LatAm ISPs eye steady growth despite market imbalances, macro woes

The Latin American internet service providers’ (ISPs) market is expected to enjoy another year of sustained expansion in 2023 despite growing competition, rising costs and macroeconomic and regulatory challenges.

That is the assessment of Basílio Perez, president of LAC-ISP, the largest grouping of ISP associations and internet chambers in Latin America. Through different entities, LAC-ISP has under its umbrella at least 40,000 regional ISPs.

Perez, who spoke to BNamericas during the Abrint ISP event in Sâo Paulo, noted that demand for fiber broadband remains high among end-users and that there are still many parts of Latin America, even small urban locations, where it is still possible to pass fiber and connect customers.

Consultancy SMC+ projected last November that there would be 112mn homes passed with fiber optics in Latin America by the end of 2022.

It forecast that there would be compound annual growth of 8.9% in the number of homes passed and 15.3% in subscriptions between 2021 and 2026, with the latter predicted to reach 59% of homes passed by 2026.

The Fiber Broadband Association (FBA), for its part, estimated Latin America’s fiber-to-the-home (FTTH) market ended 2022 with approximately 105mn homes passed. This would be an increase of 36%, or 28mn new premises, compared with the end of 2021, according to Eduardo Jedruch, head of FBA LatAm.

Based in Uruguay, LAC-ISP was founded in 2020 as a non-profit international civic association.

Currently, 12 ISP associations in Latin America are part of the federation, according to Perez. Four of these are from Brazil, two from Argentina, and in the other countries there is one per market, including Mexico, Colombia, Paraguay and Ecuador.

LAC-ISP is now in talks with an association in Chile, and with a second association of ISPs in Mexico, as well as with entities in other countries.

“The main objective of LAC-ISP is to share information and exchange examples of regulation that affect ISPs in the different countries of the region,” he said.

Apart from Brazil, which according to the executive has a more structured market for ISPs than most of Latin America, Perez highlights Colombia as a country that has been modernizing its regulations for the sector, carrying out a broad simplification of norms for ISPs to start up and operate.

The rules and prices for the use of power poles by internet providers are also more advanced in Colombia, including compared to Brazil, according to Perez.

In the Andean nation, for example, there is a single price for the use of poles regardless of the number of ISPs running cables over them. Thus, the more ISPs passing cables over one pole, the lower the fees for each of them. There is a cap on the maximum amount of cables per pole, however.

In Brazil, on the other hand, each ISP pays the same fee, regardless of the number of ISPs using the pole. The more ISPs, the greater the revenue per pole for the electricity distributor.

In Argentina, according to Perez, a peculiarity is the fact that, in the same city, poles on one side of the street may belong to the municipality and poles on the other side, to an electricity distributor.

Another challenge for the ISP segment in Argentina, he said, is the DNU 690 decree freezing telecom price increases. Perez said that Argentine ISP cooperatives are in a wait-and-see mode ahead of the October elections, whereas many others have filed lawsuits to up their prices.

Meanwhile in Mexico, the main challenge is to leapfrog local providers to fiber optics. According to Perez, compared to other markets, most ISPs in Mexico still use radio and microwave technologies to provide the service.

UNLICENSED SPECTRUM

The main topic on LAC-ISP's agenda, according to the executive, is to obtain the release of the entire 6GHz band for unlicensed use, that is, for Wi-Fi, in as many countries throughout the region as possible.

The band is fiercely disputed by mobile operators on one side and by Wi-FI companies and fixed broadband providers on the other.

Currently in Latin America, regulators in Brazil, Peru, Colombia and, more recently Argentina, have approved 1,200MHZ of the 6GHz band for Wi-Fi – the same as in the US and Canada.

In Mexico, only a portion of it was released.

Chile, which had released the entire 6GHz band, reversed its decision and reserved 700MHz for possible use of mobile broadband. Brazil is now considering backtracking as well.

“We are monitoring and sending contributions to public consultations. The last one was in Ecuador. In Mexico, we made a public stance and we were very sorry about their decision. They will be struggling with Wi-FI 6e equipment in Latin America," said Perez.