Editor’s Note: Welcome to our weekly Reality Check column. We’ve gathered a group of visionaries and veterans in the mobile industry to give their insights into the marketplace.

Mobile penetration in Latin America was around 66% in early 2008, well above the world average of 46%. And, over 375 million people own a mobile device in LATAM — almost 12% of the world’s mobile population of 3.1 billion. Given the diversity of the geography, the people and the technology deployment, the mobile environment is diverse across the region. However, seven countries — Brazil, Mexico, Colombia, Argentina, Venezuela, Chile and Peru — claim 83% of the region’s subscribers (with Brazil and Mexico accounting for over 50% of all mobile subscribers in LATAM (including the Caribbean). (Source: Paul Budde Communication Pty Ltd)

Overall, mobile had a late start in LATAM and focused predominantly on gaining subscribers and market share, by offering plans and handset subsidization as a main competitor factor. Since 2003, mobile services have been on a dramatic rise due to the costs of deploying fixed line services and the lines to procure such services. The market is still predominantly pre-paid subscribers but these subscribers are accessing similar services to what we see here in North America. And the market is growing… quickly!

Data

If you look at the mobile operators, the playing field is dominated by two key players: America Movil and Telefonica/Portugal Telecom who own roughly 65% of the market. Telecom Italia serves approximately 12% of the market. And where is the region on data services? Venezuela is the region leader for data services but Mexico and Brazil together account for over 50% of the revenues driven from data services. And today, SMS accounts for the majority of data services revenues across the region — with SMS interoperability working across most operators and geographic boundaries. The majority of the region has also deployed 2.5 and 3G services.

I spoke with Eugenio Velasco, board member for MMA LATAM and director de servicios móviles at Televisa Digital Esmas, a large content provider in the region. When we spoke about mobile services in the region, he tells me networks are getting more robust, 3G is becoming significant and the sheer number of mobile subscribers make this a region worthy of significant focus and consideration. Consumers are also beginning to spend more in mobile content and promotions — however, long term success in LATAM mobile content will be based on local content and creativity. Velasco tells me that mobile advertising also presents a huge opportunity and is an area that the market’s leaders are investigating! Internet penetration is low, while mobile is extremely high in all socioeconomic levels, making it a prime market for mobile advertising.

In LATAM, mobile penetration is six times PC penetration and is growing more rapidly. This may change as fixed-line operators introduce wireless technologies, like WiFi, and subsidize PCs, but in the meantime mobile usage as a percentage of the time a user spends absorbing media is bound to surpass the web.

Federico Pisani Massamormile, Chairman of MMA LATAM and CEO of HANZO, a company that designs and develops mobile products and campaigns for media companies and consumer brands to deliver content to and interact with their consumers through their mobile phones in Brazil, tells me that the time is now! Brazil is the 5th biggest mobile market in the world and soon there will be more mobile internet connections than PCs connected to the internet. For brands, it will be impossible to contact consumers properly in the coming years without including mobile in their marketing plans. Massamormile tells me that in Brazil the number of mobile campaigns is also increasing steadily. Consumers are getting familiar and comfortable with them and as such we are beginning to see a new mobile marketing program launched every week.

The obstacles to growth and development of the market seem to be the same throughout the region and the individuals that I spoke to emphasized a need for more effective business models, faster deployment of new services and cost effective pricing plans which will be key to driving long term growth and adoption of the new mobile services in the region. One of the main obstacles for the development of mobile advertising is that the value chain is fragmented and incomplete. It has been difficult for new entrants to find the pieces necessary to deploy services and as such, companies are treading slowly into the market for mobile advertising in the region. Additionally, due to the socio-economic divide, models that work in other countries, may require a shift in LATAM as 80-90% of the subscribers are pre-paid, depending on country.

The Mobile Marketing Association launched its LATAM chapter in March and held its first Board of Directors meeting in June 2008. The enthusiasm and passion that is shared by the board and the MMA membership in the region is outstanding as is the desire to create a consistent and high quality experience for the consumers. Guidelines such as the Code of Conduct and Consumer Best Practices will help to ensure consumer privacy and protection is at the forefront.

Guidelines

So why should a North American based company consider doing business in the region?

--Easy to do business: Similar business practices and principles can be applied in NA and LATAM. However, LATAM is not a whole but a diversity of countries and cultures — and although doing business may be easier, it is not necessarily the same in each country through out the region.

--Close geographic proximity: Jump on a plane in DC in the evening on Wednesday and you arrive in BA or Sao Paulo in time for breakfast meetings on Thursday with minimal jet lag.

--Language: The entire region speaks two main languages — Spanish and Portugese. Thus the barrier to entry with different languages per country and throughout region is greatly diminished (for those who have started business in Asia Pacific or even Europe, you know how difficult the large number of languages may be to comprehend — particularly when translating sales collateral).

--Time zone: Time zones are almost identical to North America so if you are already based in the NA region, you are able to easily converse with your teams in Latin America without staying up late or getting up early.

--Market Size! Let’s face it, it’s got enormous potential! 375 million mobile subscribers — with the majority scattered in the markets of Brazil, Mexico and Argentina.

--Fewer operators across the region: With the concentration of power in two main operators, America Movil and Telefonica (and despite local regulatory frameworks which will remain disparate in the short term), the business landscape for mobile is becoming more homogeneous across the region, giving LATAM a scale that does not exist elsewhere.

If you are evaluating the possibility of launching your business overseas, do consider LATAM. It is happening!

You may contact Laura directly at laura.marriott@mmaglobal.com. You may contact RCR Wireless News at rcrwebhelp@crain.com.

  Email Article   |   Print Article   |   Permalink  |  More from: aa_Free (no reg or sub required) |

---

Post a Comment

Name (required)
Email (will not be published) (required)

[Post a comment to this article] [Hide]