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June 16, 2011
Market research firm Pyramid Research says fixed telecom service providers in Latin America may face daunting challenges in the days ahead as broadband consumers are rapidly adopting 3G in the region.
According to its report, the number of consumers using 3G data card to access Internet is expanding at a rapid rate of 33.8 percent CAGR from 2010 to 2015.
Pyramid expects mobile broadband connections in the region (excluding smartphone connections) to reach 63.1 million subscriptions in 2015, up from 14.7 million in 2010.
3G will have a significant impact on how fixed Internet will develop in Latin America, since many users will skip fixed technology adoption.
The report titled ‘why a fixed/mobile fight to the death does not make sense for Latin American operators’ examines why there is no room for a one-size-fits-all approach.
The reason for the fixed telecom operators to be weary of is because mobile operators are betting on their ability to cover larger areas, with faster deployments and at a lower cost.
“The resultant offering is more affordable and economically viable in underserved areas," says the research firm.
A quick deployment in those areas could result in addressing that entire broadband market for a few years with little to no competition.
"Latin America is taking the leadership in mobile broadband adoption, and the impact will be as hard to predict as it has been when trying to forecast uptake across other technologies in other regions," says Vinicius Caetano, Senior Analyst at Pyramid Research.
In addressing the threat from mobile services, fixed operators are prompted to use all their service differentiation possibilities – including pay-TV and high-speed Internet, including FTTx – to prevent fixed-mobile migration.
"Meanwhile, it is important for fixed companies to focus on subscription revenue, not on revenue per use," suggests the research firm.
As far as the report goes, fixed operators will have to go the extra mile and appeal to their service differentiation to attract new clients and prevent migration from fixed to mobile.
Narayan Bhat is a contributing editor for TMCnet. To read more of Narayan’s articles, please visit his columnist page.
Edited by Rich Steeves