Less than half of Latin American countries (excluding the Caribbean) have been
allocated additional spectrum in order to launch 4G-LTE, according to GSMA Intelligence research. This trend shows the underlying need for additional spectrum capacity in the region to enable operators to launch LTE services and partly explains why Latin America is lagging behind the rest of the world in terms of LTE deployments.
More importantly, while LTE can be deployed in a variety of frequency bands in the region, there is a clear consensus towards the allocation of the AWS band (1700-2100 MHz), the APT700 band (700 MHz) and the IMT-extension band (2500-2600 MHz) to achieve regional LTE spectrum harmonisation.
Additional MHz capacity required to foster mobile broadband adoption
Over the past two years, mobile broadband connections in Latin America have grown by more than 100 million, crossing the 150 million connections mark in Q2 2013 and expected to reach half a billion by the end of 2017. Offsetting low fixed-broadband penetration in the region, mobile broadband services are being widely adopted and we anticipate that one in two connections in Latin America will be running on mobile broadband networks within the next three years.
However, while LTE networks are being rapidly deployed in other global regions – and beginning to take share from 3G in many countries – LTE deployments in Latin America are still lagging behind mainly due to the slow allocation of additional spectrum in the necessary bands.
Over the past three years, only 41% of countries across Latin America (excluding the Caribbean) have been allocated additional frequencies for LTE in a variety of bands, with only nine markets witnessing LTE commercial launches to date. Mobile operators in 13 regional markets are still awaiting the allocation of additional bandwidth indicating that there is a need for further spectrum capacity.
23 mobile operators have commercially launched LTE networks in Latin America with the vast majority of them running on ‘capacity bands’ (high frequencies, above 1 GHz), ranging from 1700 MHz to 2600 MHz.
However, only 425 MHz of spectrum in the 2500-2600 MHz band has been auctioned since January 2010 to eight operators across Brazil, Chile and Colombia that jointly represent just over 40% of total connections in Latin America. Last June, Colombia auctioned a total of 60 MHz of FDD spectrum in the 2600 MHz band with two blocks of 15+15 MHz assigned to both Claro (America Movil) and new entrant Direct TV.
Furthermore, ‘coverage bands’ (lower frequencies, below 1 GHz) are yet to be allocated in the region with the exception of some countries in the Caribbean, Bolivia and Ecuador. As a result, AWS and the IMT-extension band are the two key bands that have been largely selected for LTE use across the southern countries in Latin America – which represent a combined 72% of regional connections.
Higher frequencies typically allow mobile operators to cover urban and suburban areas where data traffic is dense and substantial network capacity is required, but operators also need spectrum in the 700 MHz band to deliver cost-efficient indoor city coverage and rural coverage. Lower frequencies require fewer base stations than capacity bands to produce greater geographic coverage and tend to be more cost-efficient.
AWS is building momentum until 700 MHz becomes widely available
There is a clear momentum around the allocation of AWS (1700-2100 MHz) as a region-wide band, which seems to be the best feasible alternative for many countries until 700 MHz becomes widely available.
A total of 480 MHz of AWS spectrum has been assigned to date across Chile, Mexico, Ecuador, Uruguay, Colombia, Paraguay and most recently in Peru and Bolivia. This frequency band is also on the auction agendas of regulators in Argentina, Venezuela, El Salvador and Honduras.
It is important to note that, while this additional spectrum will mainly be used for LTE deployments, a number of operators (notably in Chile and Mexico) have used AWS spectrum to deploy 3G technologies. Nevertheless, the widespread allocation of AWS spectrum for LTE (which started with Canadian operators Bell, Rogers, Telus, Wind and Sasktel) shows good progress towards achieving spectrum harmonisation in Latin America, enabling regional LTE roaming and wider economies of scale for device manufacturers.
Several US operators are also gravitating towards AWS spectrum to increase capacity in their existing LTE networks – including AT&T, Verizon and T-Mobile/MetroPCS – which will further help to achieve LTE roaming on the continent. However, it is important to note that the AWS band is not being used in Brazil – which alone represents 39% of total connections in Latin America – as it follows the European consensus around the 1900 MHz and 2100 MHz bands.
Network investments and the availability of compatible equipment are expected to spike once more countries allocate digital dividend spectrum in the 700 MHz band. Apart from the early allocations of 700 Mhz in Ecuador to CNT (under APT band plan) and in Bolivia to Entel and Tigo (under USA band plan), the region seems to be leaning towards harmonising around the APT700 band plan starting with Brazil and Chile in early 2014. Other countries that have committed to APT700 include Mexico, Colombia, Venezuela, Panama and Costa Rica, while Argentina, Uruguay and Peru are reportedly likely to follow.
The widespread adoption of the APT700 band plan across Latin America would further help to ensure global economies of scale, which would bring down the cost of mobile devices and network equipment production, while reducing interference issues along borders and promoting international roaming. A study conducted by the Mexican regulator, Cofetel, also shows that adopting the APT700 band plan would result in the faster expansion of network coverage than the US 700 band plan. Under the latter, it would take a minimum of 2.5 years to deploy a network covering the entire population of Mexico City, against only 1.5 years under the APT700 band plan.
% frequency bands (MHz) used in Latin American LTE deployments, as of August 2013 (excluding the Caribbean)
Source: GSMA Intelligence
Other frequency options for LTE in Latin America
A number of other bands have also been assigned for LTE use in the region, including 450 MHz (only in Brazil for rural coverage), 1800 MHz (launched in Dominican Republic and Venezuela), 1900 MHz (in Uruguay, Venezuela and Paraguay) while 900 MHz and 800 MHz may be selected for LTE use in the near future.
This shows a fragmented LTE spectrum scenario in Latin America at present with almost ten different bands required to be supported by device and chipset makers. However, the allocation of spectrum in the 1700-2100 MHz, 700 MHz and 2500-2600 MHz bands shows a clear path towards achieving regional LTE spectrum harmonisation.