1. High Level Workshop on Wireless Communication and Development: A Global Perspective University of Southern California, October 7-8 2005 New Trends in Mobile Communications in Latin America Judith Mariscal & Eugenio Rivera judith.mariscal@cide.edu

2. 2 Index 1.Introduction 2.How two carriers dominate the regional mobile market 3.How mobile has surpassed fixed telephony 4.How mobile has widened access to previously un-served groups 5.Conclusions

3. 3 Introduction In Latin America, the penetration of mobile telephony is twice that of fixed telephony. Mobile telephony provides the only source of access to some of the poorest segments of the population. Today, the Spanish firm Telefónica and the Mexican firm Telmex, have operations in fifteen countries of the region and together service 90% of the regional market.

4. 4 Mobile telephony has become the focus of attention for the region’s two largest operators: América Móvil and Telefónica Móviles: The acquisition process: aggressive campaign to attract customers and the depredation of local markets Scenario of global survival as opposed to one of collusion among companies. How two carriers dominate the regional mobile market

5. 5 Sectoral Reform in 1990’s led to the creation of National Champions: The case of Telefónica in Spain The case of Telmex in México How two carriers dominate the regional mobile market

6. 6 … The case of Telefónica Telefónica was to face competition under European Common Market. Liberalization took place in 1994. Today, Telefónica holds mobile companies in 15 countries. With market participations (excluding the case of Mexico) that fluctuate between 24% in El Salvador and 73% in Panama, with a special emphasis on the case of Brazil, where its participation is close to 50%. How two carriers dominate the regional mobile market

7. 7 The case of Telmex in México A vertically integrated company served the purpose of satisfying the demands of the key actors in the system and favored the creation of a National Champion. Early 1990’s: 1) Acquisition of privatised fixed telephony companies in Guatemala, El Salvador and Nicaragua. Late 1990’s: 2) The expansion of its mobile telephony operations to several countries in South America. How two carriers dominate the regional mobile market

8. 8 The case of Telmex in México An the end of 2004, it has operations in 11 countries, with participations that fluctuate (excluding the case of Uruguay) between 25% in Brazil and close to 76% in Mexico. In 2005, América Móvil has entered the Chilean market through the acquisition of Smartcom, the thirds largest operator of thet country. How two carriers dominate the regional mobile market

9. 9 Market participation by country and segment (2004) How two carriers dominate the regional mobile market

10. 10 Fixed versus Mobile in Latin America (1990-2003) How mobile has surpassed fixed telephony Source: Telecom Data based on ITU and operators.

11. 11 Mobiles per fixed lines in Selected Latin American countries 1997 vs 2002 How mobile has surpassed fixed telephony Source: Telecom Data based on ITU and operators.

12. 12 More competitive environment Regulatory Issues Drivers of Growth

13. 13 Calling Party Pays (CPP) Chile (1997) Brazil (1998) Mexico (1999) Prepayment Telephony… Drivers of Growth …Regulatory Issues

14. 14 Prepaid subscribers as % of Total Subscribers 2004 Drivers of Growth Source: Pyramid Research 2005.

15. 15 How mobile has widened access to previously un-served groups… Studies show advantages of mobile telephony over fixed for users of low consumption: Dymond y Oestman (2004 NECG 2004, Stephens et al (2005, Oestman 2003, Telecom CIDE (2005).

16. 16 Cost comparisons between fixed and mobile telephony for low consumption users How mobile has widened access to previously un-served groups… Note: Values in US dollars. Source: Oestman, 2003.

17. 17 Mexico: Mobile penetration by Socioeconomic Level How mobile has widened access to previously un-served groups… Source: Telecom CIDE (2005).

18. 18 Users of mobile telephony under prepayment plans by socioeconomic level (SEL) How mobile has widened access to previously un-served groups… Source: Telecom CIDE with data from Pyramid.

19. 19 Story of success Mobile means communications for low income groups Pre-paid telephony and CPP: two powerful universal access tools Regulators must face a duopoly in the region. Conclusions

20. 20 Contact www.telecom.cide.edu Judith Mariscal Avilés, PhD. Research Professor Centro de Investigación y Docencia Económicas CIDE Telecommunications Research Program Telecom-CIDE Carretera México-Toluca 3655 Col. Lomas de Santa Fe 01210 Mexico City Telephone: (52 55) 5727 9825 Fax: (52 55) 5727 9873 judith.mariscal@cide.edu eugenio.rivera@cide.edu