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Telecom incumbents and cable operators are battling for fixed broadband dominance in Latin American markets such as in Mexico, Brazil, Chile and Argentina. Important cable players in these markets have already upgraded their networks to DOCSIS 3.0 and are offering superfast speeds of up to 100Mbps. Incumbents find themselves in a position of declining market share and are considering the network options available to them to stay competitive.
Cable operators upgrade to DOCSIS 3.0
Many major cable operators in the Latin America region are now offering maximum download speeds of 100Mbps, including VTR in Chile, NET Serviços in Brazil and Cablevision in Mexico. In Argentina, although Cablevision is not yet offering 100Mbps speeds, its fastest offer is still above the speeds offered by both Telefónica and Telecom Argentina. While the take-up of superfast speeds offered by cable may be limited, such offers do give these operators a significant marketing advantage over the incumbents.
The pressure on the incumbents is made worse by the fact that the cable players are generally able to offer triple play over their upgraded networks and leverage their existing strong positions in the TV market to garner new broadband customers.
Incumbents face network choices
To maintain their market position versus the cable players, incumbents are considering how best to upgrade their fixed access networks. These upgrades will not only allow the incumbents to market faster speeds but also enable them to offer IPTV and increase their triple play subscriber bases. For example, currently neither Oi nor Telefónica are offering IPTV over ADSL connections in Brazil.
Fixed access network upgrades have already begun; Telefónica and Oi in Brazil have already made commitments to GPON FTTH. Oi launched the technology in December 2012 with the aim of reaching more than 1.5 million to 2 million homes by the end of 2015. But it is by no means clear that FTTH will dominate in major Latin American markets. For example, Telmex in Mexico is investing in both GPON FTTH and VDSL FTTC.
Instead of FTTH, incumbents might choose to deploy a technology called VDSL vectoring where fiber would be rolled to street cabinets and “crosstalk,” the interference between different copper lines, would be eliminated. Vectoring, which is currently in the pilot phase but will soon see full commercial launches, would allow the incumbents to offer downstream speeds of around 80Mbps and has the advantage of requiring less CAPEX since fiber would not need to be brought all the way to subscribers’ homes.
Vectoring would also enable incumbents a faster time to market, which is important given the difficult market situation and churn to cable these providers are seeing. Time to market could be especially important in a market such as Brazil which has major sporting events scheduled in the next three years. Using vectoring could allow the players to upgrade their networks in a timely fashion for the expected surge in traffic that the FIFA World Cup and Olympic Games will deliver.
Competition will continue to consumers benefit
The battle between cable operators and the incumbents shows no sign of abating in many Latin American markets. But while the incumbents are under pressure, they still have the financial clout to match the cable players’ offers. But for consumers, the competition between cable operators and the incumbents is bringing the benefits of faster speeds and more competitively priced offers.
Stephen Wilson contributes research to Analysys Mason’s Fixed Networks Program. Stephen has more than five years experience covering the telecom industry and specializes in analyzing fixed broadband access technologies and strategies. Stephen is a graduate in politics, philosophy and economics from St. Catherine’s College, Oxford University.
