With a total population of more than 430 million, the continent of South America is as varied and diverse as it comes. But the conversation as it relates to its telecoms journey, especially its telecoms infrastructure development, is largely monopolised by the likes of Brazil and Argentina along the east coast.
While there are obvious reasons for this, primarily the size of these countries and their direct paths to Europe and the US, less is spoken about their west coast counterparts such as Chile, Peru, Ecuador and Colombia, at least in the mainstream.
Colombia
Located on the north west of the continent and with a population of approximately 50 million, Colombia has undergone a number of government-led initiatives in development of its communications infrastructure.
Latest figures from TeleGeography’s Global Bandwidth Research Service show that while Brazil continues to generate the highest demand for bandwidth in the region, over the last few years countries on the west coast of South America have grown the fastest, at a compound annual growth rate ranging between 33% and 44%.
One growth area in particular is that of satellite communications which meet the needs for mobility-based applications for both commercial and government sectors.
“Satellite connectivity offers the most cost-effective solution to reach even the most rural and remote regions, which are often characterised by challenging terrain and sparse populations,” says Omar Trujillo, vice president of sales for fixed data Americas at SES Networks.
One example of this is a recent collaboration between INRED and SES Networks, which accelerated a government initiative led by the Colombian Ministry of Information Technologies and Communications (MinTIC) to connect 100% of Colombia via free community Wifi zones enabled by high-speed broadband over satellite.
“This initiative alone has connected nearly one million people with 1,300 community Wifi hotspots across the country,” adds Trujillo.
In the mobile space, the GSMA’s Alejandro Adamowicz, technology and strategic engagement director for Latin America, shares that: “5G has been gaining momentum in the west coast of South America.”
“In Colombia, the Ministry of Communications has granted temporary spectrum blocks usage permissions in five cities to allow the operators to make pre-commercial tests,” he says. “They also announced their intentions to assign 5G spectrum in the second semester of 2021.”
In addition, Wayra (Telefónica Movistar’s open innovation hub) launched an Internet of things (IoT) lab for entrepreneurs in partnership with iNNpulsa (the entrepreneurship and innovation agency of the government of Colombia) and the Ministry of Commerce, Industry and Tourism. Together they will develop LPWA-based IoT solutions, in areas such as smart metering, livestock tracking and consumer IoT services.
The Covid-19 pandemic has also shone a light on how critical digital communications are, with work being done in the areas of education, health and remote working.
“In Colombia, a 5G pilot test was deployed in the Bogota District Health Secretariat and Public Health Lab to allow real-time monitoring of employees’ body temperature,” says Adamowicz.
Ecuador
Moving on down to the south west is Ecuador. With a comparatively smaller population of approximately 17.3 million, it is home to mobile operators such as América Movil's Conecel (trading as Claro), Movistar, Telefonica's Otecel (trading as Movistar), and Corporación Nacional de Telecomunicaciones – CNT (previously Telecsa/Alegro).
According to a report by ResearchAndMarkets.com, Virgin Mobile is expected to launch a service in Ecuador, following on from similar launches in Mexico, Chile and Colombia.
In the case of its 5G journey, Stephen Wilcox, chief product officer at BSO, says: “It is still early days for Ecuador, but Nokia has been selected to bring the first 5G network to the country.”
Specifically, Nokia was selected by CNT to deliver the first 5G network, including Nokia support with the extensive network modernisation of existing LTE infrastructure as well as the installation of a 5G non-standalone network.
The region as a whole saw fixed traffic increase by about 15%-30% in the first half of 2020, due to Covid-19, according to IDC analysts Andrés Lira, Jose Diaz, Sebastian Helfer and Carlo Davila.
They also note that a significant portion of the traffic migrated from enterprise networks to residential networks had a different architecture. However, these traffic peaks were within the planned capacity, so most operators were prepared for it. In the second half of 2020, traffic became more stable and predictable.
“On average, operators reported a 25% increase in mobile data traffic during lockdown. As well as providing much-needed connectivity during the pandemic, the mobile industry in Latin America has engaged with businesses and governments on initiatives to alleviate the impact of Covid-19 on citizens,” says Adamowicz.
“There were also discounts on mobile services, free access to health information and event donation of medical equipment supplies for health workers, like in Ecuador.”
Peru
Next on the west coast is Peru. With a population of approximately 32 million, it is home to a far more developed telecoms market than its northern neighbours.
IDC’s analysts say that the country has witnessed sustained fibre network deployments and that, by 2019, its regulator Osiptel confirmed that 70,000km of fibre networks had been deployed.
In addition, the country has seen the expansion of traditional B2B service providers into the B2C segment – examples include telcos Nubyx, Fiberlux and Ultra, which have entered the B2C space.
At the same time, there has been a lot of development of Peru’s in-country regional broadband projects, driven by the government to reduce the digital divide. In upcoming months, the Transport and Communications Ministry expects to fully utilise approximately 13,500km of fibre-optics from a national backbone network that, due to a current concession contract, uses only 3.2% of this network.
But it’s not just terrestrial fibre that is seeing a boost – Claro’s CEO Humberto Chávez announced plans for a new subsea system, due to go live in October 2021. The 7,300km South Pacific Cable System is a joint venture between América Móvil (Claro Perú's parent company) and Telxius and will lay the foundations for the future connectivity needs of the country.
Not forgetting 5G, the GSMA’s Adamowicz reminds us that, “some weeks ago, Peru's Ministry of Transport and Communications cleared the use of 3.5GHz frequencies for fixed 5G services by operators with spectrum holdings in that band, and local operators have already launched 5G home internet service in Lima.”
“Claro and Entel’s Peruvian units were cleared to offer 5G NR fixed-wireless following the spectrum auction,” added BSO’s Wilcox.
Chile
On the most southerly point of the west coast sits Chile, with a population close to 19 million. It has arguably the most developed telecoms market compared to its above-mentioned neighbours.
According to IDC’s Lyra, Diaz, Helfer and Davila, Chile is the Latin American OECD country with the largest deployment of fibre-optic networks, with approximately 32.8% in fixed broadband connections.
It did, however, experience its share of challenges during the Covid-19 pandemic. Gabriela Álvarez, managing director of Accenture Interactive in Chile and the Hispanic South America region, comments: “Although Chile's telecommunications infrastructure passed the test when the pandemic was just beginning, the challenges that the country must face in terms of infrastructure, connectivity and digitalisation are becoming more urgent, in an uncertain and complex scenario that does not seem to have a quick resolution.”
According to the Chilean Chamber of Digital Infrastructure, the pandemic caused a significant change in the consumption pattern: mobile data, voice and fixed internet traffic increased by 40%, 50% and 30% respectively, along with an increase of more than 50% in video streaming platforms, 200% in video call applications and 70% in the use of social networks.
“Faced with these numbers, accelerating and increasing investments is key,” continues Álvarez. “It is necessary to deploy a digital architecture, a ‘new topology’ of network, with very high-speed internet covering the entire national territory, with new access nodes.”
Overall, the Chilean government has been investing in its nation’s infrastructure through such projects as National Fiber Optic, with subsidies from the state of $86 billion, and the upcoming Austral Fiber Optic, an initiative that aims to connect more than 2,800km of the country with terrestrial and subsea fibre.
On the investment front, annual spend differs by operators – fluctuating between $44 million and $200 million – in order to differentiate themselves from their competitors.
In the 5G space, February saw Chile complete the first Latin American auction to assign 5G spectrum. But IoT is also gaining traction. The IoT market in Latin America is forecast to reach 1.2 billion connections by 2025, with cities like Chile’s Santiago and Colombia’s Medellin implementing smart city initiatives using IoT technology.
As far as satellite projects go, SES’s Trujillo shares that: “Entel Chile extended broadband connectivity and 4G services provided by the O3b MEO satellite constellation for the residents of the Easter Island, one of the most remote islands in the world, enabling e-learning platforms, remote working and communication with relatives.”
Across the board, the tower sector in Latin America has seen a significant number of deals, particularly in the east coast countries. Telefónica has announced the sale of its tower infrastructure in Brazil and Argentina as well as in Chile and Peru. Also, Chile’s Entel sold their towers to American Tower.
Brazil and Mexico are the biggest markets and so “it's no surprise they are the leaders when it comes to mergers and acquisitions in this space. M&A activity across these two markets has been consistent in the last two years,” says Wilcox.
At a macro-level, “content and gaming are hugely influential in the future of telecoms in South America,” he explains.
“In terms of cloud gaming, South America is not as advanced compared to other parts of the world. Gamers in the Latam region still don’t get access to most of the major cloud gaming services, and the ones that do enter the market tend to focus on Mexico and Brazil to begin with.”
Both content and gaming were among the top traffic increase factors, according to IDC, driving new edge/cloud strategies from both data centre, cloud and telecom service providers in the near and mid-term.
With such a varied outlook across the continent, it is clear to see that some countries are faring better than others in their digital transformation journeys – differences that are not always directly tied to scale but also to the organic maturation of their respective markets.
Wherever we place Chile, Peru, Ecuador and Colombia on their development journey, it is clear that South America’s west coast is not to be underestimated – in fact, it could very soon be ready to leapfrog.
