2010 Colombia - Telecoms, Mobile, Broadband and Forecasts

Colombia’s telecom market has started to experience intensifying competition since regulations have opened the long-distance sector and ushered network unbundling and wholesale services. A single Convergence Licence allows companies to offer fixed-line telephony, Internet access, broadband, and other value added services.

The country’s telecom infrastructure is reasonably well developed in the main business centres, where service availability is relatively high for Latin America. Facilities are quite poor, however, in small urban centres and rural areas.

Though lower than average for South America, Colombia’s fixed-line teledensity measures up favourably with the country’s economic indicators. Colombia has some 30 local telephone providers, partly private, and partly owned by the municipalities where they operate. Long-distance services were liberalised in mid-2007. To operate, long-distance providers need a Convergence Licence and a multicarrier access code.

Colombia’s mobile penetration is considerably higher than would be expected given the country’s general economic indicators, largely thanks to the country’s mobile rates, which have been among the lowest in Latin America. América Móvil’s Comcel is the leading cellular operator, followed by Telefónica’s Movistar and Millicom-controlled Tigo. Avantel uses iDEN technology to serve the corporate market.

The mobile market in Colombia was gravely affected by the economic recession. In the first half of 2009, the mobile subscriber base began to shrink for the first time. The downward trend was reversed in the second part of the year, but growth has been small, and the country may be facing early mobile market saturation. The large percentage of the population living below the poverty line cannot afford a mobile phone, and many of the wealthier citizens already have two mobile lines.

Colombia’s broadband penetration is slightly below average for Latin America but higher than would be expected given the country’s economic indicators. Helped along by a regulatory framework that encourages competition and by government efforts to reduce the ‘digital divide’, broadband is expanding strongly. ADSL is the leading broadband technology in Colombia, but cable broadband continues to grow both in subscriber numbers and in geographical coverage thanks to the popularity of triple play solutions.

The mobile broadband market in Colombia took off in 2009, but speeds are reportedly erratic, rarely reaching 1Mb/s even in the major cities and often dropping to less than 100Kb/s. According to consumer reviews, Tigo offers a faster service but has less coverage than Comcel or Movistar. In some of its operating areas, fixed-line company UNE-EPM has replaced its WiMAX services with mobile broadband on Tigo’s network, using a SIM card and modem branded UNE.

Market highlights:

·         Two state-owned companies are up for sale: ETB, with about 26% of the country’s fixed lines in services, and Emcali, with about 7%.

·         Competition will receive a further boost from number portability, to be implemented by 2011.

·         More than 40 companies have received access codes for long-distance telephony, but new entrants have only managed to eke out a minuscule share of the domestic long-distance market. On the other hand, they have done much better in the international telephony sector, where competitive operators have already secured more than one third of the market share.

·         The Colombian government has launched a tender for the construction of a Ku-band satellite called Satélite Colombiano (Satcol).

·         The government is hoping to increase mobile competition by auctioning spectrum in the 2.5GHz band to new players.

·         IPTV, offered by UNE-EPM, is attracting a rapidly growing number of subscribers.

Colombia – key telecom parameters – 2008-2009

(Source: BuddeComm based on industry data)

For those needing an objective and high-level strategic analysis on Colombia, this report is essential reading and gives further information on:

·         The Law on Information and Communications Technology (ICT Law) of July 2009, which has created a new regulatory framework for the whole telecom market in Colombia.

·         The outlook for WiMAX in Colombia – while the economic downturn had a negative impact on WiMAX investments, the arrival of mobile broadband has been the main cause for the shrinking WiMAX subscriber base.

·         The introduction of wholesale services and Local Loop Unbundling (LLU).

·         The success of triple play solutions in Colombia, which has helped to boost the cable TV sector and allowed Telefónica Telecom to gain a large share of the satellite TV market.

Data in this report is the latest available at the time of preparation and may not be for the current year.