& cplSiteName &

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I'll concede that these figures are out of date.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        ADD A COMMENT
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
With 5G on the horizon, major new innovations in smartphones and the expansion of IoT devices and services, the cloud is more critical than ever in ensuring operators remain relevant.
To survive and thrive in the future, CSPs must find ways to prepare their employees for the integration of AI, automation, machine-learning and advanced data analytics in their operations.
Don't get tripped up by these myths about the European Union's General Data Protection Regulation (GDPR).
What comes after blazing broadband for the 5G specification?
How well-equipped are European operators to handle a surge in mobile data traffic on their 4G networks?
Featured Video
From The Founder
Light Reading founder Steve Saunders talks with VMware's Shekar Ayyar, who explains why cloud architectures are becoming more distributed, what that means for workloads, and why telcos can still be significant cloud services players.
Flash Poll
Upcoming Live Events
May 14-16, 2018, Austin Convention Center
May 14, 2018, Brazos Hall, Austin, Texas
September 24-26, 2018, Westin Westminster, Denver
October 9, 2018, The Westin Times Square, New York
October 23, 2018, Georgia World Congress Centre, Atlanta, GA
November 7-8, 2018, London, United Kingdom
November 8, 2018, The Montcalm by Marble Arch, London
November 15, 2018, The Westin Times Square, New York
December 4-6, 2018, Lisbon, Portugal
All Upcoming Live Events
Hot Topics
I'm Back for the Future of Communications
Phil Harvey, US News Editor, 4/20/2018
Verizon: Lack of Interoperability, Consistency Slows Automation
Carol Wilson, Editor-at-large, 4/18/2018
AT&T Exec Dishes That He's Not So Hot on Rival-Partner Comcast
Mari Silbey, Senior Editor, Cable/Video, 4/19/2018
Facebook Hearings Were the TIP of the Data Iceberg
Dan Jones, Mobile Editor, 4/20/2018
Pay-for-Play Is a Sticking Point in Congress
Mari Silbey, Senior Editor, Cable/Video, 4/18/2018
Live Digital Audio

A CSP's digital transformation involves so much more than technology. Crucial – and often most challenging – is the cultural transformation that goes along with it. As Sigma's Chief Technology Officer, Catherine Michel has extensive experience with technology as she leads the company's entire product portfolio and strategy. But she's also no stranger to merging technology and culture, having taken a company — Tribold — from inception to acquisition (by Sigma in 2013), and she continues to advise service providers on how to drive their own transformations. This impressive female leader and vocal advocate for other women in the industry will join Women in Comms for a live radio show to discuss all things digital transformation, including the cultural transformation that goes along with it.

Like Us on Facebook
Twitter Feed