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Viewing report
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Latin America Broadband & Internet Services
Frost & Sullivan, Jan 2004
Migration toward Broadband Gains Momentum in Latin America
An increasing demand for greater bandwidth and faster connection speeds is compelling traditional dial-up Internet users in many Latin American countries - particularly, Chile and Brazil - to opt for higher speed broadband Internet access solutions. This significant shift in market dynamics has enabled large cable operators such as VTR to evolve as key participants in the overall Internet business segment. Similar developments are also likely in the other competitive Internet markets of Latin America. However, replication of market success will depend on the aggressive pricing (read as low pricing) of service providers besides marketing and bundling strategies and strategic alliances with content developers.
This Frost & Sullivan research examines the Latin American market for traditional (dial-up) and broadband Internet services such as asymmetric digital subscriber line (ADSL), cable modem, and others - integrated services digital network (ISDN), wireless, and satellite. It also provides comparative information on the level of broadband Internet evolution and competitive landscape {which includes Internet service providers (ISPs), telecommunications companies, and cable operators} for six different countries: Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela.
Utilization of Indirect Marketing Channels to the For
Leveraging on existing reputation and customer relationships, distributors of Internet and broadband services such as Netizen in Argentina and UOL in Brazil have successfully established large customer bases for broadband Internet. Similarly, telecom and cable operators have also cashed-in on their vast installed base for attracting potential broadband customers. These participants have largely benefited from not having to spend a great deal on acquisition of new customers.
Future alliances among Internet service providers (ISPs), cable operators, and media groups are likely to decide the winners and losers in the region for broadband Internet, opine the analysts. Success is expected to favor those companies that are one step ahead of competition, they add.
Innovative Business Models - the Key to Market Success
The majority of the Latin American countries are affected by economic downturn and political instability. Due to this, participants in the region have adopted alternative and customer-friendly business models including free Internet access (in Argentina) and prepaid Internet cards (in Mexico) to drive business, especially in the lower strata of society. These strategies may not be capable of generating significant revenues directly for traditional Internet services. Nonetheless, they are proving to be attractive for other media-related sectors, and hence, have begun to create sizeable business volume. Such creative ways of providing low-cost, high-value services - especially for broadband Internet and utilization of new technologies like Wi-Fi - is likely to help participants in being first to the market and gain significant market share.
While opportunities for market growth still exists for traditional Internet services - at least in remote areas outside the metropolises - prudent business models are also expected to tap their existing customer base for new, revenue-generating broadband Internet services, say the analysts. Apart from that, the micro and the small and medium enterprise (SME) segments that constitute 95 percent of the businesses in the region are likely to be lucrative target markets for broadband suppliers, they conclude.
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