Large markets in Latin America are serving as test beds for a range of digital cellular and personal communications services standards, according to a study from Pyramid Research Inc.

The report outlines the astounding cellular growth in Mexico, Central and South America, a trend that Pyramid expects to continue into the next century. The number of subscribers will rise to nearly 22 million by 2000.

Privatization of wireless service-part of the worldwide trend to break government holds on telecommunications-has led to increased opportunities for service operators, equipment providers and handset suppliers.

There are at least two competing mobile cellular operators in every major Latin market-Chile has four, Colombia and Argentina each have six and Mexico has 10. In smaller markets, issuing licenses is a priority, Pyramid said.

The increase in Latin subscribers is being driven by explosive growth in Brazil and Colombia, and sustained growth in Mexico, Argentina and Venezuela, states the report, “Cellular and PCS Markets in Latin America and the Caribbean.” For instance, subscriber growth in Brazil grew at an average rate of 283 percent from 1991 to 1995, Pyramid said.

Most Latin American operators that offer digital service already have chosen Time Division Multiple Access technology because of earlier availability, said Linda Barrabee, Pyramid’s senior analyst. However, some markets “bucked the trend,” such as Argentina, Brazil and Mexico, which have announced they will delay migration to digital until second-generation TDMA or Code Division Multiple Access protocols are available commercially.

“Cellular operators should not be threatened by PCS operators in the short-term. The window of opportunity is far from closed. With or without PCS, by the year 2000, Brazil will log on 9 million cellular subscribers, Argentina will top 2 million, and Mexico will surpass 4 million,” Barrabee said.

In four years, she predicts subscribers will be 72 percent digital cellular, 19 percent PCS and 9 percent analog cellular.

Growth in equipment purchases will provide a market bonanza to cellular and PCS vendors. The total market in the next five years for cellular and PCS infrastructure equipment in Latin America and the Caribbean Sea region is expected to grow from $1.5 billion to $3.7 billion. Most of those installations will be digital cellular, the report predicts, with a big jump in 1996 due to the commercial availability of second-generation TDMA and CDMA digital cellular systems. The market for digital cellular equipment alone will rise from $87 million in 1995 to more than $2.7 billion in 2000.

L.M. Ericsson continues to lead as infrastructure supplier to the region, with Northern Telecom Ltd. coming in second, according to Pyramid. NEC Corp. has improved its position through the large Brazilian market and ranks as the third strongest equipment provider in the region, followed by AT&T Corp.

Although Mexico is experiencing some macroeconomic difficulties that will affect the country’s telecom sector, new radio spectrum licensing is a priority in 1996, the report said. Chile is expected to license three nationwide PCS operators during the first half of 1996. Puerto Rico has two licensed PCS operators and will be the first market in the Caribbean to use PCS frequencies, according to Pyramid.


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