Latin America Set for Fast Growth in Broadband Penetration

LONDON, December 3, 2010 – Latin America is set for faster growth in fixed broadband penetration than even China or India over the next four years, according to a report from research group Analysys Mason.

The report “Fixed Broadband: Worldwide Forecast 2010-2015,” predicts a compound annual growth rate of 15.4 percent for broadband in Latin America over the next few years, which is more than any other region. However, Asia Pacific will witness a greater number of new lines on account of its higher population, reaching 250 million there by 2015.

This is a case of a sleeping giant awakening. The region was slow initially to adopt the internet, accounting for just 8 percent of the global online population in April 2010. But Latin America was already the world’s fastest growing region for online penetration, climbing 22 percent from April 2009 largely through broadband deployment. The region is culturally ready for a massive surge in broadband, registering among the world’s highest rates of online engagement by several measures including the numbers of hours spent browsing per month and of queries made by “googling.”

Broadband growth across Latin America is also being driven by rapidly growing demand for affordable pay TV services, with the only viable alternative to satellite being fixed-line or wireless connections in many areas outside the major towns and cities. In fact, while the Analysys Mason report focused on fixed-line broadband, there has also been a rapid rise in mobile broadband penetration to reach more remote areas, especially in Brazil and Uruguay.

Mobile broadband is likely to grow equally explosively, again driven in large part by pay TV services delivered over a form of wireless almost unique to Latin America called MMDS (Multichannel Multipoint Distribution Service). MMDS, sometimes known as Business Radio Service, uses roof-top antennae to send and receive signals via microwave at 2.1 gigahertz and 2.5 GHz to 2.7 GHz frequencies.

Unlike Asia Pacific, or the mature broadband markets of Europe and North America, Latin American telecommunications operators have focused at an early stage of deployment on the mass consumer market, driven in part by the continent’s obsession with football, which is leading to this rapid take up of pay TV services, especially just before the recent 2010 World Cup. Many of these are services are IPTV delivered over fixed or mobile broadband, benefiting broadband operators. Colombian telco UNE EPM for example expanded its pay-TV subscriber base by 25 percent in 2010 compared to 2009.

The biggest beneficiary of this Latin American broadband boom is the giant Spanish telco Telefonica, which has subsidiaries or affiliates in most of the major countries, having originally been among the telecommunication pioneers in the continent. Telefonica is now the largest broadband operator in several leading Latin American countries, including Brazil, generating revenues helping to offset decline in the Spanish domestic market.