changing broadband landscape in latin america creates mass
TRANSCRIPT
Brasilia, November18th 2009
aChanging Broadband Landscape in Latin America
Creates Mass Market Adoption Opportunities
Pyramid Research snapshot
Mobile and Broadband Market Trends in Latin America
Pyramid Perspective
Agenda
Cross-functional
Consulting Work
• Business planning
• Analysis of end-user
preferences
• Competitive intelligence
• Market entry strategy
• Custom Market sizing
• Analysis of business models
and value chain
+23-year history of advising companies and
regulatory agencies s in the converging
communications, media and technology
industries
Structured research methodology
We examine the macroeconomic and
regulatory environment, technology
trends, and performance of both service
providers and equipment vendors.
Bottom-up approach to market sizing
End-user surveys to validate adoption
trends and anticipate shifts in demand
Regional Research Teams (In depth
country-level perspective covering
AsiaPac, EMEA, Latin America)
Communications, Media & Technology
Research Team
(Global Analysis and Benchmarking)
• Telco & Cable Transformation
• Wireless Broadband
• FMC
• Content Business Models
• Networks & Managed
Services Strategies
• Country profiles
• Telecom adoption and
revenue forecasts of 100+
countries (convergence, fixed
broadband, IPTV, mobile)
Research Coverage Areas Primary Client Types
Mobile Communications
Fixed Communications
Internet Services
Media & Content
Mobile & Fixed Operators
Vendors & Equipment
Manufacturers
Media & Content Providers
Cable Companies & ISPs
Financial & Consulting
Firms
Pyramid Research Snapshot
North America
CanadaUSA
Latin America
ArgentinaBoliviaBrazilChileColombiaCosta RicaDominican RepEcuadorEl SalvadorGuatemalaHondurasMexicoNicaraguaPanamaParaguayPeruPuerto RicoUruguayVenezuela
Western Europe
AustriaBelgiumDenmarkFinlandFranceGermanyGreeceIcelandIrelandItalyLuxembourgNetherlandsNorwayPortugalSpainSwedenSwitzerlandUK
Central &Eastern Europe
BulgariaCroatiaCzech RepublicHungaryPolandRomaniaRussian Fed.SlovakiaSloveniaUkraineUzbekistan
Asia-Pacific
AustraliaCambodiaChinaHong KongIndonesiaIndiaJapanKoreaMalaysiaNew ZealandPakistanPhilippinesSingaporeTaiwanThailandVietnam
Africa/Middle East
AlgeriaBahrainBotswanaCameroonCongo - DRCCote d’IvoireEgyptGhanaIranIsraelJordanKenyaKuwaitMauritiusMoroccoMozambiqueNamibiaNigeriaOman
QatarSaudi ArabiaSenegalSouth AfricaTanzaniaTunisiaTurkeyUgandaU.A.E.Zimbabwe
Pyramid’s coverage extends to more than 95 markets, including 19 countries
in Latin America
Pyramid Research snapshot
Broadband Trends in Latin America
- Overall Landscape of Broadband Trends in the Region
- Inhibitors for Mass Market Adoption of Connectivity Services
- Affordability of Broadband – Case Study of Brazil
- Solutions to Increase Broadband Penetration into Lower Income Segments
- Mobile Broadband as a Complement or Substitution to Bridge the Gap?
Pyramid Perspective
Agenda
xDSL67%
Cable23%
Other6%
Fiber1%
WiMAX3%
FIXED BROADBAND LINES BY
TECHNOLOGY, LATIN AMERICA
A solid pace of fixed broadband growth is projected for Latin America with
CAGR at 11.5% over the next 5 years…
2009: 37m
2014: 64m
Source: Pyramid Research Latin America Fixed Forecasts, Q2 2009
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
2006 2007 2008 2009 2010 2011 2012 2013 2014
FIXED BROADBAND LINES, 2006 – 2014,
LATIN AMERICA
Fix
ed b
roadband lin
es
(millions)
6
xDSL60%
Cable23%
Other6%
Fiber6%
WiMAX5%
37M
64M
ACCESS LINES BY TYPE, 2009-2014
LATIN AMERICA
0
100
200
300
400
500
600
700
800
900
2009 2010 2011 2012 2013 2014
Fixed broadband connections
CAGR 2009-2014
12%
Mobile connections 5%
Fixed-line connections -1%
Source: Pyramid Research
… nevertheless broadband access in Latin America is still in its infancy
compared to mobile telephony, partly caused by high connectivity prices
and low PC penetration
7
Subsc
ripti
ons
(m)
MOBILE PENETRATION, BY COUNTRY,
2009 (estimated at year-end)
0% 20% 40% 60% 80% 100% 120%
Costa Rica
Bolivia
Peru
Mexico
Brazil
Colombia
Chile
Venezuela
Uruguay
Argentina
El Salvador
Regional
Average, 89%
658M
838M
6% 8%
FIXED VS. MOBILE PENETRATION, BY REGION
(2008)
0% 20% 40% 60% 80% 100% 120% 140%
Western Europe
Central Eastern
Europe
North America
Latin America
Asia Pacific
Africa / Middle
East Mobile Penetration
Fixed Penetration
Mobile platforms have become the primary means to acess the network
for voice services…
3X
5X
2X
5X
4X
8X
SOURCE: Pyramid Research Forecasts.
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Other
Cable Modem
DSL
Mobile Broadband
SOURCE: Latin America MBPC Survey
DISTRIBUTION OF BROADBAND ACCOUNTS IN LATIN AMERICA
2005-2014
…and we see it becoming more important for broadband connectivity
as well
10
At current broadband prices and PC penetration levels, fixed broadband is
available to only about 20% of the households in Latin America
Fixed Broadband Accounts / Households YE2009
(estimated)
3%
12%
20%
20%
25%
34%
Bolivia
Peru
Latin America
Brazil
Mexico
Chile
PC Penetration as % of Households YE2009
(estimated)
13%
19%
35%
39%
28%
60%
Bolivia
Peru
Latin America
Brazil
Mexico
Chile
Broadband Access
Efficiency
57%
63%
23%
51%
89%
57%
11
2%
7%
13%
15%
28%
39%
43%
59%
0% 10% 20% 30% 40% 50% 60% 70%
Elite Service
Demographics
Public Incentives
Economy
Infrastructure
BB Pricing
PC Penetration
PC Price
MAIN INHIBITORS OF BROADBAND ADOPTION
IN EMERGING MARKETS
Pyramid Research asked operators in emerging
markets to comment on the main factors
inhibiting broadband growth. Answers provided
by 59% of operators in emerging markets
pointed to the PC price as the main inhibitor,
followed by PC penetration at 43% and
broadband price at 39% of respondents.
Operators in general felt that pricing for PCs
had to drop well below the US$500 level in
order to encourage wider adoption.
For fixed operators, another gating factor
for the adoption of broadband services is the
availability (or lack thereof) of quality last
mile infrastructure to enable broadband
provision, particularly in areas outside business
centers and upscale residential areas. Operators
have had to invest millions in updating their
copper infrastructure and shortening the loops
in order to make broadband access available to
more households and SMEs.
The main inhibitors for Broadband access in emerging markets are
associated with pricing which operators feel can be further reduced
Source: Pyramid Research 2008
12
MAIN INHIBITORS OF BROADBAND ADOPTION
IN MATURE MARKETS
7%
14%
17%
22%
28%
30%
53%
0% 10% 20% 30% 40% 50% 60%
Elite Service
PC Penetration
Infrastructure
Economy
BB Pricing
Public Incentives
PC Price
Operators in developed markets also believe that broadband penetration
could be higher if PCs and Internet access were made more affordable with
support from the public sector
Pyramid Research asked operators to
comment on the main inhibitors for
broadband adoption in mature markets.
Answers provided by operators in
mature markets were consistent with
answers provided in emerging markets,
with entry level PC prices and entry level
broadband prices again ranking as the
number one and number three inhibitors,
respectively.
While PC penetration appears to be an
important inhibitor in emerging markets,
operators in mature markets share the
opinion that local governments can do
more to stimulate broadband uptake
among the lower income segments of
their markets.
Source: Pyramid Research (2008)
13
Mexico stands out in driving fixed broadband mass market adoption in Latin
America
Service Type: PCs + Fixed Broadband (ADSL)
Target Market: residential customers without
PCs
Telmex understood higher adoption of the
service is dependable on mass market
affordability of PCs.
Telmex also identified an economic necessity as
lower income segments were often secluded
from having credit access to purchase a first
computer.
Service Positioning: Instant credit approval, no
credit card is required, reasonably priced PCs
with low-cost financing, BB is optional
Available at 12, 24, or 36 month-plans.
No subsidies, PCs sold at cost, low financing
charges
25% incentive discount is offered to existing and
new broadband clients.
The company acted quickly to customize the
bundling and financing programs facilitating the
purchase over monthly installments.
Key Takeways:
Volume of PCs sold. Telmex stands as the largest PC retailer
in Mexico, having sold approximately 400,000 units in 2008.
Yearly PC sales growth has ranged from 20% to 25%, so
broadband access. To date, Telmex sold nearly 2 million
PCs, a global reference considering the nature of its primary
business.
Nearly 100% of PC buyers will be converted into
broadband subscribers. Although the PC financing does not
require a BB subscription, 50% of all PC buyers are currently
broadband clients, 30% will choose the PC + BB bundle, and
20% will select broadband within 3 months to benefit from
the 25% discount offered.
14
Pyramid Research’s Perspective on Mass Market Broadband Affordability
Based on current broadband adoption levels (around 40% of population) in developed
markets, per head spend in broadband connectivity is between 2-3% of income.
Overall spend in telecom services and entertainment represents up to 7% of personal
income in developed markets.
Assuming developing markets are likely to allocate a greater proportion of their income
to telecom services, Pyramid estimated target prices for broadband services.
We define target prices as an amount, no greater than 5% of income, that would be
needed for broadband service to be affordable to the majority of the population in
emerging markets, including Latin America.
15
Broadband Affordability and Penetration by Income Group - Brazil
Affordability is one of the main inhibiting factors of broadband adoption.
Residential broadband costs, on average, R$90 per month for 2Mbps.
Broadband access is not affordable to households in band E; it is a marginal
spend for income band D.
In band A broadband penetration is highly affordable, and has a penetration rate
of nearly 90%. The cost of broadband represents less than 1% of an A
household’s monthly income.
1%2%
4%
8%
10%
19%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
Band A Band B Band C Average Band D Band E
Broadband Affordability by Income Band (cost of
broadband as percentage of income)
D
36%
C
17%
B
7%
A
4%
E
36%
Brazil’s Household Distribution By Income Bands
Total Households: 54.4m
b/w 2x and 5x min.
wages/monthClass D
DefinitionSocioeconomic
Band
< 2x min
wages/monthClass E
b/w 5x and 10x min.
wages./monthClass C
b/w 10x and 20x
min. wages/monthClass B
>20x minimum
wage/monthClass A
Source: Pyramid Research (2009)
16
Source: Pyramid Research
36%
36%
17%
7%
4%
0% 15% 30% 45% 60%
Band A (>R$9,300)
Band B (R$4,650-
R$9,300)
Band C (R$2,325-
R$4,650)
Band D (R$930-
R$2,325)
Band E (<R$930)
Brazil’s Household Distribution By Monthly Income/per cap
At R$26 per month, broadband would be affordable to roughly 64% of
Brazil’s households
Broadband Target Price per Month
(not to exceed 5% of income in bracket)
Less than R$26
R$26 - R$65
R$258 and above
R$65 - R$129
R$129 - R$258
At current pricing levels (between R$65 and R$130) lesser than 1/3 of households
in Brazil can afford to pay for high-speed broadband on a monthly basis.
Mobile Operators are seeing mobile broadband as a product with massive
appeal and start to offer netbooks without costs
Netbook Offered by Telcel in Mexico
• Telcel México offers a netbook without costs
for a monthly subscription of US$50. While
competing with fixed operators, Telcel also
offer wireless routers that connect to its 3G
network allowing many computers to be
pluggged to share the subscription.
•Entel Chile offers netbooks HP without costs
for a monthly subscription of US$63 with
unlimmited data. Claro Chile also promotes
netbooks without costs for US$51 per month
with data limitted 1GB.
Source: Pyramid Research
3G+ phones
Mobile Broadband is a form of connectivity that competes and complements
other access technologies. MOBILITY and PERSONALIZATION are the main
attributes / differentiators in the battle with fixed technologies
Source: Pyramid Research (2009)
Fixed Mobile
CablexDSL FTTx WiMAX Others EVDOUMTS HSPA WiMAX LTE
Datacards laptopsRouters/TVs desktops Laptops
Browsing Music/Video Advertising
Access Mobile Banking GPS
Browsing Hosting IPTV
Security Home connected Others
Pla
tfo
rmD
evic
es
Se
rvic
es
18
12% 10%9%
16%13%
11%
34%
26%
76%
26%
60%
76%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Latin America Brazil Mexico Chile Colombia Panama
Fixed Broadband
Mobile Broadband
Mobile broadband subscribers will grow 3X faster than fixed broadband in
Latin America for the 2009-2014 period
48% of all mobile subscribers in 2014 will be using 3G+ technology – over 260 million subs.
FIXED BROADBAND AND MOBILE BROADBAND SUBSCRIBER CAGR, LATIN AMERICA 2009-2014
Source: Pyramid Research Forecasts, Latin America, Q3 2008
20
Migrations towards 3G+ is gaining momentum. UMTS/HSPA technology is
becoming the dominant mobile broadband platform in Latin America
0
100
200
300
400
500
600
2007 2008 2009 2010 2011 2012 2013 2014
Su
bs
(mil
lio
ns)
4G
3G
2.5G
2G
1G
MOBILES SUBSCRIPTIONS BY GENERATION, LATIN AMERICA 2006-2014
Expected introduction of LTE
Introduction of HSPA
CAGR 2009-2014
8%
-29%
0%
47%
78%
Source: Pyramid Research
There are few LTE trials being
performed in Latin America in
2009.
Mobile broadband starts
becoming the preferred means
for broadband connectivity in
2010.
7.0
0.5 0.7 0.3 0.5
27.1
8.6
3.6 2.6 1.5
Brasil
Me
xic
o
Arge
ntin
a
Co
lom
bia
Ch
ile
2009 2014
Pyramid projects mobile broadband subscriptions to grow rapidly
and by 2012 it will represent 10% of total mobile access in Brazil
Source: Pyramid ResearchMobile Broadband includes: Datacards (PCMCIA/USB)+Handsets with modem
Mobile Broadband Access (datacards), By Country,
Millions, 2009 vs. 2014
Drivers of mobile broadband
adoption in Latin America:
Spectrum availability
Competitive pressure from
existing players
Threat of new entrants
Device, new form factors
Education
Universality policy
Content
Personalization drive
Penetration for datacard subscriptions for Latin America is on track to reach by
2011 current penetrations levels observed in Europe
Mobile Broadband (Datacards) subscriptions for selected markets in LATAM
5.0%
5.1%
0% 4% 8% 12% 16%
Spain
UK
Belgium
Average Europe
France
Italy
Norway
Average LA
Brazil
Argentina
México
Estimated 2011
Confirmed 2008
Fuente: Pyramid Research, Julio 2009
22
All types of Web 2.0 applications are already available to Internet users in
Latin America
Web 2.0 services
Faceforce is a mashup application that includes functions for:
Contact level : Facebook profile + actions like Send a Message; Send
a Gift; Write on Wall; Message; view their Full Profile; Poke)
Lead level
Account level
Social sites CommunicationsContent development
and exchange
Productivity
applications
Filters and
Integrators
Source: Pyramid Research, July 2009
23
Notebooks (>$500) Netbooks ($300-500) Netbooks (<$300)
• LG E series • LG X series
• Pavillion
series
• Dell Mini com
TV tuner ou GPS
embutido
•Dell Mini 10
•Nokia
Booklet
•LG P series
•Latitude
series
One of the main enablers for 3G Internet has been the constant evolution of
access devices: the supply market offers abundance in variety and price
ranges, and many devices already offer “personalized” features
• HP mini
Source: Pyramid Research, Subscription Computing Report, 2009
24
Availability of over 1,900 embedded devices effectively drive mass market
interest towards mobile broadband adoption
135 PC CARDS 165 USB MODEMS
Source: GSM Association
150 WIRELESS
ROUTERS
550 NOTEBOOKS 750 HANDSETS 150 EMBEDDED
MODULES
25
-
5
10
15
20
25
2009 2014 2009 2014 2009 2014 2009 2014 2009 2014 2009 2014
Argentina Brasil México Colombia Chile Perú
Desktops Laptops
Installed base of desktop PCs and laptops, Latin American markets, 2009 vs 2014
Millio
ns
The rise of laptops is a enabler for mobile conectivity services. In Latin
America, laptops will represent 55% of the total PC installed base by 2014
CAGR = 20%In Mexico, the
instaled base of
PCs will reach
34m in 2014,
58% will be
laptops
26
Source: Pyramid Research, July 2009
Bundles of broadband subscription with financing of PCs are enabling growth of
broadband into lower income and youth segments. Over 120 carriers currently
offers subscription computing programs
Source: Operadores, Pyramid Research, 2009
Mo
bil
e C
arr
iers
Fix
ed
Carr
iers
27
We see increasing competition between fixed and mobile broadband service
providers
US$1.6bn
D
E
V
I
C
E
I
N
C
L
U
D
E
D
A
C
C
E
S
S
O
N
L
Y
US$17
US$11
US$26
$129/mo (US$38)
Netbook - $1999 (US$594.28)
Abono - $99/mo (US$24.43)
FIXED BROADBAND MOBILE BROADBAND
$105/mo
US$33
TeleCentro (3play)
$159/mo
US$45.42
BAM+BAF $149 (US$44)
US$16
BROADBAND
MARKET
US$23
US$88
$119/mo (US$35)
COMPETITIVE MAP OF THE BROADBAND MARKET IN ARGENTINA, 2009
28
Fixed and mobile broadband will represent the single largest growth
opportunity in Brazil over the next five years, just like everywhere else
Subscribers BrazilLatin
AmericaWorld
Mobile voice 6% 6% 7%
Mobile Data
(Datacard)34% 39% 39%
Fixed voice 1% -1% 1%
Fixed
broadband10% 12% 11%
SUBSCRIBER CAGR PER REGION, 2009-2014 REVENUE CAGR PER REGION, 2009-2014
Revenue BrazilLatin
AmericaWorld
Mobile voice 6% 4% 3%
Mobile data 25% 21% 34%
Fixed voice -1% -2% -7%
Fixed
broadband13% 12% 9%
29
Pyramid Research snapshot
Mobile and Broadband Market Trends in Latin America
Pyramid Perspective
Agenda
The world’s largest operators focus on broadband to position for growth
31
AT&T’s deal with Apple to be the exclusive iPhone
network provider in the US has led to increased ARPU,
reduced churn and a stronger postpaid base: > 40% of
iPhone customers are new to AT&T.
EVDO operator Verizon Wireless plans to complete a
nationwide LTE rollout in 2-3 years, with 20-30
markets completed in 2010. LTE will be used initially
for data (for data cards), but eventually the operator
expects to completely migrate EVDO voice customers to
VoIP over LTE.
WiMAX operator Clearwire and cable operator Comcast
partnered to offer “High-Speed 2go,” a bundle of fixed
and mobile broadband as well as a Wi-Fi router for
$49.99 per month with a one-year contract. For an
additional $20 per month, customers can receive
nationwide mobile broadband coverage over the EVDO
network provided by Sprint.
Orange is particularly focused on digital content and
developing a comprehensive three-screen strategy
that combines the television, PC and handset. The
operator expects to profit from growing consumer
demand for premium content over the three media by
leveraging synergies between its networks, services
and content distribution capabilities.
Both mobile and fixed broadband are core parts of
Vodafone’s growth strategy. It sells a variety of
mobile broadband plans for prepaid and contract
customers that include 1GB, 3GB and 5GB of usage per
month and also offers bundles that include data cards
and netbooks. In addition, the operator now has
Vodafone-branded DSL service with 50-65% coverage in
Germany, Spain and Italy.
Telefónica’s growth strategy includes promoting
bundles that now comprise up to four services while
leveraging newly built next-generation networks. In
Spain, for example, the operator offers IPTV with HD,
multiroom, VoD and DVR services.
Source: Pyramid Research
Thanks to improvements on the access and device fronts, richer and more
sophisticated content is becoming available on mobile networks, requiring
more bandwidth
6Mbps
3Mbps
< 1Mbps
32
Mobile broadband will complement fixed early on in Latin America but will
become more of a substitute going forward
MOBILE BROADBAND COMPUTING SERVICE ADOPTION
Early adopters:
Enterprise users , high-end
urban consumers getting
bundles
Late adopters:
Mass-market uptake driven
by embedded devices, 4G,
prepaid and bundles
Early majority:
Those without existing
fixed alternatives
Complement Substitute
Adopti
on
3G
+ p
enetr
ati
on o
f popula
tion (2010 f
ore
cast
)
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Broadband penetration of households (2010 forecast)
South Africa
China
India
South Korea
Philippines
Czech Republic
France
Germany
Ukraine
UK
Canada
USA
Peru Turkey
100%
80%
60%
40%
20%
0%
AustraliaHong Kong
Indonesia
Malaysia New Zealand
Singapore
Taiwan
Thailand
Japan
Complementary service positioning:
Mature wireless and broadband markets
Substitution service positioning:
Strong wireless, weak fixed broadband markets
Russia
Hungary
Poland
Slovakia
Italy
Netherlands
Venezuela
Argentina
Costa Rica
Mexico
Spain
Eqypt
Morocco
Nigeria
Israel
Chile
Vietnam
Bolivia
Brazil
Portugal
SERVICE POSITIONING FRAMEWORK
AT&T: “In the long-term, if you don’t have
mobile broadband, you don’t have broadband.”
Source: Mobile Broadband Computing Services: Complement or Substitute for Fixed Broadband? March 2009
33
As the market for Internet access matures in Latin America, mobile
broadband will be positioned as a real alternative for connectivity means
Mobile Broadband (datacards) as a percentage of total broadband market,
selected markets, 2009 y 2014
21%
10%6%
3%
16%
24%
39%
34%37%
40%42% 42%
55%
0%
10%
20%
30%
40%
50%
60%
70%
Chile Colombia México Perú Argentina LATAM Brasil
2009 2014
34
38%
% o
f to
tal b
road
ban
d a
ccess (
Fix
ed
+ M
ob
ile)
Source: Pyramid Research, July 2009
Few takeaways:
Private and public sectors CAN and SHOULD partner closely for ICT development.
The expansion of broadband and affordable access to the Internet must be seen as top
priorities for human capital development the Americas.
Mobile technology has an important part to play in ICT & human capital development.
Mobile technologies are a very cost-efficient way of providing access where other
technologies are not available, especially where fixed technologies have very limited coverage.
In several African countries, for instance, 2.5G and 3G networks are used to deliver video
downloads for school teachers which they can use in their classes.
In Latin American markets, where fixed broadband penetration remains under 20%, mobile
broadband services can be positioned as a substitute to fixed broadband access
Mobile broadand is on track to repeat the success of conventional mobile telephony in the
1990’s, and can be a main engine for ICT development in emerging markets.
Successful mass market initiatives to promote broadband adoption look at the complete
solution, including device hardware, connectivity access, applications software, enriched
content, and training (Philippines’ Smart Schools project, Nigerias’s MTN school project).
35
36
Thank you
Cristiano Laux
Manager, Global ICT Consulting
Tel: +1 (617) 871-1921
e-mail: [email protected]
Source: Pyramid Research Latin America Fixed Forecasts, Q3 2009
0%
10%
20%
30%
40%
50%
60%
2006 2007 2008 2009 2010 2011 2012 2013 2014
PC HOUSEHOLD PENETRATION, 2006-2014,
LATIN AMERICA
Penetr
ati
on o
f house
hold
s
60%
39%35%
80%
68%
55%
0%
20%
40%
60%
80%
100%
Chile Brazil Latin America
2009 2014
PC HOUSEHOLD PENETRATION, 2009 & 2014,
BY COUNTRY
Penetr
ati
on o
f house
hold
s
Despite challenging economic conditions, PC adoption in South American
households will remain steady. We expect PC households in Latin America
to grow at a 8% CAGR in the next five years
37
Mobile data revenue will increase at a CAGR of 19%
from 2009 to 2014.
The evolution of radio access networks will enable
and support new services and applications that will
make mobile broadband the main revenue growth
driver for mobile operators in South America.
With 15% of mobile services revenue coming from
data in 2008, the region has entered a stage when
data services are essential to the whole mobile
business model.
Messaging and value-added services are the two
main components of mobile data revenue today,
and while messaging will remain the primary source
of data revenue, new content and advanced mobile
devices are encouraging South Americans to
embrace high-speed services and applications in
greater numbers.
38
In South America, Mobile data revenue will triple over the next five years,
driven by mobile broadband, to reach 35% of total mobile revenue by 2014
MOBILE DATA REVENUE BY SERVICE
SMS69%
MMS2%
Mobile broad-band
9%
Other20%
SMS36%
MMS2%
Mobile broad-band
28%
Other34%
Total data revenue 2008: US$7.5bn
Total data revenue 2014: US$22.8bn
* Other includes messaging revenue (excluding SMS and MMS) plus revenue
from non-messaging applications, such as ringtones, graphics/images, games,
Internet access, music and video.
Source: Pyramid Research
Operator
Total
subscriber
s (fiscal year-
end 2008 –
000s)
Total
revenue
(US$
millions –
FY2008)
Primary mobile
technologies
Future
mobile
technology
Potential 3G+ spectrum
bands (MHz)
Mobile
technology
timeline
Vodafone 302,600 $60,295 GSM, GPRS, EDGE, UMTS, HSPA HSPA+, LTE 800, 900,1800, 2100, 2600 Underway
China Mobile 457,250 $58,930 GSM, GPRS, EDGETD-SCDMA,
LTE900, 2300 Underway
T-Mobile 128,300 $52,332 GSM, GPRS, EDGE, UMTS, HSPA LTE 900, 1800, 2100, 2600 18-23 months
Telefónica 195,599 $49,543 GSM, GPRS, UMTS, HSPA HSPA+, LTE 900, 1800, 2100, 2600 12 months
AT&T 77,009 $49,335 GSM, GPRS. EDGE, UMTS, HSPA HSPA+, LTE 700, 850, 1900 Underway
Verizon Wireless 86,157 $49,332 CDMA2000 1x, EV-DO LTE 700, 850, 1900 6-12 months*
Orange 121,800 $43,331 GSM, GPRS, EDGE, UMTS, HSPA LTE 800, 900, 1800, 2100, 2600 24 -36 months
Sprint 49,265 $30,427 CDMA, EVDO Rev. A Mobile WiMAX 800, 900, 1900, 2500 Underway
NTT Docomo 54,115 $37,046 GSM, GPRS, PDC, FOMA, HSPA LTE 2100, 2600 12 -18 months
América Móvil 182,724 $26,789 GSM, GPRS, EDGE, UMTS, HSPALTE (WiMAX
for BB)700, 1700, 1900, 2100 24-36 months
Zain 63,535 $7,441 GSM, GPRS,EDGE, UMTS, HSPA HSPA+, LTE 900, 1800, 1900, 2100 6-24 months
Bharti 85,651 $6,571 GSM, GPRS, EDGE UMTS/HSPA 800, 900, 1800, 2100, 2600 12-24 months
Digicel ** 9,200 $1,730GSM, GPRS, EDGE, CDMA,
EVDO, mobile WiMAX
Mobile/Fixed
WiMAX and
LTE likely
800, 900, 1800, 1900, 2500,
350024 months
Source: Pyramid Research, operators
Most of the world’s leading Carriers will deploy LTE in the next three years,
while upgrades to HSPA+ are already underway
39
* Verizon plans to launch LTE commercially in 2010 in 20-30 US markets and to have nationwide coverage by 2013.
** Revenue for Digital Group Limited does not include sister company Digicel Holdings. Digicel has a mobile WiMAX network in Grand Cayman.
OperatorTotal subscriptions
(fiscal year-end 2008)
Total revenue
(US$ millions; FY2008) Primary fixed access technology
Vodafone 302,600,000 $60,295 DSL
T-Mobile 128,300,000 $52,332 PSTN, DSL, fiber
China Mobile 457,250,000 $58,930 PSTN, DSL, fiber
Verizon
Wireless86,157,000
$49,332PSTN, DSL, fiber
AT&T* 77,009,000 $49,335 PSTN, DSL, fiber
Orange 121,800,000 $43,331 PSTN, DSL, fiber
Sprint 49,265,000 $30,427 HFC (through partnership)
Telefónica 195,599,000 $49,543 PSTN, DSL, fiber, MMDS, HFC, satellite
NTT Docomo 54,155,000 $37,046 PSTN, DSL, fiber
América Móvil 182,724,000 $26,789 PSTN, DSL, fiber, WiMAX, HFC
Bharti 85,651,000 $6,571 DSL
Zain 63,535,000 $7,441 WiMAX
Digicel 9,200,000 $1,730** WiMAX
They have also embraced a multitude of last-mile fixed access technologies,
hence strengthening the endorsement of fixed-mobile convergence
40
*AT&T Broadband, AT&T’s spun-off cable TV service operating on an HFC network, was acquired by Comcast in 2001.
** Revenue for Digicel Holdings does not include sister company Digital Group Limited. Source: Pyramid Research, operators
41
Toward application-
focused, Google-like, ad-
supported models for
telcos?
Free
broadband
access offers
Increasing
emphasis on
ad-supported
models
Net neutrality
debate: toward
multilevel
Internet access
Broadband
access
commodification
Broadband access is becoming heavily discounted, and operators are moving
toward application-centric models to avoid marginalization
GLOBAL MONTHLY FIXED BROADBAND ARPU BY
TECHNOLOGY
$10
$15
$20
$25
$30
$35
$40
$45
$50
$55
xDSL Cable FTTx
AR
PU
2008 2009 2012 2014
23%
15%
31%
Source: Pyramid Research Global Fixed Forecast, Q2 2009