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Latin America - winner or loser in the telecoms race? Part 2: The best of the rest

Continuing our analysis of the Latin American telecoms market, editor Michael Schwartz looks at some more of the countries that have been winning the contracts and asks if these countries are sharing in the growth. In the second section we look at some of the medium and smaller countries including Costa Rica, Guatemala, Peru, Colombia, Venezuela and Bolivia. After the so called 'big' markets - Brazil, Mexico, Chile and Argentina - the development picture in Latin America becomes less clear cut with some strong highs and many areas where little appears to be happening.

We would firmly position Costa Rica in the former category; the country is regularly singled out for its high standard of living when compared to the rest of Central America. Its network is set to expand as Radiográfica Costarricense (RACSA), a regional operator, is initiating an aggressive policy of expansion. Several technologies will be available on a single platform supplied by ECI: SDH, Ethernet and WDM. The expansion reflects an overall increase in competition in Costa Rica. In reply, RACSA has begun a major expansion project to provide more data services as well as to offer video and voice services to its customers.

Costa Rica demonstrates commitment to telecoms modernisation. The demand for professionally qualified personnel to which we referred earlier includes Costa Rica. in the summary of the Latin Technology Indices also previously mentioned, Costa Rica tops the PC and fixed telephony indices.

On a grander scale, the President of Costa Rica, Dr Óscar Arias Sánchez, acts a patron to the Global Cyber-security Agenda, an ITU framework for international cooperation aimed at proposing strategies for solutions to enhance confidence and security in the information society. As can be seen, Costa Rica's telecoms efforts command respect in the context of Central America.

To bring the story up to date, we would mention a recent contract which involves the country's telecoms operator Instituto Costarricense de Electricidad (ICE) commissioning a Gilat SkyEdge broadband satellite communications network aimed at serving end users throughout Costa Rica, in other words including the rural areas. SkyEdge is, in fact, a satellite communications system designed to deliver voice, broadband data and video services over a unified system.

One country that has enjoyed a vast increase in mobile subscriptions is Guatemala, which gained almost 3 million new mobile phone users last year, taking the total to 10.15 million. Figures are supplied by the head of the national telecoms regulator Suptel. The new total takes mobile penetration to 75%, one of the highest rates in the region. Some 93% of subscribers use prepaid services. The strong growth last year was helped by mobile kits selling for as little as US$13.44 with the same amount of airtime and operators offering triple the value of airtime on certain days of the week. At the end of 2007, Comcel was market leader with 41% of subscribers, followed by America Movil's Claro (34%) and Movistar (25%). Comcel said it expects growth to continue this year and to add another 1 million lines.

Areas of uncertainty

Peru features fitfully in our reporting. She is paying attention to rural areas via her Universal Service Fund (FITEL) whereby she is launching a campaign to bring broadband to the country's rural backwaters. This campaign is preparatory to an operator ultimately taking over services to 1.5 million Peruvians in more than 3,500 isolated localities (FITEL fund supports Peruvian rural broadband, 20 May 2008). Further information is difficult to come by and this may imply that progress will not be quick: no news may mean slow news.

An encouraging sign has emerged from Colombia. At the recent Andicom congress, the organisers created a digital city, U-Ci. It offered visitors an interactive showroom of services, applications and solutions which aimed to demonstrate how future digital cities and lifestyles can be created. Just as important was the fact that the event was supported by the Colombian Ministry of Communications; government is interested in what happens to Colombian telecoms.

The Ministry had previously become highly involved with the introduction of WiMAX into Colombia. Fifty-five licences have now been granted out of the 161 received. The proceedings were certainly competitive (not least when one company accused another of being late for the process by all of five minutes) and in the event the number of licences granted ranged from one to 19, spread over nine companies. Recent stories from Colombia have been notable by their absence and so the picture, while not desperate, seems unclear.

In mirror image is Colombia's neighbour, Venezuela. This is a country looking for answers to the vexed question of increasing demand for skilled personnel. Venezuela featured among the markets mentioned in our feature Demand for networking skills grows in Latin America, 17 Mar 2008. And this is where the similarity with Colombia emerges; the market appears uncertain, a situation arising from the lack of reports from Venezuela over the last year or so. Comverse won a contract to supply extended billing solutions for Movilnet's mobile operations in the country. Other than that, information is not forthcoming...unless anyone reading this feature can supply further information.

There is certainly one controversial country. Bolivia is known in general political circles for its head-of-state President Evo Morales and his May Day action of taking over his country's main telco, Entel. As with Venezuela, take away the coverage we gave to one major event, the nationalisation of Entel, and there is little to report on Bolivia in the last year or so. The same applies to the other suspects in this collection, Belize, Ecuador,  El Salvador, Panama, and Paraguay. We would love to be proved wrong on all ten of these countries. If we are wrong, please tell us.

Rock bottom - can it get worse?

And finally, in what started as an inspiring tour of a region but which subsequently revealed how much progress needs to be made, we come to the bottom four, none of which has ever had a single report dedicated to them on the Developing Telecoms website. Enter Nicaragua followed by those three pieces of land which we all recognise from our school-day atlases and geography lessons: the former British, French and Dutch territories now known as Guyana, Cayenne and Surinam. There are no crumbs of comfort and no contracts. We cannot claim to have covered every single event in our reporting but we did expect at least something. It was not to be.

Hope for the future?

As we started to put this article together some relevant news releases came to our attention. Honduras has not been mentioned in this review. We can reveal that Gilat has just deployed a SkyEdge broadband satellite network in Honduras. Customer is Administradora de Redes (Aduanett), a private company owned by leading customs brokers in Honduras.

Aduanett's intention is to use the VSAT network to provide customs offices and other Honduran businesses with private networking services including interactive data, broadband Internet access, and Voice over Internet Protocol (VoIP). There is certainly a sense of urgency behind Duanett's strategy. The company's General Manager Sandra Lopez explains: "Throughout Honduras, the deployment of satellite networking is the only way we can secure the broadband communications needed to ensure peak business efficiency and productivity."

Honduras and Guatemala featured in another recent report: 3G services have now been launched in both countries by Millicom. Millicom will provide the full portfolio of 3G services including high speed mobile broadband (expected by Millicom to be a significant growth segment in these markets), Internet access for mobile customers via laptop, TV on mobile handsets, music and video downloads and video calling.

Earlier in this article we listed certain countries under the heading 'Areas of uncertainty'. They included Bolivia, Paraguay, El Salvador and Colombia. The Millicom release reveals that Bolivia has joined Honduras and Guatemala in the recent deployment of 3G, while Paraguay, El Salvador and Colombia can expect 3G by the end of this year.

This means that all six of Millicom's markets in the area will be able to exploit 3G. Perhaps the areas of uncertainty can still become areas of growth and opportunity.

Conclusions

Brazil's successes were discussed at the beginning of these articles. Brazil is the fifth largest in the world in terms of subscribers and, according to the Wireless Federation, has 133 million mobile subscribers with mobile penetration currently standing at 69.52% (over 80% of which is prepaid).

If the market is this healthy for subscribers maybe it will be healthy for manufacturers to invest in? Perhaps Brazil will become a producer with her own indigenous telecoms sector, becoming a smaller-scale version of China or India.

But does it just have to be Brazil? If the past is the guide to the future there will be a group of countries with healthy usage of mobiles but with little prospect of moving into the Brazilian dimension. But then again, these countries, Argentina, Chile, Costa Rica may be happy with the status quo.

Which leaves the rest...

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