- Published: August 2003
- Region: United States
Latin American Mobile Market: Trends and Developments
- Published: July 2003
- Region: Latin America
- Telecom Trends International (TTI)
With more wireless subscribers than wireline subscribers, Latin America presents great opportunities to carriers and vendors. This report explores the opportunites and challenges, and highlights major trends driving the market. The report presents six-year forecasts for subscribers broken down by technologies, and provides in-depth analysis on different facets of the market.
Mobile communications services have been the fastest growing segment of the Latin American telecommunications industry. However, its initial growth drivers - pent-up demand and low teledensity - have gradually been eroded by the increasingly shrinking the addressable market mainly composed of the lower strata of the market. Telecoms Trends International (TTI) recognizes the importance of understanding the dynamics of Latin America’s mobile market conditions in order to identify available opportunities as well as market trends. This market analysis report addresses both of these issues by presenting an overview of the major challenges and opportunities faced by operators of Latin America.
TTI considers that Latin America’s mobile market still presents great opportunities for vendors and operators. Operators need to start reinventing their position in the market to assure customer retention and higher returns per subscriber. Vendors will have to move beyond solely being equipment providers to become ‘partners’ with mobile operators by facilitating the launch of solutions that will ultimately increase Arpu and augment the need for network upgrades and new terminals.
Questions Addressed by This Study
However, with a region-wide recession in place, coupled with political instability a number of questions remain about the prospects of mobile communications in Latin America:
- How has the transition from monopoly towards competition contributed to the explosive mobile growth in the region and what is its future outlook?
- What are the interconnection difficulties that need to be solved?
- How can mobile operators increase their revenue from prepaid customers?
- What is the next evolutionary step for calling party pays?
- What are the consequences of imposing foreign ownership restrictions?
- How much danger to mobile operators do iDEN operators represent?
- Why is there continuous delay in spectrum auctions if governments only want to increase competition to benefit consumers?
- Consolidation seems to be the future of Latin America’s mobile market but how are operators moving towards this path?
- Is the Mvno model a feasible alternative for Latin America?
- What are the prospects for mobile messaging in the region?
All of these questions are addressed in this report, providing an overview of Latin America’s current mobile market and identifying the trends that are shaping the current competitive landscape.
Key Findings - the following are the key findings of the study:
1. By year-end 2002, there were 98.7 million mobile subscribers in Latin America. These will grow at a compound annual growth rate of 13.3 percent over the next six years. In 2008, the number of subscribers will be 209.0 million.
2. The GSM family of technologies, including Gprs, Edge, and W-cdma, will have 53 percent of the market by 2008. Cdma family of technologies, on the other hand, will have 35.6 percent of the market.
3. Mobile messaging will grow from 2.1 billion messages in 2002 to 62.1 billion messages in 2008, a compound annual growth rate of 75.6 percent.
4. Only by making available the new enhanced value-added services to their prepaid subscribers would operators be able to justify and recoup their investments in 2G+ spectrum and/or network build out.
5. The adoption of CPP not only facilitates an increase in mobile telephony penetration but also benefits mobile service providers by guaranteeing them a new revenue source.
6. The introduction of radio dispatch services under 2G+ platforms by mobile operators will erode iDEN’s less loyal customers.
7. The emergence of Mvnos is not being driven by corporations with established brand names in other industries but by telecom operators seeking to become ‘full service providers’ - as Cotas did in Bolivia and Telsur has been trying to do for over a year in Chile.
8. The fostering of competition in the mobile arena by Latin American regulatory authorities has translated into an increase in foreign direct investments in the region.
9. The ‘nationalistic’ policy of placing ceilings on foreign investors’ ownership share has had a negative impact on the development of telecommunications services.
10. The impetus towards consolidation will increase the interest in wireless spectrum for both fixed and mobile deployments as companies seek economically viable opportunities to expand their service.
Scope and Methodology
The report, “Latin American Mobile Market: Trends and Forecasts,” provides a snapshot of major trends and developments in the Latin American mobile communications market. The report analyzes industry trends, market developments, and operator strategies. Some of the topics covered in the report include the following:
1. Market forecasts broken down by technolgies
2. Next-generation networks
3. Opportunites for Mobile Virtual Network Operators (Mvnos)
4. Trends in mobile messaging
5. Competitive climate and consolidation
6. The emergence of dispatch services
7. Implications of prepaid and calling party pays
8. Regulatory climate, particularly with reference to spectrum licensing, competition, and foreign ownership.
Additional Information Relating to This Topic:
In order to develop a complete understanding the capabilities of Latin America’s mobile wireless marketplace, Telecom Trends International has launched the Latin American Mobile Information Service which consist of five reports:
- Latin American Mobile Market: Trends and Forecasts
- Latin American Mobile Enterprise: Market Trends and Forecasts
- Latin American Mobile Devices: Market Trends and Forecasts
- Latin American Mobile Infrastructure: Market Trends and Forecasts
- Latin American Mobile Data Market: Trends and Forecasts
This report is first in the series. In addition, TTI has published a landmark study on Mobile Virtual Network Operators (Mvno) opportunites in Latin America. The report is entitled, “Mobile Virtual Network Operators: The Latin American Landscape.” More in-depth coverage of mobile messaging will be found in a series of studies put out by TTI.
The information presented in this report stems from numerous in-depth interviews, extensive research into Latin American mobile market, and analysis of major trends and developments. In addition, the author performed analysis and modeling using up-to-date data supplemented by information collected by Telecom Trends International for other studies on mobile wireless markets.
In particular, these tools include:
- Vendor Interviews: Interviews with vendors marketing hardware equipment for mobile wireless networks - covering different technologies - helped provide insights into deployment trends.
- Carrier Interviews: Interviews with national and regional mobile carriers helped provide primary insights into investment strategy and deployment timing, as well as the capacity of the respective markets to sustain a new mobile operator.
- Trend Tracking. The author continuously tracked trends in the entire Latin American mobile market. SHOW LESS READ MORE >
<P>1 EXECUTIVE SUMMARY 9<BR>1.1 Questions Addressed by This Study 9<BR>1.2 Key Findings 10</P>
<P>2 SCOPE AND METHODOLOGY 11<BR>2.1 Scope 11<BR>2.2 Additional Information Relating to This Topic 11<BR>2.3 Methodology 12</P>
<P>3 MOBILE MARKET GROWTH TRENDS 13<BR>3.1 Market Highlights 13<BR>3.2 Technology Choices 14<BR>3.3 Market Forecasts by Techology 15<BR>3.3.1 GSM Technology Family 16<BR>3.3.2 CDMA Technology Family 17<BR>3.4 Subscriber Growth Outlook 18</P>
<P>4 ADDING SPICE TO MOBILE: PREPAID SERVICES 21<BR>4.1 Revisiting Prepaid 21<BR>4.2 Three Pillars of Prepaid 22<BR>4.2.1 Economic Conditions 22<BR>4.2.2 Leveraging the Mass Market 22<BR>4.2.3 Achieving Critical Mass 22<BR>4.3 Prepaid a Value Proposition 23<BR>4.3.1 Subscriber Acquisition Costs (SAC) 23<BR>4.3.2 Prepaid and Data Services 24<BR>4.3.3 Customer Retention: Essential! 25<BR>4.4 Outlook for Prepaid 28</P>
<P>5 CALLING PARTY PAYS (CPP) 29<BR>5.1 Impact of CPP 29<BR>5.2 CPP Adoption: Regional Distinctions 29<BR>5.3 Outlook for CPP 31</P>
<P>6 IDEN AND COMPETITION 33<BR>6.1 Digital SMR Carriers 33<BR>6.2 Legal Disputes Against iDEN Operators 33<BR>6.3 Outlook for Dispatch Services 33</P>
<P>7 DIFFERENT ROADS TOWARDS THE SAME GOAL: CONSOLIDATION 37<BR>7.1 Geographic Consolidation 37<BR>7.2 Technological Consolidation 38<BR>7.3 Service Consolidation 39<BR>7.4 Outlook: Wireless to Save the Day 39</P>
<P>8 FINDING THE NICHE FOR MVNOS IN LATIN AMERICA 41<BR>8.1 Explaining MVNOs 41<BR>8.2 Going Beyond the Voice Game 42<BR>8.3 What is driving MVNOs in Latin America? 42<BR>8.4 Justifying MVNOs Existence 43<BR>8.6 Outlook for MVNOs 46</P>
<P>9 AWAKENING THE SLEEPING GIANT: MOBILE MESSAGING 47<BR>9.1 Developments in Messaging 47<BR>9.2 Latin America’s Messaging Dynamics 47<BR>9.3 Market Trends 48<BR>9.3.1 Two-way B-SMS 48<BR>9.3.2 Interoperability Issues 48<BR>9.3.3 Value-Added Services 49<BR>9.3.4 Two-Way Pagers and Mobile e-Mail 49<BR>9.3.5 Roll-Out of Next-Generation Networks 49<BR>9.4 Market Influencers 49<BR>9.4.1 Market Drivers 49<BR>9.4.2 Market Inhibitors 50<BR>9.5 Market Forecasts 50<BR>9.5.1 User Forecasts 50<BR>9.5.2 Message Forecasts 50<BR>9.5.3 Messaging Deployments 51<BR>9.6 Country Highlights 51<BR>9.6.1 Brazil 51<BR>9.6.2 Venezuela 52<BR>9.6.3 Mexico 53<BR>9.7 Outlook for Mobile Messaging 53</P>
<P>10 THE CHANGING REGULATORY CLIMATE: FROM MONOPOLY TO COMPETITION 55<BR>10.1 Liberalization and Privatization 55<BR>10.2 How Did it All Begin? 56<BR>10.3 How Did it Change? 58<BR>10.4 Dealing with Interconnection! 59<BR>10.5 Regulatory Outlook 59</P>
<P>11 SPECTRUM & LICENSING AUCTIONS 61<BR>11.1 Latin America’s Spectrum Conundrum 62<BR>11.2 Repercussions of Postponing Licensing 63<BR>11.3 Licensing Alternatives 63<BR>11.3.1 Alternative I: The Auction Process 64<BR>11.3.2 Alternative II: The Beauty Contest 64<BR>11.3.3 Alternative III: The Hybrid Model 65<BR>11.4 Spectrum Licensing Outlook 65</P>
<P>12 HOW MUCH PRIVATISATION: RESTRICTIONS ON FOREIGN OWNERSHIP 67<BR>12.1 Role of Foreign Participation 67<BR>12.2 Foreign Ownership Outlook 67</P>
<P>13 CONCLUSIONS AND RECOMMENDATIONS 69<BR>13.1 Conclusions 69<BR>13.2 Recommendations 70</P>
<P>APPENDIX I: 2G+ NETWORKS IN LATIN AMERICA 73<BR>APPENDIX II: PAN-REGIONAL MOBILE PLAYERS 75<BR>APPENDIX III: MOBILE SUBSCRIBERS GROWTH BY TECHNOLOGY 78</P>
<P>LIST OF EXHIBITS</P>
<P>Exhibit 1: Latin American Mobile Subscriber Growth, 2002-2008 14<BR>Exhibit 2: Latin American Mobile Subscribers by Technology, 2002-2008 16<BR>Exhibit 3: GSM Family of Technologies, 2002-2008 17<BR>Exhibit 4: CDMA Family of Technologies, 2002-2008 18<BR>Exhibit 5: Latin American Mobile Technology Shares, 2002 19<BR>Exhibit 6: Latin American Mobile Technology Shares, 2008 20<BR>Exhibit 7: One Subscriber Economics 25<BR>Exhibit 8: Mobile Subscriber Growth in Mexico, 1999-2006 26<BR>Exhibit 9: Mexico's Prepaid Market 27<BR>Exhibit 10: Calling Party Pays in Argentina 30<BR>Exhibit 11: Nextel International, Inc., as a Pan-Regional Player 34<BR>Exhibit 12: Phases of MVNO Deployment in Latin America 42<BR>Exhibit 13: The Latin American Pioneer - Cotas Movil 44<BR>Exhibit 14: Mobile Messaging Users in Latin America, 2002-2008 50<BR>Exhibit 15: Annual Mobile Messages in Latin America, 2002-2008 51<BR>Exhibit 16: Selected Latin American Messaging Deployments 51<BR>Exhibit 17: Mobile Subscribers Growth in Selected Countries 55<BR>Exhibit 18: Fixed Vs. Mobile Penetration in Latin America, 1995-2006 56<BR>Exhibit 19: Brazil's Mobile Operating Regions 57<BR>Exhibit 20: Mobile Markets’ Competitive Status in Selected Countries 61<BR>Exhibit 21: Tumultuous Partnerships: The TIW-CVC Opportunity Dilemma 68<BR>Exhibit 22: GSM/GPRS Deployments in Latin America 73<BR>Exhibit 23: cdma2000 Deployments in Latin America 74<BR>Exhibit 24: Latin America’s Pan-Regional Mobile Operators: First Tier 75<BR>Exhibit 25: Latin America’s Pan-Regional Mobile Operators: Second Tier 76<BR>Exhibit 26: Latin America’s Pan-Regional Mobile Operators: Third Tier 76<BR>Exhibit 27: Latin America’s Pan-Regional Mobile Operators: Fourth Tier 77<BR>Exhibit 28: Mobile Subscribers by Technology and Annual Growth Rates 78</P>
<P>Latin American mobile market to double in six years</P>
<P>By 2008, GSM Technology Families to Capture Over 50 Percent of the Latin American Market</P>
<P><BR>Report Highlights Strategies Operators Should Adopt for Market Success</P>
<P>The Latin American mobile market will more than double over the next six years – growing from 98.7 million subscribers in 2002 to 209.0 million subscribers in 2008, according to a report, “Latin American Mobile Market: Trends and Forecasts,” published by market research firm, Telecom Trends International (TTI)</P>
<P>According to the market analysis report, TDMA continued to dominate the market with 59.5 percent of subscribers in 2002. CDMA technologies – cdmaOne and 1X – had 27.6 percent of the subscribers, followed by GSM/GPRS technologies which had 7.3 percent of the subscribers. Over the next few years, GSM will emerge as the dominant technology, with the GSM family of technologies, including GPRS, EDGE, and W-CDMA, having 53 percent of the market by 2008, the report said.</P>
<P>Mobile communications have been the fastest growing segment of Latin America's telecommunications industry, said Jose Otero, the author of the report. However, as market matures and the potential addressable market decreases mobile operators need to reinvent their position in the market to minimize customer churn and improve overall ARPU, he said</P>
<P>The TTI report presents an overview of the major challenges and opportunities faced by operators in Latin America. According to the report, the Latin American mobile market presents great opportunities for those vendors and operators. The report addresses the importance of understanding the dynamics of Latin America’s mobile market conditions in order to identify available opportunities as well as market trends. </P>