur.
Uruguay: The long-distance and international telephone sectors in Uruguay have been liberalised since February 2001, but state-owned Antel retains a monopoly over local telephony. Yet the country leads Latin America in many key indicators (teledensity, computer and Internet penetration), and has the region’s highest literacy rate. Despite Antel’s stranglehold over basic telecom services, the country has one of Latin America’s highest fixed-line teledensity rates. Other segments of the telecom market have been liberalised, including mobile telephony, Internet, and value-added services. In September 2005, Antel began the first 3G (UMTS) trial in Latin America, with a select group of customers. Antel’s subsidiary Ancel is the mobile market leader, but since 2005, it has two strong competitors: Telefónica Móviles, operating as Movistar, and América Móvil, operating as CTI Móvil. In the broadband market, Antel offers ADSL, wireless GSM/GPRS, and satellite technologies. Several other ISPs offer ADSL services. In fact, most Uruguayan ISPs offer some form of broadband access.
Venezuela: The telecom sector is the second-most important business in Venezuela after the oil industry. Although open to competition since 2000, the incumbent CANTV still holds 82% of the country’s fixed lines in service. Teledensity is lower than average for the region, lagging behind most of the larger Latin American economies. In contrast, Venezuela’s mobile penetration is on a par with Brazil’s and Mexico’s, and appreciably higher than average for Latin America. In early 2006, there were 3.5 mobile phones for every fixed line in service. The two leading mobile operators, Telefónica’s Movistar and CANTV’s Movilnet, operate nationwide CDMA networks, offering CDMA 2000 1x and 1xEV-DO services. Three companies with regional rural telephony licences, Digitel, Infonet, and Digicel, offer GSM services. In early 2006, Venezuelan businessman Cisneros announced that he planned to buy Digitel from TIM, and merge it with Infonet and Digicel to form a single nationwide GSM operator. Internet penetration in Venezuela is lower than the South American average, but is growing rapidly. The two largest cable TV companies, NetUno and Intercable, both offer triple play service, combining cable TV, broadband, and telephony. Under a UNDP-sponsored Wireless Internet Project, the Venezuelan government is using WiFi technology as a means of expanding Internet access nationwide; the first step involved the deployment of free WiFi access in Caracas, where the residents of six districts enjoy wireless broadband without payment or password.