Urgent Policy Reforms Needed to Deliver the Latest Generation of Mobile Broadband Services; Only 5 Per Cent of Central American Population Connected to 4G

Panama City, Panama : Countries in Central America are lagging behind in deployment and adoption of mobile broadband, putting the region’s future economic development at risk, according to the new report ‘Assessing the impact of market structure on innovation and quality: Driving mobile broadband in Central America’ released by the GSMA today. The report, authored by GSMA Intelligence, examines the development of mobile broadband in six countries (Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama) across the region and reveals how market structures are affecting network coverage, quality and innovation.

Most governments in Central America have recognised that delivering mobile broadband to all citizens is essential to economic growth. However, the report reveals that while 4G networks are available to 35 per cent of the population in Central America, the technology still only accounts for around 5 per cent of all mobile connections in the region, a sixth of that seen in South America.

“Closing the gap in 4G adoption in Central America requires urgent policy reform,” said Sebastián Cabello, Head of Latin America, GSMA. “This report underscores the need for governments and regulators to act quickly in reforming policies that will encourage investment and innovation and enable operators to deliver high-quality mobile broadband services to consumers and businesses across the region.”

Regulation Should Not Discourage Mobile Consolidation

The report shows that those markets in the region with fewer operators experience better levels of investment and innovation, higher speeds and a better quality of service. It provides evidence to governments and regulators in Central America that a review of merger regulations is needed to allow more consolidation. For example, the study identifies specific barriers in Panama, where regulations prohibit mergers between operators (currently being reviewed), and in El Salvador, where merger reviews have disregarded the role of efficiencies.

Greater Spectrum Needed for 4G Rollouts

The report also highlights the need for governments to allocate more spectrum and in sufficient amounts to achieve coverage rollout. On average, the countries surveyed in this study have only 100 MHz assigned for 4G services, compared to an average of 163 MHz in Latin America. Further, the region only has 21 per cent of the required spectrum estimated by the International Telecommunication Union for the effective provision of mobile services, with El Salvador, Guatemala and Panama in particular falling short.

Regulation is Holding Back Development and Innovation

The report reveals that certain legacy retail and wholesale regulations are limiting operators’ ability to compete and innovate. A number of the markets examined have price caps (El Salvador, Honduras and Nicaragua) and constraints on price discrimination (Costa Rica, Nicaragua and Panama). The study notes that price caps could discourage investment, while price discrimination barriers could reduce the consumption of mobile services. The research also found that direct regulations on network quality are also in place in Costa Rica, Honduras and Panama, a factor that can be counterproductive to improving network quality longer term.

“Encouraging the deployment of mobile broadband is particularly important in Central America, where mobile is the only solution to bringing connectivity to communities outside large urban centres,” continued Cabello. “An increase in broadband penetration will have a direct impact on the region’s economic growth and this must be a top priority for governments and industry alike.”

The report ‘Assessing the impact of market structure on innovation and quality: Driving mobile broadband in Central America’ is available here in English and here in Spanish.