Archive for November, 2012

New submarine cable the key to international internet connectivity in Cuba

Thursday, November 29th, 2012

Cuba still has the lowest mobile phone and internet penetration rates in the region, and is also among the lowest for fixed-line teledensity. Fixed-line and mobile services remain a monopoly of the government-controlled Empresa de Telecomunicaciones de Cuba (Etecsa Cubacel).

There remains substantial state control over the right to own and use certain communications services, including the right to access the internet. Whilst the Obama administration has recently relaxed some of the embargo rules pertaining to telecom services, differences between US and Cuban pricing rules effectively preclude US operators from operating in Cuba. Although Raul Castro has made it clear that he will be reducing the size of Cuban state expenditure in favour of private participation in the economy, the genuine liberalisation of Cuba’s telecom sector is expected to be hampered slowly over the coming years. This has been keenly witnessed in the slow development of the submarine cable between Venezuela and Cuba, which has landed at the Venezuelan end at least but which is yet to be switched on for Cuban traffic.

Market highlights:

  • Since 2009 US telcos have been able to establish themselves in Cuba though reticence on the part of Cuban authorities has made co-operation difficult.
  • The incumbent Etecsa, now merged with its mobile subsidiary Cubacel, has worked with the government to improve teledensity in poorly served areas of the capital, though services remain limited.
  • The ALBA-1 submarine fibre-optic cable between Cuba and Venezuela has the potential to provide 640Gb/s bandwidth but delays mean that years after the project started no traffic is yet carried.
  • Mobile subscriber growth of around 30% in 2011 has largely been the result the government’s 2008 decision to allow private ownership of cell phones, as also a response to the poor fixed-line infrastructure. Mobile penetration nevertheless remains among the lowest in Latin America.
  • Public internet access is also limited, with most dial-up the only realistic access for citizens. The high cost of access, as also the limitations of dial-up connectivity, mean that the potential of the WWW, as recognised in most other countries, remains impossible in Cuba.

BuddeComm’s Cuba – Telecoms, Mobile, and Broadband report profiles the fixed-line, mobile and internet markets in the Caribbean’s largest country. It includes state statistical market data for 2011 as well as developments to November 2012.

For detailed information, table of contents and pricing see: Cuba – Telecoms Mobile and Broadband – Analyses and Statistics

 

 

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Multi-spectrum auction kick-starts LTE services expansion in Portugal

Wednesday, November 28th, 2012

Economic background

Portugal’s telecom market provides one of the highest contributions to GDP in the EU. And the stagnation of the sector country is among those in Europe most affected by the crisis. The government’s high proportion of debt to GDP has continued to jeopardise publicly funded telecom infrastructure investment and placed a greater burden on the private sector to deliver fibre-based infrastructure. The newly elected government has set budget deficit targets to 2015. Spending cuts required to achieve the fiscal overhaul are expected to cause Portugal’s economy to have contracted by 3% in 2012, affecting growth, consumer spend and business investment.

Telecom market overview

Broadband penetration is below the EU average while mobile penetration is among the highest. The incumbent Portugal Telecom has seen its share of the total traffic market (voice and internet) gradually fall in the face of competition, though it retains a dominant share in both the voice and DSL markets. Market revenue is expected to fall slightly to 2013, in line with lower sector investment, as operators face regulatory burdens compounded by consumers spending less on services. Operators have reported declining revenue for several quarters, and little respite is anticipated in the near future. PT has weathered the times better than competitors on the strength of its subsidiaries in Brazil.

Mobile market

The mobile sector is now the largest sector in the telecom market in terms of revenue. MNOs have focussed on mobile data services, investing in network upgrades for HSPA and LTE since 2011. TMN and Optimus both expect to provide 80% population coverage for their LTE networks by the end of 2012. The sector will develop swiftly in 2013 following the auction of spectrum in the 2.6GHz band.

Table 1 – Key telecom parameters – 2010; 2013

Sector

2010

2013 (e)

Subscribers to telecom services (million):
Fixed broadband subscribers 2.07 2.5
Mobile broadband 16.47 17.12
Fixed-line telephony 4.48 4.61
Mobile (SIM cards) 16.47 16.15
Telecom penetration by service:
Fixed broadband 21% 31%
Mobile telephony 155% 164%
Fixed-line telephony 40% 43%

(Source: BuddeComm)

Market Highlights

  • Data revenue as a proportion of total mobile revenue continues to grow at 2-4% per year following a number of promotional efforts by operators to increase use of data services and promote wireless broadband solutions. The proportion of non-SMS related data services is also increasing.
  • Following LTE trials, MNOs now have extensive commercial services in place. Population coverage is nearing 80%, which is having a considerable effect on the availability rural broadband.
  • Portugal’s market for bundled services and IP broadcasting has a strong base in the country’s broadband network: triple and quad play has become increasingly popular during the last two years as operators’ investment in infrastructure upgrades bear fruit and customers take advantage of faster bandwidth, single billing convenience and cheaper prices resulting from greater competition.
  • An effective nationwide strategy for deploying fibre involves the cooperation of multiple operators, the government, and public subsidies. As a result, FttX in 2012 accounts for about 75% of all new broadband connections.

BuddeComm’s annual publication, Portugal – Telecoms, IP Networks, Digital Media and Forecasts, provides a comprehensive overview of the trends and developments in the telecommunications and digital media markets in one of Europe’s smaller countries yet having a progressive telecoms market. The report includes the regulator’s market data to June 2012, telcos’ financial and operating data to September 2012, and market developments to November 2012.

For detailed information, table of contents and pricing see: Portugal – Telecoms, IP Networks, Digital Media and Forecasts

 

 

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Spectrum auction set to encourage cellular sector competition in Nicaragua

Wednesday, November 28th, 2012

Nicaragua is the largest and least densely populated countries in Central America. The country’s significant GDP growth since 2010 belies the low economic base, given that it has the lowest GDP per capita in the region, with some 60% of the population live below the poverty line. As a result, much of the economic drive has been the result of international assistance, particularly from the World Bank and other agencies.

Nicaragua’s telecoms market has mirrored the poor economic achievements, with fixed-line teledensity and mobile penetration also the lowest in Central America. The broadband market remains nascent, with population penetration at about 1%. Most internet users are concentrated in the largest cities because the rural and marginal areas lack access to the most basic telecom infrastructure. A number of internet cafés provide public access to internet and email services, but these are also restricted to the larger population centres.

América Móvil’s Claro has a clear leadership in all of Nicaragua’s telecom sectors, including fixed-line, mobile, broadband, and pay TV. Mobile subscribers overtook the country’s main lines in early 2002, and now make up the significant majority of all lines.

Telefónica’s Movistar is the only company competing with Claro in the fixed-line and mobile market. In the mobile sector, Movistar holds almost one third of the market, but in the fixed-line sector, it has only about 10% of the country’s fixed lines in service.

Due to a weak regulatory structure and bureaucratic delays, further liberalisation has been slow to be implemented. The duopoly situation has dampened the competitive drive, and as a result there has been less effort than in neighbouring countries to improve quality and lower prices. However, other companies operating in the market include the Russian state corporation Rostejnologuii, Yota Mobile and IWB Holding.

The fixed-line market will probably continue to be stable, leaving growth principally in the mobile and broadband sectors. While competition in the mobile sector is expected to improve from 2013 with the introduction of two prospective players following the auction of 1800MHz spectrum, the broadband sector will be the main growth engine given the extremely low penetration coupled with consumer demand for services. In this regard, the longer-term prospect is promising.

Nicaragua – key telecom parameters – 2010 – 2012

Category

2010

2012 (e)

Fixed-line service

Total number of subscribers

258,000

305,000

Teledensity

4.4%

5.3%

Internet

Internet users

118,000

170,000

Internet users penetration

1.8%

2.9%

Broadband

Total number of subscribers

48,000

50,000

Penetration rate

0.9%

1%

Mobile telephony subscribers

Total number of subscribers (million)

3.96

5.54

Mobile penetration rate

68%

86%

(Source: BuddeComm)

Market highlights:

  • The anticipated auction of spectrum in the 1800MHz band, aimed at breaking the existing market duopoly, should increase competition and lower prices for consumers from 2013.
  • The commissioned new satellite to provide pay-TV and telecom services should be operational from mid-2015, boosting the availability and scale of services both for the country and region.
  • Claro retains a near-monopoly over broadband in Nicaragua since acquiring cable TV company Estesa, which was the only company that offered any meaningful competition. Claro’s ADSL and cable modem services are both branded Turbonett Fijo. The cable modem service uses the Hybrid Fibre Coaxial (HFC) network inherited from Estesa.

For detailed information, table of contents and pricing see: Nicaragua – Telecoms IP Networks Digital Media and Forecasts

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UK government secures EC approval for rural broadband investment

Tuesday, November 27th, 2012

The government’s £530 million allocation for rural broadband rollouts is a crucial part of its broadband plan to 2015. The funding, being spent by Broadband Delivery UK (BDUK), a body within the Department for Culture, Media and Sport, is aimed at bringing broadband to the third of UK premises which are not expected to be provided for by commercial rollouts. The approach taken – establishing a framework agreement whereby suppliers would only have to bid once to be selected for any of the potential broadband rollout projects – also anticipated that procurement costs for local authorities and suppliers would be reduced.

A number of areas in Cumbria, Scotland’s Highlands and Islands, North Yorkshire and Herefordshire were named as beneficiaries as early as 2010, while Devon and Somerset councils also secured funding. Cornwall was exempted from the government’s largesse because work there being undertaken by BT was already funded by the EC

However, the scheme has not progressed without some hiccoughs. In mid-2012 the allocation of funding was suspended amid concerns from the EC that the rollout strategy was uncompetitive given that only BT and Fujitsu had been selected as providers, despite BDUK’s framework. Fujitsu itself hardly provided effective competition to BT: the company withdrew from a number of projects, and in any case was largely sidelined by the government following a number of its high-profile public sector projects which proved to be disastrously managed and extremely wasteful of tax-payers’ money. In effect, BT has emerged as the sole beneficiary of the £530 million available.

Despite this, the EC recently approved the scheme the government, enabling projects in Wales and Surrey to go ahead, with a number of others to come on stream during 2013. This has proved to be a significant coup for the government, and also for the newly installed minister with this portfolio.

The government and regulator still struggle with an underlying lack of confidence to encourage investment in FttH, so that citizens will secure proper fibre in a piecemeal and drawn out fashion, long after many other European countries will be enjoying the myriad socio-economic benefits which such networks will deliver.

Henry Lancaster,
Senior Analyst

For more information, see the updated report United Kingdom – Broadband – Fixed Network Insights, Statistics and Forecasts

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Uruguay rolls out national FttH and LTE networks

Tuesday, November 27th, 2012

Economic conditions

Uruguay’s GDP per capita is one of the highest in the region, only second to Chile and a few of the wealthier Caribbean islands. The country is among the safest in Latin America – politically stable, free from corruption, and not prone to natural disasters. The government is supportive of business, with prudent macroeconomic policies and a generally welcoming environment for investment. Transparent regulations, growing domestic consumption, high living standards, and a cheap labour force are expected to continue drawing international capital.

Penetration of telecom services

Bar a few Caribbean islands, Uruguay enjoys the highest broadband penetration in Latin America, the second highest fixed-line teledensity after Costa Rica, and the second highest mobile penetration after Panama. With high literacy rates and widespread computer availability, Uruguay is one of the world’s leading software exporters and South America’s outsourcing hub. In terms of computer penetration, Uruguay tops all other countries in the region by a considerable margin.

Exclusivity and competition

Uruguay is one of the very few Latin American countries where the local fixed-line market is neither privatised nor liberalised. Antel, the state-owned incumbent, has a monopoly in the provision of local telephony and fixed broadband services. Other segments of the telecom market have been opened to competition, including international long-distance telephony, mobile telephony, and fixed-wireless broadband.

Uruguay is also one of the few countries in the world where broadband access via cable modem does not exist. Although cable networks are well equipped technologically and digital cable TV is widely available, telecom law prohibits data transmission over pay TV networks. There are ongoing discussions over the need to change regulations and permit TV cables to carry data. Cable broadband would help strengthen the pay TV market, make triple-play solutions more widely available, and give customers the freedom to choose their internet provider.

Government broadband initiatives

Nevertheless, Antel’s Fibre-to-the-Home (FttH) project is by far the most ambitious broadband effort in Latin America. In fact, it promises to be one of the most impressive in the world. Together with the FttH network, the opening of a new submarine cable system (Bicentenario) in early 2012 has helped boost Uruguay’s internet download speed.

Antel was also one of the first companies in the region to launch commercial LTE services. The LTE network is intended to supplement FttH broadband in areas where the latter is not available. According to plan, all of Uruguay’s population should have access, eventually, to either LTE, or FttH, or both.

Mobile market

Three players compete in the Uruguayan mobile market: Antel, Telefónica’s Movistar, and América Móvil’s Claro. Antel is the mobile market leader, followed by Movistar.

All three mobile operators offer mobile broadband as well as 3G services. Mobile broadband is the fastest growing telecom sector by far. Operators have achieved nationwide UMTS coverage, attracting a growing number of subscribers outside of Montevideo. An estimated 30% of the population have opted for mobile broadband, and the number of subscribers is soaring.

Uruguay’s fixed-line, broadband, and mobile statistics – 2010 – 2012

Sector

2010

2011

2012 (e)

Fixed-lines in service
Total subscribers (million)

0.92

0.98

1.02

Broadband
Total subscribers (million)

0.38

0.47

0.56

Mobile telephony subscribers
Total subscribers (million)

4.43

4.76

4.90

(Source: BuddeComm based on industry data)

Market highlights:

  • The government is preparing to auction nine blocks of mobile spectrum in the 900MHz, 1900MHz, and 1700-2100MHz frequency bands.
  • Antel’s FttH project uses GPON technology and offers broadband speeds of up to 100Mb/s. The network already passes more than 140,000 homes in Montevideo and Rocha. The service, branded Internet Vera (which means True Internet in Spanish) – or simply ‘vera’ – is being offered free of charge for a promotional period.
  • Antel’s LTE network covers parts of Montevideo, Punta del Este, and Maldonado. The operator plans to expand the network across the country. Like the FttH service, Antel’s LTE offering is also branded ‘vera’. Advertised maximum speeds are 20Mb/s download and 2Mb/s upload.
  • A service dubbed Universal Hogares or Internet for All aims to connect every Uruguayan home to the internet. The service is available to all those who already have a fixed telephone line, or those who acquire one, and offers basic ADSL access with no monthly fees.
  • The Bicentenario submarine cable linking Argentina and Uruguay was inaugurated and made operational in early 2012 with an initial capacity of 50Gb/s. The system’s total design capacity is 3.84Tb/s.

BuddeComm’s yearly update of Uruguay – Telecoms, Mobile, Broadband, and Forecasts provides a comprehensive overview of the trends and developments in the telecommunications market of Uruguay, including the regulator’s market data for the first half of 2012, operator and other industry data, and expected market developments in the coming years.

For detailed information, table of contents and pricing see: Uruguay – Telecoms, Mobile, Broadband and Forecasts

 

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