Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Monday, March 06, 2023

Antel's response to the opening of the Internet market

The state-owned company improved its connection speed, both upstream and downstream, and expanded its fiber coverage in order to strengthen its position in the face of the arrival of five new competitors. The risk of betting on being the wholesaler and leaving the last mile for new entrants.

In Uruguay there is a phenomenon that does not usually occur in other countries: basic services are provided by state-owned companies. Thus, water, electricity, telephone and Internet are provided by public companies, which are very efficient, which is why a state-owned company in Uruguay is synonymous with quality and a single rate throughout the country.

Antel, which provides telephony and Internet, provides fiber optic connectivity to 86% of Uruguayan homes and continues to carry out works to bring it to every corner of the country. The latest development in this regard is the replacement of copper connections with fiber in the town of Ismael Cortinas, which, when the work is completed, will make the department of Flores the first in the country to have 100% of its services through fiber optics.

This unique "Uruguayan model" of state-owned companies gives Antel a virtual monopoly because it is one of the few companies authorized to provide such a service.

The Telecommunications Regulation (Decree 115/003) classifies Internet services as "transport and transmission of data", who is responsible of giving companies Class B licenses? The Executive Power of the day.

Thus, this Class B license allows the provision of telecommunications services using as support the network, means, or links of the company itself or of another operator.

Law 19,307, commonly known as Media Law, enacted in December 2014, added an impediment when applying for this Class B license since Article 56 made clear the prohibition for audiovisual communication services companies to also provide telephony or data transmission services. In other words, in the eyes of the law, they are incompatible businesses.

As of June 2022, according to data from the Communications Services Regulatory Unit (Ursec), the fixed broadband services pie was divided among Antel, with 99% of the market, or 1,111,989 subscribers; Enalur S.A., with 1% or 9,301 customers; Telefónica Móviles del Uruguay S.A., with less than 1% or 866 users; and Telstar S.A., a company that had 235 subscribers at that time.

A new stage. In 2022 there was a milestone in the expansion of players in this niche, or a break with the "Uruguayan model", when on June 14 Ursec announced that the Executive Power authorized cable operators to provide Internet services.

Five companies were authorized: three from Montevideo, Monte Cable (Cable Montevideo S.A.), TCC (Tractoral S.A.), and Nuevo Siglo (Riselco S.A.), linked to TV channels 4, 10, and 12, respectively; one from Colonia, Korfield; and another from Pando, Praimar.

"Each of them will start to use their own networks or look for ways to contract wholesale services through other providers in order to reach users in the most efficient and effective way possible," said Mercedes Aramendía, president of Ursec.

This is not minor, since Antel can now take on the role of wholesale fiber provider, while the other companies that want to bring Internet to the homes of customers, would be in charge of the last mile of connection, a sensitive aspect in the laying of the network.

However, 2022 had a bigger novelty in store, which would arrive at the end of the year, when the Parliament approved the Accountability Law, which, among other measures, left without effect Article 56 of the Media Law, the one that prevented cable operators from providing fixed Internet services. Thus, since then, the companies of the sector may request authorization from the Executive Power to provide Internet services.

A high bar. Faced with new competitors, the reaction of the state-owned operator did not take long to arrive. Thus, as of February 2023, customers with fiber optic plans obtained higher Internet speeds, both downstream and upstream. "This benefit covers both residential and business customers, will not involve additional costs, and, depending on the contracted plan, will have different improvements," clarified the state-owned company in a press release.

And the increases in connectivity were not minor, since for residential users with the "Fibra Básico" plan (more than 500,000 homes in the country) the download speed increased by 300%; while for those who contracted the "Fibra Ultra", the increase was 33%. On the other hand, the increase in upload speed was 50% for the former and 400% for the latter.

In terms of numbers, as of November 2021, Fibra Ultra customers had a download speed of 750 Mbps, and now this has increased to 1 gigabyte, while the upload speed has increased from 60 to 300 Mbps.

Awaiting official data. The latest data on the Uruguayan Internet market dates back from June 2022, so the numbers of a period that marked a before and after are about to fall, which will be provided by Ursec. In any case, it is expected that the user number of new players is still very small, but it will be the first snapshot that will make it possible to make a projection for the remainder of 2023, a year that will mark a new stage in Uruguay's fixed Internet market.

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