Trends for 2010 in the LatAm broadband services market

The Latin American broadband services market has presented high growth rates and is considered a very attractive telecommunications market in the region. Achieving 24.7 million subscribers and almost $8,000 million in revenues during 2008. The market grew 40 percent and 28.5 percent with respect to subscribers and revenues, respectively.

Telecom companies have been getting in on the act to push penetration through commercial promotions. These include reduced and free monthly charge for a fixed period of time, as well as bundled solutions, such as triple-play offers, around the whole region. Moreover, the launching of new applications and technologies increases the demand for the broadband connections. As an example, Brazil and Mexico have 70 percent of the region’s connections. However, in terms of penetration, the main countries were found to be Chile and Argentina. Mexico and Colombia are the most dynamic markets and showed growth rates above 60 percent.

An analysis of the total connections by technology shows that most of the broadband accesses in Latin America are DSL connections. This means that the Telco companies have, in general, the biggest portion of the market. On the other hand, the cable companies realized that they face a serious problem as Internet service providers, in terms of coverage, when competing with the DSL companies in this market. Hence, during the last couple of years, cable modem providers expanded their networks to a larger number of cities and have been gaining importance in Latin America. Therefore, currently more than 26 percent of the total accesses are cable modem connections. For a detailed revision of key KPIs please refer to the following presentation (in spanish):

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Other technologies are still not well developed in the region, although 2008 and 2009 showed a great improvement in new worldwide interoperability for microwave access (WiMAX) offers and connections, specially in countries, such as Chile, Colombia, and Venezuela.

The market is forecasted to grow at a compound annual growth rate (CAGR) of 13.5 percent reaching almost 53 million connections in 2014. This means the market still offers an opportunity for growth. Not only strong sales promotions and triple-play offerings have been boosting broadband migration. The presence of important local and regional market participants add dynamism to the market. This competitive landscape has a direct effect on lowering broadband costs and enlarging the coverage.

Moreover, operators have been working on overcoming one of the main restraints for the spread of broadband in Latin America, the infrastructure limitations. Working closely with the governments in programs of digital inclusion and facilitating the purchasing of computers through credits, subsidies, etc, are some of the strategies being implemented in order to address this situation.

In addition to the typical demand drivers, including bundled and triple-play offers, commercial promotions, and niche strategies in terms of flexibility and price, market participants need to start considering a whole new approach to the pay broadband services market.

Final users are demanding total connectivity and special customized applications and contents. The spread of new applications and content (such as music, videos, networks, communities, games, and so on) through the Internet have increased the demand for greater bandwidth. Most operators have been taking advantage of this trend looking into the future and are launching important bandwidth upgrades. On top, there have been large investments in the infrastructure of telecommunication networks to offer the network reliability needed for the new applications to work.

Besides, the trend of convergence and bundling has expanded remarkably in Latin America, with not only triple-play offers, but also quadruple-play offers currently available in the market, and therefore, the concept of a unique provider is being addressed. Some other operators are offering bundles of both fixed and mobile voice services.

All these factors are taking Latin America one-step closer to the global trends in connectivity: blending and the connected home.

Best regards, CVA

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