Latin America 4G/M2M Operators Facing Economic and Regulatory Challenges.
Deployments of 4G networks and cellular M2M technology are poised for rapid growth across Latin America if mobile operators in the region can overcome a range of regulatory and economic challenges, according to new GSMA research. GSMA Intelligence, the research arm of the GSMA, has published two new reports at the Mobile 360 – Latin America conference being held in Rio de Janeiro this week (13-14 May), outlining the need for a sustainable approach to both 4G and M2M deployments in the region.
Tackling The Barriers to 4G Growth
There were 39 operators with live LTE networks in Latin America by March 2015, covering 15 of the 22 countries in the region1. The first 4G network in Latin America was launched by Antel in Uruguay in December 2011. The number of deployments has accelerated recently with 17 operators launching new 4G networks in 2014 and a further 21 operators planning launches in the coming years.
Despite this recent momentum, 4G only accounted for 2.4 per cent of the total 683 million mobile connections in Latin America in Q1 2015, below the 8.4 per cent global average. This means that the migration to 4G in the region is currently occurring at a slower pace than the earlier move to 3G. The report attributes this slower progress to a number of factors, including the insufficient allocation of suitable 4G spectrum (especially in frequencies below 1GHz, such as the 700MHz digital dividend band); the difficulties in deploying infrastructure at the municipal level to meet the current stringent coverage obligations; and a challenging macroeconomic environment that has discouraged many subscribers from upgrading to 4G devices and services.
“Latin American mobile operators are investing billions in acquiring 4G licenses and building-out 4G infrastructure despite challenges on both the supply and demand side,” said Sebastian Cabello, Head of GSMA Latin America. “Many operators are investing despite declining revenue from traditional operator services such as voice. The new 4G networks are improving service quality and will be key for universalising mobile broadband access across the region. We therefore call on policymakers in the region to address the barriers to sustainable mobile broadband deployment in order to stimulate continued investment in both 3G and 4G networks.”
According to GSMA Intelligence, 4G will account for 28 per cent of Latin American mobile connections by 2020. 3G networks – which currently cover almost 90 per cent of the region’s population – are forecast to account for 51 per cent of connections by this point. Mobile operators will be supporting the migration to mobile broadband (3G/4G) networks over this period with rising investment in infrastructure; operator capital expenditure is estimated to total almost US$170 billion in the six-year period between 2015 and 2020, an increase on the US$106 billion invested over the last six years.
Operators Taking The Lead In Latin American M2M
GSMA Intelligence estimates that there were 16.1 million cellular M2M connections in Latin America at the end of 2014, making it the fourth-largest M2M region worldwide behind (in order) Asia Pacific, Europe and North America. Growth in cellular M2M connections in Latin America is forecast to be strong over the coming years, rising by 25 per cent per year (CAGR) until 2020 and reaching 62 million connections by this point. Cellular M2M accounts for only around 2 per cent of total connections in the region today, but is forecast to rise to 7 per cent of the total by 2020.
Brazil is the largest M2M market in Latin America with 9.9 million cellular M2M connections at year-end 2014, accounting for 61 per cent of the total cellular M2M market in the region. Last year’s reduction in the SIM card tax on ‘non-person’ operated M2M devices2 has stimulated the market in Brazil, helping to accelerate M2M deployments in areas such as vehicle telematics and smart metering.
“Supportive regulatory frameworks can play an important role in stimulating the deployment and adoption of new M2M applications and services, as we have seen with the tax reduction in Brazil,” said Cabello.
“Operators in the region are providing more that just the connectivity component underpinning cellular M2M; they are developing new business models in conjunction with both local public and private partners that can provide end-to-end M2M solutions that can serve a broad range of vertical markets.”