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February 05, 2013
While in the United States the divide between mobile provider supply and mobile user demand only seems to be getting wider, some places have already discovered problem themselves.
It may be the best problem to have – it's a sign of sound growth – it's still a problem, especially when growth starts to outpace supply. For the Latin American mobile market, it may well be an issue that's starting to show itself.
A recent survey from Informa (News - Alert) Telecoms and Media showed the extent of the situation: by the end of 2013, the market is expected to boast fully 742 million subscribers – a growth of 7.1 percent year to year. Voice is set to be the major revenue stream, as some would expect, representing fully 76 percent of service revenues, but mobile data is set to offer big gains of its own.
Data revenue is expected to climb fully 18 percent over the same time last year, reaching $27.7 billion in the U.S.
What's contributing to these major gains in mobile broadband in Latin America? It's primarily a convergence of several key factors at once. The prices of smartphones have been rapidly declining throughout the region, making them more accessible. Smartphones are set to represent nearly half – 46 percent – of all mobile phones sold in 2013.
Mobile data plans are becoming more affordable as well, providing the necessary factors to drive growth in the mobile sector.
But perhaps key to the whole situation is that fixed broadband penetration in Latin America is comparatively low, as is that of the PC market. The combination of more available mobile gear and more affordable data plans with fewer available alternatives makes for a major growth factor.
Mobile companies are already preparing to accommodate this expansion, with over 60 percent of polled operators planning to release 4G services by the end of 2013. Several nations are planning LTE (News - Alert) spectrum auctions, and in some countries, like Chile and Brazil, the launch is much closer to completion.
Chile expects service to go live this year, and Brazil expects full commercial launches. But since LTE is still comparatively new, both the infrastructure and the devices for it are still in short supply and still expensive. A large amount of growth on an older network could mean a lower overall quality of service for those users on that network, and that could sour the experience.
Only 0.3 percent of all subscribers will be LTE subscribers by the end of 2013, so that could make for some log jams on the way to a better overall experience for users.
Some might consider this a good opportunity for other wireless providers, or even fixed broadband, to come in and offer Latin America better speeds and better service, but the geography of Latin America doesn't always make that possible. Still, there's certainly plenty of room for providers in the LTE market and similar to get in; a lot of users are already enjoying mobile broadband in Latin America, and there are certainly more than enough smartphones.
Latin America's status as a developing market when it comes to mobile broadband does pose plenty of opportunities, but also plenty of challenges.
Edited by Braden Becker