Sunday, February 6, 2011

Update: LTE in Latin America

Latin America is the quietest region in terms of LTE deployments and operator commitments. Other regions such as Europe and Asia Pacific have shown much more LTE activity, accounting for 35% and 26% of the 145 LTE commitments registered worldwide in 2010. Latin America accounted for just 7% of the worldwide share, with 10 operator commitments and 7 LTE trials conducted during the year.

However, more and more Latin American operators are eager to take advantage of LTE’s promises of higher speeds, increased network capacity and more efficient spectrum use. Even regulators in countries such as Chile, Venezuela and Brazil are planning to allocate both residual 3G spectrum and new spectrum specifically for LTE. Maravedis estimates that by the end of 2011 there will be more than 20 LTE commitments in the region, an additional 7 LTE trials will be conducted, and possibly 4 operators will have commercially launched the technology, however the real momentum is expected to occur in 2014-2015, when we anticipate more than 25 operators will have commercial LTE services.

The first LTE operator activity in Latin America started in 2009 in Chile, where Entel conducted trials with Ericsson, Movistar with Nokia Siemens, and Claro, whose equipment vendor was not announced. Entel already offers WiMAX in the 3.5GHz band, but uses it to complement its fixed line service. The three companies are interested in LTE and have conducted trials actively, but they face a big hurdle, which is the lack of spectrum and spectrum caps imposed by SUBTEL to participate in the upcoming spectrum auctions. SUBTEL has ruled that existing players could participate in the upcoming auctions of 700MHz and 2.6GHz in July 2011, but if any operator surpasses the limit of 60MHz it would be obliged to return some spectrum to the state. Entel PCS already has 60MHz in the 800MHz and 1.9GHz combined, while Movistar and Claro have 55MHz each. SUBTEL is planning to auction the 2600Mhz band to make a 140MHz portion (70MHz for upload and 70MHz for download) available for 4G services, meaning that up to four operators could acquire LTE spectrum (35MHz each). Entel is looking to launch LTE in the 700MHz band, however whether SUBTEL will allow existing operators to obtain additional spectrum on top of the 60MHz they already have remains uncertain.

In Brazil, LTE trials have been conducted by Telefonica. Brazilian regulator Anatel decided late last year to re-farm the 2.6GHz spectrum, currently allocated to MMDS operators, and to re-allocate it under a technology neutral scheme to support next-generation mobile broadband deployments. Under the new regulation, MMDS operators will operate in the entire 2,500-2,690MHz frequency until June 30, 2013. After that, part of the 2.5GHz spectrum will be re-farmed and they will keep only 50MHz. The spectrum will be auctioned off by 2012 for the provision of mobile broadband services. 120MHz will be allocated in this auction, however winning bidders are not expected to deploy until 2013 once the spectrum is freed from MMDS operators. Certainly Telefonica will be among the LTE pioneers in Latin America. We believe that its LTE deployment in Brazil could be earlier than 2013, since the operator already holds MMDS spectrum that it can free up for LTE deployment.

Trials have also been conducted in Argentina and Colombia. In the former, Personal has conducted LTE trials with Ericsson and Huawei last year, and Telefonica conducted trials with NEC. These were conducted in the 1.7GHz and 2.1GHz spectrum bands, reaching transmitting speeds of 50Mbps downlink in a 20MHz channel. In Colombia, UNE Telecommunications is eager to start a commercial launch of LTE. CTO Hector Perez recently expressed the company’s interest in LTE to Maravedis. They have been deploying WiMAX since 2006 in the 3.5GHz band and have over 60,000 subscribers, however, Perez said the future of UNE Telecomunicaciones lies with LTE, technology that they will pursue aggressively and will be deployed in their recently allocated 2.6GHz band, in which they obtained 50MHz.

There is clear evidence of Latin American operator interest in LTE, however how the exact number of players and the timeframe in which they will deploy the technology depend heavily on spectrum availability, and the removal of spectrum caps and other restrictions some national regulators have implemented.

MARAVEDIS is a leading analyst firm focusing on 4G and broadband wireless technologies and markets.

Author: Cintia Garza, Team Leader 4GCounts & Market Analyst CALA


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