WiMAX Poised to Explode in Latin America, Caribbean
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The sixth in our series on WiMAX Around the Globe, this article looks at WiMAX in Latin America and the Caribbean. Links to other articles in the series are at right and below.
Like other regions marked by relatively undeveloped economies, Latin America and the Caribbean basin could be a bonanza for WiMAX. If regulators push ahead with allocations and other regulatory changes needed to foster growth.
The same WiMAX-friendly conditions apply here as in Eastern Europe, Africa and much of Asia-Pacific, namely low penetration of wireline broadband serviceindeed, low penetration of wireline services of any kind.
Growth in wireline infrastructure with a few exceptions stalled across most of the region in the middle of the last century, says Juan Fernandez, a research director in Gartner Inc.s carrier and network infrastructure group.
Growth in telephony in particular has pretty much been in mobile services, Fernandez says. There are a lot of clients in the region with no fixed connectivity. So WiMAX plays well in that kind of environment.
Not that WiMAX is likely to play a role in providing mobile voice services3G build-outs are well underway in most markets and cellular operators, often also the biggest proponents of WiMAX, solidly entrenched. But wireless for fixed andeventuallymobile broadband is, as Fernandez puts it, culturally consonant.
Caroline Gabriel, research director at UK-based Rethink Technology Research Ltd., believes Latin America and the Caribbean will be one of the major markets for mobile WiMAXalthough for now the technology is mainly being used for fixed services.
The regions ascendancy in the WiMAX world has not been a straight line, however. Latin America started strong two years ago, Gabriel says. It was the most active region. It has gone slow and quiet lately. But most vendors expect a real burst of activity in 2010. After Africa, it will be the highest growth area.
4GCounts.com, a tracking service provided by Maravedis Inc. focusing on WiMAX and other broadband wireless technologies, counts 40 commercial WiMAX service providers in the region, 15% of the global total.
Maravedis says the top six operatorsTelecel (Paraguay), Telmex International (Brazil, Argentina, Mexico, Chile, Peru), Orbitel (Colombia), Neovia (Brazil), MVS Communications (Mexico) and Axtel (Mexico)represent over 75% of the approximately 500,000 subscribers.
The WiMAX subscriber base is growing at between 15% and 17% per quarter, says Cintia Garza, a market analyst with Maravedis.
Gartner, which tracks investments in network and terminal equipment, says operators in the region spent about $160 million in 2008. Theyll invest about $275 million this year and $641 million by 2012. This is a faster growth pace than for WiMAX globally.
Gartner also tracks sales of terminal devices, which roughly equates to number of subscribers, although one subscriber could have more than one terminal. It counted 540,000 in 2008so about the same as Maravediss current subscriber estimateand predicts it will grow to about 1.5 million this year, and over 12 million by 2012.
Make hay where the sun shines
This again represents a faster growth rate than WiMAX globally, and faster than in many other regions.
Most operators in Latin America and the Caribbean90%, according to Maravedisare using 3.5 GHz spectrum for WiMAX. And most have plenty of bandwidth. Over 50% own more than 50MHz of spectrum, the rest between 20MHz and 50MHz.
The reason is that there are still a lot of monopolies in the region, Garza says. So incumbents sometimes own a big chunk of the [available] spectrum, if not all of it.
But 2.3 and 2.5 GHz spectrum is thin on the ground. Some jurisdictionsnotably Brazil, a regional bellwetherhave repeatedly delayed allocation of additional spectrum, allegedly in response to lobbying by 3G operators and vendors threatened by emergence of new competitors.
In some markets, spectrum in this band was allocated several years ago to operators who planned to (but mostly didnt) use it for MMDS (Multichannel Multipoint Distribution Service) or wireless TV cable. Some of those license holders may want to launch their own WiMAX services, Gabriel says, more will want to sell off their licenses to existing WiMAX players.
But for now, there is nothing happening with that spectrum because regulators have dragged their heels on changing rules to allow WiMAX operators to use it for mobile broadband. Brazil, again, is one of the culprits.
Even the WiMAX Forums necessarily diplomatic vice president of marketing, Dr. Mohammad Shakouri, expresses some frustration at the situation. Theres a lot of politics, especially in Brazil, Shakouri says.
Gabriel believes the log jam will be broken. I think theyll sort it out, she says. I think they will have to allow mobility.
Only recently, though, WiMAX stakeholders were accusing Swedish 3G equipment vendor Ericsson of lobbying hard, and successfully, to block liberalization of regulations in Brazil.
A few jurisdictions in the region have allocated 2.5 GHz spectrum for WiMAX and do permit mobile broadband services. Digicel in the Caribbean, for example, launched mobile broadband in the Cayman Islands in 2007, using 802.16e WiMAX technology. It plans to roll out the service in other major markets in the region, including Jamaica.
Venezuela has allocated 2.5 GHz spectrum. Movilmax (owned by Omnivision) is offering mobile broadband service in the capital, Caracas, with a network of over 60 802.16e base stations. It has committed to building out a network beyond the capital with another 300 base stations this year.
Shakouri insists that operators could use 3.5 GHz spectrum with the newer 802.16e technology to offer mobile broadband service. Most of the relatively few 16e deployments in the region are in fact in the 3.5 GHz bandsimply because of the dearth of 2.5 GHz spectrum. But those operators dont offer mobility. Most interested in offering mobile services will wait for the 2.3/2.5 GHz situation to resolve itself.
In the meantime, operators are for the most part offering fixed wireless broadband access onlywhich may not be such a bad thing since its where the most pressing need exists. The majority are targeting businesses. A few also offer VoIP over WiMAX.
Gabriel believes video may eventually play a more prominent role in WiMAX in this region than elsewhere. This is because so many of the spectrum license holdersincluding the old MMDS playersare also broadcasters.
Gartners Fernandez speculates that satellite providers could use WiMAX as a return channel for their pay TV services to enable video on demand and other interactive services. Some telecom providers already active with WiMAX in the region, such as Spains Telefónica, are partnering with satellite providers to assemble triple-play offers, he points out.
Despite the current politics stymieing efforts to move mobile WiMAX forward, Latin America has some advantages over other developing regions, Gabriel points out. There appears to be a greater degree of uniformity and harmonization of regulations than in most.
That means theres an opportunity for scale, she says. It allows for roaming. It allows for more business uptake. Its a very diverse region, of course, but it does appear to operate more as one when compared to Africa or Asia-Pacific, for example.
On the other side of the ledger, the region is less accommodating to new and innovative players because so much of the spectrum is concentrated in the hands of a relative few.
Its a tough market to break into for a new operator, Fernandez says. There are some very entrenched players.
That could change, though. In an attempt to encourage entry of new players, some regulators are establishing strict limits on incumbents or current frequency holders, Garza points out. In Mexico, for example, the incumbent, Telmex, may be blocked from participating in an upcoming 3.5 GHz auction.
If the regulatory environment works itself out, Latin America and the Caribbean region could be a big win for WiMAX. And there is some cause for hope that the biggest irritantsallocation of additional 2.5 GHz spectrum and decisions to allow mobile services in the bandwill be resolved this year.
We think the region has huge potential that is about to be tapped, Gabriel says. Because some of the markets are so big, theres a lot of politics, yes, but we do think Latin America is just waiting to happen for WiMAX.
Gerry Blackwell is a veteran technology journalist and frequent contributor to Wi-Fi Planet. For more on WiMAX Around the Globe, read "WiMAX Around the Globe: APAC."