July 2014

> BROADBAND IN LATIN AMERICA: MARKET PRICES AND TRENDS

Aileen Agero
Instituto de Estudios Peruanos
aileen.aguero@gmail.com

> This paper was carried out with the assistance of a grant given to IEP
from the International Development Research Centre and the Canadian
International Development Agency (CIDA), Ottawa, Canada.

Aileen Agero
BROADBAND IN LATIN AMERICA: MARKET PRICES
AND TRENDS

Lima: Regional Dialogue on the Information

Society,(2015).

2
This work is licensed under a Creative Commons Attribution Noncommercial 2.5 Peru License.
You are free to copy, distribute and transmit the work under the terms established in the license:
http://creativecommons.org/licenses/by-nc-sa/2.5/pe/legalcode

Table of contents

1.Introduction...................................................................................................5
2. Fixed Broadband 6
2.1 The cost of residential access6
2.2 Promised quality in fixed broadband service .10
2.3 Affordability in fixed broadband services..12
3. Mobile Broadband 15
3.1 The cost of mobile access ...15
3.2 Affordability of mobile broadband18
Conclusion..20

Index of figures
Figure 1: Monthly price of the least expensive fixed broadband plan in USD
PPP (2014) ...............................................................6
Figure 2: Variation in the monthly Price of the least expensive broadband
plan, 2013 vs. 2014 (in %) ..7
Figure 3: Monthly price of fixed broadband plans (average and median) in
USD PPP (2014) ......8
Figure 4: Unit price of Mbps download speed - USD PPP ..9
Figure 5: Variation in the unit price per Mbps of download 2013 vs. 2014 (in
%) .10
Figure 6: Promised download speed (average and median) in Mbps
(2014)...........................................................................................................11
Figure 7: Variation in advertised download speed (mean) 2013 vs. 2014 (in
%) ...12
Figure 8: Price of fixed broadband (median) as a percentage of GDP per
capita (2014) ..13
Figure 9: Monthly subscription price for fixed broadband (least expensive
plan) as a percentage of GDP per capita (in %).14
Figure 10: Price of the monthly mobile broadband contract plan with at least
1 GB of download (in USD PPP).16
Figure 11: Monthly price of the least expensive fixed broadband vs. the least
expensive monthly mobile contract plan with at least 1 GB of download (in
USD PPP) ...17
Figure 12: One-day mobile broadband prepayment plan with at least 100 Mb
of download capacity (in USD PPP) .......18
Figure13: Median of the 30-day post-pay mobile broadband contract plan
with 1GB of download as a % of GDP per capita....19

1. Introduction
Research network DIRSI (Dilogo Regional sobre Sociedad de la
Informacin) makes a sizeable effort to annually monitor prices for
broadband services in Latin America. The objective is to promote dialogue
in regard to widening access to broadband services within sectors with
the lowest economic resources based on solid evidence and comparable
data between countries. The study uses as a reference the OECD
methodology, which takes into account the main operators in the market
(with a market share above 10%), and defines broadband as an Internet
access service that promises a data download speed greater than 256
Kbps. Based on the data collected, the final monthly price (including
taxes) is calculated, prorated over the first 24 months of service.

The study is conducted during the second quarter of the year and covers
fixed access services (residential access) and mobile. In 2014 information
was gathered for 1,391 plans offered by 48 fixed Internet service operators
(including fixed wireless access services). In the mobile segment, 2,132
plans offered by 28 operators in 20 countries throughout the region.
Following standard methodology, the prices are converted to US dollars
(USD) using the purchasing power parity (PPP) rates1.

11

In the case of Venezuela, it was not possible to obtain figures from operator CANTV one of the
largest in the market therefore this country does not appear in the different figures and tables
throughout this report.

2. FIXED BROADBAND
2.1

The cost of residential access

The first indicator of reference presents prices for the least

expensive plans to access fixed Internet service. It is a key indicator that

represents the minimum expense for a household to access the Internet in
each country, independent of any characteristics of the planwhich may
vary from country to country. As seen in Figure 1, Argentina is the country
where the entry plan is the most expensive, while Costa Rica has the most
affordable plan. It is worth highlighting that in some of the lower cost
markets in terms of plan fees like Costa Rica, Uruguay and Brazil, the least
expensive plans are associated with government plans aimed at
promoting broadband access among low income households (in the case
of Costa Rica and Uruguay, it is offered by the countrys state-owned
telecommunications operators).
Figure 1: Monthly price of the least expensive fixed broadband plan in USD PPP
(2014)

Source: Prepared by the author

6

The annual trend shows a sustained reduction in the cost of fixed

Internet in the region. Figure 2 indicates that in the great majority of
countries, the price of the least expensive plans has dropped over the
period 2013-2014. On average, a 16% reduction was registered in the region
over the past year, which increases the decline to almost 30% over the
period 2010-2014. Exceptions are Peru and Honduras, where the markets
evolution should be monitored in function of the increase in prices of the
most affordable plans offered by operators.
Figure 2: Variation in the monthly Price of the least expensive broadband plan,
2013 vs. 2014 (in %)

Source: Prepared by the author

Figure 3 offers a wider-scope view of the access market, by representing

average values (average and median) of all of the plans studied in each
market. It is important to keep in mind that the average combines plans
with very varied access quality and diverse technologies (FTTH, xDSL,
DOCSIS). Therefore, the median is probably a better representation of the
typical plan that the operators offer in each country.
Figure 3: Monthly price of fixed broadband plans (average and median) in USD
PPP (2014)

Promedio

Paraguay

Bolivia

Rep. Dominicana

Panam

Ecuador

Honduras

El Salvador

Argentina

Promedio AL

Per

Trinidad y Tobago

Mxico

Nicaragua

Chile

Colombia

Jamaica

Venezuela

Guatemala

Costa Rica

Uruguay

Brasil

400
350
300
250
200
150
100
50
0

Mediana

Source: Prepared by the author

The figure shows the large dispersion in fixed broadband prices in the
region. Meanwhile in Uruguay the typical plan costs $37 USD PPP, in
Paraguay this cost quadruples to $168 USD PPP. The average for the region
reaches $69 USD PPP. Countries with greater levels of developmentlike
Uruguay, Brazil and Chiletend to be located below the average, although
some countries with low GDP per capita like Guatemala and Nicaragua
stand out. Some less developed countries in the fixed broadband market
come in above the average.
8

The unit price per Mbps of download speed is a key metric because it
normalizes prices to the same unit. In other words, its an indicator that
makes it possible to compare the costs of almost 1,400 plans studied over
the base of a single promised price/quality unit of service. Figure 4
presents the results obtained based on this indicator. Again, a significant
dispersion of prices is observed in the region: while the so-called mega
download speed costs (on average) barely $2.9 USD PPP in Uruguay, in
Bolivia the same mega is available for $199.6 USD PPP (70 times more). It
is important to note that this indicator favors countries with a greater
development of FTTH networks, given that fiber services to the home tend
to offer a lower cost per unit of Mbps download speed.

Figure 4: Unit price of Mbps download speed - USD PPP

Source: Prepared by the author

The following figure shows the rapid decline in the unit cost per Mpbs of
download speed that has occurred in the region. On average, said cost has
fallen 31% in the last year, and 64% in the period 2010-2014. This positive
trend accompanies the launch of deals offering speeds higher than
30Mbps in different countries. In this study, we found that these high
9

speed deals (+30 Mbps) are available in 11 of the 20 countries that compose
the sample. The rapid fall in prices stand out in some of the higher cost
markets like Bolivia, Nicaragua and Honduras, which makes it possible to
forecast a progressive convergence of prices on a regional level.

Figure 5: Variation in the unit price per Mbps of download 2013 vs. 2014 (in %)

Source: Prepared by the author

2.2 Promised quality in fixed broadband service

The study also computes the operators promised quality in regard to each
plan offered. While the promised quality differs from the real quality, it is
assumed that this difference would not vary significantly between
countries, which grants validity to the comparative results obtained.
Figure 6 presents the results of mean values for the countries of the
region. As observed, there is a very significant dispersion in promised
quality of the service, which reflects very different realities in terms of the
level of development of the residential broadband market. Meanwhile, in
Uruguay, the typical plan promises a download speed of 51Mbps (in large

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part thanks to the important investment in fiber services to the home

realized by the operator ANTEL), in the markets less developed like Bolivia
and Guatemala this promise barely reaches 2.1Mbps. The median for the
region reaches 9Mbps.

Figure 6: Promised download speed (average and median) in Mbps (2014)

Source: Prepared by the author

Upon comparing it with the prior year, a significant increase of the

promised speed is found in the majority of the countries, which reflects
the important investments carried out by operators. As Figure 7 shows,
there has been an increase in the download speed advertised of the
typical plan in the majority of the countries studied (12 countries); in the
others, either a slight reduction is observed (Bolivia, Dominican Republic
and Costa Rica) or no change is recorded (Argentina, Chile, Guatemala,
Mexico, and Trinidad and Tobago).

11

Figure 7: Variation in advertised download speed (mean) 2013 vs. 2014 (in %)

Source: Prepared by the author

2.3 Affordability in fixed broadband services

The specialized literature has amply discussed the importance of the
affordability of telecommunications services. The studies coincide in
indicating price as one of the main barriers (although not the only one) to
the adoption of the service by households in the region. The Figure 8
presents the indicator of the affordability of the broadband services in the
region, which measures how much the cost of a typical fixed broadband
plan (mean) represents in respect to the GDP per capita of each country in
the same unit of time. It includes a line of 5% of income per capita,
considered to be the threshold above which the cost of broadband is
considered unaffordable.
As Figure 8 shows, 11 of the 20 countries studied have levels of
affordability above the suggested threshold of 5%. The regional average of
8.2% is strongly associated with the presence of very low levels of
affordability in Paraguay, Bolivia and Honduras, where high price levels
combine with low income levels.
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Figure 8: Price of fixed broadband (median) as a percentage of GDP per capita

(2014)
30,0%
24,0%
22,8%
21,6%

25,0%
20,0%
15,0%

3,0% 3,1% 3,6% 3,8%

4,3%

5,3%

6,4% 6,6% 7,0%

8,2% 9,0%

9,1%

Ecuador

2,2% 2,4% 2,6% 2,8%

Colombia

5,0%

Argentina

10,0%

Promedio AL

12,4%12,5%

Paraguay

Bolivia

Honduras

Nicaragua

El Salvador

Rep. Dominicana

Guatemala

Per

Jamaica

Panam

Mxico

Costa Rica

Venezuela

Brasil

Chile

Trinidad y Tobago

Uruguay

0,0%

Source: Prepared by the author

However, when considering the same indicator in regard to the price of

the least expensive plan available in each market (Figure 9) we observe
that only three of the 20 countries that compose the sample have
affordability levels above said threshold. In this case, the regions average
is reduced to 3%. It should be considered that the average is strongly
associated with the good performance of countries with higher income
levels and lower costs of broadband services, like Costa Rica, Uruguay and
Brazil. In general terms, this indicator makes it possible to say that the
region

presents

good

levels

of

affordability,

although

notorious

deficiencies persist in the cases of Bolivia and Central America.

13

Figure 9: Monthly subscription price for fixed broadband (least expensive plan)
as a percentage of GDP per capita (in %)

Bolivia

Honduras

Nicaragua

Guatemala

El Salvador

Jamaica

Per

Paraguay

Promedio AL

Argentina

Mxico

Rep. Dominicana

Venezuela

Ecuador

Panam

Chile

Colombia

Brasil

Uruguay

Costa Rica

Trinidad y Tobago

10,0%
9,0%
8,3%
9,0%
7,5%
8,0%
7,0%
6,0%
4,6%5,0%5,0%
5,0%
3,6%3,6%
3,2% 3%
4,0%
2,7%3,0%
2,3%
3,0%
1,8%2,1%
2,0% 0,7%0,8%0,8%1,0%1,4%1,4%
1,0%
0,0%

Source: Prepared by the author

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3. MOBILE BROADBAND
3.1 The cost of mobile access
Mobile broadband service plays an important role in terms of its potential
to connect low income population segments. With the progressive
migration of the park of terminals toward the so-called smartphones,
mobile broadband access constitutes a key alternative for connectivity in
the region. Despite the markets concentration in a few actors, the offering
of mobile broadband plans in Latin America is very broad, registering
more than 2,100 plans in 2014. Unlike fixed broadband, promised
download speeds are not used as a differentiating characteristic in the
mobile segment; mobile plans rely on features such as payment mode,
length of service, and, mainly, the data download capacity (measured in
MB or GB).
The complexity of the offering requires that a set of values be selected in
representation of different consumer profiles. In first place, the results of
the indicator that calculates the price of post-pay plans (with a contract)
with at least 1 GB of data download capacity. This type of offering is
comparable to the basic plans in the fixed broadband segment, and as
such can be considered an imperfect substitute for the plans in said
segment. Figure 10 suggests an important price dispersion in this
segment, although significantly less than in the case of fixed broadband.
While some countries with good performance indicators in fixed
broadband also stand out for their low mobile broadband prices (Uruguay,
in particular), it is worth noting that some countries that perform poorly in
the fixed broadband segment revert their position with very good
performance in the mobile segment, as in the case of Guatemala and El

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Salvador. The opposite case is Bolivia, which also performs poorly in the
mobile broadband segment.

Figure 10: Price of the monthly mobile broadband contract plan with at least 1 GB
of download (in USD PPP)

90,0
80,0
70,0
60,0
50,0
40,0
30,0
20,0
10,0
0,0

Precio medio

Precio Mediana

Source: Prepared by the author

Given that the plans calculated in the aforementioned indicator have

comparable characteristics (in terms of promised speed, payment mode,
and other relevant variables) to the basic plans in the fixed broadband
segment, in Figure 11 there is a comparison for each market studied. In
both cases, the least expensive plans found in each market that meet the
desired characteristics are taken into account. The figure shows that the
mobile alternative is the most affordable in 16 of the 20 countries that
compose the sample, which confirms the potential of these services to
expand the connectivity at the base of the income pyramid.

16

Figure 11: Monthly price of the least expensive fixed broadband vs. the least
expensive monthly mobile contract plan with at least 1 GB of download (in USD
PPP)
Argentina

59,0

26,7

Bolivia

46,6

15,5

Mxico

44,4

31,6

Per

35,8

27,3

Venezuela

34,7
33,3

Jamaica

33,2

El Salvador

32,4

Honduras

31,2

Panam

31,0

Guatemala

29,9

Nicaragua

29,1

Promedio AL

28,5

Rep. Dom.

22,7
11,1
16,2
20,8
6,0
24,0
19,4
9,8

Chile

20,4

Paraguay

20,5

26,8
25,0

41,1

Ecuador

20,2

30,8

TyT

18,6

20,2

Col

15,2
13,6

7,5

Uru.

11,8

12,4 Brasil
9,8
60,0

40,0

20,0

20,8

CR

3,2
0,0

20,0

40,0

60,0

Source: Prepared by the autor

The following indicator (Figure 12) refers to the one-day prepaid plans that
allow at least 100 MB of download data. These plans represent different
consumption profiles from the previous indicator, because they are
favored by users with lower resources whose incomes tend to fluctuate
throughout the month or the year. A significant dispersion of prices
17

throughout the region is seen, with the better performing countries being
those with the greater development of the broadband market, with the
exception of Mexico that continues to stand out for its poor performance
in the mobile broadband segment.

Figure 12: One-day mobile broadband prepayment plan with at least 100 Mb of
download capacity (in USD PPP)

10,0
9,0
8,0
7,0
6,0
5,0
4,0
3,0
2,0
1,0
0,0

9,5

5,5 5,6 5,7

0,6

1,0 1,0

1,5

2,6
2,0 2,1 2,3

3,2

3,5 3,6 3,7

4,6
4,1 4,2 4,4

Source: Prepared by the author

3.2 Affordability of mobile broadband

Like in the case of fixed broadband, Figure 13 shows the proportion that
represents the price (median) of a 30-day post-pay plan (1GB of download)
in relation to the GDP per capita in each country, highlighting the 5%
reference threshold. There are 13 countries that are below or right at the
set threshold, which contrasts favorably with the fixed service. However,
the lower-income countries in the region like Nicaragua, Bolivia and
Honduras continue situated above the desired threshold. The average of

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the region is located at 5%, which corroborates the favorable level of

affordability of the mobile broadband service.

Figure 13: Median of the 30-day post-pay mobile broadband contract plan with
1GB of download as a % of GDP per capita
15%
14%

16%
14%
12%

10%

10%

8%

8%
6%
4%
2%

5% 5% 5% 5% 6%

6%

4% 4%
3% 3% 3% 3% 3%
2%
2%
1% 2%

Nicaragua

Bolivia

Honduras

Ecuador

Paraguay

El Salvador

Per

Jamaica

Promedio AL

Guatemala

Mxico

Rep. Dominicana

Colombia

Venezuela

Brasil

Panam

Costa Rica

Chile

Trinidad y Tobago

Argentina

Uruguay

0%

Source: Prepared by the autor

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CONCLUSION
Using standard methodology, applied in OECD countries, this report seeks
to reveal the prices and (promised) quality of mobile and fixed broadband
in the Latin American region. The indicators show the great variability in
the region in terms of the development of markets and price and quality
levels. On the one side, there are countries like Uruguay, Costa Rica and
Brazil, where the services have price and quality levels comparable to
more developed countries. On the other, there are countries like Bolivia
and a large part of Central America, where the lack of infrastructure and
the limited size of the market leads to high prices and low service quality.
The trend, however, reflect positive progress made throughout the region,
especially in some of the less developed markets, which allows a
moderate optimism in respect to a gradual convergence of prices in the
mid-term.

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