Latin American Mobile Market: Trends and Forecasts

TABLE OF CONTENTS

1 EXECUTIVE SUMMARY 9

• 1.1 Questions Addressed by This Study 9
• 1.2 Key Findings 10

2 SCOPE AND METHODOLOGY 11

• 2.1 Scope 11
• 2.2 Additional Information Relating to This Topic 11
• 2.3 Methodology 12

3 MOBILE MARKET GROWTH TRENDS 13

• 3.1 Market Highlights 13
• 3.2 Technology Choices 14
• 3.3 Market Forecasts by Techology 15
  • 3.3.1 GSM Technology Family 16
  • 3.3.2 CDMA Technology Family 17
• 3.4 Subscriber Growth Outlook 18

4 ADDING SPICE TO MOBILE: PREPAID SERVICES 21

• 4.1 Revisiting Prepaid 21
• 4.2 Three Pillars of Prepaid 22
  • 4.2.1 Economic Conditions 22
  • 4.2.2 Leveraging the Mass Market 22
  • 4.2.3 Achieving Critical Mass 22
• 4.3 Prepaid a Value Proposition 23
  • 4.3.1 Subscriber Acquisition Costs (SAC) 23
  • 4.3.2 Prepaid and Data Services 24
  • 4.3.3 Customer Retention: Essential! 25
• 4.4 Outlook for Prepaid 28

5 CALLING PARTY PAYS (CPP) 29

• 5.1 Impact of CPP 29
• 5.2 CPP Adoption: Regional Distinctions 29
• 5.3 Outlook for CPP 31

6 IDEN AND COMPETITION 33

• 6.1 Digital SMR Carriers 33
• 6.2 Legal Disputes Against iDEN Operators 33
• 6.3 Outlook for Dispatch Services 33

7 DIFFERENT ROADS TOWARDS THE SAME GOAL: CONSOLIDATION 37

• 7.1 Geographic Consolidation 37
• 7.2 Technological Consolidation 38
• 7.3 Service Consolidation 39
• 7.4 Outlook: Wireless to Save the Day 39

8 FINDING THE NICHE FOR MVNOS IN LATIN AMERICA 41

• 8.1 Explaining MVNOs 41
• 8.2 Going Beyond the Voice Game 42
• 8.3 What is driving MVNOs in Latin America? 42
• 8.4 Justifying MVNOs Existence 43
• 8.5 Outlook for MVNOs 46

9 AWAKENING THE SLEEPING GIANT: MOBILE MESSAGING 47

• 9.1 Developments in Messaging 47
• 9.2 Latin America's Messaging Dynamics 47
• 9.3 Market Trends 48
  • 9.3.1 Two-way B-SMS 48
  • 9.3.2 Interoperability Issues 48
  • 9.3.3 Value-Added Services 49
  • 9.3.4 Two-Way Pagers and Mobile e-Mail 49
  • 9.3.5 Roll-Out of Next-Generation Networks 49
• 9.4 Market Influencers 49
  • 9.4.1 Market Drivers 49
  • 9.4.2 Market Inhibitors 50
• 9.5 Market Forecasts 50
  • 9.5.1 User Forecasts 50
  • 9.5.2 Message Forecasts 50
  • 9.5.3 Messaging Deployments 51
• 9.6 Country Highlights 51
  • 9.6.1 Brazil 51
  • 9.6.2 Venezuela 52
  • 9.6.3 Mexico 53
• 9.7 Outlook for Mobile Messaging 53

10 THE CHANGING REGULATORY CLIMATE: FROM MONOPOLY TO COMPETITION 55

• 10.1 Liberalization and Privatization 55
• 10.2 How Did it All Begin? 56
• 10.3 How Did it Change? 58
• 10.4 Dealing with Interconnection! 59
• 10.5 Regulatory Outlook 59

11 SPECTRUM & LICENSING AUCTIONS 61

• 11.1 Latin America's Spectrum Conundrum 62
• 11.2 Repercussions of Postponing Licensing 63
• 11.3 Licensing Alternatives 63
  • 11.3.1 Alternative I: The Auction Process 64
  • 11.3.2 Alternative II: The Beauty Contest 64
  • 11.3.3 Alternative III: The Hybrid Model 65
• 11.4 Spectrum Licensing Outlook 65

12 HOW MUCH PRIVATISATION: RESTRICTIONS ON FOREIGN OWNERSHIP 67

• 12.1 Role of Foreign Participation 67
• 12.2 Foreign Ownership Outlook 67

13 CONCLUSIONS AND RECOMMENDATIONS 69

• 13.1 Conclusions 69
• 13.2 Recommendations 70

APPENDIX I: 2G+ NETWORKS IN LATIN AMERICA 73

APPENDIX II: PAN-REGIONAL MOBILE PLAYERS 75

APPENDIX III: MOBILE SUBSCRIBERS GROWTH BY TECHNOLOGY 78

LIST OF EXHIBITS

• Exhibit 1: Latin American Mobile Subscriber Growth, 2002-2008 14
• Exhibit 2: Latin American Mobile Subscribers by Technology, 2002-2008 16
• Exhibit 3: GSM Family of Technologies, 2002-2008 17
• Exhibit 4: CDMA Family of Technologies, 2002-2008 18
• Exhibit 5: Latin American Mobile Technology Shares, 2002 19
• Exhibit 6: Latin American Mobile Technology Shares, 2008 20
• Exhibit 7: One Subscriber Economics 25
• Exhibit 8: Mobile Subscriber Growth in Mexico, 1999-2006 26
• Exhibit 9: Mexico's Prepaid Market 27
• Exhibit 10: Calling Party Pays in Argentina 30
• Exhibit 11: Nextel International, Inc., as a Pan-Regional Player 34
• Exhibit 12: Phases of MVNO Deployment in Latin America 42
• Exhibit 13: The Latin American Pioneer - Cotas Movil 44
• Exhibit 14: Mobile Messaging Users in Latin America, 2002-2008 50
• Exhibit 15: Annual Mobile Messages in Latin America, 2002-2008 51
• Exhibit 16: Selected Latin American Messaging Deployments 51
• Exhibit 17: Mobile Subscribers Growth in Selected Countries 55
• Exhibit 18: Fixed Vs. Mobile Penetration in Latin America, 1995-2006 56
• Exhibit 19: Brazil's Mobile Operating Regions 57
• Exhibit 20: Mobile Markets' Competitive Status in Selected Countries 61
• Exhibit 21: Tumultuous Partnerships: The TIW-CVC Opportunity Dilemma 68
• Exhibit 22: GSM/GPRS Deployments in Latin America 73
• Exhibit 23: cdma2000 Deployments in Latin America 74
• Exhibit 24: Latin America's Pan-Regional Mobile Operators: First Tier 75
• Exhibit 25: Latin America's Pan-Regional Mobile Operators: Second Tier 76
• Exhibit 26: Latin America's Pan-Regional Mobile Operators: Third Tier 76
• Exhibit 27: Latin America's Pan-Regional Mobile Operators: Fourth Tier 77
• Exhibit 28: Mobile Subscribers by Technology and Annual Growth Rates 78