2012 Predictions: Latin America set for shakeup in plans, revenue streams and bundled offers
The nearing maturity of mobile voice services in most Latin American countries and the reduction on mobile termination rates set by regulators are leading to three main trends in the region: the launch of unlimited plans; the search for new revenue streams; and the commercial launch of multiple-play offerings.
Competition is likely to increase in all markets, not only due to the coverage overlap of large regional telecom groups with multiple-play offerings, but also due to the launch of new entrants and mobile virtual network operators, which are attracted with the favorable macroeconomic outlook in Latin America, and due to the influence of regulatory watchdogs, especially in Colombia, Mexico and Peru, which are the most concentrated markets.
Some examples of regulatory remedies expected to be implemented include mobile number portability in Argentina and Chile during 2012, gradual MTR cuts and regulatory asymmetries in Brazil, Colombia, Mexico and other countries.
The launch of unlimited plans
Even with some growth potential ahead in the majority of Latin American countries, the traditional voice market is likely to be threatened over the next years. This includes push-to-talk over cellular networks, as well as VoIP applications with connectivity provided by data plans. These new solutions, which work over 3G and 4G networks, have a higher quality of service than previous solutions and are likely to become a substitute in a larger scale for mobile telephony.
Instant messaging, social networks and e-mail incorporated into mobile devices are also a threat to text messaging, as they are an alternative for high prices charged.
Considering these factors, unlimited voice and SMS plans, which are already offered by most mobile operators (either through on-net plans or PTT), are likely to be intensify in 2012.
The increasing competition is also an important driver, as there are new entrants expected for 2012 as Nextel in Brazil, Chile, and Mexico; VTR in Chile; UNE in Colombia; and Alestra in Mexico.
Although there are currently only a few MVNOs in commercial operations, and most of them are owned by fixed operators, it is expected that new MVNO launches happen in Latin America due to a favorable scenario for mobile services and interest of different companies in this business. However, challenges related to the current market stage, high tax burden and interconnection rates and negotiation with mobile network operators need to be overcome by MVNO candidates.
The search for new revenue streams
The search for new revenue streams is an effort of operators to increase the total market with new service offerings (Internet access, machine-to-machine, mobile payment, IT services, etc.). Considering these growth opportunities, revenues are expected to increase at a compound annual growth rate of 7.4% from 2010 to 2016, to reach $106.56 billion in 2016, according to the Frost & Sullivan study “Latin America Mobile Services Markets Outlook II, 2010.”
Among the most promising mobile services in the future, Internet access has a prominent position. Smart devices and data cards proliferation, along with affordable data plans for prepaid and postpaid users (sometimes induced by government policies, such as national broadband plans) and a wider coverage of HSPA, HSPA+ and LTE networks, are likely to drive the growth of Internet access in 2012, serving sometimes as a substitute for fixed broadband.
M2M services also expect to grow significantly in 2012, with opportunities in different verticals such as healthcare, electricity distribution, banking and vehicle tracking. This last vertical represent an outstanding opportunity in Brazil, considering that it was determined that car manufacturers must implement anti-theft localization module equipment in every new car produced.
Mobile payment is another focus of mobile operators in the region. Examples are the partnership of Telefónica S.A. and MasterCard in 12 Latin American countries and TNL PSC S.A. (Oi), Banco do Brasil and Cielo in Brazil. Other implementations expect to happen during 2012, using several solutions, such as SMS-based transactional payments, direct billing for postpaid users, online payments and near field communication.
For the enterprise segment, IT services are also a trend, especially cloud computing, enterprise mobility solutions and mobile device management, which are likely to be adopted by corporations and small and medium enterprises.
Commercial launch of multiple-play offerings
Quadruple play is likely to appear in the Latin American countries, when fixed and mobile operators integrate their commercial offerings. An example of quadruple play is from Movistar in Venezuela, which offers fixed and mobile telephony, mobile broadband, and pay TV using direct-to-home technology. Another example of a multiple-play package is with América Móvil in Brazil called “Combo Multi.”
Several multiple-play offerings expect to occur during 2012, in some cases including Internet access through Wi-Fi hotspots. The deployment of Wi-Fi hotspots denotes a concern of mobile operators to offload data traffic from 3G networks. In Brazil, this strategy is being implemented by TIM, Oi and América Móvil, while Telefónica is currently focused on expanding its 3G network coverage.
In addition to having a role as the data traffic offload, Wi-Fi hotspots may help mobile operators deal with over-the-top content, and also enter this market by providing multiplatform offerings of pay TV services and video on demand.
By Renato Pasquini, article published in RCR Wireless News on January 16, 2012 (http://www.rcrwireless.com/article/20120116/opinion/2012-predictions-latin-america-set-for-shakeup-in-plans-revenue-streams-and-bundled-offers/)