Peru's Osiptel sees fiber overtaking cable this year

Strong investments and consumer demand are driving rapid fiber optics growth in Peru and sector regulator Osiptel expects fiber to surpass residential accesses through HFC cable networks by the end of this year.

“Currently the predominant technology is HFC. However, in recent years we have seen significant fiber growth. Given the statistical information that we have and the market trends seen, we expect fiber to surpass cable this year,” Lennin Quiso Córdova, director of regulatory policies and competition at Osiptel, said in response to a question from BNamericas during a connectivity-focused webinar.

According to Osiptel, fiber optic connections accounted for 42% of total fixed internet accesses nationwide at the end of March, increasing 79.6% over the previous year.

A recent survey by the regulator indicated that 50% of operators are investing in fiber optic deployment while 25% plan such investments for the next two years. The survey was carried out with internet providers commanding a 94% share of fixed internet lines and 60% of the sector's investments.

Growth drivers

On the demand side, Quiso said that "fiber has become very attractive because it has characteristics that cannot be found in other technologies, such as symmetry, which is something that HFC networks cannot emulate." He added that other features such as connection stability and reliability are highly valued by users.

"On the supply side, we can also mention that the deployment of fiber has advantages because it represents a lower implementation cost," said Quiso.

Asked about what kind of operators are driving the fiber investment, he said that “all players are going to add to the expansion."

Like in the rest of Latin America, pay-TV operators in Peru are pushing ahead with investments in fiber to expand coverage and migrate customers from HFC networks.

"Stronger competition has been seen in the provinces with the entry of new players providing fixed internet services and a large part of them are pay-TV companies that already have residential infrastructure in place, which facilitates the conversion [to fiber]”, Osiptel president Rafael Muente Schwarz said in response to the same question from BNamericas.

"This shows the efforts of small and medium-sized firms who are coming out to compete with the well-established and larger companies," he added.

The local market with the highest concentration is capital Lima, where Spanish telco Telefónica has a dominant position. In the rest of the country, there is greater heterogeneity in terms of market participation.

The residential broadband market has become much more competitive with Telefónica seeing its participation fall from 80% in 2015 to 49.4% in March, Osiptel figures show.

Claro ranked second with 25.6%, followed by Wi-NET/Optical Technologies (10.1%) and WOW (5.9%). Entel was in fifth place with 2.1%, ahead of the Fiberluz/Fiberline group with 1.2%.

Investment hurdles

Internet service providers singled out municipal red tape and deployment costs in the survey as the main obstacles for investing in fiber deployment.

Access to information, especially regarding infrastructure sharing, and difficulties in accessing private property were also mentioned as obstacles.

Half of the internet providers surveyed by Osiptel use infrastructure sharing for their fiber optic networks, with 79% having agreements with electricity companies. High fees and drawn-out negotiations with electricity firms were the main barriers for providers not using this modality.

The webinar was told that investments in the telecommunication sector, including fixed and mobile services, amounted to 3.56bn soles (US$980mn) in 2022, a figure similar to the previous year despite major political turmoil.