lac: opportunities to invest in - dynamic spectrum...
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LAC: Opportunities to invest in telecommunications infrastructure Mauricio Agudelo, TMT specialist
LAC: Opportunities to invest in telecommunications infrastructure Mauricio Agudelo, TMT specialist
New York City, February 26th, 2015
Although broadband is expanding at a fast pace in LAC, there is still a gap in broadband infrastructures that affect the competitiveness and the social inclusion of the region
Key messages
Imbalances in the penetration of ICT services have created a significant gap allowing to continue to increase investment and the volume of resources allocated to broadband and the sector in general
CAF promotes an agenda of knowledge-management to add value to financing and investment operations, all of which serve as a catalyst to push the region into a new level of development and progress
(1) Tasa anual de crecimiento compuesta (CAGR)Fuente: CAF con base en ITU , Banco Mundial, reguladores nacionales.
Aunque la digitalización avanza rápidamente en la región, aúnpersisten desafíos significativos en varios frentes
% hous.Internet (2014)
% Mobile
BB (2014)
Singapur
México
Colombia
América Latina y el Caribe
OECD
Corea
Inv.telcom/inhab - $US(2010-2014)
142
41
45
34
77
109
88
35
38
36
81
98
N/A
46
ND
74
213
136,508
Argentina 54 52 63
25.7 30.3 35.5 41.857.5
2010 2011 2012 2013 2014
3337 39 41 42
2428 31 33 36
2010 2011 2012 2013 2014
3% 7% 13% 20%34%
8%9%
10%11%
12%
2010 2011 2012 2013 2014
Households with PC and connectivity% International
bandwidth/internet userKbits/s
FixedMobile CAGR(1) =85%
CAGR(1) = 8,5%
50,0%35,5%% of Internet
users
PC
206 237 264 286 312
2010 2011 2012 2013 2014
Internet
TACC = 22%
3
Internet usersMillions
Broadband evolution% (#access/pop.)
LAC broadband market dynamics LAC relative performance
Fuente: CAF en base a TAS.6.1%6.1%6.0%
5.6%5.2%
5.0%4.7%4.7%
4.6%4.5%
4.4%4.3%
4.2%4.1%
4.0%3.8%3.7%3.7%
3.4%3.3%
2.8%
ColombiaParaguayHonduras
BoliviaPerú
El SalvadorBrasil
PanamáEcuadorUruguay
C. AméricaALC
Trinidad & TobagoCosta RicaGuatemala
ArgentinaR. Dominicana
ChileVenezuela
MéxicoNicaragua
Empleo (miles)
PIB(USD$mn.)
América Latina: impacto económico de la digitalización(2005 - 2013) Contribución al crecimiento (%)
Donde se generan flujos de valor que contribuyen de forma importante alcrecimiento de las economías de la región
6 285 86 35.540 41 9.327 26 7.626 26 1.766 64 12.781 6 1.532 7 1.637 2 936
901 195.009 39 6.544 6 1.707
17 2.870 5 1.231
371 88.480 9 1.064
34 7.3099 1.1226 795
11 1.055153 15.976 4
Investment gap for the telecommunications sector in LACMillions of dollars
159,568
216,000
359,000
Historical investment 2006-2012
Estimated investment as per
historical2013-2020
Required investment2013-2020
Investment gap by 2020 $143.000
CAGR: 9% Investment
per-capita: US$48,50
Source: Convergencia Research – AHCIET,(2013); TAS for CAF (2014): IDEAL 2014
Main goals at 2020:o Fixed-broadband: 75%o Mobile broadband:95%
Required broadband network investments as % of GDP:
o Historical ratio:0,48o Estimated ratio: 0,80
Gross investments:Historical : $216 billionRequired: $359 billion
Closing the gap with the EU’s Digital Agenda
An investment of ~$143 thousand-million is needed by 2020 to close the broadband infrastructure gap with more advanced economies
Transport infrastructure
(regional/international)
Applications and content
providers
Access to services and
browsing
End user
New data transport pressure requires an augmentation in international capacityUnderdeveloped cross-border and
interregional connectivity demand for high-bandwidth backbone networks Low international bandwidth per internet
users must be increased for quality reasons
Interconnection Points
Low internet adoption due to
affordability issues and evidence of
quality issues
Source: CAF Analysis
Contents and apps are
requiring higher
bandwidth
Service providers –
access networks
Uneven development of regional and domestic interconnection infrastructure requires new regional and domestic IXP/CDN Latency problems need to be
solved to support advanced broadband services
Limited backbone capillarity demands for new access (last mile) networks as well as new spectrum auctions Low availability of mobile and fixed
broadband access require new broadband funding mechanisms Data-intensive demand implies opportunities
to deploy cutting-edge technologies
Investment opportunities in telecommunications infrastructure are related to bottlenecks in broadband data transport, interconnection and internet access
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Overview of main estimated telecommunications investments in LAC(1)
Internet exchange points infrastructure
Small-size telecom projects
Fiber-optic submarine cable systems(1)
$,6000-9,600
Value chain layerEstimated
investments (MM)
Nationwide and inter-regional fiber backbones (2)
~$7,000
$47 - 61
Satellite broadband communications
~$3,048
Transition to Digital Terrestrial Television (TDT)
~$3,243
(1) Estimated investments according to public information from governments, regulators, international institutions and public operators; (2) Estimated based on planned fiber sub cables and the average cost per cable; (3) Shared LTE network for México is not included. Source: CAF analysis (2014)
~$8,500
Main challenges in LAC broadband infrastructure determine a new portfolio of investment opportunities along related value chain layers
Investment range ~$27,838 – 31,452
Deployment of fiber-optic backbone networks in LAC
Transport infrastructure
(regional/international)
Interconnection Points
Service providers –
access networks
Source: CAF (2013), “Towards Latin American digital transformation”, based on data from national regulator and public ministers.
Additionally, high-bandwidth inter-regional backbone networks are a key part of the investment needed for broadband in LAC
Cross-border and interregional
connectivity in LAC is currently
underdeveloped
REDCA – deploy of fiber-optic capacity in Central America ($30MM)
UNASUR –Connectivity fiber-
optic network (under feasibility
study)
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The development of interconnection infrastructure in Latin America has been uneven so far Latin America: existing IXPs2014
Source: CAF (2014), “Internet interconnection framework for LAC”
Transport infrastructure
(regional/international)
Interconnection Points
Service providers –
access networks
Between 10% (developed countries) and 30% (developing countries) is due to transit costs Reducing transit costs
could result in a decrease of prices for the consumer
COUNTRY Number of IXPs Situation
Argentina 11 Plans to deploy an additional 10
Bolivia 2 3 planned
Brazil 28 Plans to deploy an additional 16
Chile 7 Integrated among operators
Colombia 1 Only for local traffic
Costa Rica 1
Ecuador 2 Only for local traffic
El Salvador 1 Partially operational
Guatemala 0 None planned
Honduras 0 None planned
Mexico 1 1 in formation
Nicaragua 1 Housed at a university
Panama 1 Informal agreement between ISPs
Paraguay 1 No connection from main operator.
Peru 1 Operated by a consortium.
Trinidad & Tobago
1
Uruguay 0
Venezuela 0 1 planned.
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As a result, a large portion of Latin American internet traffic is still interconnecting in the United States
Latin America: flow of internet traffic PB, 2012
Nearly 63% of LAC traffic is international, mainly from the U.S.
Developing a better regional interconnection infrastructure would:o Bring contents closer to the
regiono Latency reductiono Less pressure on existing
capacity
Transport infrastructure
(regional/international)
Interconnection Points
Service providers –
access networks
Source: CAF (2014), “Internet interconnection framework for LAC”
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Therefore, CAF has recommended deploying three interregional IXP points and a network of domestic points
Recommended regional IXP infrastructure
Even though the recommendations map does not include anIXP in the southern part of the region, the NAP in BuenosAires (created under the CABASE framework) has positioneditself as a de facto IXP since it already links ANTEL(Uruguay’s main ISP) and is also testing connections withChile and Brazil.Source: CAF (2014): IXP Interconnection.
Transport infrastructure
(regional/international)
Interconnection Points
Service providers –
access networks
Level Localization Total CAPEX(MM)
Interregional PanamáBrazil (Fortaleza), Peru (Chilca) US$ 28.8 – 32.0
National 1 Colombia, México US$ 6.9 – 11.0
National 2 BoliviaPeru (national) US$ 2.8 – 6.0
National 3Costa Rica
Guatemala, Honduras, El Salvador, Paraguay, Asunción
US$ 8.9 – 12.0
Total US$ 47.4 – 61.0
Indicative demand for pooled financing of small projects
Type of Infrastructure
Potential Sources
Total ProjectsAmount per project Total Funding
Requiredof Projects (US$ million) (US$ million)
Last Mile Fiber Optic Networks
Argentina National Government 27 $ 1.5 $ 40.5
Argentina municipalities160 small municipalities (*) $ 1.0 $ 160.0
16 larger municipalities (**) $ 2.5 $ 422.5
Brazil municipalities (****) 1280 $ 3.0 3,843
Colombia municipalities 1000 $ 2.9 $ 2,900.0
Peru municipalities 204 districts $ 3.0 $ 612.0Total 2,687 $7,978.0
Small Wireless Distribution Networks
Mini-telcos NA $ 1.0 NARural wireless service providers (countries to be determined)
1-3 $ 40.0 $ 40.0
Total 1-Mar $40.0
Internet Exchange Points
Brazil 1 $ 9.6 $ 9.6Colombia 5 $ 0.46 $ 2.3Central America 5 $ 2.82 $ 14.1Mexico 5 $ 0.46 $ 2.3Total 16 $28.3
Municipal Wi-Fi Networks
Regional Wi-Fi Programs (***) $ 5.00
Small municipalities (Brazil) 3300 $ 0.15 $495.0
Total 3,3 $ 495.0TOTAL 6,006 $8,541.3
(*) Less than 2,000 population(**) Average 5,000 population(***) Covering 50 municipalities CAPEX and OPEX for 5 years(****) Districts under 100,000 populationSource: CAF (2015): “Innovative broadband financing mechanisms”.
There is a reported shortfall of funding of ~ US$ 8.5 billion for small telecom projects considered critical to national development objectives
Integration and sustainable development
Institutional Framework
ICTInfrastructure
Digital EconomyDigital public
services
Human Capital and Digital
inclusiveness
1 Development of connectivity
2 DTT and the digital dividend
6 Fostering ICT industries and innovation
7 Incorporating ICTs into the productive system
8 Development of human capital
9 Promoting connectivity and technification
3 Development of ICT regulations
4 Spectrum management
5 Development of public policies
10 Promoting e-Government
11 Reliability in the use of ICTs
12 Incorporation of ICTs within high-impact sectors
ICT
Fram
ewor
kCAF supports actively ICT development in LAC: the role of telecommunications infrastructure
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Movilización de recursos CAF(US$mn)
Inversiones patrimoniales (equity)
Créditos (soberanos)
Cooperación Técnica
$ 226mn
$ 22mn
$ 6,6mn
En los últimos años, CAF ha financiado proyectos telecom por US$427mn y destinado ~USD$7mn a cooperación técnica en TIC
Créditos (no soberanos) $ 179mn
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