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Research and Markets: Report Predicts That Mobile Broadband Connections in Central America - Including Prepaid Connections

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Posted May 20, 2010

DUBLIN--(BUSINESS WIRE)-- Research and Markets (http://www.researchandmarkets.com/research/65c78c/latin_america_tele) has announced the addition of the "Latin America Telecom Insider / Vol. 2, No 1, Edition 5 - Emerging Opportunities: Broadband Adoption Surges in Central America" report to their offering.

Underpenetrated by broadband services, Central America will produce growth rates exceeding the Latin American average due to new competitors and sales tools, leading to another 1.65 million broadband connections being added during 2009-2014, according to a new report.

Emerging Opportunities: Broadband Adoption Surges in Central America examines broadband penetration in both the business and residential markets in Central America. It analyzes the competitive pressures that current fixed broadband operators are facing from fixed and mobile players and their potential impact on uptake. The 14-page report also evaluates the strategies of bundling broadband with pay-TV and VoIP, as well as the strategies of PC financing. Case studies examine the broadband strategies of two Central American operators.

Although the number of broadband connections in Central America grew at a 58 percent CAGR in 2004-2008, broadband penetration still lags the Latin American average at 2.46 percent of the population in 2009, notes Jose Magana, analyst at Pyramid Research and author of the report. However, market conditions are improving rapidly. "Pyramid believes that latent demand for broadband in Central America will produce strong, sustained growth ahead of the Latin American average due to new competitors and sales tools, such as bundling and financing," says Magana. "The combination of these developments will help make up for poor access and low affordability, leading to another 1.65 million broadband connections being added during 2009-2014."

Fixed broadband operators face pressure from various competitors, and the ensuing fight over subscribers will boost penetration of broadband services across the region. "Pyramid predicts that mobile broadband connections in Central America - including prepaid connections - will exceed fixed broadband by 2014, so the threat from mobile operators is real and powerful," Magana explains. "Also, the cost of a computer is a significant barrier to broadband adoption for fixed operators; to compete, operators will have to reduce equipment costs and offer convergent service."

Key Findings:

Competition is contributing to the expansion of broadband connectivity in Central America. Countries with an open and relatively competitive broadband market show higher levels of penetration.

Fixed broadband is facing strong competition from mobile broadband, which has more flexibility in terms of contract structure (prepaid/postpaid), coverage and mobility.

The cost of a PC is a significant barrier to boosting broadband uptake. Current economic conditions in Central America make devices largely unaffordable for the majority of the population.

Executive Summary:

Although the number of broadband connections in Central America grew at a 58% CAGR in 2004-2008, broadband penetration, at 2.46% of the population in 2009, still lags the Latin American average of 6.33%. Central Americas unequal income distribution, the cost of expanding the limited fixed infrastructure and insufficient competition in some markets are among the reasons behind the lag. Given the income inequality, broadband service is currently unaffordable for most people, which puts the bar even higher. Also, fixed operators may find that expanding coverage does not justify the heavy investments in areas with limited uptake or low probability of recouping investments. However, market conditions are improving rapidly. We believe that latent demand for broadband in Central America will produce strong, sustained growth ahead of the Latin American average due to new competitors and sales tools, such as bundling and financing. The combination of these developments will help make up for poor access and low affordability, leading to another 1.65m broadband connections being added during 2009-2014.

This Telecom Insider examines broadband penetration in both the business and residential markets in Central America. It analyzes the competitive pressures that current fixed broadband operators are facing from both fixed and mobile players and their potential impact on uptake. The report also evaluates the strategies of bundling broadband with pay-TV and VoIP and of PC financing. Case studies examine the broadband strategies of two Central American operators.

Key Topics Covered:

INTRODUCTION
BROADBAND IN CENTRAL AMERICA
Underpenetrated by broadband services, Central America will produce growth rates exceeding the Latin American average
Fixed broadband operators face pressure from a variety of competitors
To compete, operators will have to reduce equipment costs and offer convergent services
MARKET DETAIL
CASE STUDY: Cable Onda gains share from market leader C&W
CASE STUDY: Amnet moves toward quadruple play
CONCLUSIONS
Key findings
Recommendations
RELATED RESOURCES
Table of exhibits
Exhibit 1: Broadband penetration of population in Central America and Latin America, 2008-2014
Exhibit 2: Broadband penetration and GDP per capita in Central America and Latin America, 2009
Exhibit 3: Broadband penetration in Central America and Latin America by segment, 2009
Exhibit 4: Broadband revenue per segment in Central America, 2008-2014
Exhibit 5: Broadband subscriptions per technology in Central America, 2008-2014
Exhibit 6: PC penetration of population versus broadband penetration of population in select Latin American countries, 2009
Exhibit 7: The cost of a $300 computer as a % of nominal GDP per capita in select countries, 2009
Exhibit 8: Screenshot of Amnets ESPN360