SlideShare a Scribd company logo
1 of 36
Download to read offline
MOBILE OPPORTUNITIES: 
Poverty and Telephony Access in Latin America and the Caribbean 
Background paper 
Market Structure and Penetration 
in the Latin American 
Mobile Sector 
Judith Mariscal
DIRSI – Diálogo Regional sobre Sociedad de la Información 
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
2007 
MARISCAL, JUDITH 
Market Structure and Penetration in the Latin American Mobile Sector. Lima, DIRSI, 2007. 
35 p. il. 
MOBILE TELEPHONY; TELECOMMUNICATIONS; LATIN AMERICA; SERVICE MARKETING 
This document is under a Creative Commons Attribution-Noncommercial-No Derivative 
Works 3.0 Unported License. To see a copy of this license clic here 
http://creativecommons.org/licenses/by-nc-nd/3.0/legalcode
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
2 
Table of Contents 
1. Process of consolidation in the Mobile Market in Latin America......................5 
2. Current Market Structure ...............................................................................12 
3. Penetration trends..........................................................................................19 
4. Pricing and penetration trends.......................................................................19 
5. Other variables...............................................................................................23 
5.1 Entry .........................................................................................................23 
5.2 Technological standards ..........................................................................25 
5.3 Spectrum Allocation and Penetration Trends...........................................26 
6. Future lines of research .................................................................................29 
Bibliography .......................................................................................................33
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
3 
Market Structure and Penetration in the Latin 
American Mobile Sector 
Judith Mariscal 
Centro de Investigación y Docencia Económicas – CIDE 
Carretera México-Toluca 3655, Col Lomas de Santa Fe, 01210 México, DF 
Directora del Telecom-CIDE 
judith.mariscal@cide.edu 
As in other regions of the world, the use of mobile telephony in Latin America 
increased dramatically during the last decade surpassing all expectations for 
the industry. Mobile telephony was initiated as a premium service used mostly 
by professionals and during the mid-1990s it became a device used by very low 
income groups. In Latin America, mobile telephony provides the only source of 
access to some of the poorest segments of the population and it has become 
the central mode of communications. Mobile networks will provide coverage to 
90% of the world's population by 2010, compared with 80% in 2005. In the 
region, despite several economic slumps, the number of mobile subscribers 
increased from 4 million in 1995 to close to 300 million in 2005. The pro-poor 
accessibility of mobile services makes this industry’s expansion an interesting 
area of study as a possible channel towards development. Mobile companies
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
4 
are beginning to address the bottom of the pyramid as an important market to 
serve; adapting business models to serve the needs of low income consumers. 
The fast market growth of mobile services arises through a dynamic 
technological innovation that promises to offer increasing opportunities for 
development.1 The technological progress this industry experiences constitutes 
a crucial source of growth. The shift from analog to digital technology, 
standardization and market competition increased mobile subscription diffusion 
(Grueber, 2001). Indeed, compared to fixed telephony, mobile services arose in 
a relatively more competitive environment with more firms operating in the 
market since its inception. . 
Competition between mobile carriers promoted diffusion, encouraged 
innovation, expanded the network and reduced prices (Rouvinen, 2004). 
Innovative pricing strategies such as prepaid subscription and calling party pays 
have contributed very significantly to the dramatic growth in mobile subscription. 
However, the literature on industrial organization concludes that the mobile 
industry sustains only a few number of firms in the market (Valleti, 2003; 
Gruber, 2005). Because entry to the mobile market is restricted by the available 
spectrum, this industry is inherently oligopolistic (Sung, 2006). Moreover, in 
Latin America today we observe a consolidated market; the Spanish firm 
Telefónica and the Mexican corporation Grupo Carso Telecom, owners of 
Telmex and América Móvil, have operations in twenty six countries of the region 
and together service sixty four percent of the regional mobile market. 
This study is intended to evolve as a foundational piece of background research 
which will inform the Regional Dialogue on the Information Society (DIRSI) 
larger project on the mobile sector in Latin America. The objective in this paper 
is twofold. On the one hand, it seeks to analyse the process of consolidation 
that the region experiences today in the mobile market and on the other, identify 
the impact this market concentration has had on mobile penetration. The 
1 Technological change has modified market structure by blurring the frontiers between industries and thus 
having more players in the market. It is also offering more access to more services to a greater number of 
persons. Weiser (2005).
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
5 
ultimate objective behind this analysis is to understand how the trend in market 
structure may impact the use of mobiles by low income sectors of the 
population in Latin America. 
The findings in this paper are mixed. They do not identify a clear association 
between market concentration and mobile penetration. It suggests firms in the 
mobile market are competing for a regional position and not colluding; for 
example, the ARPUS in the mobile industry are decreasing. In accordance to 
results in other studies it finds that the most significant variables that have had 
an impact on mobile penetration are pricing strategies. 
The first section of this paper will offer an overview of the process of 
consolidation in the mobile market in Latin America and the business strategies 
that mobile firms have followed. The following section will identify its market 
structure and the last section will explore the links between variables associated 
to market concentration and known to influence mobile penetration such as 
pricing and spectrum allocation. The final comments will identify the knowledge 
gaps and suggest new lines of research. 
1. Process of consolidation in the Mobile Market in Latin America 
Today the Latin American mobile market faces the increasing consolidation of 
two carriers in virtually every country. As Table 1 shows, América Móvil and 
Telefónica hold 64 percent of the Latin American market and have operations in 
26 countries. Telecom Italy is the only other significant regional competitor with 
12 percent of the market. 
Table 1: Latin America Consolidation (2005) 
Firm Market (%) Operates Leader in
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
6 
América Móvil 36 13 countries 
Colombia, Ecuador, El 
Salvador, Guatemala, 
Mexico y Nicaragua 
Telefónica 
Movistar 28 13 countries Argentina, Brazil, Chile, 
Panama, Peru y Venezuela 
Telecom Italia 12 5 countries Bolivia 
Others 24 
The two firms together have 64% of the Latin American market 
Source: Telecom CIDE based on Rojas (2006) 
This process of consolidation occurred after more than a decade of pro-market 
reforms where the objective was to promote a competitive market with 
numerous players. While the Spanish firm Telefónica consolidated a strong 
position after the acquisition of the mobile operations of Bellsouth in many 
countries of the region in 2004 and 2005, the Mexican firm Telmex and its 
associated firm, America Móvil, developed an aggressive acquisition policy in 
local telephony as well as in the mobile sector during the late 1990s. These 
results are unexpected, not only because the objective of the 1990s´ reforms 
was to generate an atomized market, but also because the companies that 
today control the market were far from being the strongest in the world. 
This outcome may be explained, to a certain degree, by the support both 
companies received from their governments. During the 1990s, the reforms 
undertaken in the telecommunication sector in Spain and Mexico favored the 
creation of large companies with a strong position in all segments of this 
market. The strategy implemented in both cases was the result of policies that 
were directed towards the creation of National Champions and the success of 
these policies created the basis for their internationalisation. In the case of 
Spain, on the eve of the creation of the European Common Market, the Spanish 
government strengthened Telefónica before it faced competition in an open 
market. At the time, Spanish telecommunications were among the least 
modernized systems in Europe, so the government feared that Telefónica would 
be absorbed by the major European operators or, in the best possible scenario, 
that it would play a minor role within an integrated European 
telecommunications sector. Today, Telefónica in Latin America still receives
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
7 
significant support from the Spanish government via fiscal incentives and in 
some cases such as Mexico it is supported by Telefónica in Spain. 
The Spanish regulatory framework established a generous pricing policy, 
together with “cheap money” financing policy and the decision not to distribute 
dividends. During the first half of the 90s, the pricing policy was focused on 
financing the modernization of the company and on balancing tariffs. Telefónica 
benefited from the support of the Spanish government through solid financing 
mechanisms.2 Telefónica began acquiring companies that held market power 
with exclusivity periods in Argentina, Chile, Peru and Brazil. 
In the case of Mexico, as a cornerstone of the country’s modernization process, 
Telmex was privatised and sold as a vertically and horizontally integrated 
company in 1990. Achieving a privatisation successfully meant overcoming a 
number of political and economic obstacles. A vertically and horizontally 
integrated company served the purpose of satisfying the demands of the key 
actors in the system: the national private sector and the unions, which were 
lobbying against the disintegration of the company and favored the creation of a 
National Champion. Furthermore, as in the Spanish case, policy makers 
believed Telmex had to be strengthen to face the competition of the powerful 
U.S. telecommunications firms. The mobile firm, Telcel, was also sold to Grupo 
Carso and was awarded the only national licence to operate in Mexico. 
Initially, the Mexican group did not have a significant participation in the process 
of privatisation in Latin America. Its interest in the Latin American 
telecommunications sector began only during the second half of the 1990s and 
followed two different paths: the acquisition of privatised fixed telephony 
companies in Guatemala, El Salvador and Nicaragua and, the most important 
one, the expansion of its mobile telephony operations to several countries in 
South America that was initiated in 2003. 
2 This policy was not exclusively for the telecommunications sector, but was developed also in other 
sectors, such as infrastructure and banking.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
8 
In Latin America, those companies that competed in the fixed telephone 
segment of the market acquired a significant advantage that allowed them to 
consolidate a very strong position in the telecommunications market. The 
control of the incumbent position in Spain, Mexico, Argentina and Chile, for 
example, posed difficulties to competitors in overcoming first-mover 
advantages. The U.S.-based companies that entered the Latin American 
telecommunications market in what appeared to be the dynamic sectors at the 
beginning of the last decade, such as mobile and long distance, were not able 
to secure their position and today have lost all significant share of the Latin 
American market and preferred to return to their national market. Even pro-competitive 
regulatory policies were not enough to create a real level playing 
field that would counteract these initial strong positions. 
Until 1997, mobile telephony was a secondary business option for the 
incumbent companies. Fixed teledensity by far surpassed mobile penetration 
and investment in fixed telephony, being sheltered from competition and 
operating within a relatively weak regulatory environment, seemed to promise a 
major source of income. Mobile telephony firms, on the other hand, were 
subject to a more significant degree of competition. Therefore, as the mobile 
companies were facing serious difficulties in generating positive EBITDAs,3 the 
firms in the fixed sector owning mobile sister companies did not consider this 
branch of the business to be very promising. As Graph 1 shows, after 1998, 
while fixed teledensity tends to stagnate in most countries, mobile telephony 
begins to grow at two digit ratios. The average annual growth of mobile 
telephony users during the 2000-2005 period was 20.3% in the region, while 
growth in the case of traditional telephony was only 0.4%. 
3 EBITDAS (Earnings Before Interest, Taxes [income taxes], Depreciation, Amortization and [owners] 
Salaries)
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
9 
Graph 1: Average penetration fixed and mobile in Latin America, 1990 - 2005 
5 0 
4 5 
4 0 
3 5 
3 0 
2 5 
2 0 
1 5 
1 0 
5 
0 
1990 
1991 
1992 
1993 
1994 
1995 
1996 
1997 
1998 
1999 
2000 
2001 
2002 
2003 
2004 
2005 
Lines per 100/inh. 
F ix e d M o b ile 
Source: Telecom CIDE based on ITU (2005, 2006) 
In this context, mobile telephony became the focus of attention for the region’s 
two largest operators: América Móvil and Telefónica Móviles. The acquisition 
process of these two companies involved an aggressive campaign to attract 
customers and the incursion into local markets in the fight for regional 
positioning, which in some cases involved a reduction in average revenue per 
user (ARPU) (see Graph 2) during this time period as the number of users 
increased. This has generated a scenario of global survival as opposed to one 
of collusion among companies. However, as Graph 3 shows, mobile services 
continue to be in the forecast predictions a more profitable business than fixed 
services.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
10 
Graph 2: ARPU, Latin American Selected Countries, 2003 - 2005 
2 5 
2 0 
1 5 
1 0 
5 
0 
Arg e n tina 
B raz il 
C h ile 
Ec u a d o r 
M ex ic o 
Peru 
U S$ 
2 0 0 3 2 0 0 4 2 0 0 5 
Source: CIDE Telecom based on Asocel and operators 
The mobile business is no longer an appendix of fixed operations, as the 
companies decided to separate both operations in order to maximize their 
operations. Telefónica de España restructured its operations by creating 
companies specializing in mobile communications, long distance, mobile 
telephony, data, WEB services and call centers. The companies lost their 
national personality and were integrated into regional companies maintaining 
the generalized use of the Telefónica brand. The business strategy is no longer 
determined by the company in the fixed business, but rather the different 
segments develop their own strategies and are coordinated at a higher level. 
Nevertheless, the companies do take advantage of possible economies of 
scope that generate significant advantages over specialized operators.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
11 
Graph 3: Mobile overtakes Fixed (Forecast Revenue, $ Billions) 
1 0 0 
8 0 
6 0 
4 0 
2 0 
0 
2 0 0 4 2 0 0 5 2 0 0 6 e 2 0 0 7 e 2 0 0 8 e 2 0 0 9 e 
F ix e d M o b ile 
Source: Analyses quoted by Monteiro (2005) 
Indeed, as mobile telephony became a business with a very favorable 
perspective, the firms in the sector began to fight for global operations. One of 
the central objectives has been to hold a central position in Brazil; both 
Telefónica and Telmex – América Móvil entered the Brazilian market with large 
investments. 
The biggest step undertaken by Telefónica to become the central operator of 
the mobile segment in the region was the purchase of all Bellsouth operations in 
Latin America. As can be seen in the next table, Telefónica holds mobile 
companies in thirteen countries, with participations (excluding the case of 
Mexico) that fluctuate between 24% in El Salvador and 73% in Panama, with a 
special emphasis on Brazil, where its participation is close to 50%. Telefónica 
España begins its mobile operations in Mexico in 2002 with the purchase of 
Pegaso, thereby strengthening its position as the second largest supplier of 
mobile services in the country. 
In 2001, Grupo Carso follows a similar path and decides to separate TELMEX 
from TELCEL, the mobile company, which becomes the international 
conglomerate América Móvil. Through this company, the group expands its 
influence to the entire Latin American region and reaches the position described 
in the following table. As can be seen, it has operations in ten countries, with
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
12 
participations that fluctuate (excluding the case of Uruguay) between 25% in 
Brazil and close to 76% in Mexico. América Móvil has entered the Chilean 
market through the acquisition of Smartcom, the third largest operator of that 
country. 
2. Current Market Structure 
The evolution of the market structure in the region shows some variation in the 
presence of mobile firms in the market. Table 2 shows this evolution and while 
the change in the number of mobile firms is not striking its composition was 
modified significantly. During the first period Telefónica already had a 
significant participation and América Móvil was initiating its operations in the 
region. An important change was the departure of European and U.S. based 
firms of the mobile market in Latin America. By the year 2000 firms such as 
British Telecom, France Télécom, and Bellsouth left the region. Only TIM from 
Italy maintained a position in Brazil and Argentina. Telefónica strengthen its 
position and América Móvil became a regional firm in the Latin American 
market. The companies that survived in the region are mostly owned by 
Telefónica and América Móvil.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
Table 2: Mobile Firms in Latin America (selected countries) 
Country 1995 - 2000 # 2000 – 2005 # Variation 
13 
Brazil 
Portugal Telecom, 
Telefónica, British Telecom, 
TIM, Bellsouth, Telia, SK 
Telecom, NTT, Telesystems, 
DDI. 
10 
Portugal Telecom, Telefónica, 
TIM, América Móvil, Brasil 
Telecom, Telemig, Oi. 
7 -3 
Argentina 
Bellsouth (Movicom), 
Telefónica, France Télécom 
and TIM, Agea/Clarín 
5 Telefónica, América Móvil, TIM, 
Nextel. 4 -1 
Colombia 
Milicom, Cable & Wireless, 
Bell Canada, Telefónica, 
AT&T 
5 América Móvil, Telefónica, Ola, 
Avantel 4 -1 
Chile Bellsouth, Telefónica, 
Smartcom, Entel 4 América Móvil, Telefónica, Entel 3 -1 
Ecuador Bellsouth, Conecel 2 América Móvil, Telefónica, 
Alegro 3 +1 
Telemóvil 3 Telefónica, América Móvil, 
El Salvador Telefónica, France Tëlécom, 
Telemóvil, Digicel, Intelfon 5 +2 
Guatemala Comcel, Bellsouth 2 Comcel, América Móvil, 
Telefónica 3 +1 
Honduras Millicom/Motorola, 
Telia/Megatel 2 América Móvil, Millicom 2 0 
Peru Telefónica, TIM 2 Nextel, Telefónica , América 
Móvil 3 +1 
Nicaragua Bellsouth 1 América Móvil, Telefónica 2 +1 
Panamá Cable & Wireless, Bellsouth 2 Cable & Wireless, Telefónica 2 0 
Paraguay Telecel, Núcleo 2 Telecel, Núcleo, América Móvil, 
Vox 4 +2 
Uruguay Antel, Bellsouth 2 Antel, Telefónica, América Móvil 3 +1 
Source: Telecom CIDE based on Rozas (2005) 
By the year 2005, the operations of the Mexican group América Móvil and of the 
Spanish firm Telefónica Móviles covered fifteen countries in Latin America with 
a joint participation within some countries surpassing 90% of the market, as is 
the case of Nicaragua, Colombia, Ecuador and Mexico (see Table 3).
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
14 
Table 3: Market participation by country and segment (2005) 
Country / Segment AMX 
(%) 
TEM 
(%) 
AMX+TMX 
(%) 
AMX+TMX 
(%) 2005 
Argentina 31 38 69 53.8 
Brazil 22 34 56 75.5 
Chile 17 47 64 35.1 
Colombia 63 27 90 90.1 
Ecuador 65 31 96 94.7 
El Salvador 37 23 60 56.1 
Guatemala 47 25 72 71.8 
Honduras 34 -- 34 28.3 
Mexico 77 14 91 90.4 
Nicaragua 67 33 100 98.4 
Panama -- 53 53 73.1 
Paraguay 10 -- 10 0 
Peru 35 60 95 52.0 
Uruguay 14 36 50 36.7 
Venezuela -- 44 44 45.7 
Source: Telecom-CIDE based on the companies’ annual report and 
regulator’s web pages. 
Note: Mobile density in the country is calculated as the number of 
subscribers per 100 inhabitants. Decimals were omitted. 
AMX: América Móvil, TEM: Telefónica Móviles. 
Graph 4 shows the current market participation4. In those countries where the 
number of firms has increased such as Paraguay, El Salvador y Uruguay, the 
entrants that have captured a significant portion of the market are owned by 
either Telefónica or América Móvil. 
4 Telefónica has changed the name of the firms it acquired in the region and used the generic name of 
Telefónica Movistar, except for the case of Brazil where the brand name is Vivo and is a joint venture with 
Portugal Telecom. América Móvil has adopted a different strategy. In Colombia, Ecuador and México it 
maintained the original brand names, Comcel, Porta y Telcel, respectively. In Argentina, Paraguay and 
Uruguay, it uses the generic name of CTI and in the Central American countries, as well as in Brazil the 
brand name is Claro.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
15 
Graph 4: Market Share by Country, 2005 
Argentina 
Telecom 
Personal 
29% 
Movistar 
38% 
CTI 
31% 
Nextel 
2% 
Bolivia 
Nuevatel 
15% 
Telecel 
25% 
Entel Movil 
60% 
Brazil 
Vivo 
34% 
Telemig / 
Amazônia 
Celular 
5% 
Claro 
22% 
TIM 
23% 
Oi 
12% 
Brasil 
Telecom GSM 
3% 
Otros 
1% 
Chile 
ENTEL PCS 
36% 
Movistar 
47% 
Claro 
17% 
Colombia 
Comcel 
63% 
Movistar 
27% 
Ola 
9% 
Avantel 
1% 
Ecuador 
Movistar 
31% 
Alegro 
4% 
Porta 
Celular 
65% 
El Salvador 
Telemovil 
32% 
Movistar 
23% 
Claro 
37% 
Digicel 
8% 
Intelfon 
0% 
Guatemala 
Movistar 
25% 
Claro 
47% 
Comcel 
28%
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
16 
Honduras 
Claro 
34% Tigo 
66% 
México 
Telcel 
77% 
Iusacell 
4% 
Movistar 
14% 
Unefon 
3% 
Nextel 
2% 
Nicaragua 
Movistar 
33% 
Claro 
67% 
Perú 
Claro 
35% 
Nextel 
5% Movistar 
60% 
Panamá 
Cable & 
Wireless 
47% Movistar 
53% 
Paraguay 
Vox 
12% 
Telecel 
40% 
Nucleo 
38% 
CTI 
10% 
Uruguay 
Movistar 
36% 
CTI 
14% 
Ancel 
50% 
Venezuela 
Digitel 
13% 
Movilnet 
41% 
Infonet 
1% 
Digicel/Elc 
Movistar 
44% 
a 
1% 
Source: Telecom CIDE based on operators web page and annual reports.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
17 
The number of firms in a market not always provides a clear account of market 
concentration. To obtain a more precise perspective we use the Herfindahl – 
Hirschman Index (HHI) as a measure of market concentration. 5 As table 4 
shows mobile markets in Latin America have different concentrations; the HHI 
reaches values close to 5000 in those countries where there is a carrier that has 
more than 50 percent market share. Within these countries there are cases of 
artificial duopoly and where there are a greater number of companies. The 
former group includes Honduras, Nicaragua and Panamá. In the case of 
Honduras and Nicaragua, the dominant carrier has more than 60%, market 
share; however, it is important to consider that the industry has recently been 
privatized. In the case of Panamá, this distribution is more equitable. 
Table 4: Herfindahl – Hirschman Index in Selected Countries 
País 2001 2002 2003 2004 2005 
Argentina 2477 2488 2483 2438 3232 
Bolivia 4223 3966 4430 4798 4413 
Brazil 3377 3192 2882 2631 2388 
Chile 2961 2839 2796 2872 3801 
Colombia 4215 4708 4582 4171 4752 
El Salvador 3661 3449 3140 2857 2965 
Ecuador 5145 5165 5411 5312 5267 
Guatemala 3288 3435 3606 3274 3600 
Honduras 10000 10000 10000 5900 5521 
Mexico 6448 6035 6256 5957 6148 
Nicaragua 10000 8484 3866 5248 5563 
Panama 5063 5047 5001 5000 5020 
Paraguay 4320 3823 3717 3326 3293 
Peru 4435 3753 3629 3718 4891 
Uruguay 6026 5955 5818 5384 3966 
Venezuela 3978 3702 3575 3635 3767 
Source: Telecom CIDE based on operators 
The second group of countries with a high HHI includes Bolivia, Colombia, 
Ecuador, México and Peru. Even though in these cases there are three or more 
operators in the market, the dominant carrier has more than 60 percent market 
share. The case of Mexico shows the highest concentration with an HHI of more 
than 6000 and Telcel, the dominant carrier having 77 percent market share. 
5 The Herfindahl – Hirschman Index (IHH) is a measure of market concentration and thus of its structure. It 
is the sum of the participation of the firms in the market and takes the value of 0 and 1. Zero denotes no 
concentration while one reflects a fully concentrated market.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
18 
Graph 5: HHI: Evolution, LA selected countries 
1 0 0 0 0 
8 0 0 0 
6 0 0 0 
4 0 0 0 
2 0 0 0 
0 
2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 
A rg B r a C h H o n 
M e x N ic P a r V e n 
Source: Telecom CIDE 
As graph 5 shows, in recent years the evolution of the IHH in Latin American 
has been uneven across countries. In Brazil, Paraguay and Venezuela, the 
level of concentration has diminished between 2001 and 2005. Brazil has the 
lowest concentration level in the region while in Argentina and Chile the HHI 
increased probably due to the acquisition of Bell South’s by Telefónica Móviles 
in 2005. 
In Honduras and Nicaragua, concentration decreased spectacularly due to the 
recent process of privatization and the entrant companies positioned 
themselves in the market rapidly. The case of Nicaragua stands out as the HHI 
has fluctuated drastically in a short period of time. When the market was 
liberalized, three firms entered, Telefónica, Alo PCS and Enitel (the latter 
property of América Móvil),and in 2003 América Móvil acquired another firm, 
PCS , creating a monopoly. In Honduras the situation is different; in 2003 the 
entrance of América Móvil created a more competitive market. 
Finally, the last case shown in Graph 5 is Mexico whose HHI is the highest in 
the region reaching a level of 6 thousand units with Telcel an associated firm to 
América Móvil holds a dominant position and Telefónica has not been able to 
increase its participation significantly. Today, the entrance of Telefónica and 
América Móvil into the different markets of the region determines the 
concentration of the market.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
19 
3. Penetration trends 
As the previous sections have revealed the mobile market in Latin America 
shows a significant concentration. In order to identify the outcome of this 
concentration we now turn to an analysis of the penetration trends and their 
association with concentration in the region. The growth in penetration rates are 
determined by numerous factors including income, technological innovation and 
regulation. It is clear that higher income countries have higher level of 
penetration but our interest in this section is to analyze the role of regulatory 
variables as they relate to market structure and mobile penetration. 
A critical distinguishing feature of mobile services is that it provides extensive 
coverage. However, coverage can only be provided by a limited number of firms 
when there is scarcity of radio spectrum (Grueber, 2005). In this context, firms 
may respond by product differentiation which is typically implemented during the 
early phase of diffusion and by price competition. The following sections will 
then explore the issues surrounding pricing and spectrum allocations as they 
represent two crucial regulatory factors that are, according to the literature, 
determinants of market structure as well as drivers of growth in the mobile 
market. 
4. Pricing and penetration trends 
Price setting in the mobile market is complex; at the wholesale level it includes 
interconnection between networks.6 At the retail level there are two basic ways 
to set prices, calling party pays and receiving party pays. Even though the latter 
is the most appropriate in terms of allocative efficiency, calling party pays (CPP) 
has received more attention (Gruber, 2005). 
In fact, CPP as a pricing strategy contributed to support the rapid development 
of mobile use and dramatically changed the access to voice communications. 
6 Empirical studies show that price competition in the mobile market is of the Cournot Type, that is, price is 
set above marginal cost and decrease with the number of entrants to the market (Gruber, 2005)
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
20 
Interconnectivity with the fixed users of the incumbent company had important 
effects on the development of mobile telecommunications in Latin America. The 
main issue here was defining the criteria for access charges. Normally, the fixed 
telephony operators operating within the same concession zones determine 
symmetrical access charges. The most common modality had been the 
receiving party pays one, whereby the company originating the call retains the 
full payment of the user. The second modality is to establish a formula to share 
the income, usually distributing 50% to each of the operators involved in a 
successful communication. In the case of mobile telephony, due to the 
differences in convergence, coverage and maturity between fixed and mobile 
technologies, symmetrical access charges did not allow for mobile operators to 
generate enough income to finance their companies. Therefore, initially the 
most common solution was for the user of mobile telephony to pay for both, 
outgoing and incoming calls. The high costs for the user of this solution greatly 
limited the number of subscribers. 
A number of changes in the regulatory environment as well as in the business 
strategy of several mobile telephony companies, created the conditions to 
change this limitation to the growth of the sector. One was the adoption of CPP 
and the other prepaid systems that allowed users to use the telephone without a 
large expenditure at the forefront.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
21 
Table 5: Mobile Telephony, basic information, 2005 
Country Users 
(Million) 
Penetration 
(%) 
Prepaid 
(%) 
ARPU 
(US $) 
Prepaid 
Introduction 
CPP 
Introduction 
Argentina 25 57.27 70 13.7 1998 1997 
Bolivia 2 26.37 85 12.5 1997 1996 
Brazil 92 46.25 80 11.7 1998 1994 
Chile 12 67.79 82 13.3 1998 1997 
Colombia 28 47.92 81 12.6 1996 1994 
El Salvador 2.5 35.05 82 17.9 1998 1999 
Ecuador 8 47.22 87 12.8 1996 1998 
Guatemala 5 25.02 90 14.3 1998 1999 
Honduras 2 17.79 86 15.2 1998 2000 
México 51 44.34 91 18.3 1993 1999 
Nicaragua 1.2 21.77 92 15.9 1999 1998 
Panama 1.7 41.88 90 33.3 1997 
Paraguay 1.5 30.64 83 10.0 1997 1997 
Peru 7 19.96 80 16.9 1997 1996 
Uruguay 0.8 18.51 83 11.3 1998 1995 
Venezuela 16 46.71 92 20.2 1997 1991 
Source: Telecom Data 
Brazil adopted the CPP modality from the beginning, ANATEL has established 
maximum access charges, which were applied by the different mobile 
companies. In 1997, Chile changed its regulations to introduce the “calling party 
pays” (CPP) modality, which transferred the payment for mobile calls to the 
originating party. Additionally, the country’s regulatory agencies determined 
access charges for mobile companies by applying the same methodology to 
them as to operators in non competitive conditions, thereby having the fixed 
operators pay the charges for the call. As table 5 shows the modality of CCP 
was extended to practically all countries in the region. 
The favorable interconnection arrangements with CPP offered mobile 
companies the financial resources for subsidizing the acquisition of new 
customers which accounts for the rapid growth of the sector (Gruber, 2005). 
Through these pricing strategies, mobile access increased dramatically; what 
initially appeared as a means of communications restricted to the highest 
income groups, was transformed into the principal means of access to 
telecommunications of the poorer sectors of the region. As graph 6 shows the 
adoption of CCP led to a significant increase in mobile penetration and to a 
substitution from fixed to mobile (see Graph 1).
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
22 
Graph 6: CPP impact on mobile adoption 
C P P in t r o d u c t io n 
8 0 
7 0 
6 0 
5 0 
4 0 
3 0 
2 0 
10 
0 
19 9 4 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 
A rg e n t in a B o liv ia B ra zil C h ile 
C o s ta R ic a N ic a ra g u a M exic o P e ru 
Source: Telecom CIDE 
The introduction of the prepaid option significantly increased mobile usage in 
the region. As Graph 7 shows, most of mobile usage in Latin America is 
prepaid. 
Graph 7: Prepaid vs. Postpaid 
P r e p a id v s . P o s t p a id 
12 0 
10 0 
8 0 
6 0 
4 0 
2 0 
0 
Arg e n tina 
Boliv ia 
B ras il 
C hile 
C o lom b ia 
E l S a lv ador 
Ec u a d o r 
G ua tem a la 
H o n d u ras 
Méx ic o 
N ic aragua 
Panam á 
Paraguay 
Perú 
U ruguay 
Venez u e la 
% 
P re p a g o P o s t p a g o 
Source: Telecom CIDE 
What can be observed in the Latin American case is price competition. With 
more carriers there have been new pricing strategies and more penetration. 
This has lead to decreasing ARPUS as new subscribers are low income users
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
23 
which is a tendency observed at the worldwide level (Gruber, 2005). As a region 
and at the country level, ARPUS have decreased. This trend is observed in 
Argentina, Brazil, Chile and México (Graph 8). 
Graph 8: ARPUS vs. Penetration 
8 0 
7 0 
6 0 
5 0 
4 0 
3 0 
2 0 
1 0 
0 
2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 e 
A R P U L A P e n L A A R P U A rg P e n A rg 
A R P U B ra z P e n B ra z A R P U C h P e n C h 
A R P U M e x P e n M e x 
Source: Telecom CIDE based on Pyramid 
5. Other variables 
5.1 Entry 
As Graph 9 shows, the entry of either Telefónica or América Móvil into the 
market may be associated with an increase in penetration. The year after the 
entry of any of these firms the penetration increases. It is too early to observe 
the impact in countries such as Chile and Perú since the entry of these firms 
occurred last year.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
24 
Graph 9: Market Entry and Penetration 
Argentina 
AM 
16.88 19.26 17.76 19.34 
35.35 
57.27 
70 
60 
50 
40 
30 
20 
10 
0 
2000 2001 2002 2003 2004 2005 
Brazil 
13.66 16.73 
20.06 
AM 
26.46 
35.67 
46.25 
50 
40 
30 
20 
10 
0 
2000 2001 2002 2003 2004 2005 
Mexico 
TEM 
14.24 
21.68 
25.45 28.08 
36.64 
44.34 
50 
40 
30 
20 
10 
0 
2000 2001 2002 2003 2004 2005
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
25 
El Salvador 
10 
AM 
13 13 15 
23 
34 
40 
35 
30 
25 
20 
15 
10 
5 
0 
2000 2001 2002 2003 2004 2005 
Ecuador 
5 7 
12 
18 
TEM 
27 
47 
50 
40 
30 
20 
10 
0 
2000 2001 2002 2003 2004 2005 
Colombia 
5.3 7 
AM 
11 14 
23 
48 
60 
50 
40 
30 
20 
10 
0 
2000 2001 2002 2003 2004 2005 
Source: Telecom CIDE 
5.2 Technological standards 
The worldwide expansion of mobile telephony is associated with the 
introduction of digital technologies in the early 1990s. Because with 
digitalization less radio spectrum was used it was possible to increase mobile 
usage as well as quality (Rouvinen, 2004). Moreoever, with an increased user 
base, network effects and economies of scale made mobile telephony a very
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
26 
valuable service. Regulators must decide if to allow competition between 
technologies, that is choosing a technological standard, or within technologies, 
that is, issuing licensees to multiple operators (Koski & Kretschmer, 2005) 
In Latin America there is a rapid migration from analogue technologies to digital, 
as can be seen in Table 6; it is expected that by 2008 all of the network will be 
digital (Graph 10). Empirical studies find that standardization does not promote 
price competition while other policy instruments such as number portability are 
more effective in inducing mobile diffusion. (Koski & Kretschmer, 2005) 
Table 6: Mobile network adoption by technology: Latin America and Caribbean, 1990 – 2002 
Technology 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 
Analogue 5 8 5 11 9 0 4 0 2 2 1 0 4 
Digital 0 0 0 0 6 3 11 11 35 27 23 9 15 
Graph 10: Diffusion of analogue and digital mobile Telecommunications in 
Latin America 
0 20 4 0 6 0 8 0 10 0 
2 0 0 8 e 
2 0 0 1 
% 
D ig ita l A n a lo g u e 
Source: Telecom CIDE based on 3G Americas 
5.3 Spectrum Allocation and Penetration Trends 
Radio spectrum is a key input for the supply of mobile services; it is a public 
good for exclusive use when it is used by a mobile firm. Other services such as 
radio diffusion compete for spectrum allocation and thus leave only a portion for 
mobile use. This fact along with the high sunk costs associated with the 
installation of a mobile network leads to a mobile market with a limited possible
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
27 
number of firms. Rivadeneyra (2004) finds that the average number of firms a 
mobile market has is 3.8. Whereas a study provided by Goldman and Sachs 
sustains those carriers with less than 25 percent of market share do not reach a 
break even point and argue that the ideal number of firms in a mobile market is 
no more than three. The allocation mechanism of radio frequencies may then 
provide oligopolistic rents as they represent an entry barrier (Gruber, 2006). 
In Latin America, spectrum allocation has followed a command and control 
criteria. Table 7 taken from Hazlett & Muñoz (2006) illustrates the mechanisms 
used to provide licensees in different countries in Latin America. 
Table 7: Spectrum Licensing in Latin America 
Is service 
license 
distinct 
from 
wireless 
license? 
Is the 
wireless 
license 
associated 
with a 
service? 
Does the 
service 
license 
permit new 
services? 
Technology 
neutrality? 
Spectrum 
comand 
and 
control? 
Spectrum 
property 
rigths? 
Positive 
administra-tive 
silence 
Is license 
revoked if 
licensee 
provides 
unauthoriz 
ed service? 
Argentina yes no yes yes intermediate no no 
Bolivia yes yes no no yes no yes 
Brazil yes yes no no yes no yes 
Chile yes no no no yes no yes yes 
Colombia yes yes no no yes no yes yes 
Costa Rica no no yes no yes 
Ecuador yes yes no no yes no yes 
El Salvador yes no yes yes yes no no 
Guatemala no yes yes yes yes 
Honduras yes yes no no yes no yes 
Mexico yes yes No no yes no yes 
Nicaragua yes yes yes yes intermediate no yes yes 
Panama yes yes no no yes no yes 
Paraguay no yes no no yes no depends on 
the contract 
Peru yes 
yes, but 
restricted 
ones 
no yes no no depends on 
the contract 
Uruguay yes yes No yes yes no yes 
Venezuela yes yes No yes no no 
Source: Hazlett and Muñoz (2006) 
The dominant strategy to allocate rights of use for spectrum is by specific 
services which limit its use, that is, a firm must request a new license for each 
different service it wishes to provide. In Argentina and Nicaragua there is a 
more liberal regime but the quantity of spectrum allocated is very small. In 
Guatemala and El Salvador market mechanisms play a more significant role
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
28 
and property rights in the use of frequencies are clearly defined and there are 
possibilities of increasing the assigned spectrum through an auction. 
In most of these countries, licensees are awarded by line of business, that is, 
firms need a different license to provide a new service. Technological neutrality 
is explicitly included in the telecommunications law in Argentina, El Salvador, 
Nicaragua, Uruguay and Mexico, even though in is not always implemented. 
Property rights over the spectrum are authorized only in Guatemala, while in the 
other countries in this study it is considered property of the nation and can only 
be leased. 
In Latin America most governments have allocated a relatively small amount of 
spectrum compared to countries such as the U.S or European countries. The 
average amount of assigned cellular spectrum in the region is 102 MHz, 
considerable lower than the average in the European Union of 266 MHz. Graph 
11 shows how the assigned spectrum in the largest Latin American economies 
is quite lower than European countries 
Graph 11: GDP per capita vs. MHz 
Source: Hazlett and Muñoz (2006) 
It is difficult to identify clear associations between spectrum allocation and 
penetration. One would expect to find a greater penetration in countries that 
allocate more spectrum and this does not appear to be the case. For example, 
according to the data provided in Table 7, Ecuador and Venezuela allocate
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
29 
fewer spectrums than Peru but both countries have almost twice as much 
mobile penetration than Peru. 
However, it is possible to identify some trends. The greater liberalization in the 
allocation of the spectrum and a more flexible use are probably an explanation 
for less market concentration in Guatemala, El Salvador Chile, Brazil and 
Argentina. But less market concentration does not necessarily lead to more 
penetration. In countries such as Mexico, Ecuador and Colombia, where there 
is more market concentration, mobile penetration has increased significantly. 
Table 8: Penetration, spectrum allocation and market concentration 
Country Penetration Spectrum HHI Subscribers 
(Thousands) 
Subs/MHz 
(Thousands) 
Argentina 57.27 120* 3232 25000 208.33 
Brazil 46.25 110* 2388 92000 836.36 
Chile 67.79 170.0 3801 12000 70.59 
El Salvador 35.05 137.87* 2965 2500 18.25 
Ecuador 47.22 80* 5267 8000 100.00 
Guatemala 25.02 140* 3600 5000 35.71 
Mexico 44.34 155.0 6148 51000 329.03 
Peru 19.96 130.3 4891 7000 53.72 
Venezuela 46.71 101.8 3767 16000 157.17 
Source: Telecom CIDE based on regulators´ web pages, companies´ web pages and Hazlett and Muñoz 
(2006) 
6. Future lines of research 
This document offered an exploratory view of the market structure in the mobile 
market in Latin America. Given the importance of mobile services as a mean of 
access to low income groups, the objective in this paper was to identify the 
impact that the consolidation of two firms in the region has had on mobile 
penetration as a piece of background research which will inform the Regional 
Dialogue on the Information Society (DIRSI) larger project on the mobile sector 
in Latin America. Following this line of inquiry this paper investigated the links 
between variables associated to market concentration and known to influence 
mobile penetration such as pricing and spectrum allocation. 
The findings were mixed. The first finding is that market concentration differs 
significantly across the countries. Even though both Telefónica and América 
Móvil have consolidated their position in Latin America and are today the only
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
30 
significant players at the regional level, the number of firms in each market vary 
in each country7. However, as measured by the IHH, it is possible to observe an 
increasing concentration in most countries. 
At this exploratory phase, the implications of this concentration are not clear. 
This study did not find an association between more spectrum allocation and 
neither concentration nor penetration. There are opposing cases such as Brazil 
and Mexico that have quite different levels of concentration and almost the 
same penetration. 
What is clear from this exploratory analysis is that pricing strategies had a very 
significant impact over penetration. CCP and prepaid mechanisms led to a 
significant increase in mobile access to important segments of the population. 
We observe that the introduction of both pricing strategies in Latin American 
countries led to the increase in penetration even in the absence of spectrum 
auctions. This study also identified the decrease in ARPUS during recent years. 
This trend points to the possible existence of an oligopolistic competition 
between the firms that are fighting for regional positioning rather than colluding. 
It also may be an indication of a business strategy that, after saturating the top 
end of the market, is now targeting the bottom of the pyramid where ARPUS 
may be lower. In this respect, the Regulatel Telecommunications Gaps Model 
recently published a document that measures the relative costs and potential 
revenues associated with bringing service access to unserved populations, and 
thereby determine the relative economic attractiveness, or constraints, to 
investment in expanding services into those areas. 
There are a number of knowledge gaps further research needs to consider. The 
preliminary findings in this study did not find an association between market 
concentration and mobile growth. This study suggests that pricing strategies 
have been the most significant determinant of growth. These results must be 
strengthening by further investigation into the possible impacts of market 
7 The other relevant player, TIM, is in the process of selling its assets in Latin America.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
31 
concentration. Other variables that may be influenced by market concentration 
or influence it and that were not analysed in this document are: 
• Prices and affordability, interconnection, roaming charges. 
• Elasticity of demand, household expenditure survey data. 
• Cost structure. 
• Asymmetric access to information, knowledge of customer bases. 
• Ability to dominate regulators (there is no regional level regulatory 
entity, e.g. corresponding to the EU level). 
On the other hand, the specific market concentration that the region is 
experiencing, that is, a duopolistic competition with regional operators may 
provide opportunities to business models that address the bottom of the 
pyramid segment of the market. With ARPUs diminishing in the mobile regional 
market we need to investigate new business strategies. It is important to 
evaluate through interviews with corporate actors alternative market models, as 
well as new strategies for increasing ARPU and/or new forms of revenue. With 
technological change and new next generation network opportunities, market 
actors may move towards new revenue models. 
Moreover, these new business models may provide opportunities to address the 
bottom of the pyramid users. Research into these opportunities must include the 
identification of common projects in the region. At the regional level there are 
clear "universal" issues in terms of communication needs that may require 
solutions that are not available at a low enough price or in scale. While each 
national project may have a small market, if one aggregates the demand, from 
all the regional projects the business opportunity may be interesting. Common 
projects may provide scale. At a more applicable research level DIRSI may 
identify corporate partners that can provide low cost solutions to these projects. 
This line of research should also identify "best practice" solutions to delivering 
these solutions to the bottom of the pyramid. 
This knowledge gaps in terms of empirical research on mobile services is large. 
The gap is even more significant on the demand side. We know very little on the 
consumption patterns of mobile users. To address these gaps large - scale field
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
32 
studies are a significant source of empirical data but experimental research may 
be useful in identifying determinants variables and testing competing 
hypotheses.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
33 
Bibliography 
SACHS, Goldman (2001). Telecom Services: Europe. 
SACHS, Goldman (2002). Wireless: Cellular-PCS and PHS, United States. 
GRUBER, H. (2006). 3G Mobile Licenses in Europe: Five years after. 
European 
Investment Bank. Available at: 
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=918003 
GRUBER, H. (2005), The Economics of Mobile Telecommunications. 
Cambridge 
University Press. 
HAZLETT, T. and R. Muñoz (2006). Spectrum Allocation in Latin America: An 
Economic Analysis. George Mason Law & Economics Research Paper 
No. 06-44. Available at: 
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=928521 
ITU (2006). World Telecommunication Indicators Handbook, Geneva. 
ITU (2005). Yearbook of Statistics Chronological Time Series 1995-2004, 
Geneva. 
KOSKI, H. and T. Kretschmer (2004). Entry, Standards and Competition: Firm 
Strategies and the Diffusion of Mobile Telephony, in Review of Industrial 
Organization, Springer, vol. 26(1), pages 89-113, November. 
MCKENZIE, D. and P. Small (1997). Econometric Cost Structure Estimates for 
Cellular Telephony in the Unites States, in Journal of Regulatory 
Economics, Volume 12, Number 2, September.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
34 
MONTEIRO, M. (2005). Shaping the Broadband Society Shaping the 
Broadband 
Society Fixed Mobile Convergence: Fixed Mobile Convergence: Market & 
User perspectives. Available at: 
http://www.bb2all.org/FMC-agenda.html 
RIVADENEYRA (2005). Los desafíos en la regulación en Latinoamérica para 
los 
servicios de telefonía móvil, en Revista AHCIET, Núm. 102, Abril/Junio 
2005. 
ROJAS, E. (2006). Tendencias Móviles en America Latina y México, Mobile 
Mexico and Central America Summit 2006. 
ROUVINEN, P. (2004). Diffusion of Digital Mobile Telephony - Are Devoloping 
Countries Different? Discussion Papers 901, The Research Institute of 
the Finnish Economy. Available at: 
http://www.etla.fi/files/1033_dp901.pdf 
ROZAS, P. (2005). Privatización, reestructuración industrial y prácticas 
regulatorias en el sector telecomunicaciones. Serie de recursos 
naturales e Infraestructura No. 93, CEPAL – Santiago. 
ROZAS, P. (2002). Competencia y conflictos regulatorios en la industria de las 
telecomunicaciones de América Latina, Serie Gestión Pública No. 25, 
CEPAL – Santiago. 
VALLETI, T. (2006). Market Definition and remedies in Mobile Telephony, 
Tanaka Bussines Scholl Imperial College London. Available at: 
http://www.cerna.ensmp.fr/cerna_regulation/Documents/Antitrust2006/Valletti.pdf 
VALLETI, T. (2003). Is Mobile Telephony a Natural Oligopoly? In Review of 
Industrial Organization, Springer, Volume 22, Number 1 / February.
MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 
35 
VALLETI, T. (1998), “Price Discrimination and Price Dispersion in a Duopoly”, 
FEEM. Working Paper ETA 33.98. Available at SSRN: 
http://ssrn.com/abstract=122035 
VASIL’YEVA, N. (2006). Economics in Mobile Telecommunications Firm. 
EERC/EROC Annual Student Conference “Economics of the Firm”, 
Available at: 
www.eerc.kiev.ua/eroc/anconference/ninth/papers/Vasil'yeva.pdf

More Related Content

What's hot

Information and Communications Technology in Sub-Saharan Africa: A Sector Review
Information and Communications Technology in Sub-Saharan Africa: A Sector ReviewInformation and Communications Technology in Sub-Saharan Africa: A Sector Review
Information and Communications Technology in Sub-Saharan Africa: A Sector ReviewDr Lendy Spires
 
Mobile technology – a tool for wider equality
Mobile technology – a tool for wider equalityMobile technology – a tool for wider equality
Mobile technology – a tool for wider equalitySYL
 
Kauppa ja tekniikka mobilecommunicationtechnologies
Kauppa ja tekniikka mobilecommunicationtechnologiesKauppa ja tekniikka mobilecommunicationtechnologies
Kauppa ja tekniikka mobilecommunicationtechnologiesSYL
 
Mobile phones for development in Africa
Mobile phones for development in AfricaMobile phones for development in Africa
Mobile phones for development in AfricaKutoma Wakunuma
 
Mobile phones, human rights and social justice in africa
Mobile phones, human rights and social justice in africaMobile phones, human rights and social justice in africa
Mobile phones, human rights and social justice in africaDr Lendy Spires
 
ADV 126 Media Planning & Buying - T-Mobile
ADV 126 Media Planning & Buying - T-MobileADV 126 Media Planning & Buying - T-Mobile
ADV 126 Media Planning & Buying - T-MobileKelly Hsu
 
Ict4d crossmedia iweeks_wissenbach
Ict4d crossmedia iweeks_wissenbachIct4d crossmedia iweeks_wissenbach
Ict4d crossmedia iweeks_wissenbachKerstiRu
 
The impact of internet advertisement on consumer behavior
The impact of internet advertisement on consumer behaviorThe impact of internet advertisement on consumer behavior
The impact of internet advertisement on consumer behaviorResearchWap
 
Connected Hispanics and Civic Engagement
Connected Hispanics and Civic EngagementConnected Hispanics and Civic Engagement
Connected Hispanics and Civic EngagementIvonne Kinser
 
Online Research Panels in Africa _ VoicesAfrica
Online Research Panels in Africa _ VoicesAfricaOnline Research Panels in Africa _ VoicesAfrica
Online Research Panels in Africa _ VoicesAfricaVoices Africa
 
Idrees sm sall
Idrees sm sallIdrees sm sall
Idrees sm sallsachinis
 
Mobile Democracy
Mobile DemocracyMobile Democracy
Mobile DemocracyABDELAAL
 
Innovation- MXit by Herman Heunis
Innovation- MXit by Herman HeunisInnovation- MXit by Herman Heunis
Innovation- MXit by Herman HeunisKas Media
 
Internet development report of asia pacific 2016- least developed countries (...
Internet development report of asia pacific 2016- least developed countries (...Internet development report of asia pacific 2016- least developed countries (...
Internet development report of asia pacific 2016- least developed countries (...Shreedeep Rayamajhi
 
Ict data market 2010 m ccorp_vietnam
Ict data market  2010 m ccorp_vietnamIct data market  2010 m ccorp_vietnam
Ict data market 2010 m ccorp_vietnamBrian TRAN
 
Bridging the Mobile Gender Gap-Regulator-Society: Engagement & Commitment
Bridging the Mobile Gender Gap-Regulator-Society: Engagement & CommitmentBridging the Mobile Gender Gap-Regulator-Society: Engagement & Commitment
Bridging the Mobile Gender Gap-Regulator-Society: Engagement & CommitmentAntonino Galo
 
Wireless advertising messaging legal analysis & public policy issues, a review
Wireless advertising messaging legal analysis & public policy issues, a reviewWireless advertising messaging legal analysis & public policy issues, a review
Wireless advertising messaging legal analysis & public policy issues, a reviewAndrew Olsen
 

What's hot (20)

Acornredecom2010roux
Acornredecom2010rouxAcornredecom2010roux
Acornredecom2010roux
 
Information and Communications Technology in Sub-Saharan Africa: A Sector Review
Information and Communications Technology in Sub-Saharan Africa: A Sector ReviewInformation and Communications Technology in Sub-Saharan Africa: A Sector Review
Information and Communications Technology in Sub-Saharan Africa: A Sector Review
 
Mobile technology – a tool for wider equality
Mobile technology – a tool for wider equalityMobile technology – a tool for wider equality
Mobile technology – a tool for wider equality
 
Kauppa ja tekniikka mobilecommunicationtechnologies
Kauppa ja tekniikka mobilecommunicationtechnologiesKauppa ja tekniikka mobilecommunicationtechnologies
Kauppa ja tekniikka mobilecommunicationtechnologies
 
Mobile phones for development in Africa
Mobile phones for development in AfricaMobile phones for development in Africa
Mobile phones for development in Africa
 
Mobile phones, human rights and social justice in africa
Mobile phones, human rights and social justice in africaMobile phones, human rights and social justice in africa
Mobile phones, human rights and social justice in africa
 
ADV 126 Media Planning & Buying - T-Mobile
ADV 126 Media Planning & Buying - T-MobileADV 126 Media Planning & Buying - T-Mobile
ADV 126 Media Planning & Buying - T-Mobile
 
Ict4d crossmedia iweeks_wissenbach
Ict4d crossmedia iweeks_wissenbachIct4d crossmedia iweeks_wissenbach
Ict4d crossmedia iweeks_wissenbach
 
The impact of internet advertisement on consumer behavior
The impact of internet advertisement on consumer behaviorThe impact of internet advertisement on consumer behavior
The impact of internet advertisement on consumer behavior
 
WOC Telecom Spring 2006
WOC Telecom Spring 2006WOC Telecom Spring 2006
WOC Telecom Spring 2006
 
Connected Hispanics and Civic Engagement
Connected Hispanics and Civic EngagementConnected Hispanics and Civic Engagement
Connected Hispanics and Civic Engagement
 
Online Research Panels in Africa _ VoicesAfrica
Online Research Panels in Africa _ VoicesAfricaOnline Research Panels in Africa _ VoicesAfrica
Online Research Panels in Africa _ VoicesAfrica
 
Idrees sm sall
Idrees sm sallIdrees sm sall
Idrees sm sall
 
Mobile Democracy
Mobile DemocracyMobile Democracy
Mobile Democracy
 
Pacific Alliance: Digital Connectivity
Pacific Alliance: Digital ConnectivityPacific Alliance: Digital Connectivity
Pacific Alliance: Digital Connectivity
 
Innovation- MXit by Herman Heunis
Innovation- MXit by Herman HeunisInnovation- MXit by Herman Heunis
Innovation- MXit by Herman Heunis
 
Internet development report of asia pacific 2016- least developed countries (...
Internet development report of asia pacific 2016- least developed countries (...Internet development report of asia pacific 2016- least developed countries (...
Internet development report of asia pacific 2016- least developed countries (...
 
Ict data market 2010 m ccorp_vietnam
Ict data market  2010 m ccorp_vietnamIct data market  2010 m ccorp_vietnam
Ict data market 2010 m ccorp_vietnam
 
Bridging the Mobile Gender Gap-Regulator-Society: Engagement & Commitment
Bridging the Mobile Gender Gap-Regulator-Society: Engagement & CommitmentBridging the Mobile Gender Gap-Regulator-Society: Engagement & Commitment
Bridging the Mobile Gender Gap-Regulator-Society: Engagement & Commitment
 
Wireless advertising messaging legal analysis & public policy issues, a review
Wireless advertising messaging legal analysis & public policy issues, a reviewWireless advertising messaging legal analysis & public policy issues, a review
Wireless advertising messaging legal analysis & public policy issues, a review
 

Viewers also liked

The Carbonated Soft Drink Industry: Challenges and Strategies
The Carbonated Soft Drink Industry: Challenges and StrategiesThe Carbonated Soft Drink Industry: Challenges and Strategies
The Carbonated Soft Drink Industry: Challenges and StrategiesSashenka Goodall
 
Supply and demand – researching mobile services for the University
Supply and demand – researching mobile services for the UniversitySupply and demand – researching mobile services for the University
Supply and demand – researching mobile services for the UniversityLTatUoN
 
Exploring the Benefits of Using WordPress for Learning
Exploring the Benefits of Using WordPress for LearningExploring the Benefits of Using WordPress for Learning
Exploring the Benefits of Using WordPress for LearningB.J. Schone
 
Cola Wars
Cola Wars Cola Wars
Cola Wars vameyer
 
A Case Study of Micro-Blogging for Learning at Qualcomm
A Case Study of Micro-Blogging for Learning at QualcommA Case Study of Micro-Blogging for Learning at Qualcomm
A Case Study of Micro-Blogging for Learning at QualcommB.J. Schone
 
Demand-supply-analysis (Nokia)
Demand-supply-analysis (Nokia)Demand-supply-analysis (Nokia)
Demand-supply-analysis (Nokia)Pankaj Saharan
 
demand-supply-elasticity-of-coca-cola (1)
 demand-supply-elasticity-of-coca-cola (1) demand-supply-elasticity-of-coca-cola (1)
demand-supply-elasticity-of-coca-cola (1)abhishekkumar1105
 
Business plan coffee shop
Business plan coffee shopBusiness plan coffee shop
Business plan coffee shopAmol Kadu
 

Viewers also liked (9)

The Carbonated Soft Drink Industry: Challenges and Strategies
The Carbonated Soft Drink Industry: Challenges and StrategiesThe Carbonated Soft Drink Industry: Challenges and Strategies
The Carbonated Soft Drink Industry: Challenges and Strategies
 
Supply and demand – researching mobile services for the University
Supply and demand – researching mobile services for the UniversitySupply and demand – researching mobile services for the University
Supply and demand – researching mobile services for the University
 
Exploring the Benefits of Using WordPress for Learning
Exploring the Benefits of Using WordPress for LearningExploring the Benefits of Using WordPress for Learning
Exploring the Benefits of Using WordPress for Learning
 
Cola Wars
Cola Wars Cola Wars
Cola Wars
 
A Case Study of Micro-Blogging for Learning at Qualcomm
A Case Study of Micro-Blogging for Learning at QualcommA Case Study of Micro-Blogging for Learning at Qualcomm
A Case Study of Micro-Blogging for Learning at Qualcomm
 
Demand-supply-analysis (Nokia)
Demand-supply-analysis (Nokia)Demand-supply-analysis (Nokia)
Demand-supply-analysis (Nokia)
 
Market demand and supply of coke
Market demand and supply of cokeMarket demand and supply of coke
Market demand and supply of coke
 
demand-supply-elasticity-of-coca-cola (1)
 demand-supply-elasticity-of-coca-cola (1) demand-supply-elasticity-of-coca-cola (1)
demand-supply-elasticity-of-coca-cola (1)
 
Business plan coffee shop
Business plan coffee shopBusiness plan coffee shop
Business plan coffee shop
 

Similar to Market Structure and Penetration in the Latin American Mobile Sector

Africa - Paving the digital way
Africa - Paving the digital wayAfrica - Paving the digital way
Africa - Paving the digital wayRussell Southwood
 
With US$ 107B in revenue,Latin America now accounts for 10% of the global mob...
With US$ 107B in revenue,Latin America now accounts for 10% of the global mob...With US$ 107B in revenue,Latin America now accounts for 10% of the global mob...
With US$ 107B in revenue,Latin America now accounts for 10% of the global mob...Sumit Roy
 
Telecommunications industry at cliffs edge Time for bold decisions_June2016
Telecommunications industry at cliffs edge Time for bold decisions_June2016Telecommunications industry at cliffs edge Time for bold decisions_June2016
Telecommunications industry at cliffs edge Time for bold decisions_June2016Raffaella Bianchi
 
Taking A Look At Communication History
Taking A Look At Communication HistoryTaking A Look At Communication History
Taking A Look At Communication HistoryMaggie Cavanaugh
 
Communications review-latin-america-vol16-no2
Communications review-latin-america-vol16-no2Communications review-latin-america-vol16-no2
Communications review-latin-america-vol16-no2CMR WORLD TECH
 
Assessing The Competencies Of Telecommunication Companies
Assessing The Competencies Of Telecommunication CompaniesAssessing The Competencies Of Telecommunication Companies
Assessing The Competencies Of Telecommunication CompaniesKatie Parker
 
Majority Takeover of Telekom Austria AG by America Movil SAB de CV
Majority Takeover of Telekom Austria AG by America Movil SAB de CVMajority Takeover of Telekom Austria AG by America Movil SAB de CV
Majority Takeover of Telekom Austria AG by America Movil SAB de CVSneha Malhotra
 
Politics And Reality Of Telephone Subscriber Registration
Politics And Reality Of Telephone Subscriber RegistrationPolitics And Reality Of Telephone Subscriber Registration
Politics And Reality Of Telephone Subscriber RegistrationConrad Taylor
 
Essay Technical Advancement In The Field Of Telecommunication
Essay Technical Advancement In The Field Of TelecommunicationEssay Technical Advancement In The Field Of Telecommunication
Essay Technical Advancement In The Field Of TelecommunicationMichelle Brown
 
The Future of Telecoms in Africa, Feb 2014, Deloitte
The Future of Telecoms in Africa, Feb 2014, DeloitteThe Future of Telecoms in Africa, Feb 2014, Deloitte
The Future of Telecoms in Africa, Feb 2014, DeloitteAdrian Hall
 
OmlisWP_Latin_American_Mobile_Payments
OmlisWP_Latin_American_Mobile_PaymentsOmlisWP_Latin_American_Mobile_Payments
OmlisWP_Latin_American_Mobile_Paymentshelmutokike
 
Telecom - A driving force for Investment in Latin America
Telecom - A driving force for Investment in Latin AmericaTelecom - A driving force for Investment in Latin America
Telecom - A driving force for Investment in Latin AmericaJames Doran
 
Tariffs and the affordability gap in mobile telephone services in latin ameri...
Tariffs and the affordability gap in mobile telephone services in latin ameri...Tariffs and the affordability gap in mobile telephone services in latin ameri...
Tariffs and the affordability gap in mobile telephone services in latin ameri...ACORN-REDECOM
 
My Ghana@50 Lecture on where we are on ICTs
My Ghana@50 Lecture on where we are on ICTs My Ghana@50 Lecture on where we are on ICTs
My Ghana@50 Lecture on where we are on ICTs Amos Anyimadu
 
Strategic analysis Telefonica Enterprise
Strategic analysis Telefonica Enterprise Strategic analysis Telefonica Enterprise
Strategic analysis Telefonica Enterprise Oscar Olivo Fuentes
 
Deck Presentation: LATAM Market: Opportunities and Challenges
Deck Presentation: LATAM Market: Opportunities and ChallengesDeck Presentation: LATAM Market: Opportunities and Challenges
Deck Presentation: LATAM Market: Opportunities and ChallengesArcher Inc.
 
2012-Mars-ComStrat82-BENZONI-et-al
2012-Mars-ComStrat82-BENZONI-et-al2012-Mars-ComStrat82-BENZONI-et-al
2012-Mars-ComStrat82-BENZONI-et-alAnh Tuc Nguyen
 
Swot Analysis Of Omantel
Swot Analysis Of OmantelSwot Analysis Of Omantel
Swot Analysis Of OmantelBrenda Higgins
 

Similar to Market Structure and Penetration in the Latin American Mobile Sector (20)

Africa - Paving the digital way
Africa - Paving the digital wayAfrica - Paving the digital way
Africa - Paving the digital way
 
With US$ 107B in revenue,Latin America now accounts for 10% of the global mob...
With US$ 107B in revenue,Latin America now accounts for 10% of the global mob...With US$ 107B in revenue,Latin America now accounts for 10% of the global mob...
With US$ 107B in revenue,Latin America now accounts for 10% of the global mob...
 
Telecommunications industry at cliffs edge Time for bold decisions_June2016
Telecommunications industry at cliffs edge Time for bold decisions_June2016Telecommunications industry at cliffs edge Time for bold decisions_June2016
Telecommunications industry at cliffs edge Time for bold decisions_June2016
 
Taking A Look At Communication History
Taking A Look At Communication HistoryTaking A Look At Communication History
Taking A Look At Communication History
 
Communications review-latin-america-vol16-no2
Communications review-latin-america-vol16-no2Communications review-latin-america-vol16-no2
Communications review-latin-america-vol16-no2
 
Assessing The Competencies Of Telecommunication Companies
Assessing The Competencies Of Telecommunication CompaniesAssessing The Competencies Of Telecommunication Companies
Assessing The Competencies Of Telecommunication Companies
 
Majority Takeover of Telekom Austria AG by America Movil SAB de CV
Majority Takeover of Telekom Austria AG by America Movil SAB de CVMajority Takeover of Telekom Austria AG by America Movil SAB de CV
Majority Takeover of Telekom Austria AG by America Movil SAB de CV
 
Politics And Reality Of Telephone Subscriber Registration
Politics And Reality Of Telephone Subscriber RegistrationPolitics And Reality Of Telephone Subscriber Registration
Politics And Reality Of Telephone Subscriber Registration
 
Essay Technical Advancement In The Field Of Telecommunication
Essay Technical Advancement In The Field Of TelecommunicationEssay Technical Advancement In The Field Of Telecommunication
Essay Technical Advancement In The Field Of Telecommunication
 
The Future of Telecoms in Africa, Feb 2014, Deloitte
The Future of Telecoms in Africa, Feb 2014, DeloitteThe Future of Telecoms in Africa, Feb 2014, Deloitte
The Future of Telecoms in Africa, Feb 2014, Deloitte
 
OmlisWP_Latin_American_Mobile_Payments
OmlisWP_Latin_American_Mobile_PaymentsOmlisWP_Latin_American_Mobile_Payments
OmlisWP_Latin_American_Mobile_Payments
 
Telecom - A driving force for Investment in Latin America
Telecom - A driving force for Investment in Latin AmericaTelecom - A driving force for Investment in Latin America
Telecom - A driving force for Investment in Latin America
 
Tariffs and the affordability gap in mobile telephone services in latin ameri...
Tariffs and the affordability gap in mobile telephone services in latin ameri...Tariffs and the affordability gap in mobile telephone services in latin ameri...
Tariffs and the affordability gap in mobile telephone services in latin ameri...
 
My Ghana@50 Lecture on where we are on ICTs
My Ghana@50 Lecture on where we are on ICTs My Ghana@50 Lecture on where we are on ICTs
My Ghana@50 Lecture on where we are on ICTs
 
Strategic analysis Telefonica Enterprise
Strategic analysis Telefonica Enterprise Strategic analysis Telefonica Enterprise
Strategic analysis Telefonica Enterprise
 
Deck Presentation: LATAM Market: Opportunities and Challenges
Deck Presentation: LATAM Market: Opportunities and ChallengesDeck Presentation: LATAM Market: Opportunities and Challenges
Deck Presentation: LATAM Market: Opportunities and Challenges
 
MCommerce
MCommerceMCommerce
MCommerce
 
2012-Mars-ComStrat82-BENZONI-et-al
2012-Mars-ComStrat82-BENZONI-et-al2012-Mars-ComStrat82-BENZONI-et-al
2012-Mars-ComStrat82-BENZONI-et-al
 
Swot Analysis Of Omantel
Swot Analysis Of OmantelSwot Analysis Of Omantel
Swot Analysis Of Omantel
 
Mobile in ethiopia 1
Mobile in ethiopia 1Mobile in ethiopia 1
Mobile in ethiopia 1
 

More from Dialogo regional sobre Sociedad de la Información

More from Dialogo regional sobre Sociedad de la Información (20)

Broadband and development: evidence and new research directions from Latin Am...
Broadband and development: evidence and new research directions from Latin Am...Broadband and development: evidence and new research directions from Latin Am...
Broadband and development: evidence and new research directions from Latin Am...
 
Informational lives of the poor: an exploratory study in three mexican commun...
Informational lives of the poor: an exploratory study in three mexican commun...Informational lives of the poor: an exploratory study in three mexican commun...
Informational lives of the poor: an exploratory study in three mexican commun...
 
Broadband and development: evidence and new research directions from Latin Am...
Broadband and development: evidence and new research directions from Latin Am...Broadband and development: evidence and new research directions from Latin Am...
Broadband and development: evidence and new research directions from Latin Am...
 
Impacto web 2.0 nuevos mecanismos para vincular la investigación y la políti...
Impacto web 2.0  nuevos mecanismos para vincular la investigación y la políti...Impacto web 2.0  nuevos mecanismos para vincular la investigación y la políti...
Impacto web 2.0 nuevos mecanismos para vincular la investigación y la políti...
 
Policy influence process in Research ICT Africa - Alison Gillwald
Policy influence process in Research ICT Africa - Alison GillwaldPolicy influence process in Research ICT Africa - Alison Gillwald
Policy influence process in Research ICT Africa - Alison Gillwald
 
Policy influence in ICT: experience from Asia - Helani Galpaya
Policy influence in ICT: experience from Asia - Helani GalpayaPolicy influence in ICT: experience from Asia - Helani Galpaya
Policy influence in ICT: experience from Asia - Helani Galpaya
 
Publishing and career development: how to get published - Colin Blackman
Publishing and career development: how to get published - Colin BlackmanPublishing and career development: how to get published - Colin Blackman
Publishing and career development: how to get published - Colin Blackman
 
El rol de las tic en la competitividad de las PyME - María Verónica Alderete
El rol de las tic en la competitividad de las PyME - María Verónica AldereteEl rol de las tic en la competitividad de las PyME - María Verónica Alderete
El rol de las tic en la competitividad de las PyME - María Verónica Alderete
 
Tarifas de banda larga na América Latina e Caribe: Avaliação comparativa e te...
Tarifas de banda larga na América Latina e Caribe: Avaliação comparativa e te...Tarifas de banda larga na América Latina e Caribe: Avaliação comparativa e te...
Tarifas de banda larga na América Latina e Caribe: Avaliação comparativa e te...
 
Broadband tariffs in Latin America and the Caribbean: Benchmarking and trends...
Broadband tariffs in Latin America and the Caribbean: Benchmarking and trends...Broadband tariffs in Latin America and the Caribbean: Benchmarking and trends...
Broadband tariffs in Latin America and the Caribbean: Benchmarking and trends...
 
El rol de las TIC en la competitividad de las PyME - Verónica Alderete
El rol de las TIC en la competitividad de las PyME - Verónica AldereteEl rol de las TIC en la competitividad de las PyME - Verónica Alderete
El rol de las TIC en la competitividad de las PyME - Verónica Alderete
 
Las tecnologías de la información y el cambio climático en países en desarrol...
Las tecnologías de la información y el cambio climático en países en desarrol...Las tecnologías de la información y el cambio climático en países en desarrol...
Las tecnologías de la información y el cambio climático en países en desarrol...
 
Digital poverty roxana barrantes
Digital poverty roxana barrantesDigital poverty roxana barrantes
Digital poverty roxana barrantes
 
Impacto de las TIC en el ingreso de los hogares
Impacto de las TIC en el ingreso de los hogaresImpacto de las TIC en el ingreso de los hogares
Impacto de las TIC en el ingreso de los hogares
 
Impact of ICT and innovation on industrial productivity in Uruguay
Impact of ICT and innovation on industrial productivity in UruguayImpact of ICT and innovation on industrial productivity in Uruguay
Impact of ICT and innovation on industrial productivity in Uruguay
 
Science and technology, ICT and profitability in the manufacturing sector in ...
Science and technology, ICT and profitability in the manufacturing sector in ...Science and technology, ICT and profitability in the manufacturing sector in ...
Science and technology, ICT and profitability in the manufacturing sector in ...
 
ICT in Latin America. A microdata analysis
ICT in Latin America. A microdata analysisICT in Latin America. A microdata analysis
ICT in Latin America. A microdata analysis
 
ICT and labor productivity in Colombian manufacturing industry
ICT and labor productivity in Colombian manufacturing industryICT and labor productivity in Colombian manufacturing industry
ICT and labor productivity in Colombian manufacturing industry
 
El acceso universal a las telecomunicaciones y su vinculo con las politicas d...
El acceso universal a las telecomunicaciones y su vinculo con las politicas d...El acceso universal a las telecomunicaciones y su vinculo con las politicas d...
El acceso universal a las telecomunicaciones y su vinculo con las politicas d...
 
Oportunidades de la banda ancha movil
Oportunidades de la banda ancha movilOportunidades de la banda ancha movil
Oportunidades de la banda ancha movil
 

Recently uploaded

IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019
IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019
IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019IES VE
 
UiPath Studio Web workshop series - Day 8
UiPath Studio Web workshop series - Day 8UiPath Studio Web workshop series - Day 8
UiPath Studio Web workshop series - Day 8DianaGray10
 
How Accurate are Carbon Emissions Projections?
How Accurate are Carbon Emissions Projections?How Accurate are Carbon Emissions Projections?
How Accurate are Carbon Emissions Projections?IES VE
 
9 Steps For Building Winning Founding Team
9 Steps For Building Winning Founding Team9 Steps For Building Winning Founding Team
9 Steps For Building Winning Founding TeamAdam Moalla
 
Introduction to Matsuo Laboratory (ENG).pptx
Introduction to Matsuo Laboratory (ENG).pptxIntroduction to Matsuo Laboratory (ENG).pptx
Introduction to Matsuo Laboratory (ENG).pptxMatsuo Lab
 
Salesforce Miami User Group Event - 1st Quarter 2024
Salesforce Miami User Group Event - 1st Quarter 2024Salesforce Miami User Group Event - 1st Quarter 2024
Salesforce Miami User Group Event - 1st Quarter 2024SkyPlanner
 
Computer 10: Lesson 10 - Online Crimes and Hazards
Computer 10: Lesson 10 - Online Crimes and HazardsComputer 10: Lesson 10 - Online Crimes and Hazards
Computer 10: Lesson 10 - Online Crimes and HazardsSeth Reyes
 
20230202 - Introduction to tis-py
20230202 - Introduction to tis-py20230202 - Introduction to tis-py
20230202 - Introduction to tis-pyJamie (Taka) Wang
 
Basic Building Blocks of Internet of Things.
Basic Building Blocks of Internet of Things.Basic Building Blocks of Internet of Things.
Basic Building Blocks of Internet of Things.YounusS2
 
Anypoint Code Builder , Google Pub sub connector and MuleSoft RPA
Anypoint Code Builder , Google Pub sub connector and MuleSoft RPAAnypoint Code Builder , Google Pub sub connector and MuleSoft RPA
Anypoint Code Builder , Google Pub sub connector and MuleSoft RPAshyamraj55
 
UWB Technology for Enhanced Indoor and Outdoor Positioning in Physiological M...
UWB Technology for Enhanced Indoor and Outdoor Positioning in Physiological M...UWB Technology for Enhanced Indoor and Outdoor Positioning in Physiological M...
UWB Technology for Enhanced Indoor and Outdoor Positioning in Physiological M...UbiTrack UK
 
Meet the new FSP 3000 M-Flex800™
Meet the new FSP 3000 M-Flex800™Meet the new FSP 3000 M-Flex800™
Meet the new FSP 3000 M-Flex800™Adtran
 
Nanopower In Semiconductor Industry.pdf
Nanopower  In Semiconductor Industry.pdfNanopower  In Semiconductor Industry.pdf
Nanopower In Semiconductor Industry.pdfPedro Manuel
 
OpenShift Commons Paris - Choose Your Own Observability Adventure
OpenShift Commons Paris - Choose Your Own Observability AdventureOpenShift Commons Paris - Choose Your Own Observability Adventure
OpenShift Commons Paris - Choose Your Own Observability AdventureEric D. Schabell
 
Designing A Time bound resource download URL
Designing A Time bound resource download URLDesigning A Time bound resource download URL
Designing A Time bound resource download URLRuncy Oommen
 
Bird eye's view on Camunda open source ecosystem
Bird eye's view on Camunda open source ecosystemBird eye's view on Camunda open source ecosystem
Bird eye's view on Camunda open source ecosystemAsko Soukka
 
COMPUTER 10 Lesson 8 - Building a Website
COMPUTER 10 Lesson 8 - Building a WebsiteCOMPUTER 10 Lesson 8 - Building a Website
COMPUTER 10 Lesson 8 - Building a Websitedgelyza
 
Building AI-Driven Apps Using Semantic Kernel.pptx
Building AI-Driven Apps Using Semantic Kernel.pptxBuilding AI-Driven Apps Using Semantic Kernel.pptx
Building AI-Driven Apps Using Semantic Kernel.pptxUdaiappa Ramachandran
 

Recently uploaded (20)

IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019
IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019
IESVE Software for Florida Code Compliance Using ASHRAE 90.1-2019
 
UiPath Studio Web workshop series - Day 8
UiPath Studio Web workshop series - Day 8UiPath Studio Web workshop series - Day 8
UiPath Studio Web workshop series - Day 8
 
How Accurate are Carbon Emissions Projections?
How Accurate are Carbon Emissions Projections?How Accurate are Carbon Emissions Projections?
How Accurate are Carbon Emissions Projections?
 
201610817 - edge part1
201610817 - edge part1201610817 - edge part1
201610817 - edge part1
 
9 Steps For Building Winning Founding Team
9 Steps For Building Winning Founding Team9 Steps For Building Winning Founding Team
9 Steps For Building Winning Founding Team
 
Introduction to Matsuo Laboratory (ENG).pptx
Introduction to Matsuo Laboratory (ENG).pptxIntroduction to Matsuo Laboratory (ENG).pptx
Introduction to Matsuo Laboratory (ENG).pptx
 
Salesforce Miami User Group Event - 1st Quarter 2024
Salesforce Miami User Group Event - 1st Quarter 2024Salesforce Miami User Group Event - 1st Quarter 2024
Salesforce Miami User Group Event - 1st Quarter 2024
 
Computer 10: Lesson 10 - Online Crimes and Hazards
Computer 10: Lesson 10 - Online Crimes and HazardsComputer 10: Lesson 10 - Online Crimes and Hazards
Computer 10: Lesson 10 - Online Crimes and Hazards
 
20150722 - AGV
20150722 - AGV20150722 - AGV
20150722 - AGV
 
20230202 - Introduction to tis-py
20230202 - Introduction to tis-py20230202 - Introduction to tis-py
20230202 - Introduction to tis-py
 
Basic Building Blocks of Internet of Things.
Basic Building Blocks of Internet of Things.Basic Building Blocks of Internet of Things.
Basic Building Blocks of Internet of Things.
 
Anypoint Code Builder , Google Pub sub connector and MuleSoft RPA
Anypoint Code Builder , Google Pub sub connector and MuleSoft RPAAnypoint Code Builder , Google Pub sub connector and MuleSoft RPA
Anypoint Code Builder , Google Pub sub connector and MuleSoft RPA
 
UWB Technology for Enhanced Indoor and Outdoor Positioning in Physiological M...
UWB Technology for Enhanced Indoor and Outdoor Positioning in Physiological M...UWB Technology for Enhanced Indoor and Outdoor Positioning in Physiological M...
UWB Technology for Enhanced Indoor and Outdoor Positioning in Physiological M...
 
Meet the new FSP 3000 M-Flex800™
Meet the new FSP 3000 M-Flex800™Meet the new FSP 3000 M-Flex800™
Meet the new FSP 3000 M-Flex800™
 
Nanopower In Semiconductor Industry.pdf
Nanopower  In Semiconductor Industry.pdfNanopower  In Semiconductor Industry.pdf
Nanopower In Semiconductor Industry.pdf
 
OpenShift Commons Paris - Choose Your Own Observability Adventure
OpenShift Commons Paris - Choose Your Own Observability AdventureOpenShift Commons Paris - Choose Your Own Observability Adventure
OpenShift Commons Paris - Choose Your Own Observability Adventure
 
Designing A Time bound resource download URL
Designing A Time bound resource download URLDesigning A Time bound resource download URL
Designing A Time bound resource download URL
 
Bird eye's view on Camunda open source ecosystem
Bird eye's view on Camunda open source ecosystemBird eye's view on Camunda open source ecosystem
Bird eye's view on Camunda open source ecosystem
 
COMPUTER 10 Lesson 8 - Building a Website
COMPUTER 10 Lesson 8 - Building a WebsiteCOMPUTER 10 Lesson 8 - Building a Website
COMPUTER 10 Lesson 8 - Building a Website
 
Building AI-Driven Apps Using Semantic Kernel.pptx
Building AI-Driven Apps Using Semantic Kernel.pptxBuilding AI-Driven Apps Using Semantic Kernel.pptx
Building AI-Driven Apps Using Semantic Kernel.pptx
 

Market Structure and Penetration in the Latin American Mobile Sector

  • 1. MOBILE OPPORTUNITIES: Poverty and Telephony Access in Latin America and the Caribbean Background paper Market Structure and Penetration in the Latin American Mobile Sector Judith Mariscal
  • 2. DIRSI – Diálogo Regional sobre Sociedad de la Información MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 2007 MARISCAL, JUDITH Market Structure and Penetration in the Latin American Mobile Sector. Lima, DIRSI, 2007. 35 p. il. MOBILE TELEPHONY; TELECOMMUNICATIONS; LATIN AMERICA; SERVICE MARKETING This document is under a Creative Commons Attribution-Noncommercial-No Derivative Works 3.0 Unported License. To see a copy of this license clic here http://creativecommons.org/licenses/by-nc-nd/3.0/legalcode
  • 3. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 2 Table of Contents 1. Process of consolidation in the Mobile Market in Latin America......................5 2. Current Market Structure ...............................................................................12 3. Penetration trends..........................................................................................19 4. Pricing and penetration trends.......................................................................19 5. Other variables...............................................................................................23 5.1 Entry .........................................................................................................23 5.2 Technological standards ..........................................................................25 5.3 Spectrum Allocation and Penetration Trends...........................................26 6. Future lines of research .................................................................................29 Bibliography .......................................................................................................33
  • 4. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 3 Market Structure and Penetration in the Latin American Mobile Sector Judith Mariscal Centro de Investigación y Docencia Económicas – CIDE Carretera México-Toluca 3655, Col Lomas de Santa Fe, 01210 México, DF Directora del Telecom-CIDE judith.mariscal@cide.edu As in other regions of the world, the use of mobile telephony in Latin America increased dramatically during the last decade surpassing all expectations for the industry. Mobile telephony was initiated as a premium service used mostly by professionals and during the mid-1990s it became a device used by very low income groups. In Latin America, mobile telephony provides the only source of access to some of the poorest segments of the population and it has become the central mode of communications. Mobile networks will provide coverage to 90% of the world's population by 2010, compared with 80% in 2005. In the region, despite several economic slumps, the number of mobile subscribers increased from 4 million in 1995 to close to 300 million in 2005. The pro-poor accessibility of mobile services makes this industry’s expansion an interesting area of study as a possible channel towards development. Mobile companies
  • 5. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 4 are beginning to address the bottom of the pyramid as an important market to serve; adapting business models to serve the needs of low income consumers. The fast market growth of mobile services arises through a dynamic technological innovation that promises to offer increasing opportunities for development.1 The technological progress this industry experiences constitutes a crucial source of growth. The shift from analog to digital technology, standardization and market competition increased mobile subscription diffusion (Grueber, 2001). Indeed, compared to fixed telephony, mobile services arose in a relatively more competitive environment with more firms operating in the market since its inception. . Competition between mobile carriers promoted diffusion, encouraged innovation, expanded the network and reduced prices (Rouvinen, 2004). Innovative pricing strategies such as prepaid subscription and calling party pays have contributed very significantly to the dramatic growth in mobile subscription. However, the literature on industrial organization concludes that the mobile industry sustains only a few number of firms in the market (Valleti, 2003; Gruber, 2005). Because entry to the mobile market is restricted by the available spectrum, this industry is inherently oligopolistic (Sung, 2006). Moreover, in Latin America today we observe a consolidated market; the Spanish firm Telefónica and the Mexican corporation Grupo Carso Telecom, owners of Telmex and América Móvil, have operations in twenty six countries of the region and together service sixty four percent of the regional mobile market. This study is intended to evolve as a foundational piece of background research which will inform the Regional Dialogue on the Information Society (DIRSI) larger project on the mobile sector in Latin America. The objective in this paper is twofold. On the one hand, it seeks to analyse the process of consolidation that the region experiences today in the mobile market and on the other, identify the impact this market concentration has had on mobile penetration. The 1 Technological change has modified market structure by blurring the frontiers between industries and thus having more players in the market. It is also offering more access to more services to a greater number of persons. Weiser (2005).
  • 6. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 5 ultimate objective behind this analysis is to understand how the trend in market structure may impact the use of mobiles by low income sectors of the population in Latin America. The findings in this paper are mixed. They do not identify a clear association between market concentration and mobile penetration. It suggests firms in the mobile market are competing for a regional position and not colluding; for example, the ARPUS in the mobile industry are decreasing. In accordance to results in other studies it finds that the most significant variables that have had an impact on mobile penetration are pricing strategies. The first section of this paper will offer an overview of the process of consolidation in the mobile market in Latin America and the business strategies that mobile firms have followed. The following section will identify its market structure and the last section will explore the links between variables associated to market concentration and known to influence mobile penetration such as pricing and spectrum allocation. The final comments will identify the knowledge gaps and suggest new lines of research. 1. Process of consolidation in the Mobile Market in Latin America Today the Latin American mobile market faces the increasing consolidation of two carriers in virtually every country. As Table 1 shows, América Móvil and Telefónica hold 64 percent of the Latin American market and have operations in 26 countries. Telecom Italy is the only other significant regional competitor with 12 percent of the market. Table 1: Latin America Consolidation (2005) Firm Market (%) Operates Leader in
  • 7. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 6 América Móvil 36 13 countries Colombia, Ecuador, El Salvador, Guatemala, Mexico y Nicaragua Telefónica Movistar 28 13 countries Argentina, Brazil, Chile, Panama, Peru y Venezuela Telecom Italia 12 5 countries Bolivia Others 24 The two firms together have 64% of the Latin American market Source: Telecom CIDE based on Rojas (2006) This process of consolidation occurred after more than a decade of pro-market reforms where the objective was to promote a competitive market with numerous players. While the Spanish firm Telefónica consolidated a strong position after the acquisition of the mobile operations of Bellsouth in many countries of the region in 2004 and 2005, the Mexican firm Telmex and its associated firm, America Móvil, developed an aggressive acquisition policy in local telephony as well as in the mobile sector during the late 1990s. These results are unexpected, not only because the objective of the 1990s´ reforms was to generate an atomized market, but also because the companies that today control the market were far from being the strongest in the world. This outcome may be explained, to a certain degree, by the support both companies received from their governments. During the 1990s, the reforms undertaken in the telecommunication sector in Spain and Mexico favored the creation of large companies with a strong position in all segments of this market. The strategy implemented in both cases was the result of policies that were directed towards the creation of National Champions and the success of these policies created the basis for their internationalisation. In the case of Spain, on the eve of the creation of the European Common Market, the Spanish government strengthened Telefónica before it faced competition in an open market. At the time, Spanish telecommunications were among the least modernized systems in Europe, so the government feared that Telefónica would be absorbed by the major European operators or, in the best possible scenario, that it would play a minor role within an integrated European telecommunications sector. Today, Telefónica in Latin America still receives
  • 8. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 7 significant support from the Spanish government via fiscal incentives and in some cases such as Mexico it is supported by Telefónica in Spain. The Spanish regulatory framework established a generous pricing policy, together with “cheap money” financing policy and the decision not to distribute dividends. During the first half of the 90s, the pricing policy was focused on financing the modernization of the company and on balancing tariffs. Telefónica benefited from the support of the Spanish government through solid financing mechanisms.2 Telefónica began acquiring companies that held market power with exclusivity periods in Argentina, Chile, Peru and Brazil. In the case of Mexico, as a cornerstone of the country’s modernization process, Telmex was privatised and sold as a vertically and horizontally integrated company in 1990. Achieving a privatisation successfully meant overcoming a number of political and economic obstacles. A vertically and horizontally integrated company served the purpose of satisfying the demands of the key actors in the system: the national private sector and the unions, which were lobbying against the disintegration of the company and favored the creation of a National Champion. Furthermore, as in the Spanish case, policy makers believed Telmex had to be strengthen to face the competition of the powerful U.S. telecommunications firms. The mobile firm, Telcel, was also sold to Grupo Carso and was awarded the only national licence to operate in Mexico. Initially, the Mexican group did not have a significant participation in the process of privatisation in Latin America. Its interest in the Latin American telecommunications sector began only during the second half of the 1990s and followed two different paths: the acquisition of privatised fixed telephony companies in Guatemala, El Salvador and Nicaragua and, the most important one, the expansion of its mobile telephony operations to several countries in South America that was initiated in 2003. 2 This policy was not exclusively for the telecommunications sector, but was developed also in other sectors, such as infrastructure and banking.
  • 9. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 8 In Latin America, those companies that competed in the fixed telephone segment of the market acquired a significant advantage that allowed them to consolidate a very strong position in the telecommunications market. The control of the incumbent position in Spain, Mexico, Argentina and Chile, for example, posed difficulties to competitors in overcoming first-mover advantages. The U.S.-based companies that entered the Latin American telecommunications market in what appeared to be the dynamic sectors at the beginning of the last decade, such as mobile and long distance, were not able to secure their position and today have lost all significant share of the Latin American market and preferred to return to their national market. Even pro-competitive regulatory policies were not enough to create a real level playing field that would counteract these initial strong positions. Until 1997, mobile telephony was a secondary business option for the incumbent companies. Fixed teledensity by far surpassed mobile penetration and investment in fixed telephony, being sheltered from competition and operating within a relatively weak regulatory environment, seemed to promise a major source of income. Mobile telephony firms, on the other hand, were subject to a more significant degree of competition. Therefore, as the mobile companies were facing serious difficulties in generating positive EBITDAs,3 the firms in the fixed sector owning mobile sister companies did not consider this branch of the business to be very promising. As Graph 1 shows, after 1998, while fixed teledensity tends to stagnate in most countries, mobile telephony begins to grow at two digit ratios. The average annual growth of mobile telephony users during the 2000-2005 period was 20.3% in the region, while growth in the case of traditional telephony was only 0.4%. 3 EBITDAS (Earnings Before Interest, Taxes [income taxes], Depreciation, Amortization and [owners] Salaries)
  • 10. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 9 Graph 1: Average penetration fixed and mobile in Latin America, 1990 - 2005 5 0 4 5 4 0 3 5 3 0 2 5 2 0 1 5 1 0 5 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Lines per 100/inh. F ix e d M o b ile Source: Telecom CIDE based on ITU (2005, 2006) In this context, mobile telephony became the focus of attention for the region’s two largest operators: América Móvil and Telefónica Móviles. The acquisition process of these two companies involved an aggressive campaign to attract customers and the incursion into local markets in the fight for regional positioning, which in some cases involved a reduction in average revenue per user (ARPU) (see Graph 2) during this time period as the number of users increased. This has generated a scenario of global survival as opposed to one of collusion among companies. However, as Graph 3 shows, mobile services continue to be in the forecast predictions a more profitable business than fixed services.
  • 11. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 10 Graph 2: ARPU, Latin American Selected Countries, 2003 - 2005 2 5 2 0 1 5 1 0 5 0 Arg e n tina B raz il C h ile Ec u a d o r M ex ic o Peru U S$ 2 0 0 3 2 0 0 4 2 0 0 5 Source: CIDE Telecom based on Asocel and operators The mobile business is no longer an appendix of fixed operations, as the companies decided to separate both operations in order to maximize their operations. Telefónica de España restructured its operations by creating companies specializing in mobile communications, long distance, mobile telephony, data, WEB services and call centers. The companies lost their national personality and were integrated into regional companies maintaining the generalized use of the Telefónica brand. The business strategy is no longer determined by the company in the fixed business, but rather the different segments develop their own strategies and are coordinated at a higher level. Nevertheless, the companies do take advantage of possible economies of scope that generate significant advantages over specialized operators.
  • 12. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 11 Graph 3: Mobile overtakes Fixed (Forecast Revenue, $ Billions) 1 0 0 8 0 6 0 4 0 2 0 0 2 0 0 4 2 0 0 5 2 0 0 6 e 2 0 0 7 e 2 0 0 8 e 2 0 0 9 e F ix e d M o b ile Source: Analyses quoted by Monteiro (2005) Indeed, as mobile telephony became a business with a very favorable perspective, the firms in the sector began to fight for global operations. One of the central objectives has been to hold a central position in Brazil; both Telefónica and Telmex – América Móvil entered the Brazilian market with large investments. The biggest step undertaken by Telefónica to become the central operator of the mobile segment in the region was the purchase of all Bellsouth operations in Latin America. As can be seen in the next table, Telefónica holds mobile companies in thirteen countries, with participations (excluding the case of Mexico) that fluctuate between 24% in El Salvador and 73% in Panama, with a special emphasis on Brazil, where its participation is close to 50%. Telefónica España begins its mobile operations in Mexico in 2002 with the purchase of Pegaso, thereby strengthening its position as the second largest supplier of mobile services in the country. In 2001, Grupo Carso follows a similar path and decides to separate TELMEX from TELCEL, the mobile company, which becomes the international conglomerate América Móvil. Through this company, the group expands its influence to the entire Latin American region and reaches the position described in the following table. As can be seen, it has operations in ten countries, with
  • 13. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 12 participations that fluctuate (excluding the case of Uruguay) between 25% in Brazil and close to 76% in Mexico. América Móvil has entered the Chilean market through the acquisition of Smartcom, the third largest operator of that country. 2. Current Market Structure The evolution of the market structure in the region shows some variation in the presence of mobile firms in the market. Table 2 shows this evolution and while the change in the number of mobile firms is not striking its composition was modified significantly. During the first period Telefónica already had a significant participation and América Móvil was initiating its operations in the region. An important change was the departure of European and U.S. based firms of the mobile market in Latin America. By the year 2000 firms such as British Telecom, France Télécom, and Bellsouth left the region. Only TIM from Italy maintained a position in Brazil and Argentina. Telefónica strengthen its position and América Móvil became a regional firm in the Latin American market. The companies that survived in the region are mostly owned by Telefónica and América Móvil.
  • 14. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR Table 2: Mobile Firms in Latin America (selected countries) Country 1995 - 2000 # 2000 – 2005 # Variation 13 Brazil Portugal Telecom, Telefónica, British Telecom, TIM, Bellsouth, Telia, SK Telecom, NTT, Telesystems, DDI. 10 Portugal Telecom, Telefónica, TIM, América Móvil, Brasil Telecom, Telemig, Oi. 7 -3 Argentina Bellsouth (Movicom), Telefónica, France Télécom and TIM, Agea/Clarín 5 Telefónica, América Móvil, TIM, Nextel. 4 -1 Colombia Milicom, Cable & Wireless, Bell Canada, Telefónica, AT&T 5 América Móvil, Telefónica, Ola, Avantel 4 -1 Chile Bellsouth, Telefónica, Smartcom, Entel 4 América Móvil, Telefónica, Entel 3 -1 Ecuador Bellsouth, Conecel 2 América Móvil, Telefónica, Alegro 3 +1 Telemóvil 3 Telefónica, América Móvil, El Salvador Telefónica, France Tëlécom, Telemóvil, Digicel, Intelfon 5 +2 Guatemala Comcel, Bellsouth 2 Comcel, América Móvil, Telefónica 3 +1 Honduras Millicom/Motorola, Telia/Megatel 2 América Móvil, Millicom 2 0 Peru Telefónica, TIM 2 Nextel, Telefónica , América Móvil 3 +1 Nicaragua Bellsouth 1 América Móvil, Telefónica 2 +1 Panamá Cable & Wireless, Bellsouth 2 Cable & Wireless, Telefónica 2 0 Paraguay Telecel, Núcleo 2 Telecel, Núcleo, América Móvil, Vox 4 +2 Uruguay Antel, Bellsouth 2 Antel, Telefónica, América Móvil 3 +1 Source: Telecom CIDE based on Rozas (2005) By the year 2005, the operations of the Mexican group América Móvil and of the Spanish firm Telefónica Móviles covered fifteen countries in Latin America with a joint participation within some countries surpassing 90% of the market, as is the case of Nicaragua, Colombia, Ecuador and Mexico (see Table 3).
  • 15. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 14 Table 3: Market participation by country and segment (2005) Country / Segment AMX (%) TEM (%) AMX+TMX (%) AMX+TMX (%) 2005 Argentina 31 38 69 53.8 Brazil 22 34 56 75.5 Chile 17 47 64 35.1 Colombia 63 27 90 90.1 Ecuador 65 31 96 94.7 El Salvador 37 23 60 56.1 Guatemala 47 25 72 71.8 Honduras 34 -- 34 28.3 Mexico 77 14 91 90.4 Nicaragua 67 33 100 98.4 Panama -- 53 53 73.1 Paraguay 10 -- 10 0 Peru 35 60 95 52.0 Uruguay 14 36 50 36.7 Venezuela -- 44 44 45.7 Source: Telecom-CIDE based on the companies’ annual report and regulator’s web pages. Note: Mobile density in the country is calculated as the number of subscribers per 100 inhabitants. Decimals were omitted. AMX: América Móvil, TEM: Telefónica Móviles. Graph 4 shows the current market participation4. In those countries where the number of firms has increased such as Paraguay, El Salvador y Uruguay, the entrants that have captured a significant portion of the market are owned by either Telefónica or América Móvil. 4 Telefónica has changed the name of the firms it acquired in the region and used the generic name of Telefónica Movistar, except for the case of Brazil where the brand name is Vivo and is a joint venture with Portugal Telecom. América Móvil has adopted a different strategy. In Colombia, Ecuador and México it maintained the original brand names, Comcel, Porta y Telcel, respectively. In Argentina, Paraguay and Uruguay, it uses the generic name of CTI and in the Central American countries, as well as in Brazil the brand name is Claro.
  • 16. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 15 Graph 4: Market Share by Country, 2005 Argentina Telecom Personal 29% Movistar 38% CTI 31% Nextel 2% Bolivia Nuevatel 15% Telecel 25% Entel Movil 60% Brazil Vivo 34% Telemig / Amazônia Celular 5% Claro 22% TIM 23% Oi 12% Brasil Telecom GSM 3% Otros 1% Chile ENTEL PCS 36% Movistar 47% Claro 17% Colombia Comcel 63% Movistar 27% Ola 9% Avantel 1% Ecuador Movistar 31% Alegro 4% Porta Celular 65% El Salvador Telemovil 32% Movistar 23% Claro 37% Digicel 8% Intelfon 0% Guatemala Movistar 25% Claro 47% Comcel 28%
  • 17. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 16 Honduras Claro 34% Tigo 66% México Telcel 77% Iusacell 4% Movistar 14% Unefon 3% Nextel 2% Nicaragua Movistar 33% Claro 67% Perú Claro 35% Nextel 5% Movistar 60% Panamá Cable & Wireless 47% Movistar 53% Paraguay Vox 12% Telecel 40% Nucleo 38% CTI 10% Uruguay Movistar 36% CTI 14% Ancel 50% Venezuela Digitel 13% Movilnet 41% Infonet 1% Digicel/Elc Movistar 44% a 1% Source: Telecom CIDE based on operators web page and annual reports.
  • 18. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 17 The number of firms in a market not always provides a clear account of market concentration. To obtain a more precise perspective we use the Herfindahl – Hirschman Index (HHI) as a measure of market concentration. 5 As table 4 shows mobile markets in Latin America have different concentrations; the HHI reaches values close to 5000 in those countries where there is a carrier that has more than 50 percent market share. Within these countries there are cases of artificial duopoly and where there are a greater number of companies. The former group includes Honduras, Nicaragua and Panamá. In the case of Honduras and Nicaragua, the dominant carrier has more than 60%, market share; however, it is important to consider that the industry has recently been privatized. In the case of Panamá, this distribution is more equitable. Table 4: Herfindahl – Hirschman Index in Selected Countries País 2001 2002 2003 2004 2005 Argentina 2477 2488 2483 2438 3232 Bolivia 4223 3966 4430 4798 4413 Brazil 3377 3192 2882 2631 2388 Chile 2961 2839 2796 2872 3801 Colombia 4215 4708 4582 4171 4752 El Salvador 3661 3449 3140 2857 2965 Ecuador 5145 5165 5411 5312 5267 Guatemala 3288 3435 3606 3274 3600 Honduras 10000 10000 10000 5900 5521 Mexico 6448 6035 6256 5957 6148 Nicaragua 10000 8484 3866 5248 5563 Panama 5063 5047 5001 5000 5020 Paraguay 4320 3823 3717 3326 3293 Peru 4435 3753 3629 3718 4891 Uruguay 6026 5955 5818 5384 3966 Venezuela 3978 3702 3575 3635 3767 Source: Telecom CIDE based on operators The second group of countries with a high HHI includes Bolivia, Colombia, Ecuador, México and Peru. Even though in these cases there are three or more operators in the market, the dominant carrier has more than 60 percent market share. The case of Mexico shows the highest concentration with an HHI of more than 6000 and Telcel, the dominant carrier having 77 percent market share. 5 The Herfindahl – Hirschman Index (IHH) is a measure of market concentration and thus of its structure. It is the sum of the participation of the firms in the market and takes the value of 0 and 1. Zero denotes no concentration while one reflects a fully concentrated market.
  • 19. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 18 Graph 5: HHI: Evolution, LA selected countries 1 0 0 0 0 8 0 0 0 6 0 0 0 4 0 0 0 2 0 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 A rg B r a C h H o n M e x N ic P a r V e n Source: Telecom CIDE As graph 5 shows, in recent years the evolution of the IHH in Latin American has been uneven across countries. In Brazil, Paraguay and Venezuela, the level of concentration has diminished between 2001 and 2005. Brazil has the lowest concentration level in the region while in Argentina and Chile the HHI increased probably due to the acquisition of Bell South’s by Telefónica Móviles in 2005. In Honduras and Nicaragua, concentration decreased spectacularly due to the recent process of privatization and the entrant companies positioned themselves in the market rapidly. The case of Nicaragua stands out as the HHI has fluctuated drastically in a short period of time. When the market was liberalized, three firms entered, Telefónica, Alo PCS and Enitel (the latter property of América Móvil),and in 2003 América Móvil acquired another firm, PCS , creating a monopoly. In Honduras the situation is different; in 2003 the entrance of América Móvil created a more competitive market. Finally, the last case shown in Graph 5 is Mexico whose HHI is the highest in the region reaching a level of 6 thousand units with Telcel an associated firm to América Móvil holds a dominant position and Telefónica has not been able to increase its participation significantly. Today, the entrance of Telefónica and América Móvil into the different markets of the region determines the concentration of the market.
  • 20. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 19 3. Penetration trends As the previous sections have revealed the mobile market in Latin America shows a significant concentration. In order to identify the outcome of this concentration we now turn to an analysis of the penetration trends and their association with concentration in the region. The growth in penetration rates are determined by numerous factors including income, technological innovation and regulation. It is clear that higher income countries have higher level of penetration but our interest in this section is to analyze the role of regulatory variables as they relate to market structure and mobile penetration. A critical distinguishing feature of mobile services is that it provides extensive coverage. However, coverage can only be provided by a limited number of firms when there is scarcity of radio spectrum (Grueber, 2005). In this context, firms may respond by product differentiation which is typically implemented during the early phase of diffusion and by price competition. The following sections will then explore the issues surrounding pricing and spectrum allocations as they represent two crucial regulatory factors that are, according to the literature, determinants of market structure as well as drivers of growth in the mobile market. 4. Pricing and penetration trends Price setting in the mobile market is complex; at the wholesale level it includes interconnection between networks.6 At the retail level there are two basic ways to set prices, calling party pays and receiving party pays. Even though the latter is the most appropriate in terms of allocative efficiency, calling party pays (CPP) has received more attention (Gruber, 2005). In fact, CPP as a pricing strategy contributed to support the rapid development of mobile use and dramatically changed the access to voice communications. 6 Empirical studies show that price competition in the mobile market is of the Cournot Type, that is, price is set above marginal cost and decrease with the number of entrants to the market (Gruber, 2005)
  • 21. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 20 Interconnectivity with the fixed users of the incumbent company had important effects on the development of mobile telecommunications in Latin America. The main issue here was defining the criteria for access charges. Normally, the fixed telephony operators operating within the same concession zones determine symmetrical access charges. The most common modality had been the receiving party pays one, whereby the company originating the call retains the full payment of the user. The second modality is to establish a formula to share the income, usually distributing 50% to each of the operators involved in a successful communication. In the case of mobile telephony, due to the differences in convergence, coverage and maturity between fixed and mobile technologies, symmetrical access charges did not allow for mobile operators to generate enough income to finance their companies. Therefore, initially the most common solution was for the user of mobile telephony to pay for both, outgoing and incoming calls. The high costs for the user of this solution greatly limited the number of subscribers. A number of changes in the regulatory environment as well as in the business strategy of several mobile telephony companies, created the conditions to change this limitation to the growth of the sector. One was the adoption of CPP and the other prepaid systems that allowed users to use the telephone without a large expenditure at the forefront.
  • 22. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 21 Table 5: Mobile Telephony, basic information, 2005 Country Users (Million) Penetration (%) Prepaid (%) ARPU (US $) Prepaid Introduction CPP Introduction Argentina 25 57.27 70 13.7 1998 1997 Bolivia 2 26.37 85 12.5 1997 1996 Brazil 92 46.25 80 11.7 1998 1994 Chile 12 67.79 82 13.3 1998 1997 Colombia 28 47.92 81 12.6 1996 1994 El Salvador 2.5 35.05 82 17.9 1998 1999 Ecuador 8 47.22 87 12.8 1996 1998 Guatemala 5 25.02 90 14.3 1998 1999 Honduras 2 17.79 86 15.2 1998 2000 México 51 44.34 91 18.3 1993 1999 Nicaragua 1.2 21.77 92 15.9 1999 1998 Panama 1.7 41.88 90 33.3 1997 Paraguay 1.5 30.64 83 10.0 1997 1997 Peru 7 19.96 80 16.9 1997 1996 Uruguay 0.8 18.51 83 11.3 1998 1995 Venezuela 16 46.71 92 20.2 1997 1991 Source: Telecom Data Brazil adopted the CPP modality from the beginning, ANATEL has established maximum access charges, which were applied by the different mobile companies. In 1997, Chile changed its regulations to introduce the “calling party pays” (CPP) modality, which transferred the payment for mobile calls to the originating party. Additionally, the country’s regulatory agencies determined access charges for mobile companies by applying the same methodology to them as to operators in non competitive conditions, thereby having the fixed operators pay the charges for the call. As table 5 shows the modality of CCP was extended to practically all countries in the region. The favorable interconnection arrangements with CPP offered mobile companies the financial resources for subsidizing the acquisition of new customers which accounts for the rapid growth of the sector (Gruber, 2005). Through these pricing strategies, mobile access increased dramatically; what initially appeared as a means of communications restricted to the highest income groups, was transformed into the principal means of access to telecommunications of the poorer sectors of the region. As graph 6 shows the adoption of CCP led to a significant increase in mobile penetration and to a substitution from fixed to mobile (see Graph 1).
  • 23. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 22 Graph 6: CPP impact on mobile adoption C P P in t r o d u c t io n 8 0 7 0 6 0 5 0 4 0 3 0 2 0 10 0 19 9 4 19 9 5 19 9 6 19 9 7 19 9 8 19 9 9 2 0 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 A rg e n t in a B o liv ia B ra zil C h ile C o s ta R ic a N ic a ra g u a M exic o P e ru Source: Telecom CIDE The introduction of the prepaid option significantly increased mobile usage in the region. As Graph 7 shows, most of mobile usage in Latin America is prepaid. Graph 7: Prepaid vs. Postpaid P r e p a id v s . P o s t p a id 12 0 10 0 8 0 6 0 4 0 2 0 0 Arg e n tina Boliv ia B ras il C hile C o lom b ia E l S a lv ador Ec u a d o r G ua tem a la H o n d u ras Méx ic o N ic aragua Panam á Paraguay Perú U ruguay Venez u e la % P re p a g o P o s t p a g o Source: Telecom CIDE What can be observed in the Latin American case is price competition. With more carriers there have been new pricing strategies and more penetration. This has lead to decreasing ARPUS as new subscribers are low income users
  • 24. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 23 which is a tendency observed at the worldwide level (Gruber, 2005). As a region and at the country level, ARPUS have decreased. This trend is observed in Argentina, Brazil, Chile and México (Graph 8). Graph 8: ARPUS vs. Penetration 8 0 7 0 6 0 5 0 4 0 3 0 2 0 1 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 e A R P U L A P e n L A A R P U A rg P e n A rg A R P U B ra z P e n B ra z A R P U C h P e n C h A R P U M e x P e n M e x Source: Telecom CIDE based on Pyramid 5. Other variables 5.1 Entry As Graph 9 shows, the entry of either Telefónica or América Móvil into the market may be associated with an increase in penetration. The year after the entry of any of these firms the penetration increases. It is too early to observe the impact in countries such as Chile and Perú since the entry of these firms occurred last year.
  • 25. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 24 Graph 9: Market Entry and Penetration Argentina AM 16.88 19.26 17.76 19.34 35.35 57.27 70 60 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 Brazil 13.66 16.73 20.06 AM 26.46 35.67 46.25 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 Mexico TEM 14.24 21.68 25.45 28.08 36.64 44.34 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005
  • 26. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 25 El Salvador 10 AM 13 13 15 23 34 40 35 30 25 20 15 10 5 0 2000 2001 2002 2003 2004 2005 Ecuador 5 7 12 18 TEM 27 47 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 Colombia 5.3 7 AM 11 14 23 48 60 50 40 30 20 10 0 2000 2001 2002 2003 2004 2005 Source: Telecom CIDE 5.2 Technological standards The worldwide expansion of mobile telephony is associated with the introduction of digital technologies in the early 1990s. Because with digitalization less radio spectrum was used it was possible to increase mobile usage as well as quality (Rouvinen, 2004). Moreoever, with an increased user base, network effects and economies of scale made mobile telephony a very
  • 27. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 26 valuable service. Regulators must decide if to allow competition between technologies, that is choosing a technological standard, or within technologies, that is, issuing licensees to multiple operators (Koski & Kretschmer, 2005) In Latin America there is a rapid migration from analogue technologies to digital, as can be seen in Table 6; it is expected that by 2008 all of the network will be digital (Graph 10). Empirical studies find that standardization does not promote price competition while other policy instruments such as number portability are more effective in inducing mobile diffusion. (Koski & Kretschmer, 2005) Table 6: Mobile network adoption by technology: Latin America and Caribbean, 1990 – 2002 Technology 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 Analogue 5 8 5 11 9 0 4 0 2 2 1 0 4 Digital 0 0 0 0 6 3 11 11 35 27 23 9 15 Graph 10: Diffusion of analogue and digital mobile Telecommunications in Latin America 0 20 4 0 6 0 8 0 10 0 2 0 0 8 e 2 0 0 1 % D ig ita l A n a lo g u e Source: Telecom CIDE based on 3G Americas 5.3 Spectrum Allocation and Penetration Trends Radio spectrum is a key input for the supply of mobile services; it is a public good for exclusive use when it is used by a mobile firm. Other services such as radio diffusion compete for spectrum allocation and thus leave only a portion for mobile use. This fact along with the high sunk costs associated with the installation of a mobile network leads to a mobile market with a limited possible
  • 28. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 27 number of firms. Rivadeneyra (2004) finds that the average number of firms a mobile market has is 3.8. Whereas a study provided by Goldman and Sachs sustains those carriers with less than 25 percent of market share do not reach a break even point and argue that the ideal number of firms in a mobile market is no more than three. The allocation mechanism of radio frequencies may then provide oligopolistic rents as they represent an entry barrier (Gruber, 2006). In Latin America, spectrum allocation has followed a command and control criteria. Table 7 taken from Hazlett & Muñoz (2006) illustrates the mechanisms used to provide licensees in different countries in Latin America. Table 7: Spectrum Licensing in Latin America Is service license distinct from wireless license? Is the wireless license associated with a service? Does the service license permit new services? Technology neutrality? Spectrum comand and control? Spectrum property rigths? Positive administra-tive silence Is license revoked if licensee provides unauthoriz ed service? Argentina yes no yes yes intermediate no no Bolivia yes yes no no yes no yes Brazil yes yes no no yes no yes Chile yes no no no yes no yes yes Colombia yes yes no no yes no yes yes Costa Rica no no yes no yes Ecuador yes yes no no yes no yes El Salvador yes no yes yes yes no no Guatemala no yes yes yes yes Honduras yes yes no no yes no yes Mexico yes yes No no yes no yes Nicaragua yes yes yes yes intermediate no yes yes Panama yes yes no no yes no yes Paraguay no yes no no yes no depends on the contract Peru yes yes, but restricted ones no yes no no depends on the contract Uruguay yes yes No yes yes no yes Venezuela yes yes No yes no no Source: Hazlett and Muñoz (2006) The dominant strategy to allocate rights of use for spectrum is by specific services which limit its use, that is, a firm must request a new license for each different service it wishes to provide. In Argentina and Nicaragua there is a more liberal regime but the quantity of spectrum allocated is very small. In Guatemala and El Salvador market mechanisms play a more significant role
  • 29. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 28 and property rights in the use of frequencies are clearly defined and there are possibilities of increasing the assigned spectrum through an auction. In most of these countries, licensees are awarded by line of business, that is, firms need a different license to provide a new service. Technological neutrality is explicitly included in the telecommunications law in Argentina, El Salvador, Nicaragua, Uruguay and Mexico, even though in is not always implemented. Property rights over the spectrum are authorized only in Guatemala, while in the other countries in this study it is considered property of the nation and can only be leased. In Latin America most governments have allocated a relatively small amount of spectrum compared to countries such as the U.S or European countries. The average amount of assigned cellular spectrum in the region is 102 MHz, considerable lower than the average in the European Union of 266 MHz. Graph 11 shows how the assigned spectrum in the largest Latin American economies is quite lower than European countries Graph 11: GDP per capita vs. MHz Source: Hazlett and Muñoz (2006) It is difficult to identify clear associations between spectrum allocation and penetration. One would expect to find a greater penetration in countries that allocate more spectrum and this does not appear to be the case. For example, according to the data provided in Table 7, Ecuador and Venezuela allocate
  • 30. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 29 fewer spectrums than Peru but both countries have almost twice as much mobile penetration than Peru. However, it is possible to identify some trends. The greater liberalization in the allocation of the spectrum and a more flexible use are probably an explanation for less market concentration in Guatemala, El Salvador Chile, Brazil and Argentina. But less market concentration does not necessarily lead to more penetration. In countries such as Mexico, Ecuador and Colombia, where there is more market concentration, mobile penetration has increased significantly. Table 8: Penetration, spectrum allocation and market concentration Country Penetration Spectrum HHI Subscribers (Thousands) Subs/MHz (Thousands) Argentina 57.27 120* 3232 25000 208.33 Brazil 46.25 110* 2388 92000 836.36 Chile 67.79 170.0 3801 12000 70.59 El Salvador 35.05 137.87* 2965 2500 18.25 Ecuador 47.22 80* 5267 8000 100.00 Guatemala 25.02 140* 3600 5000 35.71 Mexico 44.34 155.0 6148 51000 329.03 Peru 19.96 130.3 4891 7000 53.72 Venezuela 46.71 101.8 3767 16000 157.17 Source: Telecom CIDE based on regulators´ web pages, companies´ web pages and Hazlett and Muñoz (2006) 6. Future lines of research This document offered an exploratory view of the market structure in the mobile market in Latin America. Given the importance of mobile services as a mean of access to low income groups, the objective in this paper was to identify the impact that the consolidation of two firms in the region has had on mobile penetration as a piece of background research which will inform the Regional Dialogue on the Information Society (DIRSI) larger project on the mobile sector in Latin America. Following this line of inquiry this paper investigated the links between variables associated to market concentration and known to influence mobile penetration such as pricing and spectrum allocation. The findings were mixed. The first finding is that market concentration differs significantly across the countries. Even though both Telefónica and América Móvil have consolidated their position in Latin America and are today the only
  • 31. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 30 significant players at the regional level, the number of firms in each market vary in each country7. However, as measured by the IHH, it is possible to observe an increasing concentration in most countries. At this exploratory phase, the implications of this concentration are not clear. This study did not find an association between more spectrum allocation and neither concentration nor penetration. There are opposing cases such as Brazil and Mexico that have quite different levels of concentration and almost the same penetration. What is clear from this exploratory analysis is that pricing strategies had a very significant impact over penetration. CCP and prepaid mechanisms led to a significant increase in mobile access to important segments of the population. We observe that the introduction of both pricing strategies in Latin American countries led to the increase in penetration even in the absence of spectrum auctions. This study also identified the decrease in ARPUS during recent years. This trend points to the possible existence of an oligopolistic competition between the firms that are fighting for regional positioning rather than colluding. It also may be an indication of a business strategy that, after saturating the top end of the market, is now targeting the bottom of the pyramid where ARPUS may be lower. In this respect, the Regulatel Telecommunications Gaps Model recently published a document that measures the relative costs and potential revenues associated with bringing service access to unserved populations, and thereby determine the relative economic attractiveness, or constraints, to investment in expanding services into those areas. There are a number of knowledge gaps further research needs to consider. The preliminary findings in this study did not find an association between market concentration and mobile growth. This study suggests that pricing strategies have been the most significant determinant of growth. These results must be strengthening by further investigation into the possible impacts of market 7 The other relevant player, TIM, is in the process of selling its assets in Latin America.
  • 32. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 31 concentration. Other variables that may be influenced by market concentration or influence it and that were not analysed in this document are: • Prices and affordability, interconnection, roaming charges. • Elasticity of demand, household expenditure survey data. • Cost structure. • Asymmetric access to information, knowledge of customer bases. • Ability to dominate regulators (there is no regional level regulatory entity, e.g. corresponding to the EU level). On the other hand, the specific market concentration that the region is experiencing, that is, a duopolistic competition with regional operators may provide opportunities to business models that address the bottom of the pyramid segment of the market. With ARPUs diminishing in the mobile regional market we need to investigate new business strategies. It is important to evaluate through interviews with corporate actors alternative market models, as well as new strategies for increasing ARPU and/or new forms of revenue. With technological change and new next generation network opportunities, market actors may move towards new revenue models. Moreover, these new business models may provide opportunities to address the bottom of the pyramid users. Research into these opportunities must include the identification of common projects in the region. At the regional level there are clear "universal" issues in terms of communication needs that may require solutions that are not available at a low enough price or in scale. While each national project may have a small market, if one aggregates the demand, from all the regional projects the business opportunity may be interesting. Common projects may provide scale. At a more applicable research level DIRSI may identify corporate partners that can provide low cost solutions to these projects. This line of research should also identify "best practice" solutions to delivering these solutions to the bottom of the pyramid. This knowledge gaps in terms of empirical research on mobile services is large. The gap is even more significant on the demand side. We know very little on the consumption patterns of mobile users. To address these gaps large - scale field
  • 33. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 32 studies are a significant source of empirical data but experimental research may be useful in identifying determinants variables and testing competing hypotheses.
  • 34. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 33 Bibliography SACHS, Goldman (2001). Telecom Services: Europe. SACHS, Goldman (2002). Wireless: Cellular-PCS and PHS, United States. GRUBER, H. (2006). 3G Mobile Licenses in Europe: Five years after. European Investment Bank. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=918003 GRUBER, H. (2005), The Economics of Mobile Telecommunications. Cambridge University Press. HAZLETT, T. and R. Muñoz (2006). Spectrum Allocation in Latin America: An Economic Analysis. George Mason Law & Economics Research Paper No. 06-44. Available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=928521 ITU (2006). World Telecommunication Indicators Handbook, Geneva. ITU (2005). Yearbook of Statistics Chronological Time Series 1995-2004, Geneva. KOSKI, H. and T. Kretschmer (2004). Entry, Standards and Competition: Firm Strategies and the Diffusion of Mobile Telephony, in Review of Industrial Organization, Springer, vol. 26(1), pages 89-113, November. MCKENZIE, D. and P. Small (1997). Econometric Cost Structure Estimates for Cellular Telephony in the Unites States, in Journal of Regulatory Economics, Volume 12, Number 2, September.
  • 35. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 34 MONTEIRO, M. (2005). Shaping the Broadband Society Shaping the Broadband Society Fixed Mobile Convergence: Fixed Mobile Convergence: Market & User perspectives. Available at: http://www.bb2all.org/FMC-agenda.html RIVADENEYRA (2005). Los desafíos en la regulación en Latinoamérica para los servicios de telefonía móvil, en Revista AHCIET, Núm. 102, Abril/Junio 2005. ROJAS, E. (2006). Tendencias Móviles en America Latina y México, Mobile Mexico and Central America Summit 2006. ROUVINEN, P. (2004). Diffusion of Digital Mobile Telephony - Are Devoloping Countries Different? Discussion Papers 901, The Research Institute of the Finnish Economy. Available at: http://www.etla.fi/files/1033_dp901.pdf ROZAS, P. (2005). Privatización, reestructuración industrial y prácticas regulatorias en el sector telecomunicaciones. Serie de recursos naturales e Infraestructura No. 93, CEPAL – Santiago. ROZAS, P. (2002). Competencia y conflictos regulatorios en la industria de las telecomunicaciones de América Latina, Serie Gestión Pública No. 25, CEPAL – Santiago. VALLETI, T. (2006). Market Definition and remedies in Mobile Telephony, Tanaka Bussines Scholl Imperial College London. Available at: http://www.cerna.ensmp.fr/cerna_regulation/Documents/Antitrust2006/Valletti.pdf VALLETI, T. (2003). Is Mobile Telephony a Natural Oligopoly? In Review of Industrial Organization, Springer, Volume 22, Number 1 / February.
  • 36. MARKET STRUCTURE AND PENETRATION IN THE LATIN AMERICAN MOBILE SECTOR 35 VALLETI, T. (1998), “Price Discrimination and Price Dispersion in a Duopoly”, FEEM. Working Paper ETA 33.98. Available at SSRN: http://ssrn.com/abstract=122035 VASIL’YEVA, N. (2006). Economics in Mobile Telecommunications Firm. EERC/EROC Annual Student Conference “Economics of the Firm”, Available at: www.eerc.kiev.ua/eroc/anconference/ninth/papers/Vasil'yeva.pdf