Summary

• A decade of reforms
• The mobile juggernaut
• Internet heads South
• Performance evaluation
• The rise of telecom regulators
• Enhancing sector efficiency

Tables

• Table 1
• Table 2
• Table 3

2. The mobile juggernaut

The combination of private ownership and increasing competition has placed mobile markets in Latin America amongst the fastest growing in the world. The number of mobile cellular subscribers in Latin America soared to over 39 million in 1999, up from just 100'000 subscribers in 1990, and 3.5 million in 1995. This means that today, one in every four telephone users in Latin America depends on a mobilephone and, in some markets, the ratio is one in two. Paraguay and Venezuela have become the first countries in the region, and two of only a dozen in the world, where mobilephone users outnumber those who depend on a fixed-line connection.

Over US$ 10 billion has been raised in Latin America from new mobile cellular licenses since 1990. These payments come from the more than 60 new mobile cellular companies that have sprung up in the region since 1990. By the end of 1999, two-thirds of Latin America had a competitive mobile market (see Figure 2, top chart). One exception has been the Caribbean where exclusive concessions have often been granted to a lone cellular operator, generally the fixed-line incumbent.

The profile of the telecommunications market in the Americas region is rapidly changing as the number of new cellular subscribers has started to exceed by far the number of new subscribers to traditional fixed line services (Figure 2, bottom chart).

Unsurprisingly, the overall trend towards higher growth rates in use of mobile since 1996 is inextricably linked to increased competition and service innovations, such as Calling Party Pays (CPP) and pre-paid. The increase in subscribers as a result of implementation of CPP is striking. Peru adopted CPP in May 1996 and by the end of the year, the number of cellular subscribers increased over 150 per cent compared to the previous year.

Another major driver of cellular growth in Latin America, as well as elsewhere in the world, has been pre-paid service. In Venezuela, pre-paid subscribers increased over three-fold during 1999, accounting for 73 per cent of the subscriber base, while the contract subscriber base dropped by some 15 per cent. In Mexico, the exponential growth of mobile telephony can be at least partly attributed to the introduction of pre-paid services in 1993. By 1998, the country had the largest number of cellular pre-paid subscribers in the region, some 60 per cent of all mobile users. By the end of 1999, almost 85 per cent of Telmex cellular subscribers were on the pre-paid plan "Amigo".