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www.BNamericas.com June 2012

Central America: The transforming power of competition

Introduction
Figure 1 - Fixed Broadband Penetration (2009 vs 2011) Figure 2 - Mobile Market Shares Across Central America

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Spearheading progress

Leave it to the wireless segment Interconnected backbones Central America a two-trick pony?

Figure 3 - HSPA+ Launches in Central America Figure4 - Redca network

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Figure 5 - Mobile Money Launches by Groups Operating in Central America

Mobile Money

Conclusion

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Central America

June 2012

Introduction
The entry of América Móvil and Telefónica in Costa Rica last year gives these groups a presence in almost all Central American countries, six in the case of AméricaMóvil and five for Telefónica, which has no presence in Honduras. This could encourage more uniformity in offerings across the sub-region, and Telefónica has already made such a move, eliminating long distance rates for its Guatemalan clients when they call any other Telefónica unit in Central America. There has previously been talk of Central America’s governments working together to arrive atstandardized roaming rates across the sub-region, but Telefónica’s cross-border rates offer suggests that it is the governments’ separate efforts to encourage competition that collectively represent the most important factor for making services more accessible and harmonized. For example, Panama probably has the highest degree of competition in Central America, and, even compared with countriesthroughout the rest of Latin America, it has some impressive service penetration statistics: Mobile penetration is far in excess of 100%; HSPA+ has been launched by three of its four mobile operators; there is free WiFi at 1,000 locations in 22 cities; broadband penetration stands at 8%; and 45% of the population are using the internet. Despite recent accusations that former incumbent Cable & WirelessPanamá (CWP) is not investing enough to stand up to rivals, the intense competition at home has forced this operator to look at easier growth opportunities in neighboring countries, offering telecoms-enabled public services such as teleradiology, telemammography, CCTV surveillance, court telecoms systems and 911 services. And it’s not just the globalized multinationals that are contributing toservice consolidation across the region; there are also local firms that are forming multiterritory footprints in wireless broadband and MVNO operations. Finally, neatly transcending all these developments is the Redca backbone, a fiber-optic system being built along the power line infrastructure that interconnects the power grids from Mexico to Colombia.

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www.BNamericas.comCentral America

June 2012

Spearheading progress
Costa Rica rightfully gets all the press when it comes to telecoms news in Central America these days. In the run up to last year’s liberalization of the mobile segment, the government was acutely aware of protecting the advantage that state-owned incumbent ICE had, and it took a series of steps to prepare for the onset of competition.Chief among these was the decision to add the prepaid billing option to its mobile services in 2009, when penetration was only 50%. Prepaid billing began in April 2010, and a year later mobile penetration had grown to 67%. América Móvil and Telefónica then launched services in November 2011, and overall penetration passed 100% in March 2012. The creation of sector-specific regulator Sutel inFebruary 2009 also energized regulatory activity in the telecoms market, leading to a sector development roadmap through 2014 that included a mandate to set up a universal access fund —Fonatel, which today has US$190 million— and draft a national broadband plan. The broadband plan was published in March this year and is aimed at achieving 100% coverage of schools and social services by 2014 through...