This report covers developments in the broadband and Internet markets of Latin America and the Caribbean. The countries covered in this report include:
Argentina, Belize, Bolivia, Brazil, Chile, Columbia, Costa Rica, Cuba, Dominican Republic, Ecuador, El Salvador, Guatemala, Guyana, Haiti, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Puerto Rico, Suriname, Uruguay, Venezuela and the small Caribbean island nations.
Latin America lags behind in broadbandEstimated broadband penetration in Latin America and the Caribbean was about 6.3% at end-2009, well below the world average of approximately 8.0%.
The slow uptake of broadband in the region can be attributed to several factors, including:
high prices due to insufficient competition;
low PC penetration;
insufficient fixed-line structure to carry ADSL;
poverty and unequal income distribution;
a lack of economies of scale;
regulatory hurdles. On the positive side, bandwidth has been increasing in most countries, leading to higher speeds and lower prices. ADSL, the leading broadband technology in Latin America, represents about two thirds of the total broadband market.
Although several countries include Local Loop Unbundling (LLU) in their telecom regulations, there is no mechanism to ensure implementation. Argentina and a few other nations have developed wholesale broadband markets, but most Latin American incumbents charge excessively high access fees, rendering the business of ADSL resale unviable. As a result, ADSL is usually available only from the fixed-line incumbents. Some countries have more than one regional incumbent, but each one only offers ADSL services within its region of operation, therefore there is no competition.
In fact, the only meaningful broadband competition in Latin America is across technologies.
Cable modem access, in particular, has been gaining popularity thanks to triple play solutions comprising voice, Internet, and video over Hybrid Fibre-Coaxial (HFC) cables. About one third of Latin American broadband is via cable modem. The largest proportion of cable modem subscribers can be found in Chile, where this technology accounts for 46% of the broadband market.
Wireless and satellite broadband are widely available, particularly for corporate customers. WiMAX can be found in most countries, but it has attracted only a small number of subscribers.
We estimate that broadband penetration will grow to at least 6.8% by end-2010. Given the region’s general economic indicators, there is ample room for expansion. Although the situation varies considerably from country to country, the region as a whole should be a fertile ground for broadband investment in 2010/2011.
Latin American countries - broadband subscribers and penetration - 2009 - 2010
Country 2009 2010 Annual change Penetration
Argentina 4,300,000 5,100,000 19% 12.6%
Belize 1 9,400 10,300 10% 2.9%
Bolivia 96,000 110,000 15% 1.1%
Brazil 11,489,000 12,600,000 10% 6.4%
Chile 1,725,000 1,952,000 13% 11.4%
Colombia 2,142,000 2,400,000 12% 5.3%
Costa Rica 1 294,000 350,000 19% 7.7%
Dominican Republic 1 300,700 346,100 15% 3.6%
Ecuador 295,000 444,000 51% 3.1%
El Slavador 149,400 180,000 20% 2.4%
Guatemala 1 85,000 100,000 18% 0.7%
Mexico 9,900,000 12,000,000 21% 11.0%
Nicaragua 1 44,000 51,000 16% 0.9%
Panama 201,000 222,000 10% 6.3%
Paraguay 1 130,000 160,000 23% 2.5%
Peru 813,000 935,000 15% 3.1%
Puerto Rico 1 1,100,000 1,350,000 23% 33.0%
Suriname 1 6,200 6,800 10% 1.3%
Uruguay 330,000 413,000 25% 12.3%
Venezuela 1,236,000 1,400,000 13% 4.9%
Others 1 50,000 58,000 16% n/a
TOTAL 34,645,700 40,130,200 16% 6.8%
(Source: BuddeComm based on industry data with BuddeComm estimates)
Note 1: estimate for 2009
In terms of Internet user penetration, Argentina is the regional leader, with a rate more than twice as high as the world average. The broadband market is one of the most developed in Latin America, only second to Chile’s. ADSL is the main broadband technology, but cable modem occupies a significant place with about one fourth of the subscriber base. The market is divided fairly equally between Telefónica de Argentina, Telecom Argentina, and Grupo Clarín.
With a promising economic outlook and rising prosperity, demand for broadband in Brazil is expected to soar. Broadband operators have been struggling to keep up with the growing demand, which has led to problems of system overload. Brazil’s government has been drawing up plans to spread broadband across the vast country in one of the world’s largest infrastructure projects. Two major factors have inhibited the growth of broadband in Brazil: shortage of fixed-line infrastructure, and broadband prices, which are too high for the Brazilian socio-economic environment.
Chile’s Internet and broadband penetration rates are the highest in Latin America. This can be attributed to the country’s relatively high GDP, its receptivity towards new technologies, and a setup that has succeeded in creating some competition between broadband providers. In fact, when it comes to new technologies, Chile tends to be Latin America’s pioneer. The region’s first triple play, WiMAX, and IPTV services, for example, were launched in Chile. Fttx infrastructure has been deployed on a limited scale.
Colombia’s broadband penetration is slightly below average for Latin America but higher than would be expected given the country’s economic indicators. Helped along by a regulatory framework that encourages competition and by government efforts to reduce the ‘digital divide’, broadband is growing strongly. ADSL is the leading broadband technology in Colombia, but cable broadband continues to grow both in subscriber numbers and in geographical coverage thanks to the popularity of triple play solutions.
0 Costa Rica’s broadband market is the most advanced in Central America, with the highest broadband penetration for this sub-region. Geographical distribution however is unequal, with a much higher digital gap than in the case of telephone services. Compared with the whole of Latin America, Costa Rica’s broadband penetration lags behind Chile, Argentina, Uruguay, and some Caribbean islands.
Panama’s Internet penetration is expected to grow substantially in 2010/11 thanks to the government’s Internet for All project. In 2010, Panama became one of the first countries in the world to offer free wireless access nationwide, reaching 80% of the population. The government project, dubbed National Internet Network or Internet for All, offers basic Internet access only, with a speed limit of 256Kb/s. In the broadband market, competition is limited, as incumbent Cable & Wireless Panamá is reluctant to unbundle its local network and has secured a virtual monopoly in the delivery of ADSL access. The only competition is across technologies, from cable modem and WiMAX services.
Internet user penetration in Peru used to be higher than average for Latin America, a remarkable feat considering Peru’s poor economic indicators. But while other countries have raced ahead thanks to broadband growth, Peru has fallen behind. Lack of market competition has made TdP’s ADSL service one of the most costly in Latin America. The only competition comes from other broadband technologies. Within only two years of launching services, triple player Telmex Peru has managed to wrest market share in both broadband and cable TV. Having won a WiMAX licence, Russia’s Yota promises to cover 12 regions of the country with a WiMAX network.
Broadband is one of the highest growth sectors in Mexico’s telecommunications market. Nevertheless, the market suffers from a lack of competition, with Telmex still accounting for the lion’s share of ADSL subscribers. The main cable TV providers, Megacable, Cablemás and Cablevisión, have begun to incentivise the purchase of triple play bundles of cable TV, broadband and telephony, and as a result their broadband subscriber base continued to enjoy healthy growth through 2009 and into early 2010. Nevertheless, there is significant scope for additional growth as Mexico’s broadband penetration is less than half of the OECD average while its broadband prices are amongst the highest in the OECD.
Fixed broadband has enormous growth potential, but speeds are low and prices are high. Uruguay is the only market in Latin America where cable modem broadband is not allowed. The fixed broadband market is heavily dominated by the incumbent Antel, which has a 94% market share. Only one company - fixed wireless operator Dedicado - offers any meaningful competition, with about 6% of the market. In terms of broadband penetration, Uruguay ranks third in Latin America after Argentina and Chile. But Uruguay’s broadband connections are much slower than the rest of Latin America, with most connections still below 512Kb/s.
Internet and broadband penetration in Venezuela are below average for Latin America and much lower than would be expected, considering that the country’s GDP per capita is the highest in the region. The reason for this is that ADSL is slower and more expensive than in other Latin American countries. State-owned incumbent CANTV has a monopoly in the provision of ADSL, with which it dominates the broadband sector. The only competition comes from cable modems, wireless broadband, and satellite, none of which are very well developed. Inter occupies a distant second place after CANTV in the broadband market, with a triple-play package that includes cable TV, cable modem, and telephony.
Data in this report is the latest available at the time of preparation and may not be for the current year.
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