This report provides information on Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama. Each country has its own chapter and covers the following subjects.
Market and Industry Overviews
Major Players (fixed and mobile)
Mobile Voice and Data Markets
Broadband (DSL, cable, wireless)
Central America is a tropical isthmus that connects North and South America, and separates the Caribbean from the Pacific. It comprises the seven republics of Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, and Panama. The region is relatively small, extending for about 524,000km². The land is fertile and rugged, and dominated by a string of volcanic mountain ranges.
Belize: While geographically part of Central America, Belize has much in common with its Caribbean Island neighbours. The Belizean telecom market was officially liberalised in January 2003, yet the incumbent, Belize Telecommunications (BTL), still holds a virtual monopoly. With scant competition and ineffective regulatory control, it has been able to charge exorbitant rates for its services. A controversy over VoIP is a case in point. Although both the government and the regulator declared that they wanted to move the telecom sector towards greater competition, in practice BTL lobbied against VoIP and has been able to block any possible competitors from using VoIP. BTL does, however, face competition in the mobile sector, where SpeedNet launched services in March 2005 under the brand name Smart, and succeeded in carving out about 18% of the market after only 15 months of operation.
Costa Rica: State-owned Instituto Costarricense de Electricidad (ICE) and its subsidiary RACSA are the monopoly providers of virtually all telecom services except for pay TV and paging. While this situation worked in the past, it is now leading to considerable problems, such as long waiting lists for phones, poor service quality, obsolescence, and lack of investment. Although it has one of the highest fixed-line teledensity rates in Latin America, Costa Rica’s mobile penetration is significantly lower than the regional average and well below what could be expected given its relatively high GDP per capita. The preliminary signing of the Dominican Republic-Central American Free-Trade Agreement (DR-CAFTA) in January 2004 marked a significant step for Costa Rica, as DR-CAFTA calls for the liberalisation of some telecom services. But the Costa Rican population is deeply divided over DR-CAFTA, and the ratification of the agreement has been delayed, together with any liberalisation plans.
El Salvador: The country’s telecom market is among the most open in Central America. The government’s liberal approach has allowed new technologies to flourish. Fixed-line teledensity, however, remains low. Despite growing steadily, phone lines, mainly in rural areas, are insufficient to meet local demand. Mobile telcos have capitalised on the underdeveloped fixed-line network by emphasising their ability to offer a fast, high-quality service with nationwide coverage. At more than 42%, El Salvador’s mobile penetration is lower than the Latin American average, but is remarkably high considering the country’s low GDP per capita. The mobile market is served by five competing operators, and there are about three times as many mobile phones as fixed lines in service. With a budding VoIP market, and cable TV telcos permitted to provide telephony and Internet, El Salvador is a promising country for convergence strategies. Two operators already offer triple play services.
Guatemala: The largest telecom market in Central America, Guatemala has been held back by poverty, income inequality, and violence. The distribution of income in Guatemala is highly unequal, with around 75% of the population below the poverty line. The telephone system reflects this inequality, with a relatively modern network centred in Guatemala City, but one of the lowest teledensity rates in the region. Outside the capital, the rest of the country’s fixed-line infrastructure is inadequate and antiquated, though much improved since the telecom sector was liberalised in 1996. Mobile telephony is the fastest growing market. There are about four times as many mobile phones as fixed lines in service. While mobile penetration is about 20% lower than the Latin American average, it is remarkably high considering that the country’s GDP per capita is roughly one-half that of the region as a whole.
Honduras: One of the poorest countries in the Latin America, Honduras has one of the least developed telecom infrastructures and the fourth lowest teledensity in the region. Fixed-line telephony was officially opened to competition in December 2005. A New Telecom Law governing full liberalisation, however, has been delayed due to political controversy over the role of Empresa Hondureña de Telecomunicaciones (Hondutel), the state-owned national telecom provider. Efforts to privatise the incumbent have so far failed to come to fruition, and are awaiting the New Telecom Law to be passed. Two companies compete in the mobile market: Millicom’s Tigo and América Móvil’s Claro. Unsatisfied demand for basic telephony has driven a veritable boom in the mobile market, with annual growth rates of around 80%.
Nicaragua: With the second lowest fixed-line teledensity in Latin America (after Haiti), Nicaragua is one of a growing list of countries leapfrogging directly into mobile communications. Nicaragua’s mobile phones exceed the number of fixed lines in service by almost seven to one. In fact, while Nicaragua’s fixed-line teledensity is the second lowest in Latin America, its mobile penetration is the fifth lowest, surpassing Honduras, Peru, Haiti, and Cuba. Since 2004, the country’s mobile market has been growing at an average annual rate of approximately 60%. Liberalisation of the fixed-line market is still awaiting proper implementation, having been delayed by political and legal wrangles. América Móvil’s Enitel holds a virtual monopoly over the country’s fixed lines. The mobile market, on the other hand, is a lively duopoly between Telefónica’s Movistar and América Móvil’s Claro, the latter clearly in the lead with a 70% market share.
Panama: With significant telecom infrastructure, a liberalised market, and serviced by five global fibre optic cables, Panama is an attractive country for telecom investments, especially following the October 2006 decision to broaden the Panama Canal. Competition, however, is slow to develop in basic telephony, where the incumbent Cable & Wireless Panamá (C&WP) is reluctant to unbundle its local network, but the long distance sector has attracted several players, leading to huge price drops, especially in international calls. During 2006, C&WP was the Panamanian public services company that incurred the most complaints. Its mobile unit, trading as +Movil, has a 50% share of the mobile market; Telefónica’s Movistar has the other 50%. In the Internet market, although penetration is still low, dial-up and ADSL connections are developing at a fast pace; growth potential in this sector is excellent. The leading cable TV company, Cable Onda, has started to offer Triple Play services (converged broadband, telephony and pay TV).