Maravedis: Latin America could see LTE commercial deployments in 2011

Cintia Garza is Team Leader 4GCounts & Market Analyst CALA. MaravedisSeveral LTE trials have been conducted by Latin American operators since 2010, including Telefonica Argentina, Entel in Chile, Personal Argentina, America Movil in Mexico, among others. Although interest on LTE deployments is latent in Latin America (LATAM), most operators in the region will have to wait at least until 2013 to deploy the technology... Why? Operators in most cases, are facing a challenging regulatory environment, where either spectrum auctions have been delayed, or spectrum has been auctioned and is not used by the current license holders, or regulators have imposed restrictions for mobility in the 2.5GHz band, which is normally used in most countries to provide mobile broadband services, but in several Latin American countries is being limited to nomadic or portable applications such as in Mexico, or it has been allocated for MMDS services, such as in Brazil.

Furthermore, we don't expect that many mobile operators in the region would deploy LTE in the short term, simply because they still see a growth potential with their legacy technologies, and would like to exploit and continue developing their current 3G networks. Operators in Brazil, Chile and Argentina are expanding their networks from HSPA to HSPA+, also a LTE deployment would represent a much higher infrastructure cost for operators, than upgrading their 3G networks to HSPA+, and LTE devices are not yet available in mass quantities and have not reached economies of scale, for these operators to find attractive to deploy the technology at this time. All these factors, in our opinion, make unlikely that a LTE deployment occurs anytime soon in these countries.

So, would it be possible to see any earlier deployment of LTE in LATAM? We have hopes that in Colombia UNE Telecomunicaciones will be among the first operators to deploy LTE commercially. This operator, which has also launched a fixed WiMAX network in the 3.5GHz, won 50MHz of spectrum in the 2.5GHz band, in an auction that took place in 2010. With this spectrum, UNE plans a LTE commercial deployment by September 2011, to provide mobile broadband access and TV services, and UNE is accelerating its deployment plans because one of the requisites imposed by the government when obtaining this license was to launch a LTE network before the end of the year 2011. By doing this, UNE will be the 4G/LTE pioneer in LATAM, but will also have to lead with all the challenges associated of a first entrant, while the others wait and see what UNE is doing. UNE has yet to select an infrastructure provider for its LTE network, although no official announcement has been made by the company on which vendor they will choose, ZTE has shown interest in this deployment, and we also believe that Chinese vendor Huawei has good chances to be selected by the Colombian operator, because of the low cost of the terminals, this factor will be determinant for a good penetration of the service in any LATAM country. UNE is a public company and its main shareholder is EPM (Empresas Publicas de Medellín) which has a 100% ownership of this company. EPM is the largest enterprise group in Colombia, with participation in the sectors of energy, gas, water and telecommunications.

What about the other LATAM countries? In one of my previous blogs "Update: LTE in Latin America" I provided an overview of the LTE scenario in Brazil, Argentina, Chile and Colombia. I would like to now talk about Mexico, which is going through an interesting situation. As a general background, MVS Mexico is the main 2.5GHz license holder in Mexico and for several years has been deploying proprietary technologies in this band rather than mobile WiMAX, because mobility is not allowed in the 2.5 GHz band. Just recently, MVS announced to have formed a consortium with Intel, Clearwire and Alestra to invest around USD 400 million to develop a 4G (LTE) network in Mexico, the consortium is pending of approval from COFETEL, the telecom regulator in Mexico. If the proposal is approved by the government MVS along with is partners would be deploying LTE before the end of this year. This proposal might help MVS to avoid losing its 2.5GHz license, given that COFETEL is planning to take back this 2.5GHz spectrum from MVS Mexico. MVS's rivals however, are demanding that COFETEL take that spectrum from MVS to resell in the market, however there is a lack of clear policies in Mexico, and COFETEL has not yet arrived to a conclusion about this case.

MVS owns as much as 190MHz of 2.5GHz spectrum in Mexico. Its rivals are urging the government to recover this spectrum, which could be allocated to up to four players. Competition is tough for MVS Mexico, and the Government in Mexico might take so long to make a final decision on this new proposal. But there are hopes, and possibly Mexico along with Colombia will be at the LTE front this year. Although few LTE commercial deployments could happen as early as 2011 in LATAM, it will be the region, in which LTE will have the slowest development, mainly because mobile operators will continue developing its 3G networks for a few more years. LTE growth in LATAM is not expected until 2014 at least.

Cintia Garza is Team Leader 4GCounts & Market Analyst CALA. For more information, contact the author at [email protected] Maravedis is a leading analyst firm focusing on disruptive technologies including smart networks using WiMAX, IEEE and 3GPP/LTE.

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