Pyramid Points - LATAM Operators Warm Up to Spectrum Sharing
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LATAM Operators Warm Up to Spectrum Sharing

December 11, 2012

Spectrum shortage and increasing network costs are becoming concerns in the mobile industry. MNOs are investing in more spectrum and infrastructure to remain competitive and offer state-of-the-art services. Coverage was the main differentiator among operators, providing a competitive advantage, but this type of competition is changing.

Today, voice services and SMS are essential for customers in Latin America. The evidence suggests that SMS traffic is increasing, along with minutes of use (MOU).

Exhibit: SMS traffic and MOU trends, Latin America

Operators Warm Up to Spectrum Sharing

Source: Pyramid Research Mobile Data Forecast, Q3 2012

VoIP, online gaming and video streaming have a seemingly insatiable thirst for mobile data, thus posing challenges for operators in Latin America. We forecast that the demand for mobile data access will increase every year, and operators are struggling to keep up. Few operators can invest in spectrum and infrastructure, and governments are struggling to auction enough additional frequency bands, and to do so quickly enough, to meet operator -- and consumer -- demand.

Under these circumstances, MNOs do not have many choices to overcome the spectrum shortage or enough cash to acquire it. A cost-effective solution to this problem is the sharing of infrastructure with other MNOs. Sharing the network was unthinkable in a market where coverage was a competitive advantage, but the market has evolved and mobile content now is more relevant than coverage. It is quite reasonable to think that operators with the biggest footprint, especially in concentrated markets, will be reluctant to share their infrastructure (and thus dilute their competitive advantage) with the competition, but it is reasonable to think that tier-2 operators will share certain portions of their networks.

Sharing infrastructure can take many options, from a passive sharing (e.g., towers, sites), to an active sharing (e.g., spectrum, RAN sharing). The reduction of costs is inversely related to the level of network sharing.

Because the competition is now in the arena of mobile data, operators will try to differentiate from the rest in terms of content -- for example, with fixed-mobile convergent services and unified communication applications that are data-intensive. As a hypothetical example, two or more MNOs could roll out a single LTE network, reducing deployment times, costs and complying with certain social goals expressed by the regulatory framework. In economies where the so-called digital divide is a major concern, network sharing could incentivize the rollout of infrastructure in areas without mobile coverage.

— Jose Mercado, Senior Analyst

Related resources:

OTT IP Messaging: Operator Strategies for Over-the-Top Communication
Telecom Insider published October 2012
The main focus of this report is on mobile IP messaging. We examine the significance of OTT communication (voice and messaging), and more specifically the impact of OTT messaging, and take a closer look at six different strategies that operators are currently using to respond to the threat posed by OTT. The report presents case studies from SingTel, Claro, Orange, Telefonica, T-Mobile, Vodafone and Three and examines how these different operators are approaching OTT communication. We conclude with some recommendations for operators as they rethink and refine their strategies.

Latin America Mobile Data Pricing Landscape and Trends
Telecom Insider published August 2012
This Insider examines what carriers are doing at a Latin America regional level in terms of pricing, to close the gap between revenue and data traffic growth. We focus on the major regional mobile markets: Argentina, Brazil, Chile, Colombia, Mexico, Peru and Venezuela. The report concludes with case studies that illustrate some of the future trends analyzed in this report, a summary of key highlights and a set of recommendations.

Pyramid Research Mobile Data Forecast
Forecast published quarterly
A premium version of the Mobile Demand Forecast, it tracks current and future demand for mobile data services, within the context of overall mobile demand. This forecast includes all the same tracking as the standard Mobile Demand Forecast but breaks down mobile data ARPS, revenues and subscriptions at the service level.


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