Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Tuesday, August 11, 2020

Neutral operators and shared networks: A new competitive scenario is set up in AMBA

The amount of investments, the complexity of the permits, and the complex macroeconomic context in Argentina have led neutral operators to advance with proposals for sharing through different models in the last two years. Two of them are the American Tower and Ufinet.

For Convergencia Research, 2019 closed with 1.15 million fiber accesses to the home. This figure is 20% higher than ENACOM's public data: for the entity, the barrier of one million accesses was only exceeded in the first quarter of 2020.

Of the total estimated by  Convergencia Research, 49% of the clients belong to Telefónica, 28% to other operators in the interior, 21% to Claro and the rest to Telecom. For the latter, only the accesses in Santiago del Estero, Catamarca, La Rioja, Tucumán and Reconquista Santa Fe are estimated, where it launched services in April 2019. 

Claro also bets on Mendoza, but not on the same localities as Telefónica. There are two particular cases: one is Santiago del Estero, where FTTH will compete with two local cable companies -Express and TIC (Supercanal) -; the other is La Rioja, where Sapem and Telecom deploy fiber.

The entry of Telecom into the aforementioned provinces - mostly Supercanal area - together with the deployments of Claro and Telefónica, left the competition in the large urban centers of each province. The graphic that accompanies this page shows that Claro and Telecom will fight the NOA, Córdoba, Santa Fe and part of Cuyo; Telefónica will dispute its FTTH in Patagonia faced with Fibertel's cable modem, and in a more comfortable position in Cuyo, where Supercanal deploys fiber more slowly. Claro also bets on Mendoza, but not on the same localities as Telefónica. There are two particular cases: one is Santiago del Estero, where FTTH will compete with two local cable companies -Express and TIC (Supercanal) -; the other is La Rioja, where Sapem and Telecom deploy fiber.

In the AMBA the competitive scenario would be modified. Telecom, Claro, Movistar and Telecentro do not always compete among the four, but generally two. This situation would be altered with the entry of neutral operators, such as American Tower and Ufinet. The way in which those who go over these shared networks decide to compete may change, for the UBB, the quasi-duopolic scenario known since the inception of fixed broadband. In addition, in the suburbs there is an immediate potential market of 110,000 homes not yet connected and another 100,000 served by wireless technologies that sooner or later will demand fiber, according to estimates from Convergencia Research.

The other key of 2020 is that fiber, not only for households but also because of its importance for 5G, has become the investment temptation for local companies. With the economic crisis, pandemic and disputes over the problem of the use of poles, Iplan is committed to playing with its fiber in the suburbs, Córdoba and Santa Fe, and Grupo Boldt enters smaller towns with a model that leaves the door open to alliances with cooperatives. They are not the only cases of local investment, but they are two concrete examples.

Sharing of infrastructure to reach the home with fiber is on the race. The amount of investments, the complexity of the permits, and the complex macroeconomic context in Argentina have led neutral operators to advance with proposals for sharing through different models in the last two years. Two of those models are American Tower and Ufinet.

The tower company of American Tower works with fiber in a neutral sharing model in municipalities in the North and Northwest areas of the Buenos Aires metropolitan area (AMBA). In the Municipality of San Martín, Claro and Movistar joined this model. As confirmed to Convergencialatina by Josefina Hernández Gazcón, Director of Legal and Public Affairs for Argentina and Paraguay at American Tower, in these countries the company did not change its position regarding the projected investments, although it noted a “more conservative” position on the part of operators due to their delinquency problems, which affect their ability to continue investing.

Ufinet, whose infrastructure option for FTTH networks takes advantage of the laying of the electricity distribution network, maintained its deployment in line with what was planned despite the pandemic. It advances with a focus on the southern half of the City of Buenos Aires and the southern and southwestern districts of Greater Buenos Aires. In the remainder of the year they expect to complete the deployment in Florencio Varela and start at least two new areas that would add 100,000 homes and thus reach the milestone of one million homes passed.

Sharing could change the game of competition at AMBA. Until now, with regard to high-speed networks (more than 25 Mbps), households - with a few exceptions - in the best of cases had two offers, that of a cable operator and one of the incumbents, or that of two cable companies, or that of a cable company and Claro's fiber. Depending on how Claro and Movistar decide to address the sharing.

 

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