Good connections

When it comes to telecommunications, it’s not by chance that Chile stands out among its Latin American neighbors. Chile’s geographic isolation makes the ability to communicate with the rest of the world essential to its continued economic growth.

Chile has one of the most advanced telecommunications infrastructures in South America. IMD’s 2011 World Competitiveness Yearbook ranks Chile first in Latin America and 25th out of 59 economies worldwide. One reason it gives for this is the country’s high-standard telecommunications.

Nokia’s Connectivity Scorecard 2011I ranks Chile second worldwide and adds that in Latin America, Chile outperforms Mexico and has widened the gap with Argentina and Brazil.

“The country’s internet and broadband penetration rates are among the highest in the region, and this can be attributed to its relatively high GDP, its receptivity towards new technologies, and high competition in its broadband market,” the report states.

Chile is especially strong when it comes to adopting new technologies, it adds. It was the first country in Latin America to introduce mobile WiMAX, IPTV, wireless TVoIP, triple-play services, EDGE, and mobile voice-to-text, and was second to introduce 3G mobile services.

Competition for quadruple-play (mobile and fixed telephone, TV and internet package) is heating up as well.

“The trend in Chile is more advanced than in other countries of the region,” says Sergio Rodriguez, a telecommunications analyst with Fitch Ratings, who adds that fixed telephony operators offer quadruple play as a way to control disconnection rates as subscribers move to mobile.

telecoms1Penetration of mobile telephony in Chile is almost twice the world average and on a par with rates in industrialized countries. In one decade the number of subscribers rose from 5 million to 19.8 million by 2010 when, in December, penetration reached 115.6 per 100 inhabitants.

Chile’s telecoms operators are also investing in fiber optic networks. The government estimates overall investments in fiber optics will amount to $7 billion in the next few years.

“Investments will focus on fiber optic to homes and investments in mobile networks to improve data (mobile broadband) services and investments in LTE,” says Patricio Soto, a telecommunications analyst with IDC.

LTE, or Long Term Evolution, is a standard for wireless high-speed data communication comprised of 3G and 4G networks.

telecoms2Furthermore, Chile stands out for internet use. In 2010 it had 1.8 million fixed-line broadband connections, up 6.3% on 2009, with a household penetration rate of 36.58%. Mobile broadband access has shown explosive growth—a 649% increase between January 2009 and December 2010, according to Subtel (Undersecretariat for Telecommunications).

Including both fixed-line and mobile, Chile had more than 3 million internet connections by December 2010.

The main trends in internet use include a drop in the price of computers, increased broadband access even among lower-middle sectors of the population, an increase in average connection time, the growth of social networks (about 26% of Chileans have Facebook accounts) and the greater internet use for transactional activities.

According to the Santiago Chamber of Commerce (CCS), Chile’s digital economy accounted for sales of over $32 billion in 2010, up 10% on 2009, with e-commerce accounting for $20 billion of that amount.

Over the next few years, e-commerce is expected to continue to show high growth. In the medium term, the outlook is also extremely promising as the market incorporates the generation that grew up with computers, mobile telephones and online social networks.

For more information:
Subtel (Subsecretaría de Telecomunicaciones)

Success Story
Virgin Mobile targets Chile

Virgin Mobile Latin America has selected Chile for the initial launch its mobile virtual network operator (MVNO) service in Latin America. Virgin Mobile plans to launch the service in Chile before the end of the first quarter 2012.

“We felt that the progressive economy, transparent and inviting regulatory environment along with Chile being ‘right-sized’ for our first launch in the region made it an ideal market candidate,” says Peter Macnee, President and CEO of Virgin Mobile Latin America. “In addition, Virgin’s heritage of building a strong brand relationship with the youthful market segment suits the generally young demographic of this country.”

Part of the UK-based group founded by Richard Branson, Virgin Mobile will provide its MVNO services in Chile using Movistar’s Telefonica Chile network.

“Chile will be our first launch with Colombia likely our second,” Macnee says. “We are focusing much of our business development efforts now on Argentina, Brazil and Mexico.”

The company will invest more than $200 million to develop MVNO service across Latin America over the next five years. Latin America is viewed as an attractive market for MVNOs because of its significant population of more than 550 million, strong economic prospects and attractive regulatory structures, there are fewer than ten active MVNO operators in the region.

In a statement, Richard Branson said: “We are excited to have made such good progress towards launching our first mobile business in Latin America in Chile. This is an exciting project for Virgin and we believe Virgin Mobile Chile customers will be delighted by the services we will be offering them at launch.”

An MVNO is a company that provides mobile phone services but does not have its own licensed frequency allocation of radio spectrum, nor does it necessarily have all of the infrastructure required to provide mobile telephone service.