The GSMA director for Latin America affirms that the elimination of obsolete regulations and regulatory simplification are crucial to foster innovation and promote the development of new digital products and services. There are three main recommendations: spectrum management, infrastructure deployment and regulatory simplification.
In early July, the 5G Americas entity announced that global 5G connections reached almost 2 billion in the first quarter of 2024 with 185 million new additions. In it, the United States leads with 220 million connections. However, Latin America also saw strong growth in 4G LTE and 5G connections, adding eight million new LTE connections for a total of 591 million across the region.
“In the global context, Latin America is not one of the leading regions in digital terms or in the deployment of new technologies. But the good news about that is that with each G or generation that has been implemented, the number of years it has taken to arrive in Latin America compared to the leading countries has been reduced," explains Lucas Gallitto, director for Latin America, to AméricaEconomía. of the GSMA.
GSMA is a global association that brings together more than 750 telecommunications operators and digital ecosystem companies around the world, with a total of approximately 1,500 members. In Latin America it has around 60 operators, among which are WOM, Tigo, Millicom, Telefónica, América Móvil, among others.
According to the report 'The Mobile Economy in Latin America 2024' released in June by GSMA, 55% of mobile connections in the region will be 5G by 2030. At the end of 2023 it was 5% and a boost of 14% is expected. % by 2025. In April, 29 operators in 10 countries launched commercial 5G services.
Although 65% of the regional population uses mobile internet, 225 million people still do not do so due to barriers related to factors such as the affordability of devices and the lack of digital skills, explains the same study. The usage gap is wider in Guatemala (49%), Ecuador (41%) and Peru (40%).
Still, the mobile sector contributed US$520 billion (8% of GDP) to the Latin American economy, and contributed 2 million jobs in 2023. The industry's economic contribution is projected to increase to US$600 billion by 2030, of which US$70 billion will come from 5G. Likewise, licensed cellular IoT connections will increase from 74 million in 2023 to 125 million by 2030, with Brazil and Mexico representing almost 80% of the growth, highlights the GSMA study.
LATIN ADVANCE
THE GSMA conducts country-specific studies, generally coinciding with presidential elections, to highlight the challenges and opportunities in telecommunications and 5G to incoming governments.
The two most recent are Mexico and Panama, countries that held elections this year.
In this regard, in Panama, the recent electoral situation has highlighted the need for a long-term spectrum policy, an efficient deployment of digital infrastructure and regulatory simplification. “The GSMA suggestion suggests that the next Panamanian government focus on a spectrum pricing methodology that facilitates investment, improves predictability in band allocation, and addresses local regulatory obstacles that hinder the installation of infrastructure,” says Gallitto.
While Mexico faces important challenges related to the cost of spectrum.
According to the director for Latin America of GSMA, in the Aztec country approximately 90% of the cost of spectrum is defined by annual fees established by Congress, instead of a market mechanism. “This has resulted in one of the highest spectrum prices in the region and has led to spectrum giveback situations. The next government will have the opportunity to review and possibly reform this scheme to improve the situation,” says Lucas Gallitto.
Other countries are also on GSMA's radar regarding their performance.
Chile is a notable example in this sense. “Historically, Chile has led in digitalization, connectivity and speed indices. The country has adopted a strategic vision in the exploitation of the radio spectrum, offering concessions for 30 years, which provides certainty and encourages investment,” says the GSMA executive. Although the Chilean government is considering reviewing this approach, Gallitto believes that the stability provided by this policy has been a key factor in its leadership in the region and globally.
Brazil, for its part, faces a series of challenges due to its size and complexity. However, it has demonstrated significant progress in the implementation of 5G.
“The country carried out a successful tender in which 93% of the value of the spectrum was allocated to coverage commitments, prioritizing expansion over collection. Additionally, Brazil has worked on consolidating the operator market, reducing the number of operators to three, and facilitating infrastructure deployment through the antenna law and other reforms. This has led to 5G coverage in Brazil being around 40% of the population, exceeding the milestones established by the government,” explains Gallitto.
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Colombia has also made significant efforts to improve its spectrum management. “Recently, the country has implemented auctions with more favorable conditions for investment, and efforts are being made to renew spectrum concessions at more affordable prices. This represents positive progress in the right direction for the Colombian market,” says Gallitto.
While Peru faces political and management challenges, including the recovery of band 3.5 for 5G. “Here, consistency in public policy is seen as the biggest challenge, due to frequent political changes, which complicates the implementation of long-term strategies,” indicates the executive.
In Argentina, the new government is addressing the problems that arose with Decree of Necessity and Urgency 690, which has been repealed. Lucas Gallitto says this change could lay the groundwork for stronger growth in the telecommunications sector. “Although there is still the challenge of establishing an effective public-private agenda between the industry and the new authorities,” he says.
WHY DOES 5G MATTER?
“It is not just about building 5G networks, but [being clear] about what we want those networks for,” Gallitto remarks.
And 5G is mainly designed to meet the needs of the B2B market, offering advanced solutions. And for that reason, GSMA considers that the absence of policies that stimulate demand in industrial sectors may limit the impact of 5G and delay its implementation.
Among the specific barriers to demand, according to Gallito, are high tariffs, the lack of relevant content that is also in the Spanish language, and poor accessibility to equipment, since the cost of the devices continues to be a relevant barrier. “Mobile devices are often considered luxury goods due to high tax rates, making them difficult to acquire for a significant portion of the population and businesses,” notes Gallitto.
In addition to the challenges related to demand, there are obstacles that affect the supply and the infrastructure necessary for 5G, highlighted by regulation and low efficiency in granting permits for the installation of infrastructure required for 5G deployment.
“Each [Latin American] municipality has its own rules for installing towers and antennas, which increases the costs and complexity of the process. The absence of a single window for permits further complicates the situation,” says the executive.
Latin America is a region characterized by its great heterogeneity in the adoption of new technologies. According to Lucas Gallitto, on the one hand, we find countries that are fast-followers , that is, nations that quickly adopt new technologies with an advanced vision of the future and well-developed technical skills. These countries tend to incorporate technological innovations relatively quickly, driven by a favorable regulatory environment and adequate infrastructure.
This contrast is clearly reflected in the evolution of generations of mobile technology in the region. For example, the adoption of 3G in Latin America occurred several years after its launch in leading countries, such as South Korea and Japan.
“The transition to 4G was faster, and the adoption of 5G, although still in development, has been even more agile compared to previous generations. Thus, while some countries are advancing rapidly in the implementation of new technologies, others continue to face significant challenges, showing two sides of the same coin in the technological advance of the region,” he emphasizes.
According to Gallitto, despite advances in coverage, the region still faces a significant challenge: 28% of Latin Americans who have access to 4G coverage do not use it. Due to a lack of relevant local content and a lack of digital skills. That is, even if the service is free, some people do not use it because they do not know how to take advantage of it or they do not find content that interests them.
It is essential that public policies not only focus on increasing the supply of connectivity, but also on addressing these underlying problems.
“We need to work on improving the availability of relevant content and promoting digital skills among users. This will help ensure that we not only expand coverage, but also increase the adoption and effective use of technology, reducing the gap between available coverage and its actual utilization,” concludes Gallitto.
