Light Reading
A new industry report suggests that the market for fixed broadband services in Latin America is about to grow dramatically, driven by fiber access, but I don't see it.

FTTH in Latin America – Really?

Carolyn Mathas
4/18/2014
50%
50%

A recent industry report claims that competition among triple- and quadruple-play providers is driving the adoption of fixed-line broadband services in Latin America, and recommends that service providers should provide both connectivity and content services.

I have no beef with the general conclusions drawn by Ignacio Perrone, senior consultant at Frost & Sullivan Information & Communication Technologies, but I think that drive for adoption is more like a slow crawl.

The numbers presented by Perrone look promising. In 2013, revenues for the Latin American fixed-line broadband services market were $11.75 billion, and, according to Perrone, they are set to reach $18.40 billion in 2018. The study encompasses DSL, cable broadband, fixed wireless, and fiber-to-the–home (FTTH), the latter being the most promising in the growth figures.

But why hasn't this grown faster and earlier? One reason cited is cost. Licenses for concessions, network deployment, marketing, sales, and international connectivity take a big bite out of profitability.

When I read the recommendations in the report that traditional telecom companies must become sole service providers by providing both connectivity and content services, I couldn't agree more. However, based on my experience of having lived recently in both Costa Rica and Chile, I also think that income per capita and the lack of customer service are going to hamper any such developments.

Given the average income in most of these countries, how fast could this adoption be? Here's a rundown of monthly minimum wage (2010) in US$ in Central and South American countries:

  • Argentina, $457
  • Bolivia, $110
  • Brazil, $300
  • Columbia, $261
  • Costa Rica, $388
  • Ecuador, $254
  • El Salvador, $81
  • Guatemala, $186
  • Honduras, $279
  • Nicaragua, $133
  • Panama, $371
  • Paraguay, $192
  • Peru, $200
  • Uruguay, $294
  • Venezuela, $303

I'll concede that these figures are out of date. Let's say, for argument's sake, that in the past three years, these figures have doubled. In Costa Rica, I paid $75 per month in 2013 for a very good Internet service, which I needed to be able to work. In Chile, for the same level reliable service in 2014, the cost is pretty much the same, although in both countries, it's possible to find basic service in the $25 to $40 per month range. Imagine what the price would be for an FTTH service. Therein lies most of the disconnect.

In addition to the percentage of income that these broadband services will eat up, there is a second challenge. So far, in my limited experience, customer service is not really understood as a concept in Latin America.

The company from which I purchase residential WiFi in Chile asks that I deposit the amount I owe monthly directly into its bank account -- at the bank. After many months I am still awaiting my first invoice, and I am hoping that I will be able to pay online. However, since I had to give them cash for the first month and the installation, I am not very hopeful. One of my friends moved into a high-rise apartment building with WiFi, and it took more than three weeks to be connected. Lead times for satellite service are eight weeks. And, by the way, my small town of 25,000 residents does have fiber installed -- it's just not being used yet.

I just don't see the huge demand, ability to pay, or infrastructure in place. Certainly, fixed broadband demand will no doubt explode in Latin America at some point, as the economies in the region are growing. Today, however, that explosion is pretty hard to spot.

— Carolyn Mathas, contributing editor, special to Light Reading

(3)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View
Yulot
50%
50%
Yulot,
User Rank: Moderator
4/21/2014 | 9:28:41 AM
Colombia FTTx
Colombia has a government sponsored FTTN initiative under deployment throughout the country, to give high speed access to all communities (even the really remote ones). The project started in 2012 and is being deployed and operated by Azteca Comunicaciones (from Mexican Grupo Salinas). So not quite TTH, but at least proper high speed, as opposed to dodgy connected internet.
briandnewby
50%
50%
briandnewby,
User Rank: Light Sabre
4/19/2014 | 8:28:00 AM
Re: barriers to adoption
It seems like another realistic barrier, at least in some of the countries, is that the governments aren't likely excited about end-users having better Internet access.  That would make "twitter bans," for instance, much harder.

 
nasimson
50%
50%
nasimson,
User Rank: Light Sabre
4/18/2014 | 9:51:03 AM
barriers to adoption
@ Carolyn Mathas:

You have shared some important insights from your first hand experience. I didnt know that the lead time for satellite service installation is 8 weeks !!! It seems that barriers to adoption are HUGE in Latin America.

 

> And, by the way, my small town of 25,000 residents does have fiber
> installed -- it's just not being used yet.


What do you mean by "not being used yet"?


Thanks in advance for explaining.
More Blogs from Column
PICMG, which develops open modular standards for embedded computing, looks ahead to the next decade.
As it embraces SDN and NFV, the networking industry needs to ensure it doesn't create new silos and repeat the innovation-stifling mistakes of its past.
Give it up for the optical specialists who are more than mere 'plumbers.'
Operators can cut the cost and complexity of extending legacy services to all-IP environments.
Flash Poll
From The Founder
It's clear to me that the communications industry is divided into two types of people, and only one is living in the real world.
LRTV Huawei Video Resource Center
Interview With Rick Talbot, Principal Analyst, Current Analysis

10|31|14   |   2:12   |   (0) comments


At the NFV Open Cloud Forum 2014, Rick Talbot shared his positive feedback about the holistic and open approach that Huawei adopts for SDN and NFV. He also found the open sharing at the event valuable as it features different perspectives from Huawei experts, telecom operators, industry analysts as well as security experts.
LRTV Huawei Video Resource Center
Interview With David Snow, Principal Analyst, Current Analysis

10|31|14   |   2:24   |   (0) comments


David Snow talked about his understanding of Huawei and its SoftCOM strategy at the NFV Open Cloud Forum 2014, saying that Huawei's wide approach combining IT and CT expertise, introducing big data and analytics into solutions and contributing to the OpenStack community particularly resonate with him and make the company stand out in the industry.
LRTV Huawei Video Resource Center
Interview With Roz Roseboro, Senior Analyst, Heavy Reading

10|31|14   |   3:13   |   (0) comments


Roz Roseboro commented on Huawei's data center capabilities and NFV solutions at the NFV Open Cloud Forum 2014, saying that in addition to covering all three key domains of compute, storage and networking, the company also emphasizes the importance of management capabilities and professional services, which are essential in making NFV a reality.
LRTV Huawei Video Resource Center
Interview With Michael Howard, Co-founder & Principal Analyst, Infonetics Research

10|31|14   |   5:25   |   (0) comments


Michael Howard talked about SDN, NFV, and OpenStack adoption at Huawei's NFV Open Cloud Forum 2014. Particularly, he pointed out that Virtual Enterprise CPE is the top NFV use case that operators plan to invest in over 2014 and 2015 to deliver new enterprise services through virtualized functions.
LRTV Huawei Video Resource Center
Interview With Jerry Caron, Senior Vice President, Current Analysis

10|31|14   |   3:11   |   (0) comments


At Huawei's NFV Open Cloud Forum 2014, Jerry Caron from Current Analysis said that orchestration and management are key to realizing SDN and NFV for global carriers, and the approach that Huawei is taking, with its FusionSphere Cloud OS at the core, is in the right direction to address the challenges.
LRTV Documentaries
Broadband Battles

10|31|14   |   01:39   |   (0) comments


This year's Broadband World Forum featured a number of show floor battles focused on access gear, components and coffee.
Jonestown
Mobile Backhaul: Going to the Dark Side?

10|30|14   |   2:26   |   (1) comment


Heavy Reading's Patrick Donegan shares his view on a dark trend that bubbled up at Light Reading's annual backhaul conference in NYC.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview With CEO of SwitchCom

10|30|14   |   4:13   |   (0) comments


SwitchCom, an IT company based in Angola, recommends a variety of Huawei solutions and hardware to their customers in the energy industry.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview With Ethiopia's Ministry of Water Irrigation & Energy

10|30|14   |   4:08   |   (0) comments


Gosaye Mengistie of Ethiopia's Ministry of Water Irrigation & Energy discusses the collaboration with Huawei in that country.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview with Dongfang Electronics Corporation

10|30|14   |   5:46   |   (0) comments


Dongfang Electronics Corporation, headquartered in Chengdu, China, is one of China's largest manufacturers of power generators and contractors of power station projects.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview with Zimbabwe's Customers

10|30|14   |   3:31   |   (0) comments


Representatives of Zimbabwe's Ministry of Power and Development discuss the energy needs of their country as well as new areas of improvement due to enhanced ICT capabilities.
LRTV Huawei Video Resource Center
2014 Huawei Electric Power Industry Summit: Interview With Colbún Chile

10|30|14   |   4:29   |   (0) comments


In Chile, an aging energy infrastructure was in dire need of a modern update. Claudio Valenzuela of Colbún discusses how Huawei's ICT solutions continue to provide crucial information to improve the grid and how an in-country engineer is a cricial asset.
Upcoming Live Events
November 6, 2014, Santa Clara
November 11, 2014, Atlanta, GA
December 2, 2014, New York City
December 3, 2014, New York City
December 9-10, 2014, Reykjavik, Iceland
February 10, 2015, Atlanta, GA
May 6, 2015, McCormick Convention Center, Chicago, IL
May 30, 2015, The Westin Peachtree, Atlanta, GA
June 9-10, 2015, Chicago, IL
Infographics
WhoIsHostingThis.com presents six of the world's most extreme WiFi hotspots, enabling the most epic selfies you can imagine.
Hot Topics
Microsoft's Skype Embraces WebRTC on IE
Sarah Reedy, Senior Editor, 10/27/2014
FTC Slaps AT&T With Throttling Lawsuit
Sarah Reedy, Senior Editor, 10/28/2014
Wheeler Gets Down With OTT
Mari Silbey, Independent Technology Editor, 10/29/2014
China's MVNOs Hit the Wall
Robert Clark, 10/27/2014
Let's Not Kill SDN & NFV With Silos
Francois Locoh-Donou, Senior VP, Global Products Group, Ciena, 10/28/2014
Like Us on Facebook
Twitter Feed